UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549 

FORM 10-Q 

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

For the period ended June 30, 20152016

Commission File Number: 50-11050 

ELITE DATA SERVICES, INC.

(Exact Name of Registrant as Specified in its Charter) 

FloridaELITE DATA SERVICES, INC.

(Exact Name of Registrant as Specified in its Charter)

720 S. Colorado Blvd., PH North

Denver, CO 80246

(Address of principal executive offices)

4447 N. Central Expressway Ste 110-135 Dallas, TX 75205(702) 240-9378

(Issuer's telephone number)

1550 Wewatta St.

Denver, CO 80202

(Former name or former address, if changed since last report)

Registrant's telephone number including area code: (972) 885-3981 (702) 240-9378

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Larger accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	x

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

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: As of August 18, 2015,October 25, 2017, the Company had 25,595,902150,018,799 shares of common stock of the registrant outstanding.

ELITE DATA SERVICES, INC.

Quarterly Report on Form 10-Q for the period ended June 30, 20152016

Table of Contents 

Table of Contents 

Part I – FINANCIAL INFORMATION

Item 1.	Unaudited Condensed Consolidated Financial Statements.			4
	Condensed Consolidated Balance Sheets			4
	Condensed Consolidated Statement of Operations			5
	Condensed Consolidated Statement of Cash Flows			6
	Notes to Unaudited Condensed Consolidated Financial Statements			7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.			23 44
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.			29 51
Item 4.	Controls and Procedures.			29 51

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings.			30 53
Item 1A.	Risk Factors.			30 54
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.			31 54
Item 3.	Defaults Upon Senior Securities.			32 55
Item 4.	Submission of Matters to a Vote of Security Holders.			32 55
Item 5.	Other Information.			32 55
Item 6.	Exhibits.			33 56
Signatures				35 59

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Information included or incorporated by reference in this Report contains forward-looking statements. Forward-looking statements, which involve assumptions and describe our future plans, strategies and expectations, 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. Among the material risks which may impact Forward Looking Statements are the following: the risk that we are unsuccessful in obtaining additional capital through the private sale of common shares, debt and/or convertible debt on commercially reasonable terms and which we require in order to fund the Company’s business; the risk that we are unsuccessful in growing and developing our business, and the risk that our business does not perform to expectations, or does not operate profitably. The safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, apply to forward-looking statements made by the Company. The reader is cautioned that no statements contained in this Report should be construed as a guarantee or assurance of future performance or results. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks described in this report and matters described in this report generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. These forward-looking statements are based on current expectations, and the Company assumes no obligation to update this information. Readers are urged to carefully review and consider the various disclosures made by the Company in this Report and in the Company's other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of certain of the risks and factors that may affect the Company's business. 

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PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ELITE DATA SERVICES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited) 

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

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EELITELITE DATA SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited) 

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

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ELITE DATA SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) 

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

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ELITE DATA SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SIX MONTHS ENDED JUNE 30, 20152016

(Unaudited) 

NOTE 1. DESCRIPTION OF BUSINESS

Elite Data Services, Inc., Florida corporation (hereinafter the “Company”, “Our”, “We” or “Us”) is a technology Company whose software applications are developed to marketretail focused management company which currently owns a 20% minority interest of WOD Market LLC, a Colorado limited liability company, a provider of intelligent retail solutions for gym owners and advertise assets thatcoaches, including the management of retail sales, up front inventory purchases, ongoing inventory management, payments, marketing, and related services. Under a joint venture agreement dated March 14, 2017, the Company ownstoday co-operates WOD with WOD Holdings Inc. (“WODH”), a Delaware corporation majority owned by Brenton Mix, our Chief Executive Officer, and controls. In additionTaryn Watson, a related party.

Prior to March 14, 2017, the Company was a technology driven management company which owned and operated online marketing and gaming businesses: Elite Data Marketing LLC, and Elite Gaming Ventures LLC, from 2013 and 2014, respectively.

During the year ending December 31, 2015, we made limited progress with our online marketing platforms due to lack of funding to complete required programming and coding enhancements. During the year ending December 31, 2016, we anticipated obtaining additional funding which would have afforded us the ability of bringing certain new marketing offerings to our automotive platforms in hopes of increasing traffic flow, capturing new users and generating revenues. Due to the Company not being a current and fully reporting company in 2016, the Company was unable to raise the capital needed to advance the online marketing business resulting in a loss of business opportunities.

On March 14, 2017, Company executed a note cancellation agreement and assignment with Baker & Myers & Associates LLC which resulted in Elite Data Marketing LLC no longer being a subsidiary of the Company, with no further operational effect or obligation to the Company.

Separately, pursuant to the terms of the Joint Venture with HYHI formed on or about May 18, 2016, we have been focused on an expansion opportunityintended to implement the creation of the joint venture relationship using Elite Data Holdings S.A., a Honduras corporation, a wholly-owned subsidiary of Elite Gaming Ventures LLC, a Florida limited liability company ("EVG"), a wholly-owned subsidiary of the Company, and a distributor license from HYHI and El Mar Muerto Beauty Mineral, S.A., a Honduras corporation ("EMBM") to establish gaming operations (the "Purpose") by distributing and maintaining a total of eighty (80) slot machines in the gaming sector oncities of La Lima, Cortes; eighty (80) slot machines in the islandcities of Roatan, the largest of the bay islands of Honduras. On April 6, 2015, we entered into a contract to acquire a gaming distribution license for two cities on the Honduras mainlandTrujillo, Colon; and Roatan. The Company is currently working on implementing gamingOne Hundred and Sixty (160) slot machines in Roatan in conjunction with its continued usethe bay island of its existing technologiesHonduras.

In order to generate revenue under its business plan.effect the distributor license related to the gaming operations, the Company and EVG was responsible for providing any and all financial and operational resources required to execute on the license granted to the Company, including, but not limited to, the funding for the initial and ongoing operating costs in the minimum amount of Five Hundred Thousand Dollars (USD $500,000) on or before December 31, 2016 (the "Initial Funding"). See Note 4,16.

During the period ending December 31, 2016, the Company was unable to raise the capital required to pay the minimum operational costs of the joint venture which resulted in a loss of business opportunities, and further strained the relationship with HYHI, our joint venture partner.

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On March 14, 2017, Company executed a joint venture termination agreement with H Y H Investments S.A. which resulted in Elite Gaming Ventures LLC (and, its wholly-owned subsidiary, Elite Data Holdings S.A.) no longer being a subsidiary of the Company, with no further operational effect or obligation to the Company, except for certain amounts owed by the Company under a further amendment to the Amended and Restated Redeemable Note 9executed on May 18, 2016 at the time the Joint Venture was formed.

Separately, the Company intended to expand its operations in the fourth quarter of 2016 to include intelligent retail solutions for gym owners and coaches through the completion of the acquisition of WOD, as set forth in the definitive agreement dated August 26, 2016, at which time the Company acquired a minority interest stake of 20% of WOD, with 100% ownership interest of WOD anticipated to be completed on or before October 15, 2016. See Note 11.15.

WOD serves the fitness community by allowing coaches and trainers to focus on what’s important while athletes have access to the products they need to perform at their highest level. WOD aims to relieve gym owners and coaches of the burden of managing retail sales including upfront inventory purchases, ongoing inventory management, payments, marketing, etc. while also providing a service for members to have convenient access to products that help them perform better. WOD intends to forge a mutually beneficial relationship with each gym, customer and vendor to ensure the best possible experience.

On January 10, 2017, the Company executed the first amendment to the purchase of WOD to extend the second closing date from on or about September 15, 2016 to on or about March 31, 2017, and further extend the third and final closing date from on or about October 15, 2016 to on or about June 30, 2017, respectively.

Pursuant to management’s decision to divest itself from its online marketing and gaming businesses, and focus exclusively on the fitness retail sales business, the Company executed the second amendment to the definitive agreement on March 14, 2017, which further amended certain terms of the WOD purchase, including the formation of a joint venture to further develop and manage the current WOD business.

Under the terms of the Joint Venture, the initial ownership interest of WOD was 20% owned by the Company, with the remaining 80% owned WODH, with the option of Company to provide additional capital contributions to WOD in increments of not less than $10,000 up to a total of $8 million dollars in the aggregate, which included an equity exchange of up to a total of 800 units (80%) of WOD owned initially by WODH to the Company for a total of approximately 199,000 shares of Series B Preferred Stock and approximately 19,801,000 shares of Common Stock of the Company (the “Shares”) to be issued to WODH upon the completion of a final closing on or before December 31, 2018, under the terms set forth in Amendment No. 2.

Until a minimum of at least $4 million in additional capital contributions have been made by the Company to WOD, resulting in a controlling ownership interest of not less than 60% of WOD by the Company, all the Shares of Company stock earmarked for the equity exchange with WODH is being held in a Voting Trust (as defined elsewhere in this filing), along with other key shareholder positions, in order to recapitalize the Company post a 1:1000 reverse split (which was previously approved), pending effectiveness after the Company becomes a current and fully-reporting public company.

For more information, see Note 15.

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NOTE 2. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Elite Data Services, Inc. (the "Company") are presented in accordance with the requirements for Form 10-Q and Regulation S-X. Accordingly, they do not include all of the disclosures required by generally accepted accounting principles. In the opinion of management, all adjustments (all of which were of a normal recurring nature) considered necessary to fairly present the financial position, results of operations, and cash flows of the Company on a consistent basis, have been made.The accompanying unaudited interim condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained in our annual 10-K filing, filed with the SEC on April 15, 2015.September 27, 2016.

In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements, which would substantially duplicate the disclosure contained in the audited consolidated financial statements for the most recent fiscal year ended December 31, 20142015 have been omitted. The consolidated balance sheet at December 31, 2014, has been derived from the audited financial statements included in the 2014 Annual Report. 

Going Concern 

The Company has accumulated a deficit of $10,751,131.$19,900,620. The Company currently has only limited working capital with which to continue its operating activities. The amount of capital required to sustain operations is subject to future events and uncertainties. The Company must secure additional working capital through loans, sale of equity securities, or a combination, in order to implement its current business plans. There can be no assurance that such funding will be available in the future, or available on commercially reasonable terms favorable to the Company. These conditions raise substantial doubt about the Company's ability to continue as a going concern. 

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The accompanying condensed consolidated financial statements have been presented on the basis of the continuation of the Company as a going concern and do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern. 

Management continued to manage its costs for the six months ended June 30, 20152016 to ensure appropriate funding is on hand for its continued operations through convertible debentures and financing from a related party. See Note 7 and 8. Management’s plans include the raising of capital through the equity markets to fund future operations and pay debts and generating of revenue through our business. See Note 12. However, even if we do raise sufficient capital to support our operating expenses and generate adequate revenues, there can be no assurances that the revenue will be sufficient to enable us to develop business to a level where we will generate profits and positive cash flows from operations.

NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

Principles of Consolidation 

The consolidated financial statements have been prepared in accordance with generally accepted accounting principles and include the accounts of the Company and its subsidiaries, Dynamic Energy Development CorporationCorp. and Transformation Consulting, Inc. All intercompany balances and transactions have been eliminated in consolidation.

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Use of Estimates

The preparation of financial statements in conformity with United States generally accepted accounting principles 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. The Company regularly evaluates estimates and assumptions related to intangible assets and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. 

Reclassifications  

Certain reclassifications have been made in Statement of Operations for the year 2014 to the period ended June 30, 2015. These reclassifications impacted the classification of certain items within the Statement of Operations: relating to classification of interest expense. The reclassifications had no impact on previously reported total operating expenses, net loss, or stockholders' deficit. 

Impairment of Long-Lived Intangible Assets

We review our long-lived assets, including intangible assets subject to amortization, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment, if any, is measured as the excess of the carrying amount over the fair value based on market value (when available) or discounted expected cash flows of those assets, and is recorded in the period in which the determination is made. Intangible assets not subject to amortization are tested annually for impairment and more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired.

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Development Costs 

Development costs are expensed in the period they are incurred unless they meet specific criteria related to technical, market and financial feasibility, as determined by management, including but not limited to the establishment of a clearly defined future market for the product, and the availability of adequate resources to complete the project. If all criteria are met, the costs are deferred and amortized over the expected useful life, or written off if a product is abandoned. For the six months ended June 30, 2015,2016, the Company incurred no development costs. As of June 30, 2015,2016, the Company had no deferred product development costs. 

Income Taxes

Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted the accounting standards codified in ASC 740, Income Taxes as of its inception. Pursuant to those standards, the Company is required to compute tax asset benefits for net operating losses carried forward. Potential benefit of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not that it will utilize the net operating losses carried forward in future years. 

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ASC 740-10-25 prescribes recognition thresholds that must be met before a tax position is recognized in the financial statements and provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. An entity may only recognize or continue to recognize tax positions that meet a "more likely than not" threshold. Based on its evaluation, the Company has concluded that there are no significant uncertain tax positions requiring recognition in its financial statements. 

The Company does not have any unrecognized tax benefits as of June 30, 20152016 that, if recognized, would affect the Company's effective income tax rate. The Company's policy is to recognize interest and penalties related to income tax issues as components of income tax expense. The Company did not recognize or have any accrual for interest and penalties relating to income taxes as of June 30, 20152016 and December 31, 2014.2015.

Cash

Cash include all highly liquid instruments with an original maturity of three months or less at the date of purchase. The Company maintains its cash in cash deposit accounts, which are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per legal ownership. At times, the Company’s accounts may exceed federally insured limits. To date, the Company has not experienced any losses in such accounts. At June 30, 2015,2016, the Company had no cash equivalents. 

Fair Value of Financial Instruments 

The Company’s financial instruments consist of cash, accounts payable, accrued liabilities, line of credit payable, loans from a related party, contingent consideration payable, and convertible note payable. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements. 

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Fair Value Measurement 

The Company values its derivative instruments under FASB ASC 820 which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. 

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement). 

The three levels of the fair value hierarchy are as follows: 

Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities. 

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Level 2 – Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date. 

Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. 

The Company's financial instruments consisted of cash, prepaid expense, deposit, accounts payable and accrued liabilities, line of credit, loan from stockholders and convertible debt. The estimated fair value of cash, prepaid expense, deposit, accounts payable and accrued liabilities, line of credit, loan from stockholders approximates its carrying amount due to the short maturity of these instruments. The recognition of the derivative values of convertible debt are based on the weighted-average Black-Scholes option pricing model. 

Revenue Recognition

The Company recognizes revenue in accordance with the FASB ASC Section 605-10-S99, Revenue Recognition, Overall, SEC Materials ("Section 605-10-S99"). Section 605-10-S99 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services rendered; (3) the fee is fixed and determinable; and (4) collectability is reasonably assured.

Net Income (Loss) Per Common Share 

Basic loss per common share (“EPS”) is calculated by dividing the net loss available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. The number of common shares that are exercisable or converted into common stock is not material to affect diluted EPS results. Further, since the Company shows losses for the periods presented basic and diluted loss per share are the same for all periods presented.

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Common Share Non-Monetary Consideration

In situations where common shares are issued and the fair value of the goods or services received is not readily determinable, the fair value of the common shares is used to measure and record the transaction. The fair value of the common shares issued in exchange for the receipt of goods and services is based on the stock price as of the earliest of the date at which:

	i	The counterparty’s performance is complete;
	ii.	commitment for performance by the counterparty to earn the common shares is reached; or
	iii.	the common shares are issued if they are fully vested and non-forfeitable at that date.

Stock-Based Compensation

On December 1, 2005, the Company adopted the fair value recognition provisions codified in ASC 718, Compensation-Stock Compensation. The Company adopted those provisions using the modified-prospective-transition method. Under this method, compensation cost recognized for all periods prior to December 1, 2005 includes: a) compensation cost for all share-based payments granted prior to, but not yet vested as of November 30, 2005, based on the grant-date fair value and b) compensation cost for all share-based payments granted subsequent to November 30, 2005, based on the grant-date fair value. In addition, deferred stock compensation related to non-vested options is required to be eliminated against additional paid-in capital. The results for periods prior to December 1, 2005 were not restated.

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The Company accounts for equity instruments issued in exchange for the receipt of goods or services from parties other than employees in accordance with ASC 505, Equity. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the counterparty.

Share Purchase Warrants

The Company accounts for common share purchase warrants at fair value in accordance with ASC 815, “Derivatives and Hedging”. The Black-Scholes option pricing valuation method is used to determine fair value of these warrants. Use of this method requires that the Company make assumptions regarding stock volatility, dividend yields, expected term of the warrants and risk-free interest rates. 

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Recently Issued Accounting Pronouncements

Recently and Issued Accounting PronouncementsOther than as set forth below, management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.

In May 2014,January 2016, the FASBFinancial Accounting Standards Board (“FASB”) issued ASU 2014-09, “Revenue from ContractsAccounting Standards Update (“ASU”) 2016-01, “Financial Instruments - Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10).” The amendments require all equity investments to be measured at fair value with Customers.” ASU 2014-09 requireschanges in the fair value recognized through net income (other than those accounted for under the equity method of accounting or those that result in consolidation of the investee). The amendments also require an entity to recognizepresent separately in other comprehensive income the amountportion of revenuethe total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to which it expectsmeasure the liability at fair value in accordance with the fair value option for financial instruments. In addition, the amendments eliminate the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities and the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be entitleddisclosed for transfer of promised goods or services to customers. ASU-2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The amendments in this update also require disclosure of sufficient information to allow users to understand the nature, amount, timing and uncertainty of revenue and cash flow arising from contracts. ASU-2014-09 is effective for annual and interim reporting periods beginning after December 15, 2016, using one of two retrospective application methods. Early application is not permitted. The Company is currently evaluating the effect that the adoption of ASU 2014-09 will have on the Company’s consolidated financial statements. 

In April 2015, the FASB issued amended guidance in a FASB ASU on, "Interest-Imputation of Interest", which simplifies the balance sheet presentation of debt issuance costs. Under the new guidance, debt issuance costs related to a recognized debt liability will be presentedinstruments measured at amortized cost on the balance sheet as a direct deduction from the liability.for public business entities. This treatment is consistent with the presentation of debt discounts. The new guidance is effective for fiscal years beginning after December 15, 2015,2017, including interim periods within those fiscal years. The Company does not expect to early adopt this guidance and does not believe that the adoption of this guidance will have a material impact on its consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting." ASU 2016-09 amends several aspects of the accounting for share-based payment transactions including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted andany interim or annual period. If early adopted, an entity must adopt all of the new guidance should be applied retrospectively.amendments in the same period. The Company is currently evaluating the potential impact of the adoption of this updateASU 2016-09 on January 1, 2016 will not have a material impact on ourthe Company's consolidated financial statements.

Other recent accounting pronouncements issued byEffects of Notes Payable Amendments. Cancellation and Forgiveness of Debt

In May 2016 the FASB (includingCompany reorganized much of its Emerging Issues Task Force),debt and previous venture agreements. The table below shows the AICPA, and the SEC during the current reporting period did not, or are not believed by management to have a material impact on the Company’s present or futurecondensed consolidated financial statements. statement of the modifications in these agreements. This table only shows those notes that were modified.

Holder		Note Value Reorg				Value Change Reorg				Forgiveness Cancellation				Note Balance June 30, 2016				Interest Balance Reorg				Forgiven Interest				Retroactive Interest				Interest Balance June 30, 2016
Note 1		$	112,500			$	187,500			$	112,500			$	300,000			$	3,519							$	19,600			$	26,702
Note 2			225,000				175,000				225,000				400,000				4,375								26,133				35,286
Note 3							4,900,000								4,900,000																245,000
Note 4			587,564								587,564				500,000				110,353			$	92,465				33,417				57,277
Note 5			136,960				38,040				136,960				175,000				41,564												45,147
Note 6							27,500								27,500												1,054				1,383
Note 7			50,000								50,000

		Derivative Liability Reorg				Debt Discount Reorg				Note Extinguishment
Note 1		$	913,039			$	66,421			$	112,500
Note 2			911,332				83,288				225,000
Note 3
Note 4											587,564
Note 5											136,960
Note 6
Note 7							50,000				50,000

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The table below shows the impact on notes payable by the modifications above and the re-catagorizing of the notes to their remaining term.

Holder		Short Term				Long Term				Related Party
Note 1						$	300,000
Note 2							400,000
Note 3		$	1,900,000				3,000,000
Subtotal							3,700,000
Note 4			250,000				250,000			Yes
Note 5			100,000				75,000			Yes
Subtotal			350,000				325,000
Note 6			27,500
Note 7			50,000
Note 8			17,500
Note 9			79,310
Note 10			42,239
Note 11			14,787
Note 12			142,340
Subtotal			2,273,676
Debt Discount			(5,574	)
Total			2,268,102

NOTE 4. DEPOSIT FOR PURCHASE OF LICENSE (JOINT VENTURE PAYMENT)

Gaming License and Securities Purchase Agreement

On April 4, 2015, the Company instructed the escrow agent to deliver $100,000 as a deposit in good faith pursuant to the Securities Purchase Agreement dated April 4, 2015 (the “SPA”) and Promissory Note dated April 6, 2015 (the “Note”) to acquire all of the capital stock of El Mar Muerto Beauty Mineral, Sociedad Anonima (hereafter “EMBM”) a Honduras corporation, whose sole assets consist of a Honduras gaming license for EMBM’s use, which permits the operation of Eighty (80) gaming machines in Trujillo, Eighty (80) gaming machines in La Lima, and One Hundred and Sixty (160) gaming machines in Roatan, the largest of Honduras’s bay islands, for a total purchase price of $10,000,000. On September 30, 2015, the Company amended the Note and SPA to reflect a due date of April 6, 2016 in conjunction with the first payment of Nine Hundred Thousand Dollars ($900,000), which is due in either cash, stock, or 25% of the net revenues of EMBM’s operations at the seller’s option, and the current purchase price owed was reduced to $9,900,000, which deducts the $100,000 deposit tendered on April 4, 2015 as referenced herein. The business purpose for the amendment was to allow the Company the proper time to incorporate a Honduras corporation in compliance with the laws of the Republic of Honduras to own the securities of EMBM and effectively be able to transact business in that municipality. The good-faith non-refundable deposit permitted negotiation for a commitment at a later date, which the Company will recognize upon the effective date of April 6, 2016.

First Amendment; Securities Purchase Agreement and Note

On September 30, 2015, the Company amended the Note and SPA to reflect a due date of April 6, 2016 in conjunction with the first payment of Nine Hundred Thousand Dollars ($900,000), which is due in either cash, stock, or 25% of the net revenues of EMBM’s operations. The Note was also amended to reflect the current purchase price owed was reduced to $9,900,000, which deducts the $100,000 non-refundable deposit tendered on April 6, 2015. The business purpose for this amendment was to allow the Company the proper time to incorporate a Honduras corporation to be in compliance with the laws of the Republic of Honduras to effectively be able to transact business in that municipality. The good-faith non-refundable deposit permitted negotiation for a commitment at a later date.

Second Amendment; Securities Purchase Agreement

Effective November 20, 2015, the Company signed a Second Amendment (the “Amendment”) to the Securities Purchase Agreement (the “Agreement”) with H y H Investments, S.A. (the “Seller”) regarding the acquisition of the gaming license whereby the Company re-assigned the Agreement to Elite Holdings S.A., a wholly owned subsidiary owned by the Company on a jointly and severally liable basis with the Company so as to comply with the regulatory authority of the Republic of Honduras. The Amendment also removed any Required Approvals on part of the Seller to enter into the Agreement. The Amendment specifies that as long as the Company is current in its payment obligations, upon good faith payment, Purchaser shall have the right to operate gaming machines permitted under the license and proceed with the use of the license as owner of EMBM with full power and authority to contract, license, sub-license, loan, lease, enter into contract or any other business venture in which entitles Purchaser to the benefit of the license on behalf of the Corporation. The Amendment also clarified that the shares of EMBM would be assigned to Elite Holdings, S.A. after the full purchase price had been tendered to the Seller. The Company will recognize the appropriate asset and liability when performance occurs on the effective date April 6, 2016.

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Third Amendment; Securities Purchase Agreement and Joint Venture Agreement

On May 20, 2016, the Company and H Y H Investments, S.A. ("HYHI") executed the Third Amendment to the Securities Purchase Agreement (the "Third Amendment"), pursuant to which the parties agreed to further clarify and amend and restate certain provisions of the Original Purchase Agreement, First Amendment and Second Amendment (the "Original Purchase Agreement"). Pursuant to the terms of the Third Amendment, the parties mutually agreed to cancel the Original Purchase Agreement dated April 6, 2015, in exchange for a new Joint Venture Agreement (the "Joint Venture") executed on even date therewith, pursuant to which the Company and HYHI agreed to create a joint venture relationship using Elite Data Holdings S.A., a Honduras corporation, a wholly-owned subsidiary of Elite Gaming Ventures LLC, a Florida limited liability company ("EVG"), a wholly-owned subsidiary of the Company, and a distributor license from HYHI and El Mar Muerto Beauty Mineral, S.A., a Honduras corporation ("EMBM") to establish gaming operations (the "Purpose") by distributing and maintaining a total of eighty (80) slot machines in the cities of La Lima, Cortes; eighty (80) slot machines in the cities of Trujillo, Colon; and One Hundred and Sixty (160) slot machines in Roatan in the bay island of Honduras. In addition, the Company and EVG agreed to pay HYHI consideration in the total amount of USD $10,000,000 (the "Total Consideration"), including, but not limited to a convertible note, a revenue share plan, and an initial amount of $100,000, which was paid in the Original Purchase Agreement, as amended, and is the same $100,000 deposit described in this Note 4.

NOTE 4.5. RELATED PARTY TRANSACTIONS

Baker Myers - LOCAsset Purchase and Convertible Note - ClassifiedRide

The principle amount due Sarah Myers (director and executive officer of the Company, the related party) at June 30, 2015 was $167,257, which represents an unsecured promissory note and addendums (“Myers – LOC”). These amounts are unsecured and bear interest at the rate of 12% per annum. The Myers – LOC has been amended to be due and payable on December 31, 2015. The accrued interest under the Myers – LOC as of June 30, 2015 was $27,540. 

January 13, 2014 Agreement - ClassifiedRide

On January 13, 2014, the Company entered into an asset purchase agreement with Baker Myers and Associates, LLC (“Baker Myers”) to acquire certain assets including, www.classifiedride.com, an online classified listing website whereprivate sellers can buy, sell, and trade their vehicle. Ms. Myers is the managing member and sole owner of Baker Myers, and also serves as an Officer and Director of the Company. As of June 30,December 31, 2014, pursuant to GAAP ASC 805-50-30, the transaction carrying value of the assets wasrather than the fair value were recorded to the transaction as it was being made by a related party as $587,564 and aparty. A convertible note totaling $587,564 was amended and issued into reflect the amount of $587,564 withcarrying value that carries an interest rate of 8% per annum. The Maturity Date of the Note is January 13, 2017. Upon default of the Note, the interest rate increases to 10%. Pursuant to the Note, Baker Myers may convert all or any part of the outstanding and unpaid principal amount of this Note within 180 days from the date of the note into fully paid and non-assessable shares of Common Stock at the conversion price of $.05 per share with a limitation of 4.99% of the total shares of common stock of the Company outstanding. The Note also contains a $2,000 per day fee for failure to deliver common stock to the Holder upon three days delivery. At June 30, 2015,2016, the note balance and accrued interest was $587,564$756,481. These amounts were modified per the Baker Myers Note and $67,512, respectively. Share Cancellation and Exchange Agreement below

January 15, 2014 Agreement –Baker Myers - Asset Purchase and Stock Consideration - Autoglance

On January 15, 2014, the Company entered into an Agreement with Baker Myers for 51% of the membership interest of Autoglance, LLC, a Tennessee Limited Liability Company, and with it majority control over all owned assets of Autoglance, LLC, including the website www.autoglance.com (collectively “Autoglance”) for 765,000 shares the Company’s common stock as consideration.

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SeparationBaker Myers Note and SettlementShare Cancellation and Exchange Agreement with Steven Frye

On June 15, 2015,May 18, 2016, the Elite Data Services, Inc. (the "Company") Company and Baker Myers and Associates LLC, a Nevada limited liability company ("Baker Myers," an entity owned by Sarah Myers, the President, Chief Operating Officer and Director of the Company entered into) executed a SeparationNote and SettlementShare Cancellation and Exchange Agreement Release(the "Share Exchange Agreement"), with respect to that certain unsecured Promissory Note (the "Original Baker Myers Note") dated on or about January 13, 2013, in the original amount of Claims$587,500 (the “Agreement”"Original Amount") with Steven Frye, our former Chief Executive Officer, Chief Financial Officer, and President. According, pursuant to the Agreement, the Companywhich Baker Myers agreed to pay Mr. Frye $54,794forego and waive any and all right in, entitlement to or interest in (A) a total of $87,500 in principal, a total of $92,465 in accrued interest, late charges, reimbursable attorneys' fees, reimbursable expenses and any other sums due and payable under the Original Baker Myers Note totaling $179,965 (the "Cancelled Amount") as of the date of execution (the "Effective Date"), any future payments due under the Original Baker Myers Note and all or any other of Baker Myers's rights under the Cancelled Amount of the Original Baker Myers Note, thereby extinguishing and canceling the Cancelled Amount of the Original Baker Myers Note and terminating any and all of Company's obligations thereunder, (B) the Shares (hereinafter also referred to as the "Cancelled Shares") in exchange for services renderedthe issuance an Option Agreement (the "Option Agreement"), registered in the formBaker Myers's name to purchase up to a certain number of 391,386membership interests (the "EDM Membership Interest") of Elite Data Marketing LLC, a Florida limited liability company (the "EDM"), in an amount totaling one hundred percent (100%) of the ownership interest in EDM (the "Option 1"), (B) the issuance by Company to Baker Myers of a three-year "cashless" common stock purchase warrant (the "Warrant No. BM-1") for the right to purchase a total of 3,000,000 shares of CommonSeries B Preferred Stock of the Company valued(the "Preferred Warrant Shares"), at $.14a purchase price of $0.001 per share, with certain rights and preferences as set forth in the certificate of designation (the "Certificate of Designation of Series B Preferred), in exchange for the Cancelled Shares, as referenced in the Share Exchange Agreement, and (C) the issuance of an amended and restated convertible redeemable note (the "Redeemable Note") in the aggregate principal face amount of Five Hundred Thousand Dollars (US$500,000), at ten percent (10%) interest per annum commencing on date of execution (the "Effective Date"), due and payable by the Company in eight (8) separate equal quarterly payments of Sixty-Two Thousand Five Hundred Dollars (USD $62,500), plus accrued interest to date, due on the first day of each quarter beginning on the date of the Agreement. The Agreement further stated Mr. Frye would be responsible for all taxes, and Mr. Frye signedfirst quarter following the date of execution of this Original Baker Myers Note, convertible into shares of the Company's common stock at a general release of any and all claims, known or unknown, against the Company. On July 1, 2015, Mr. Frye delivered his executed paperworkconversion price equal to the Company.lesser of $0.01 per share or a discount of fifty-eight percent (58%) of the lowest trading price for the ten (10) prior trading days, subject to aggregate conversion limitations of 4.99% and other terms and conditions set forth therein. The balance of the note and accrued interest at June 30, 2016 was $557,277. 

NOTE 5. CONTINGENT CONSIDERATION PAYABLENew Company Subsidiary - Elite Data Marketing LLC

On February 25, 2011, the Company’s wholly owned subsidiary, Dynamic Energy Alliance Corporation (hereafter “DEDC”) and a former director no longer associated withMay 20, 2016, the Company (hereafter “the Director”) entered intoexecuted an Assignment of Ownership Interest with its newly formed subsidiary, Elite Data Marketing LLC, pursuant to which the Company assigned and transferred (A) a Stock Purchase Agreement (hereafter “Agreement”certain amount of Company's ownership interest held in www.classifiedride.com, an online classified listing website (the "ClassifiedRide") and corresponding Amendments No. 1, No. 2 and No. 3, dated December 30, 2011, March 31, 2012 and September 26, 2012, respectively, by which DEDC acquired all, equal to an aggregate total of one hundred percent (100%) of the outstanding sharesownership interest of Transformation Consulting, Inc. (hereafter “TC”). The purchase price for the shares was $2,000,000, payableClassifiedRide asset (the "ClassifiedRide Asset"), acquired by the Company from Baker Myers, on or about January 13, 2014, and (B) a certain amount of Company's ownership interest in Autoglance LLC, a Tennessee limited liability company (the "Autoglance"), equal to an aggregate total of fifty-one percent (51%) of the gross revenuesunits of TC, subjectmembership interest (the "Autoglance Units"), including, but not limited to, the following contingent reduction or increasemajority control over all owned assets of the purchase price. Pursuant to the Agreement, if TC’s gross revenues during the two years following the closing were less than $2,000,000, then the purchase price for the shares would be reduced to the actual revenue received by TC during the two year period. If TC’s revenues during the same two year period exceed $2,000,000, then the purchase price for the shares would be increased by one-half of the excess revenues over $2,000,000 (hereafter “contingent consideration”).  

Pursuant to the contingent consideration of $2,000,000 due to the Director from TC, all revenues generated by TC under the Agency Agreement were disbursed to the former Director. Through December 31, 2012, gross revenues under the TC Stock Purchase Agreement totaled approximately $2,000,000.Through December 31, 2013, payments, net of refunds, made to Director under the TC Stock Purchase Agreement totaled $984,638. On September 30, 2013, the former director assigned the remaining contingent consideration debt note (hereafter the “Note”) to Habanero Properties via an Assignment and Assumption Agreement. The Note was subsequently offset by $108,788 as payment for warrants exercised at their strike priceAutoglance, acquired by the former director. Habanero Properties subsequently assigned the remaining contingent consideration due and payable to Rocky Road Capital, Inc.  

For the period ended June 30, 2015, the Company eliminated the remaining balance due and payable by entering into five Assignment of Convertible Promissory Note and Consent and a Convertible Promissory Note totaling $322,012 with third parties not affiliated with the Company. Each agreement specified the amount of the assignment to be paid back at $.10 per share for the conversion of 3,220,120 Shares of the Company’s Common Stock. None of the assignments amounted to any of the Assignees owing more than 4.99% of the outstanding securities of the Company. The estimated fair value of the common shares was used to measure and record the transaction with the difference between the conversion prices and estimated fair value being recorded as lossfrom Baker Myers, on extinguishment of debt. For the period ended, June 30, 2015, the Company recognized a loss of $107,816 on extinguishment of debt as a result of the transactions.

or about January 15, 2014.

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At June 30, 2015 and December 31, 2014, the contingent consideration payable is as follows:

		As of June 30,				As of December 31,
Contingent consideration due		2015				2014
Contingent consideration due		$	2,000,000			$	2,000,000
Less payments, net of refunds, to Director			(984,638	)			(984,638	)
Payment of exercise of warrants			(108,788	)			(108,788	)
Conversion of contingent consideration to common stock			(906,574	)			(340,362	)
		$	0			$	566,212

NOTE 6. LOAN PAYABLE – RELATED PARTY

On April 14, 2014, the Company entered into a Promissory Note dated April 15, 2014 (the “Note”) with Stephen Frye, former Chief Executive Officer, President, CFO,Myers – Line of Credit (LOC)

The principal amount due Sarah Myers (director and Directorexecutive officer of the Company, for $13,500 with interest accruing at the rate of 12% per annum with an extended due date of December 31, 2015 (“Addendum One”). On June 15, 2015, the Company entered into Addendum Two (“Addendum Two”), which allowed the conversion of $15,207 (the principal and outstanding interest due under the Note) payable in Common Stock of the Company with the price per share being the closing price of the Company’s stock as of the date of the Agreement. The fair value of the closing stock price was calculated, as of June 15, 2015, at $0.14, whereby the Note and accrued interest was converted into 108,614 shares of Restricted Common Stock of the Company. As of June 30, 2015, loan payable to related party is $0. 

NOTE 7. COMMITMENTS AND CONTRACTUAL OBLIGATIONS 

Loans Payable Related Party  

The amounts due to a related partyparty) at June 30, 2016 and 2015 of $167,257,was $175,000 and $151,000, respectively, represents the an unsecured promissory note and addendums (“Myers – LOC.- LOC”). These amounts are unsecured and bear interest at the rate of 10% and 12% per annum, respectively. The Myers - LOC has been amended to be due and payable on December 31, 2016 The accrued interest under the Myers - LOC as of June 30, 2016 and 2015 was $45,147 and $27,540, respectively.

The amount due under the Myers - LOC at June 30, 2016 was $175,000. The amount is unsecured and bears interest at 10% per annum. At June 30, 2015,2016, accrued interest on the amount was $45,147.

NOTE 7. PROMISSORY NOTE

Tarpon Bay Partners – Line of Credit

In conjunction with the Equity Line as discussed in Note 15 below, the Company issued a promissory note to Tarpon Bay Partners for $50,000, due on January 31, 2016, with 10% interest per annum as consideration for transaction costs incurred by Tarpon. The $50,000 of transaction costs will be treated as a note discount under current Generally Accepted Accounting Principles and the discount will be amortized as costs related to equity financing issuances. At March 31, 2016, the note balance and accrued interest was $27,540.  $50,000 and $4,610, respectively.

Tarpon Bay Partners – Line of Credit Payable – Termination Agreement and Convertible Note

On August 16, 2013, Birch First Capital Fund, LLC and/or Birch First Capital Management, LLC (“Birch First”) filed a complaint againstMay 24, 2016, the Company and Tarpon Bay Partners LLC ("Tarpon") executed a Termination Agreement (the "Termination Agreement"), in which the parties agreed to cancel the original Equity Purchase Agreement (the "Original Purchase Agreement"), dated July 14, 2015 (except for the original Promissory Notes (the "Original Tarpon Note") which was amended and restated as set forth below), in the 15th Judicial Circuitoriginal amount of Florida (2013 CA 012838) alleging breach of contract under a Line of Credit Agreement (“LOC”) totaling $151,000. On November 18, 2013, Birch First brought a lawsuit in the 15th Judicial Circuit of Florida against Mr. Charles Cronin and Dr. Earl Beaver (former officers and directors of the Company), naming the Company as a nominal defendant. A motion to dismiss was filedUSD $50,000.00, issued by the Company concerning this derivative lawsuit,to Tarpon as additional compensation pursuant to Original Purchase Agreement), which gave the Company the right to issue and sell to Tarpon any of the Five Million Dollars ($5,000,000) of the Company's common stock.

In exchange for the Termination Agreement, the Company agreed to (a) amend and restate the terms of the Original Tarpon Note, in the form of the issuance of an amended and restated convertible redeemable note (the "Amended Tarpon Note"), in the principal amount of $50,000.00, at ten percent (10%) interest per annum commencing on July 14, 2015 (the "Effective Date"), to be due and payable to Tarpon by Company in four (4) separate equal quarterly payments of Twelve Thousand Five Hundred Dollars (USD $12,500), plus accrued interest to date, due on the first day of each quarter beginning on July 1, 2016, convertible into shares of the Company's common stock at a conversion price equal to fifty-eight percent (58%) of the lowest trading price for the ten (10) prior trading days, subject to aggregate conversion limitations of 9.99% and other terms and conditions set forth therein , and (b) execute a new Equity Purchase Agreement (the "New Purchase Agreement"), pursuant to which the Company would have the right to issue and sell to Tarpon a total of Fifteen Million Dollars ($15,000,000) of the Company's common stock, under the same terms as the Original Purchase Agreement, except for no additional compensation in lieu of the Amended Tarpon Note, to be executed on such mutually agreed upon date in the future after the Company is still currently pending. As ofcurrent on all SEC filings and is relisted on the Over-the-Counter (OTC) OTCBB and OTCQB markets.

On June 30, 2015,2016, the Company and Birch First (collectively the “Parties”) were still in negotiations to settlement terms, and on July 23, 2015 the Parties finalized the settlement agreements which lead to the conclusion of Case 2013 CA 012838. See Note 12. 

principal outstanding was $50,000 with accrued interest at $4,610.

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At June 30, 2015,Convertible Redeemable Note for Unpaid Invoices

On May 18, 2016, the disputed liability including accrued interest underCompany and JMS Law Group PLLC ("JMS") executed a settlement letter (the "Settlement Letter") in which the LOC, was $212,794.parties agreed to settle unpaid invoices for services rendered by JMS to the Company in the amount of $20,000, and further agreed to pay JSM a total of $7,500 for continued services to the Company until July 31, 2016.

Pursuant to the terms of the Settlement Letter, the Company issued to JMS a six month convertible redeemable note (the "Note") in the principal amount of USD $ 27,500, at a rate of ten percent (10%) per annum commencing on date of issuance , convertible into shares of the Company's common stock at a conversion price equal to the lesser of $0.01 per share or a discount of fifty-eight percent (58%) of the lowest trading price for the ten (10) prior trading days, and other customary and standard terms and conditions set forth therein. The principle balance of the LOC of $151,000 is classified as a line of credit payablenote and the related accrued interest at June 30, 2015, of $61,794 is classified in accrued liabilities.2016 was $28,883.

Stock CompensationTermination Agreement to Definitive Agreement for investor relations services the acquisition of a new subsidiary

Company and Properties of Merit Inc. ("POM") are parties to that certain Definitive Agreement, dated May 20, 2016, incorporated by reference in Form 8K filed with the SEC on May 24, 2016, pursuant to which the Company agreed to acquire one hundred percent (100%)of the ownership interest in POM, in the form of three (3) separate closings with the first closing originally anticipated on or before May 27, 2016, subject to certain performance requirements of both parties prior to each closing.

The Company issued to POM a six month convertible redeemable note (the "Note") in the principal amount of USD $ 17,500, at a rate of ten percent (10%) per annum commencing on date of issuance , convertible into shares of the Company's common stock at a conversion price equal to the lesser of $0.01 per share or a discount of fifty-eight percent (58%) of the lowest trading price for the ten (10) prior trading days, and other customary and standard terms and conditions set forth therein. The balance of the note and accrued interest at June 30, 2016 was $17,785.

NOTE 8. RELATED PARTY CONVERTIBLE PROMISSORY NOTE

Baker Myers Convertible Note

On December 3,January 13, 2014, the Company entered into an Investor Relations Consulting Agreement (the “Agreement”asset purchase agreement with Baker Myers and Associates, LLC (“Baker Myers”) to acquire certain assets including, www.classifiedride.com, an online classified listing website where private sellers can buy, sell, and trade their vehicle. Ms. Myers is the managing member and sole owner of Baker Myers, and also serves as an Officer and Director of the Company. As of September 30, 2014, a convertible note was amended and issued in the amount of $587,564 with EraStar Inc. (“EraStar”). Underan interest rate of 8% per annum to Baker Myers. The Maturity Date of the Note is January 13, 2017. Upon default of the Note, the interest rate increases from 8% per annum to 10% per annum. Pursuant to the terms of the Agreement, the Company had the ability to challenge performance under the contract to an independent referee within certain timelines, which the Company initiated on January 21, 2015 (the “Termination Date”). As a resultNote, Baker Myers may convert all or any part of the ruling in favoroutstanding and unpaid principal amount of this Note within 180 days from the date of the note into fully paid and non-assessable shares of Common Stock at the conversion price of $.05 per share with a trading limitation of 4.99% of the authorized common stock of the total shares outstanding. The Note also contains a $2,000 per day fee for failure to deliver common stock to the Holder upon three days delivery.

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Baker Myers Note and Share Cancellation and Exchange Agreement

On May 18, 2016, the Elite Data Services, Inc. (the "Company") Company and Baker Myers and Associates LLC, a Nevada limited liability company ("Baker Myers," an entity owned by Sarah Myers, the President, Chief Operating Officer and Director of the Company ) executed a Note and Share Cancellation and Exchange Agreement (the "Share Exchange Agreement"), with respect to that certain unsecured Promissory Note (the "Original Baker Myers Note") dated on or about January 13, 2013, in the original amount of $587,500 (the "Original Amount"), pursuant to which Baker Myers agreed to forego and waive any and all right in, entitlement to or interest in (A) a total of $87,500 in principal, a total of $92,465 in accrued interest, late charges, reimbursable attorneys' fees, reimbursable expenses and any other sums due and payable under the Original Baker Myers Note totaling $179,965 (the "Cancelled Amount") as of the date of execution (the "Effective Date"), any future payments due under the Original Baker Myers Note and all or any other of Baker Myers's rights under the Cancelled Amount of the Original Baker Myers Note, thereby extinguishing and canceling the Cancelled Amount of the Original Baker Myers Note and terminating any and all of Company's obligations thereunder, (B) the Shares (hereinafter also referred to as the "Cancelled Shares") in exchange for the issuance an Option Agreement (the "Option Agreement"), registered in the Baker Myers's name to purchase up to a certain number of membership interests (the "EDM Membership Interest") of Elite Data Marketing LLC, a Florida limited liability company (the "EDM"), in an amount totaling one hundred percent (100%) of the ownership interest in EDM (the "Option 1"), (B) the issuance by Company to Baker Myers of a three-year "cashless" common stock purchase warrant (the "Warrant No. BM-1") for the right to purchase a total of 3,000,000 shares of Series B Preferred Stock of the Company (the "Preferred Warrant Shares"), at a purchase price of $0.001 per share, with certain rights and preferences as set forth in the certificate of designation (the "Certificate of Designation of Series B Preferred), in exchange for the Cancelled Shares, as referenced in the Share Exchange Agreement, and (C) the issuance of an amended and restated convertible redeemable note (the "Redeemable Note") in the aggregate principal face amount of Five Hundred Thousand Dollars (US$500,000), at ten percent (10%) interest per annum commencing on date of execution (the "Effective Date"), due and payable by the independent referee,Company in eight (8) separate equal quarterly payments of Sixty-Two Thousand Five Hundred Dollars (USD $62,500), plus accrued interest to date, due on the entire Agreement was cancelled. Asfirst day of each quarter beginning on the date of the first quarter following the date of execution of this Original Baker Myers Note, convertible into shares of the Company's common stock at a conversion price equal to the lesser of $0.01 per share or a discount of fifty-eight percent (58%) of the lowest trading price for the ten (10) prior trading days, subject to aggregate conversion limitations of 4.99% and other terms and conditions set forth therein 

At June 30, 2015,2016, the Company had not reached EraStar due toprincipal was $500,000 with the management problems followingaccrued interest on the passing of EraStar’s Chairman. For the six month period ended June 30, 2015, the Company expensed $772,594 of warrant expense and stock based compensation for investor relations’ services, and $40,000 is accrued in accrued liabilities.amount at $57,277.

NOTE 8.9. CONVERTIBLE PROMISSORY NOTES

Convertible Note with Iconic Holdings, LLC 

On March 16, 2015 (the “Effective Date”), the Company entered into a $120,000 Convertible Note with Iconic Holdings, LLC (“Iconic”) with a Maturity Date of March 16, 2016. Under the terms of the Convertible Note, the Company received net proceeds of $100,000 with $10,000 being retained under an Original Issuance Discount (“OID”) and $10,000 having been paid to Iconic as legal fees pertaining to the transaction. The convertible debenture bears a one-time interest charge of 10% assessed on the outstanding principal not repaid as of the 181th day from the effective date. Beginning on the 181th day from the Effective Date, the Company must seek permission from Iconic to repay the outstanding balance of the Note, and Iconic will have the right to convert any unpaid sums into common stock of the Company equal to 60% of the lowest trading price of the Company’s common stock during the 20 consecutive trading days prior to the conversion. The balance outstanding at June 30, 2015 was $120,000. See Note 12. 

Convertible Note with JSJ Investments Inc.

On June 11, 2015, the Company issued a 12% Convertible Note (the “JSJ Note”) to JSJ Investments, Inc, (“JSJ”) in the principal amount of $100,000 (netreceiving cash proceeds of $88,000 to the Company after payment of related legal and broker fees).fees. The JSJ Note bears interest at the rate of 12% per annum, and iswas due December 11, 2015 (the “Maturity Date”). The JSJ Note has a redemption premium of 135% of the Principal if repaid within 90 and 120 days, which increases to a redemption premium of 145% if after the 120th day (the "Repayment Amount"). The Company must request permission from JSJ to pay the JSJ Note after the 120th day. At any time or times on or after the Maturity Date, the Holder is entitled to convert all of the outstanding and unpaid principal amount of the JSJ Note into fully paid and non-assessable shares of Common Stock of the Company at a 45% discount to the lowest trading price during the previous twenty (20) trading days to the date of the conversion notice. As of June 30, 2015, the balance outstanding on the JSJ Note was $100,000 and accrued interest was $658.  

The embedded conversion option qualifies for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging. Pursuant to ASC 815, “Derivatives and Hedging”,. On the Maturity Date Company will recognize the fair value of the embedded conversion features asrecognized a derivative liability whenof $91,388 based on the note becomes convertible on December 11, 2015.

Black-Scholes pricing model and recorded a corresponding derivative loss of the same amount. JSJ is entitled to convert all the outstanding and unpaid principal amount of the Note into

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ConvertibleCommon Stock at a 45% discount to the lowest trading price during the previous twenty (20) trading days to the date of the conversion notice. JSJ converted $14,417 of the principle into common stock after the maturity date and as of December 31, 2015, the balance outstanding on the JSJ Note was $85,583 and, accrued interest was $6,625. On January 28, 2016, JSJ made a formal demand for repayment of the Note payable by February 26, 2016 and has threatened litigation if payment is not tendered. This could be considered an event of default where by JSJ could enforce the Company to redeem all or any portion of the Note so demanded (including all accrued and unpaid interest), in cash, at a price equal to 150% of the outstanding balance, plus accrued Interest and Default Interest and any other amounts then due under this Note. As of June 30, 2016, the balances outstanding on the JSJ Note were principle of $79,310, accrued interest was $11,912 and the note discount was $0. At the time of the filing of this Report, JSJ has converted a total of $20,690 of the principle into shares of the Company’s common stock, resulting in principal balance remaining of $79,310 with accrued interest at $11,912.

LG Capital Funding, LLC

On June 16, 2015, the Company andissued a 6% Convertible Note (the “LG Note”) to LG Capital Funding, LLC (“LG”) entered into a Securities Purchase Agreement under which we issued a convertible note in the principal amount of $52,500 (the "LG Note") due June 16, 2016 bearingreceiving cash proceeds of $45,000 after payment or related legal and broker fees. The LG Note bears interest at the rate of 6% per annum. After brokerannum and legal fees, the Company netted $45,000. The LG Note is due and payable on June 16, 2016 with interest payable in shares of common stock. If(the “Maturity Date”). The embedded conversion option qualifies for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging. Pursuant to ASC 815, “Derivatives and Hedging. Based on the Black-Scholes pricing model, the Company fails to repayrecognized the LG Note when due, or if other Eventsfair value of Default thereunder apply,the embedded conversion feature of $73,459 as a default interest rate of 24% per annum will apply along with other breach provisions and related penalties containedderivative liability on the date in which the note become convertible on December 16, 2015. The Company recorded a debt discount in the note.amount of $48,412 and a one day derivative expense of $25,047 in connection with the initial valuation of the derivative liability, to be amortized utilizing the effective interest method of accretion over the term of the Note. The LG Note is convertible into sharesconversion features of our common stockthe note are at a conversion price equal to 58% of the lowest closing bid price of our common stock for the ten trading days on or prior to the date upon which notice of conversion is received, subject to reduction to 48% if there is DTC Chill placed on our sharesreceived. After the conversion date loan cannot be paid back in cash unless expressly permitted by LG Capital. As of common stock. The Company may prepay in fullJune 30, 2016, the unpaid principal and interest on the LG Capital Convertible Note, upon notice, any time prior to the 180th day after the issuance date. Any prepayment is subject to payment of a prepayment amount ranging from 115% to 140% of the thenbalances outstanding balance on the LG Note (inclusivewere principle of accrued and unpaid interest and any default amounts then owing), depending on when such prepayment is made.  

Additionally, upon the occurrence of certain fundamental events as described in the LG Note, we are required to repay the LG Note at the request of the holder in an amount equal to 150% of the then balance. Further, such redemption must be closed and funded within three days of giving notice of redemption or the right to redeem shall be null and void. As of June 30, 2015, the outstanding balance of the note was $52,500 and$42,239, accrued interest was $129.  $2,669 and the note discount was $0. At the time of the filing of this Report, LG Capital has converted a total of $10,261of the principal and interest of $281 into shares of the Company’s common stock, resulting in principal balance remaining of $42,239 with accrued interest at 2,669.

Adar Bays, LLC

On June 16, 2015, the Company issued a 6% Convertible Note (the “Adar Note”) to Adar Bays, LLC (“Adar”) in the principal amount of $52,500 receiving cash proceeds of $45,000 after payment or related legal and broker fees. The Adar Note bears interest at the rate of 6% per annum and is due June 16, 2016 (the “Maturity Date”). The embedded conversion option qualifies for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging.Hedging. Pursuant to ASC 815, “Derivatives and HedgingHedging. ”,Based on the Black-Scholes pricing model, the Company will recognizerecognized the fair value of the embedded conversion featuresfeature of $73,459 as a derivative liability whenon the LGdate in which the note becomesbecome convertible on December 16, 2015.

Convertible Note with Adar Bays, LLC

On June 16, 2015, theThe Company and Adar Bays, LLC (“Adar”) entered intorecorded a Securities Purchase Agreement under which we issued a convertible notedebt discount in the principal amount of $52,500 (the "Adar Note") due June 16, 2016 bearing$48,412 and a one day derivative expense of $25,047 in connection with the initial valuation of the derivative liability, to be amortized utilizing the effective interest atmethod of accretion over the rateterm of 6% per annum. After broker and legal fees, the Company netted $45,000.Note. The Adar Note is due and payable on June 16, 2016, with interest payable in sharesconversion features of common stock. If the Company fails to repay the Adar Note when due, or if other Events of Default thereunder apply, a default interest rate of 24% per annum will apply along with other breach provisions and related penalties contained in the note. The Adar Note is convertible into shares of our common stocknote are at a conversion price equal to 58% of the lowest closing bid price of our common stock for the ten trading days on or prior to the date upon which notice of conversion is received, subject to reduction to 48% if there is DTC Chill placed on our sharesreceived. After the conversion date loan cannot be paid back in cash unless expressly permitted by Adar Bays, LLC. As of common stock. The Company may prepay in fullJune 30, 2016, the unpaid principal and interestbalances outstanding on the Adar Note upon notice, any time prior to the 180th day after the issuance date. Any prepayment is subject to paymentwere principle of a prepayment amount ranging from 115% to 140% of the then outstanding balance on the Adar Note (inclusive of accrued and unpaid interest and any default amounts then owing), depending on when such prepayment is made. Additionally, upon the occurrence of certain fundamental events as described in the Adar Note, we are required to repay the note at the request of the holder in an amount equal to 150% of the then balance of the note. Further, such redemption must be closed and funded within three days of giving notice of redemption or the right to redeem shall be null and void. As of June 30, 2015, the outstanding balance of the note was $52,500 and$14,787, accrued interest was $129. 

The embedded conversion option qualifies for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging. Pursuant to ASC 815, “Derivatives and Hedging”,$2,427and the Company will recognizeloan discount was $0. At the fair valuetime of the embedded conversion features asfiling of this Report, Adar has converted a derivative liability whentotal of $37,713 principle into shares of the Adar Note becomes convertible on December 16, 2015. 

Company’s common stock, resulting in principal balance remaining of $14,787 with accrued interest at $2,427.

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EMA Financial, LLC

On July 14, 2015, (the "Note Issuance Date"), the Company entered into a Securities Purchase Agreement (the "SPA") with EMA Financial, LLC ("EMA"), whereby EMA agreed to invest $156,500 (the "Note Purchase Price") in our Company in exchange for a convertible promissory note (the "Note"). The Company netted cash proceeds $135,000 after brokerage and legal fees aggregating $21,500 was disbursed at closing. Additionally, the Company issued to EMA 100,000 shares of Common Stock of the Company as a loan fee. Pursuant to the SPA, on July 14, 2015, we issued a convertible promissory note (the "Note") to EMA, in the original principal amount of $156,500 (the "Note Purchase Price"), which bears interest at 12% per annum. All outstanding principal and accrued interest on the Note is due and payable on the maturity date, which is July 14, 2016 (the " Maturity Date"). EMA may extend the Note Maturity Date by providing written notice at least five days before the Note Maturity Date. However, EMA may only extend the Note Maturity Date for up to an additional one-year period. Any amount of principal or interest that is due under the Note, which is not paid by the Note Maturity Date, will bear interest at the rate of 24% per annum until it is paid (the "Note Default Interest"). The Note is convertible by EMA into shares of our common stock at any time on the date which is six (6) months following the Issue Date ("Prepayment Termination Date"). At any time before the Prepayment Termination Date, the Company shall have the right, exercisable on not less than five (5) Trading Days prior written notice to EMA of this Note, to prepay the outstanding balance on this Note (principal and accrued interest), in full. The conversion price is the lower of: i) the closing sale price of the Common Stock on the Principal Market on the Trading Day immediately preceding the closing date, and (ii) 60% of the lowest sale price for the Common Stock on the Principal Market during the 20 consecutive Trading Days immediately preceding the Conversion Date. EMA does not have the right to convert the Note into Common Stock if such conversion would result in EMA's beneficial ownership exceeding 4.9% of our outstanding Common Stock at that time. As of June 30, 2016, the balance outstanding on the Note was $142,340, accrued interest was $17,971 and the loan discount was $11,518. At the time of the filing of this Report, EMA has converted a total of $14,160 of principle into shares of the Company’s common stock, resulting in a principle balance remaining of $142,340 with accrued interest at $ 17,971 and a debt discount of $5,574.

Birch First Capital Fund, LLC

Litigation

On August 16, 2013, Birch First Capital Fund, LLC, a Delaware limited liability company, and/or Birch First Capital Management, LLC, as its manager (collectively, “Birch First Capital”) filed a complaint against the Company in the 15th Judicial Circuit of Florida (2013 CA 012838) alleging breach of contract under a Line of Credit Agreement (“LOC”) totaling $151,000. On November 18, 2013, Birch First brought a lawsuit in the 15th Judicial Circuit of Florida against Mr. Charles Cronin and Dr. Earl Beaver (former officers and directors of the Company), naming the Company as a nominal defendant. A motion to dismiss was filed by the Company concerning this derivative lawsuit, which is still currently pending. On July 23, 2015, the Parties finalized the settlement agreements, which lead to the conclusion of Case 2013 CA 012838.

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Settlement

On July 23, 2015, the Company and Birch First Capital Fund LLC (“Birch First Capital”), a Delaware limited liability company and Birch First Advisors LLC, a Delaware limited liability company (“Birch Advisors”), executed a Settlement and Stipulation Agreement (the “Settlement Agreement”) dated July 21, 2015, pursuant to which the parties dismissed, with no liability admitted or deemed to be admitted by any party, any and all claims that have been, or could have been, raised in the outstanding litigation between the parties (the “Litigation”).

On July 23, 2015, pursuant to the terms and conditions of the Settlement Agreement, the Company executed an amended and restated convertible debenture (the “Amended and Restated Note”) dated July 21, 2015 in the total amount of $300,000 bearing two percent (2%) interest per annum for a period of two years for the benefit of Birch First Capital. Pursuant to the terms of the Amended and Restated Note, $75,000 of the principal balance would be immediately converted at $0.10 per share for a total of 750,000 shares of the Company’s Common Stock issued within five (5) days from the date of execution of the Settlement Agreement. The remaining $225,000 in principal and interest of the Amended and Restated Note will be convertible on a quarterly basis in the amount of $37,500 into shares of the Company’s Common Stock at a share price equal to the lesser of $0.10 per share, or fifty percent (50%) of the three (3) lowest intraday trading average for the twenty (20) day trading period prior to each conversion date, until paid in full, with accrued and unpaid interested due and payable in the final payment, under certain terms and conditions set forth in the Amended and Restated Note. The Company recognized and expensed non-cash settlement fees aggregating $85,842.

The original note contains an embedded conversion option and is separated from the Note and accounted for as a derivative instrument at fair value and discount to the Note. Using the Black-Scholes option pricing model, the fair market value of the of the of the embedded conversion option at inception was determined to be $472,028 with the following assumptions: risk-free rate of interest of .711%, expected life of 2.0 years, expected stock price volatility of 175.371%, and expected dividend yield of zero. The initial carrying value of the embedded conversion option was $472,028 exceeded the note and $225,000 was attributed to the note discount and $247,028 to a one day derivative loss.

The parties agreed to amend certain parts of the Amended and Restated Note. As of December 31, 2015, Birch and the Company had not specified the terms of any such amendment, but, at the mutual agreement of the parties, no shares have been issued pursuant to the Amended and Restated Note. As of June 30, 2016, the balance outstanding on the Note was $400,000, accrued interest was $35,287.

Birch Advisors, LLC

On July 23, 2015, pursuant to the terms and conditions of the Settlement Agreement referenced herein, the Company executed a new Consulting and Advisory Agreement (the “Agreement”) dated July 21, 2015 with Birch Advisors, LLC (“Consultant”) for a period of twenty-four (24) months to commence upon the execution date of the signed Agreement, payable in the form of a convertible debenture (“New Note”) in the amount of $300,000 at two percent (2%) interest per annum for a period of two years. Pursuant to the Agreement, Consultant shall be paid $37,500 each quarter in the form of a reduction of the outstanding principal balance of the New Note, convertible into shares of the Company’s Common Stock at a share price equal to the lesser of $0.10 per share or a twenty-five (25%) discount of the three (3) lowest intraday trading average for the twenty (20) day trading period prior to each conversion date, until paid in full, with accrued and unpaid interest due and payable in the final payment.

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The Consultant will perform advisory and consultation services to the Company, including, but not limited to, assisting Company’s management with general corporate operations, business development strategies, marketing and business plans, SEC compliance and advising the Company on other ad-hoc matters as appropriate. The parties agreed that either the Company or Consultant may request a quarterly review by a designated third party reviewer, whom shall determine if the Company has the right to terminate the Agreement earlier for non-performance by the Consultant. The Agreement also contains other customary and standard provisions. The convertible note liability will be recorded as the quarterly benchmarks are reached.

The original note contains an embedded conversion option and is separated from the Note and accounted for as a derivative instrument at fair value and discount to the Note. Using the Black-Scholes option pricing model, the fair market value of the of the of the embedded conversion option at inception was determined to be $84,267 with the following assumptions: risk-free rate of interest of .711%, expected life of 1.69 years, expected stock price volatility of 170.599%, and expected dividend yield of zero. The initial carrying value of the embedded conversion option was $84,267 and exceeded the note and $72,267 was attributed to the note discount and $12,000 was recorded one day derivative loss.

The parties agreed to amend certain parts of the New Note that would mutually benefit each party. As of December 31, 2015, the Consultant and the Company had not specified the terms of any such amendment, but, at the request of the Consultant, no shares have been issued pursuant to the New Note. Birch completed the services during the six months for the period ended December 31, 2015, and the parties have mutually agreed to not issue the shares payable at this time. The Note payable is accrued by quarter since it depends on the services being performed. At June 30, 2016, the principal and accrued interest under the Note was $300,000 and $26,702, respectively.

First Amendment to the Settlement Agreement

On May 18, 2016, the Company and Birch First Capital Fund LLC ("Birch First Capital") and Birch First Advisors LLC ("Birch Advisors") executed the First Amendment to the Settlement Agreement (the "First Amendment"), pursuant to which the parties mutually agreed to amend and restate the amended and restated convertible debenture (the "Original Amended Note") in the original amount of USD $300,000 (the "Original Amended Note Amount"), the convertible debenture (the "Original New Note") in the original amount of USD $300,000 (the "Original New Note Amount") and the original consulting agreement (the "Original Consulting Agreement") dated on or about July 23, 2015, to reflect the following: (a) the execution of an Amended and Restated Convertible Redeemable Note (the "Amended and Restated Redeemable Note No.1") in the principal amount of USD $400,000, at a rate of ten percent (10%) per annum with interest commencing on July 23, 2015, convertible into shares of the Company's common stock at a conversion price equal to the lesser of $0.01 per share or a discount of fifty-eight percent (58%) of the lowest trading price for the ten (10) prior trading days, and other terms and conditions set forth therein, (b) the issuance by Company to Birch First Capital a three-year "cashless" stock purchase warrant (the "Warrant No.1") for the right to purchase a total of 4,000,000 shares of Series B preferred Stock of the Company (the "Preferred Warrant Shares"), at a purchase price of $0.001 per share, on the terms and conditions set forth therein, (c) the execution of an Amended and Restated Convertible Redeemable Note (the "Amended and Restated Redeemable Note No. 2") in the principal amount of USD $300,000, at a rate of ten percent (10%) per annum commencing on July 23, 2015, convertible into shares of the Company's common stock at a conversion price equal to the lesser of $0.01 per share or a discount of fifty-eight percent (58%) of the lowest trading price for the ten (10) prior trading days, subject to aggregate conversion limitations of 4.99% and other terms and conditions set forth therein, (d) the execution of an Amended and Restated Consulting Agreement (the "Amended and Restated Consulting Agreement") on the terms and conditions set forth therein, including, but not limited to, for a period of twenty-four (24) months, with

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consideration payable to Birch Advisors and/or its assigns in cash in the amount of Ten Thousand Dollars ($10,000.00) per month, including, any and all payments set forth Amended and Restated Redeemable Note No.2, and the issuance by the Company to Birch First Advisors and/or assigns a three-year "cashless" stock purchase warrant (the "Warrant No.2") for the right to purchase up to 1,000,000 shares of common stock of the Company (the "Common Warrant Shares") each month a strike price of $0.001 per share (the "Exercise Price"), and (e) the acceptance by the Company of the execution of the Assignment of Amended and Restated Redeemable Note No.2 (hereinafter referred to as the "Assigned Note") between Birch Advisors and Birch First Capital, in which Birch Advisors agreed to assign the ownership interest of Assigned Note to Birch First Capital, on the terms and conditions set forth therein, of which the Company was not a party, however, provided consent at the request of Birch Advisors and Birch First Capital. In addition, each of the agreements contains customary representations and warranties provisions.

The components of the convertible notes payable discussed in Note 6 through Note 9 at June 30, 2016 are as follows:

NOTE 9. DEPOSIT FOR PURCHASE OF LICENSE 10. DERIVATIVE INSTRUMENT LIABILITIES

The fair market value of the derivative instruments liabilities at June 30, 2016, was determined to be $343,839 with the following assumptions: (1) risk free interest rate of .20%, (2) remaining contractual life of .01 years, (3) expected stock price volatility of 304% to 370%, and (4) expected dividend yield of zero. Based upon the change in fair value, the Company has recorded a loss on derivative instruments for the six months ended June 30, 2016, of $1,124,993 and a corresponding increase in the derivative instruments liability.

The entire amount of derivative instrument liabilities are classified as current due to the fact that settlement of the derivative instruments could be required within twelve months of the balance sheet date.

NOTE 11. COMMITMENTS

Stock Compensation for investor relations services

On December 3, 2014, the Company entered into an Investor Relations Consulting Agreement (the “Agreement”) with EraStar Inc. (“EraStar”). Under the terms of the Agreement, the Company had the ability to challenge performance under the contract to an independent referee within certain timelines, which the Company initiated on January 21, 2015 (the “Termination Date”). As a result of the ruling in favor of the Company by the independent referee, the entire Agreement was cancelled.

NOTE 12. FAIR VALUE MEASUREMENT

The Company values its derivative instruments under FASB ASC 820 which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).

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The three levels of the fair value hierarchy are as follows:

Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.

Level 2 - Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date.

Level 3 - Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

The Company's financial instruments consisted of cash, prepaid expense, deposit, accounts payable and accrued liabilities, line of credit, loan from stockholders and convertible debt. The estimated fair value of cash, prepaid expense, deposit, accounts payable and accrued liabilities, line of credit, loan from stockholders approximates its carrying amount due to the short maturity of these instruments. The recognition of the derivative values of convertible debt are based on the weighted-average Black-Scholes option pricing model, which the Company’s classifies as a level three of the fair value measurement hierarchy.

The derivative liabilities are measured at fair value using quoted market prices and estimated volatility factors based on historical quoted market prices for the Company's common stock, and are classified within Level 3 of the valuation hierarchy.

The following table provides the assets and liabilities carried at fair value measured on a recurring basis as of December 31, 2015.

The following table provides the assets and liabilities carried at fair value measured on a recurring basis as of June 30, 2016.

As of April 4,June 30, 2016, the Company had a derivative liability amount of $343,839 which was classified as a Level 3 financial instrument.

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NOTE 13. EQUITY INCENTIVE PLAN

Effective October 15, 2015, the Company instructedadopted the Equity Incentive Plan (the “Plan”) whereby the Company may issue common stock, not to exceed 25,000,000 shares of common stock of the Company (the “ Stock Award ” or “ Stock Awards ”), or grant options to acquire common stock of the Company (the “ Option ” or “ Options ”), (the “ Stock ”), which may be in the form of Stock Awards, or “incentive stock options” (“ ISOs ”) intended to satisfy the requirements of Section 422 of the Internal Revenue Code of 1986, as amended, and the regulations thereunder (the “ Code ”), or “non-qualified stock options” (“ NQSOs ”).

Pursuant to the Plan, the exercise price of stock awards or options granted under the plan which are designated as NQSO’s shall not be less than 85% of the fair market value of the stock subject to the Option on the date of grant, and not less than 65% of the fair market value of the stock subject to the Stock Award on the date of grant. To the extent required by applicable laws, rules and regulations, the exercise price of a NQSO granted to any person who owns, directly or by attribution of stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company or of any Subsidiary (a “Ten Percent Stockholder”) shall in no event be less than 110% of the fair market value of the stock covered by the Stock Award or Option at the time the Stock Award or Option is granted.

Pursuant to the Plan, the exercise price of stock awards or options granted under the Plan which are designated as ISO’s shall not be less than the fair market value of the stock covered by the stock award or option at the time the option is granted. The exercise price of an ISO granted to any Ten Percent Stockholder shall in no event be less than 110% of the fair market value.

The fair market value is defined as the closing price of such stock on the date before the date the value is to be determined on the principal recognized securities exchange or recognized securities market on which such stock is reported. If selling prices are not reported, its escrow agentfair market value shall be the mean between the high bid and low asked prices for such stock on the date before the date the value is to deliver $100,000 as a depositbe determined (or if there are no quoted prices for such date, then for the last preceding business day on which there were quoted prices). If there is no established market for the stock, the fair market value will be determined in good faith pursuantby the Administer. The Administer will either be the Board of Directors or an Administer appointed by the Board of Directors. We do not have outstanding stock awards or options to purchase shares of our common stock under the Security Purchase Agreement dated April 4, 2015 (the “SPA”) and Promissory Note dated April 6, 2015 (the “Note”) to acquire all of the capital stock of El Mar Muerto Beauty Mineral, Sociedad Anonima (hereafter “EMBM”) a Honduras corporation, whose sole assets consist of a Honduras gaming license, which permits the operation of Eighty (80) gaming machines in Trujillo, Eighty (80) gaming machines in La Lima, and One Hundred and Sixty (160) gaming machines in Roatan, the largest of Honduras’s bay islands, for a total purchase price of $10,000,000. On June 30, 2015, the Company amended the Note and SPA to reflect a due date of April 6, 2016 in conjunction with the first payment of Nine Hundred Thousand Dollars ($900,000), which is due in either cash, stock, or 25% of the net revenues of EMBM’s operationsPlan at the seller’s option, and the current purchase price owed was reduced to $9,900,000, which deducts the $100,000 deposit tendered on April 4, 2015 as referenced herein. The Company will record the asset and liability in accordance with generally accepted accounting principles upon the effective date of the amended SPA and Note. See Note 11.March 31, 2016.

NOTE 10. CAPITAL STOCK 14. STOCKHOLDERS’ EQUITY

Authorized

The Company is authorized to issue 10,000,000250,000,000 shares of preferred stock, having a par value of $0.0001 per share, and 50,000,000500,000,000 shares of common stock, having a par value of $0.0001 per share.

Effective October 15, 2015, the Company Restated its Articles of Incorporation and Bylaws, and Equity Incentive Plan increasing the total number of shares of stock of all classes which we shall have authority to issue from 60,000,000 shares to 750,000,000 shares, of which the Common Stock, $0.0001 par value per share, was increased from 50,000,000 shares to 500,000,000 shares (hereinafter called "Common Stock") and of which the Preferred Stock, $0.0001 par value per share, was increased from 10,000,000 shares to 250,000,000 shares (hereinafter called "Preferred Stock").

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On May 17, 2016, the Company filed a Designation of Rights and Preferences for Series B Preferred stock authorizing 100,000,000 share to be issued under this designation. The Series B Preferred shares have a par value $.0001 and are senior to all other shares authorized by the Company. These share vote as if converted at a ratio of 1:1,000 and vote as a single class.

Issued and Outstanding

Issued and Outstanding 

Preferred Stock

At June 30, 2015,2016, the Company there are no shares of preferred stock outstanding.

On May 18, 2016, the Company authorized the issuance of 2,000,000 shares of Series B Preferred Stock to two (2) separate parties in the amount of 1,000,000 shares each to Ricketts and Antol, respectively, pursuant to the executed Ricketts Subscription Agreement and Antol Subscription Agreement. The Series B Preferred shares were offered and sold to the parties in a private placement transaction in reliance upon exemptions from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended. The Company based such reliance on certain representations made by each of the parties to the Company including that each of the parties were accredited investor s as defined in Rule 501 of Regulation D. These shares were not issued in this quarter and have been recorded in the financial statements for the year ended December 31, 2016.

Common Stock

At June 30, 2015,2016, the Company has 130,237,299 shares of common stock issued and outstanding totaled 25,493,402. outstanding.

During the six months ended June 30, 2015,2016, the Company issued 6,274,332102,515,033 shares of common stock as follows: for the conversion of $60,407 and $ 281 in accrued interest.

On January 8,Reverse Stock Split

Effective October 15, 2015, the Company sold 25,000Board of Directors under their sole discretion by Board Resolution and applicable FINRA requirements may initiate a 1:1,000 Reverse Split, the number of shares of capital stock issued and outstanding will be reduced to the number of shares of capital stock issued and outstanding immediately prior to the effectiveness of a Reverse Split, divided by up to one thousand (1,000). Each fractional share shall be rounded up to the nearest whole share. There will be no change to the number of authorized shares of Common Stock and received net proceedsPreferred Stock as a result of $25,000.  a Reverse Split. With the exception of the number of shares issued and outstanding, the rights and preferences of the shares of capital stock prior and subsequent to a Reverse Split will remain the same. It is not anticipated that the Company's financial condition, the percentage ownership of management, the number of shareholders, or any aspect of the Company's business would materially change, solely as a result of a Reverse Split.

On January 30,Pursuant to Form 8K filed with the SEC on November 2, 2015, the Company entered into shares for liability settlement with a creditor wherein an aggregate of $88,431 of debt was settled by the aggregate issuance of 87,212 shares of common stock. The estimated fair value of the common shares was used to measure and record the transaction with the difference between the conversion prices and estimated fair value being recorded as gain on extinguishment of debt aggregating $44,825.

On February 4,stated that “[e]ffective October 15, 2015, the Company entered intoeffectuated the actions contained in this Section hereinabove. Although, the corporate action described did include the approval by the voting shareholders of a note conversion agreement with Rocky Road Capital, Inc.reverse stock split of up to convert $94,2001 for 1,000, such effectuated action did not affect an actual (or specific) reverse split on such date, but rather provided for a future approval only. Subject to such approval, the Board of Directors were granted the principal balance, whichright to effect a reverse split at any time during the following one year period, at a ratio (between 1 for 1,000), and on such determined “effective date” deemed appropriate by the Board Directors, at such time (which subsequently was duedetermined later to a former director and subsequently assigned to Rocky Road Capital, Inc., into 942,000 shares of Common Stock (at $0.10 per share), thereby reducing the balance owed under the note to $472,012. The estimated fair value of the common shares was used to measure and record the transaction with the difference between the conversion prices and estimated fair value being recorded as loss on extinguishment of debt aggregating $376,800.

be August 26, 2016).

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On February 20, 2015,August 26, 2016, the Board of Directors decided that it was in the best interest of the Company enteredto approve a reverse split of the Company's Common Stock at a specified ratio of 1:1,000, as a condition of the execution of WOD Definitive Agreement, as described more fully under Subsequent Events in Item 12 herein, pursuant to the prior approval effective as of October 15, 2015, as referenced in Form 8K filed with the SEC on September 2, 2016. Further, the Company confirmed that at the effective time of the reverse stock split, all of the outstanding shares of our outstanding Common Stock were automatically converted into a note conversion agreement with Rocky Road Capital Inc.smaller number of shares, at the reverse split ratio of 1:1,000, on the effective date.

However, due to convert $150,000the fact, that on August 26, 2016, the Company was delinquent on certain required SEC quarterly filings for year ending 2016, it was determined by the Board of Directors that the “effective date” of the principal balance,reverse stock split, could not be the same date as the approval date of August 26, 2016, and therefore, the “effective date” had to be postponed until such time as the Company became current as a fully reporting company. Separately, until the Company was current on its filings, the Company could not notify its shareholders about the “effective date” of the reverse split, which would also be subject to approval by FINRA.

Therefore, the Company advises that it intends to define an “effective date” of the reverse stock split as soon as possible after the Company becomes current as a fully reporting company, and complete the required filing with the State of Florida, at which time notice of the “effective date” will be provided to the Company’s shareholders under Form 8K and FINRA, as applicable.

Holders of record of the Common Stock and Series B Convertible Preferred Stock at the close of business on the Record Date were entitled to participate in the written consent of our shareholders. Each share Common Stock was dueentitled to one vote and each share of Series B Convertible Preferred Stock was entitled to vote 1:1,000 to each share of Common Stock.

Reverse Split

On the effective date of the Reverse Split, as determined by the Company when applicable (the “Effective Date”), all of the outstanding shares of our outstanding Common Stock were automatically converted into a former directorsmaller number of shares, at the reverse split ratio of 1:1,000.

The Reasons for the Reverse Split

The Reverse Split was intended to reduce the number of outstanding shares in an effort to increase the market value of the remaining outstanding shares. In approving the Reverse Split, the Directors considered that the Company's Common Stock may not appeal to brokerage firms that are reluctant to recommend lower priced securities to their clients. Investors may also be dissuaded from purchasing lower priced stocks because the brokerage commissions, as a percentage of the total transaction, tend to be higher for such stocks. Moreover, the analysts at many brokerage firms do not monitor the trading activity or otherwise provide coverage of lower priced stocks. The Directors also believed that most investment funds are reluctant to invest in lower priced stocks.

However, the effect of the Reverse Split upon the market price for the Company's Common Stock cannot be predicted with certainty, and subsequently assignedthe history of similar stock split combinations for companies in like circumstances is varied. There can be no assurance that the market price per share of the Company's Common Stock after the Reverse Split will rise in proportion to Rocky Road capital, Inc., into 1,500,000the reduction in the number of shares of Common Stock (at $.10 per share), thereby reducingoutstanding resulting from the balance owed under the note to $322,012.Reverse Split. The estimated fair valuemarket price of the commonCompany's Common Stock may also be based on its performance and other factors, some of which may be unrelated to the number of shares was used to measure and record the transaction with the difference between the conversion prices and estimated fair value being recorded as loss on extinguishment of debt aggregating $600,000.  outstanding.

On June 12, 2015 and June 15, 2015,

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Potential Risks of The Reverse Split

There can be no assurance that the Company entered into note conversions pursuantbid price of the Company's Common Stock will continue at a level in proportion to the Rocky Road note totaling $322,012 at $.10reduction in the number of outstanding shares resulting from the Reverse Split, that the Reverse Split will result in a per share forprice that will increase its ability to attract employees and other service providers or that the conversionmarket price of 3,220,120 Sharesthe post-split Common Stock can be maintained. The market price of the Company's Common Stock is also based on its financial performance, market condition, the market perception of its future prospects and the Company's industry as a whole, as well as other factors, many of which are unrelated to the number of shares outstanding. If the market price of the Company's Common Stock declines after the Reverse Split, the percentage decline as an absolute number and as a percentage of the Company's overall capitalization may be greater than would occur in the absence of a Reverse Split.

Potential Effects of The Reverse Split

For each holder of Common Stock, the number of shares held on the Effective Date will be reduced by the Reverse Split as follows: the number of shares held before the Reverse Split will be divided by 1,000, and if the result had a fractional component, the result is that cash will be given in lieu of any fractional shares. By way of example, a shareholder with 100,000 shares of Common Stock before the Reverse Split will hold 100 shares of Common Stock upon completion of the Reverse Split and will receive cash in lieu of the fractional remaining share.

The issuance of cash in lieu of fractional shares will effect a small change in the relative percent ownership of the respective common shareholders. This change is not expected to be material.

Accounting Matters. The par value of the Company’s Common Stock thereby eliminatingremained unchanged at $0.0001 per share after the entire balance owed. Rocky Road Capital Inc. The estimated fair valueReverse Split. Also the capital account of the common shares was used to measureCompany remained unchanged, and record the transaction withCompany does not anticipate that any other accounting consequences would arise as a result of the difference between the conversion prices and estimated fair value being recorded as loss on extinguishment of debt aggregating $152,520.Reverse Split.

On June 15, 2015,Effect on Authorized and Outstanding Shares. Based on the Company entered into a Separationstockholdings and Settlement Agreement Releasethe number of Claims (the “Settlement Agreement”) with Steven Frye, our former Chief Executive Officer, Chief Financial Officer, and President. According to the Settlement Agreement, the Company agreed to pay Mr. Frye $54,794 for services rendered in the form of 391,386 shares of Common Stock issued and outstanding on the Effective Date. As a result of the Company closing priceReverse Split, the number of shares of capital stock issued and outstanding (as well as the Company’s stock asnumber of June 15, 2015 ($.14 per share). The Settlement Agreement further stated Mr. Frye would be responsible for all taxes and signed a general release of any and all claims, known or unknown, against the Company. On July 1, 2015, Mr. Frye delivered his executed paperwork to the Company.

On June 15, 2015, the Company entered into Addendum Two (“Addendum Two”) of the Promissory Note dated April 15, 2014 (the “Note”) between the Company and Steven Frye. The Promissory Note dated April 15, 2015 was for the principle amount of $13,500 with 12% accrued interest. As of June 15, 2015, the principal and interest totaled $15,206 and was converted into 108,614 shares of Common Stock underlying any options, warrants, convertible debt or other derivative securities) on the Effective Date will be reduced to the number of shares of capital stock issued and outstanding immediately prior to the effectiveness of the Company at the fair valueReverse Split, divided by one thousand (1,000), minus any shares that were eliminated with cash in lieu of the closing stock price calculated as of June 15, 2015 ($0.14). On July 1, 2015, Mr. Frye delivered his executed paperwork to the Company.fractional shares.

With the exception of the number of shares issued and outstanding, the rights and preferences of the shares of capital stock prior and subsequent to the Reverse Split will remain the same. It is not anticipated that the Company's financial condition, the percentage ownership of management, the number of shareholders, or any aspect of the Company's business would materially change, solely as a result of the Reverse Split. The Reverse Split will be effectuated simultaneously for all of the Company's Common Stock and the exchange ratio was the same for all shares of the Company's Common Stock. The Reverse Split will affected all of our shareholders uniformly and will not affect any shareholder's percentage ownership interests in the Company or proportionate voting power, except to the extent caused by the exchange of cash in lieu of fractional shares. The Reverse Split will not alter the respective voting rights and other rights of shareholders.

The Reverse Split was not intended as, and will not have the effect of, a "going private transaction" covered by Rule 13e-3 under the Exchange Act.

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As a result of the Reverse Split, there was a reduction in the number of shares of Common Stock issued and outstanding and no change to the number of authorized shares of the Company’s Common Stock under the Company’s Articles of Incorporation, as amended. Because the number of issued and outstanding shares of Common Stock decreased, the number of shares of Common Stock remaining available for issuance in the future increased.

Effectiveness of The Reverse Split

Exchange of Certificates After Split. It will not be necessary for stockholders to exchange their old certificates. However, those stockholders who wish to obtain new certificates should contact the transfer agent, Manhattan Transfer Registrar Company, 57 Eastwood Road, Miller Place, NY 11764, Phone: (631) 928-7655.

Tax Impact of the Reverse Split. The following discussion summarizing material federal income tax consequences of the Reverse Split is based on the Internal Revenue Code of 1986, as amended (the "Code"), the applicable Treasury Regulations promulgated thereunder, judicial authority and current administrative rulings and practices in effect on the date this Information Statement was first mailed to shareholders. This discussion does not discuss consequences that may apply to special classes of taxpayers (e.g., non-resident aliens, broker-dealers, or insurance companies). Stockholders should consult their own tax advisors to determine the particular consequences to them.

The receipt of the Common Stock following the effective date of the Reverse Split, solely in exchange for the Common Stock held prior to the Reverse Split, will not generally result in recognition of a gain or loss to the shareholders. Although the issue is not free from doubt, additional shares received in lieu of fractional shares, including shares received as a result of the rounding up of fractional ownership, should be treated in the same manner. The adjusted tax basis of a shareholder in the Common Stock received after the Reverse Split will be the same as the adjusted tax basis of the Common Stock held prior to the Reverse Split exchanged therefor, and the holding period of the Common Stock received after the Reverse Split will include the holding period of the Common Stock held prior to the Reverse Split exchanged therefor.

No gain or loss will be recognized by the Company as a result of the Reverse Split. The Company's views regarding the tax consequences of the Reverse Split are not binding upon the Internal Revenue Service or the courts, and there can be no assurance that the Internal Revenue Service or the courts would accept the positions expressed above.

THIS SUMMARY IS NOT INTENDED AS TAX ADVICE TO ANY PARTICULAR PERSON. IN PARTICULAR, AND WITHOUT LIMITING THE FOREGOING, THIS SUMMARY ASSUMES THAT THE SHARES OF COMMON STOCK ARE HELD AS "CAPITAL ASSETS" AS DEFINED IN THE CODE, AND DOES NOT CONSIDER THE FEDERAL INCOME TAX CONSEQUENCES TO THE COMPANY'S SHAREHOLDERS IN LIGHT OF THEIR INDIVIDUAL INVESTMENT CIRCUMSTANCES OR TO HOLDERS WHO MAY BE SUBJECT TO SPECIAL TREATMENT UNDER THE FEDERAL INCOME TAX LAWS (SUCH AS DEALERS IN SECURITIES, INSURANCE COMPANIES, FOREIGN INDIVIDUALS AND ENTITIES, FINANCIAL INSTITUTIONS AND TAX EXEMPT ENTITIES). IN ADDITION, THIS SUMMARY DOES NOT ADDRESS ANY CONSEQUENCES OF THE REVERSE SPLIT UNDER ANY STATE, LOCAL OR FOREIGN TAX LAWS. THE STATE AND LOCAL TAX CONSEQUENCES OF THE REVERS SPLIT MAY VARY AS TO EACH STOCKHOLDER DEPENDING ON THE STATE IN WHICH SUCH STOCKHOLDER RESIDES. AS A RESULT, IT IS THE RESPONSIBILITY OF EACH SHAREHOLDER TO OBTAIN AND RELY ON ADVICE FROM HIS, HER OR ITS TAX ADVISOR AS TO, BUT NOT LIMITED TO, THE FOLLOWING: (A) THE EFFECT ON HIS, HER OR ITS TAX SITUATION OF THE REVERSE SPLIT,

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INCLUDING, BUT NOT LIMITED TO, THE APPLICATION AND EFFECT OF STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX LAWS; (B) THE EFFECT OF POSSIBLE FUTURE LEGISLATION OR REGULATIONS; AND (C) THE REPORTING OF INFORMATION REQUIRED IN CONNECTION WITH THE REVERSE SPLIT ON HIS, HER OR ITS OWN TAX RETURNS. IT WILL BE THE RESPONSIBILITY OF EACH SHAREHOLDER TO PREPARE AND FILE ALL APPROPRIATE FEDERAL, STATE AND LOCAL TAX RETURNS.

Share Certificates

Following the Reverse Split, the share certificates held will continue to be valid. In the future, new share certificates will reflect the reverse split, but this in no way will affect the validity of current share certificates.

Warrants Issued for Services

The Company issued no warrants in the six months endingAs of June 30, 2015, and there were 2,3072016, the Company had no outstanding warrants outstanding with a weighted average exercise price of $260 at June 30, 2015. for services.

The following table summarizes the warrant activity for the six months ended June 30, 2015: 2016:

Warrants Issued In Settlements

NOTE 14. ACQUISITION

		Warrants Outstanding
						Weighted
						Average
		Number of				Exercise
		Shares				Price
Balance, December 31, 2014			1,002,307			$	259
Granted			—			$	—
Exercised			—				—
Expired/Cancelled			(1,000,000	)			(2	)
Balance, June 30, 2015			2,307			$	260
Exercisable at June 30, 2015			2,307			$	260

The range of exercise pricesGaming License and the weighted average exercise price and remaining weighted average life of the warrants outstanding at June 30, 2015 were $130 to 390.00, $260 and .51 years, respectively. The aggregate intrinsic value of the outstanding warrants at June 30, 2015 was $0.  

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NOTE 11. PURCHASE OF THE GAMING LICENSE Securities Purchase Agreement

On April 4, 2015, the Company entered into a Securities Purchase Agreement (the “Agreement”) and Promissory Note (the “Note”) with H y H Investments, S.A. (the “Seller”) for the purchase of all outstanding securities of El Muerto Beauty Mineral, Sociedad Anonima (hereafter “EMBM”) whose sole asset consists of a license to operate 80 gaming machines in two cities on the Honduras mainland and 160 gaming machines in Roatan, the largest of the bay islands of Honduras. The total purchase price for the licenseacquisition was Ten Million Dollars ($10,000,000) payable in the form of a Promissory Note (the “Note”). Upon the signing of the Agreement and Note, the $100,000 funds in escrow were paid to the Seller under the terms of the Note. The Company owes no further obligation under the terms of the Note until April 6, 2016, at which time $900,000 is due to the Seller, payable in the form of cash or shares of common stock of the Company. If the Seller elects to convert such payment or a portion of such payment into shares, the value of the shares will be assessed asCompany at the average closing price of the common stock of the Company for the five trading days immediately preceding April 6, 2016. The remaining balance under the Note is payable up to $2,500,000 per year thereafter through March 31, 2021 by either cash payments or by a revenue-share of 25% of the net revenues received by EMBM during such time period. In the event that Seller has not received the full amount due on or before March 31, 2021, such amount due may be payable via the issuance of the Company’s shares of common stock at the average closing price of the Company’s common stock for the five trading days immediately preceding March 31, 2021. Beginning on or after April 17, 2017, payments tendered in the Company’sform of Company common stock may be repurchased by the Company given the Seller’s approval.approval with the purchase price being the value of the shares at the corresponding payment date. The Company is not obligated to re-purchase the shares. The Seller agreed to waive interest payments of 3.85% per annum, due in monthly installments, in exchange for a sub-license granting the Seller usage of twenty-five (25) machines in the municipality of Roatan.

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First Amendment; Securities Purchase Agreement and Note

On JuneSeptember 30, 2015, the Company amended the Note and SPA to reflect a due date of April 6, 2016 in conjunction with the first payment of Nine Hundred Thousand Dollars ($900,000), which is due in either cash, stock, or 25% of the net revenues of EMBM’s operations. The Note was also amended to reflect the current purchase price owed was reduced to $9,900,000, which deducts the $100,000 non-refundable deposit tendered on April 6, 2015. See Note 9.The business purpose for this amendment was to allow the Company the proper time to incorporate a Honduras corporation to be in compliance with the laws of the Republic of Honduras to effectively be able to transact business in that municipality. The good-faith non-refundable deposit permitted negotiation for a commitment at a later date.

Second Amendment; Securities Purchase Agreement

Effective November 20, 2015, the Company signed a Second Amendment (the “Amendment”) to the Securities Purchase Agreement (the “Agreement”) with H y H Investments, S.A. (the “Seller”) regarding the acquisition of the gaming license whereby the Company re-assigned the Agreement to Elite Holdings S.A., a wholly owned subsidiary owned by the Company on a jointly and severally liable basis with the Company so as to comply with the regulatory authority of the Republic of Honduras. The Amendment also removed any Required Approvals on part of the Seller to enter into the Agreement. The Amendment specifies that as long as the Company is current in its payment obligations, upon good faith payment, Purchaser shall have the right to operate gaming machines permitted under the license and proceed with the use of the license as owner of EMBM with full power and authority to contract, license, sub-license, loan, lease, enter into contract or any other business venture in which entitles Purchaser to the benefit of the license on behalf of the Corporation. The Amendment also clarified that the shares of EMBM would be assigned to Elite Holdings, S.A. after the full purchase price had been tendered to the Seller. The Company will recordrecognize the appropriate asset and liability in accordance with generally accepted accounting principles uponwhen performance occurs on the effective date April 6, 2016.

Third Amendment; Securities Purchase Agreement and Joint Venture Agreement

On May 20, 2016, the Company and H Y H Investments, S.A. ("HYHI") executed the Third Amendment to the Securities Purchase Agreement (the "Third Amendment"), pursuant to which the parties agreed to further clarify and amend and restate certain provisions of the Original Purchase Agreement, First Amendment and Second Amendment (the "Original Purchase Agreement").

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Pursuant to the terms of the Third Amendment, the parties mutually agreed to cancel the Original Purchase Agreement dated April 6, 2015, in exchange for a new Joint Venture Agreement (the "Joint Venture") executed on even date therewith, pursuant to which the Company and HYHI agreed to create a joint venture relationship using Elite Data Holdings S.A., a Honduras corporation, a wholly-owned subsidiary of Elite Gaming Ventures LLC, a Florida limited liability company ("EVG"), a wholly-owned subsidiary of the Company, and a distributor license from HYHI and El Mar Muerto Beauty Mineral, S.A., a Honduras corporation ("EMBM") to establish gaming operations (the "Purpose") by distributing and maintaining a total of eighty (80) slot machines in the cities of La Lima, Cortes; eighty (80) slot machines in the cities of Trujillo, Colon; and One Hundred and Sixty (160) slot machines in Roatan in the bay island of Honduras.

Pursuant to the terms of the Joint Venture, HYHI agreed to effect the distributor license (the "License") related to the Purpose, provided that the Company and EVG would be responsible for providing any and all financial and operational resources required to execute on the License granted to the Company, including, but not limited to, the funding for the initial and ongoing operating costs in the minimum amount of Five Hundred Thousand Dollars (USD $500,000) on or before December 31, 2016 (the "Initial Funding").

In addition, the Company and EVG agreed to pay HYHI consideration in the total amount of USD $10,000,000 (the "Total Consideration"), due and payable as follows:

(a) Initial Payment. An initial payment of $100,000, which was paid in the Original Purchase Agreement, as amended,

(b) Convertible Note. A further amendment and restatement of the amended SPA and restated convertible note (the "Original Amended Note"), dated April 6, 2015, in the form of the amended and restated convertible redeemable note (the "Amended and Restated Redeemable Note") to reflect the original issuance date of January 1, 2016 (the "Restated Issuance Date"), and a decrease in the original principal amount from Nine Million Nine Hundred Thousand Dollars (USD $9,900,000) to Four Million Nine Hundred Thousand Dollars (USD $4,900,000) (the "New Principal Amount"), at ten percent (10%) interest per annum, due and payable to HYHI by DEAC as follows: (A) two (2) separate payments of Four Hundred Fifty Thousand Dollars (USD $450,000), plus accrued interest to date, due on July 1, 2016 and October 1, 2016, respectively, for a total of Nine Hundred Thousand Dollars (USD $900,000), and payable in cash or convertible into shares of common stock of DEAC at a conversion price equal to the lesser of $0.01 per share or fifty percent (50%) to the five (5) trading day average closing price immediately preceding the payment date, and (B) the remaining balance of Four Million (USD $4,000,000) payable in cash in a total of eight (8) equal quarterly installments of Five Hundred Thousand Dollars (USD $500,000), plus accrued interest to date, on the first day of each quarter beginning with January 1, 2017 and ending on January 1, 2019, convertible into shares of common stock of DEAC at fifty percent (50%) discount to the five (5) trading day average closing price immediately preceding the payment date, and other terms more fully described in the amended note set forth in the Amended and Restate Redeemable Note.

(c) Revenue Share Plan. A revenue share split of any and all revenues derived from the Joint Venture (the "Revenue Share Plan") on a basis equal to twenty-five percent (25%) to EGV, and seventy-five percent (75%) to HYHI until such time as HYHI has received payment in full of the Total Consideration, and thereafter one hundred percent (100%) of the revenues shall be paid to EVG, for the term of this Agreement. Notwithstanding anything herein to the contrary, EVG shall be required to pay HYHI certain minimum licensing fee payments (the "Minimum Licensing Fee Payments") in the amount of Two Hundred Fifty Thousand Dollars (USD $250,000.00) due and payable to HYHI on or before 31st day of each quarter, beginning on January 1, 2017, if the total amount paid to HYHI in the then prior quarter from the seventy-five percent (75%) revenue split does not exceed that amount. In the event DEAC and EGV is unable to make the Minimum Licensing Fee Payments in full when due, DEAC shall pay HYHI the amounts owed in the form of the issuance of a new convertible redeemable note (the "Licensing Redeemable Note") for each such occurrence, in the form and on the same terms and Maturity Date as set forth in the Amended and Restated Redeemable Note.

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The Joint Venture also included the option of the Company and EVG to acquire the ownership of EMBM and License directly, within thirty (30) days of the date payment in full of the Total Consideration is made to HYHI pursuant to the Agreement, at which time, EVG and Company would have the right to exercise an option (the "Option") to acquire one hundred percent (100%) of EMBM, including, but not limited to, any and all assets (e.g. gaming licenses, etc.), and liabilities required to continue the gaming operation set forth by the Joint Venture, for a purchase price of (USD $10.00) (the "Option Payment"), paid by the Company to HYHI. Upon receipt by HYHI of a written notice to exercise the Option and the Option Payment from EVG or Company, HYHI would execute any and all documents necessary to effect the assignment and transfer (the "EMBM Assignment") of one hundred percent (100%) of EMBM, including, but not limited to, any and all assets and liabilities required to continue the gaming operation set forth by the Joint Venture, to the Company, free of any encumbrances, liens, or other third party claims related to the DEAC and EGV, except for the obligations incurred from and remaining in the Joint Venture after the Assignment.

In the event of a termination, or if the Company is unable to provide the Initial Funding when due, or for a period not to exceed ninety (90) days in each monthly instance, the financial and operational resources needed to maintain the operations of the Company for its intended Purpose in an amount not less than Twenty-Five Dollars (USD $25,000) per month, less any revenues generated during such period, HYHI shall have the right to cancel the Joint Venture in writing, thus terminating any further obligations of the parties to this Agreement (the "Termination"), including the cancellation of any further Minimum Licensing Fee Payments and the combined total of any outstanding amounts owed by DEAC, in excess of One Million Dollars (USD$1,000,000.00), on the Amended and Restated Redeemable Note and all other Licensing Redeemable Notes, issued to HYHI which have not been converted, or otherwise assigned, sold or transferred by HYHI to one or more other parties prior to such Termination date.

NOTE 15. SUBSEQUENT EVENTS

Subsequent to our six months ended June 30, 2016 and to the date of filing of this Report, the Company issued the following additional shares of common stock in connection with the convertible notes:

On September 1, 2016, the Company issued 62,815,000 common shares for the conversion of $753.78 of convertible debt.

On June 7, 2017, the Company issued 13,500,000 common shares for the conversion of $1,477.50 of convertible debt.

NOTE 12. SUBSEQUENT EVENTSTermination Agreement to Definitive Agreement for the acquisition of a new subsidiary

2,500 Common Shares IssuedThe Company and Properties of Merit Inc. ("POM") are parties to Shareholderthat certain Definitive Agreement, dated May 20, 2016, incorporated by reference in Form 8K filed with the SEC on May 24, 2016, pursuant to which the Company agreed to acquire one hundred percent (100%)of the ownership interest in POM, in the form of three (3) separate closings with the first closing originally anticipated on or before May 27, 2016, subject to certain performance requirements of both parties prior to each closing.

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On July 27, 2014,22, 2016, Elite Data Services, Inc. (the "Company") and Properties of Merit Inc. ("POM") executed a Termination Agreement, pursuant to which the parties mutually agreed to terminate the Definitive Agreement dated May 20, 2016, incorporated by reference in Form 8K filed with the SEC on May 24, 2016, pursuant to which the Company issued 2,500 restricted shares via a notice agreed to acquire one hundred percent (100%)of issuance of stock to an individual for his preparation and assistancethe ownership interest in POM, in the Company’s preparationform of financial statementsthree (3) separate closings, due to, among other reasons, certain events that occurred subsequent to the date of execution of the Definitive Agreement, including, but not limited to, the Company's inability to (i) become current in its reporting obligations with the Securities and Exchange Commission, and (ii) obtain the financings required to complete the first and subsequent closings to finance the ongoing activities of POM within a reasonable period of time.

The Termination Agreement included amongst other provisions, a mutual release of each party related to any future rights and claims against the other, except that the Company is required to repay POM for advances made to Company pursuant to the year ended December 31, 2013. executed definitive agreement in the total amount of Seventeen Thousand Five Hundred Dollars (USD $17,500.00), on the terms set forth in executed amended convertible redeemable note (the "Amended Note"), which replaces the original note set forth in the Definitive Agreement.

SummaryLetter of Transactions with Tarpon Bay Partners,Intent - WOD Market LLC

On July 14, 2015, we entered into an Equity Purchase Agreement (the "Purchase Agreement" or “Equity Line”) and Registration Rights Agreement (the “Registration Agreement”) with Tarpon Bay Partners LLC (“Tarpon”) whereby Tarpon is obligated, providing22, 2016, the Company has met certain conditions, includingand WOD Market LLC ("WOD"), a Colorado limited liability company executed a Letter of Intent for the filingproposed acquisition by the Company of WOD in the form of a Form S-1 Registration Statement for the sharesshare exchange arrangement on terms to be acquired, to purchase up to $5,000,000 of the Company’s common stock at the rates set forth in a definitive agreement and other ancillary agreements as are customary to consummate the Purchase Agreement. In conjunction withtransaction contemplated (the "Definitive Documentation"), anticipated to be signed and closed on or before July 29, 2016.

Pursuant to the Equity Line,execution of the LOI, WOD agreed to arrange interim funding of no less than USD $40,000.00 for certain operational costs of the Company issued a promissory noteprior to Tarponclosing, including expenses related to the completion of the Company's outstanding Form 10K for $50,000, due on Januaryyear ending December 31, 2015, and Form 10Q for periods ending March 31, 2016 with 10% interest per annum as considerationand June 30, 2016, and other such items required in order for transaction costs incurred by Tarpon. The $50,000the Company to become a fully reporting public company, to be advanced within five (5) business days from the date of transaction costs willthe LOI, under mutually agreed to terms to be treated as a reductionformalized in additional paid-in capital since the transaction costs relate to equity financing.  Definitive Documentation.

Definitive Agreement for the Acquisition of WOD Markets LLC

On August 26, 2016, the Company and the controlling shareholders of WOD Market LLC ("WOD"), a Colorado limited liability company (“WOD”), executed a definitive agreement (the "WOD Definitive Agreement"), pursuant to which the Company agreed to acquire one hundred percent (100%) of the ownership interest in WOD, in the form of three (3) separate closings, subject to the following terms and conditions:

(a) First Closing. On August 26, 2016 (the "First Closing" or "Initial Closing"), the Company would acquire a total of twenty percent (20%) of the ownership interest of WOD in an equity exchange in which the controlling shareholders of WOD would assign and transfer a total of 200 units of membership interests (the "WOD Units") to the Company in exchange for a total of 100,000 shares of Series B Preferred Stock of the Company (the "New DEAC Shares"), issued by the Company to the controlling shareholders of WOD.

In addition, within two (2) business days after the Initial Closing, WOD shall advance a total of Forty Thousand Dollars ($40,000) to DEAC for the purposes of funding the completion of DEAC’s audit and SEC filing of Form 10K for the period ending December 31, 2015, Form 10Q for period ending March 31, 2016, Form 10Q for period ending June 30, 2016, and other documentation required for DEAC to become a compliant and fully reporting public company (the "Interim Financing"), secured by two (2) separately executed Convertible Redeemable Notes (“WOD Notes”).

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Further, as a condition of the execution of WOD Definitive Agreement, DEAC has agreed to immediately, as of August 26, 2016, initiate a reverse split of 1:1000 of DEAC’s Common Stock (the “Reverse Split”), pursuant to the prior approval received by DEAC from the holders of majority of DEAC’s outstanding capital stock, as described in the Schedule 14C filed with the SEC on September 23, 2015. The Purchase Agreement has a termeffective date of two-years (the "term")the reverse split is anticipated to commence on September 15, 2016, subject to final approval of FINRA. Subject to the completion of the Reverse Split, the Controlling Shareholders have agreed to exchange and may be terminated sooner by the Company or if Tarpon has purchasedcancel a total of $5,000,0001,000,000 shares of the Company's common stock before the expiration of the term. During the term of the Purchase Agreement, the Company may at any time deliver a "Put Notice" to Tarpon thereby requiring Tarpon to purchase a certain dollar amount (the "Investment Amount") in exchangeSeries B Preferred Stock (500,000 each by Dr. Ricketts and Mr. Antol) for a portion of the Shares (the "Put"), determined by an estimated amount of Shares equal to the investment amount indicated in the Put Notice divided by the closing bid price of the Company's common stock on the trading day (the "Closing Price") immediately preceding the date the Put Notice was given (the "Put Date"), multiplied by one hundred twenty-five percent (125%) (the "Estimated Put Shares"). On the trading date preceding the delivery date of such Shares, Tarpon shall deliver payment for the Shares equal to the Company's requested Investment Amount. 

Subject to certain restrictions, the purchase price for the Shares is equal to ninety percent (90%) of the lowest closing bid price, quoted by the exchange or principal market Company's Common Stock is traded on, on any trading day during the ten (10) trading days immediately after the date the Company delivers to Tarpon a Put Notice in writing requiring Tarpon (the "Valuation Period") to purchase the applicable number of Shares of the Company, subject to certain terms and conditions of the Purchase Agreement. In the event the number of Estimated Put Shares initially delivered to Tarpon is greater than the Put Shares purchased by Tarpon pursuant to such Put Notice, then immediately after the Valuation Period Tarpon shall deliver to the Company any excess Estimated Put Shares associated with such Put Notice. If the number of Estimated Put Shares delivered to Tarpon is less than the Put Shares purchased by Tarpon pursuant to a Put Notice, then immediately after the Valuation Period the Company shall deliver to Tarpon the difference between the Estimated Put Shares and the Put Shares issuable pursuant to such Put Notice. 

The number of Shares sold to Tarpon shall not exceed the number of such Shares that, when aggregated with all other shares of common stock of the Company then beneficially owned by Tarpon, would result in Tarpon owning more than 9.99% of all of the Company's common stock then outstanding. Additionally, Tarpon may not execute any short sales of the Company's common stock. Further, the Company has the right, but never the obligation to draw down on the total of $5,000,000. The Purchase Agreement also contains other customary and standard provisions. 

Convertible Note to EMA Financial, LLC 

On July 14, 2015, (the "Note Issuance Date"), the Company entered into a Securities Purchase Agreement (the "SPA") with EMA Financial, LLC ("EMA"), whereby EMA agreed to invest $156,500 (the "Note Purchase Price") in our Company in exchange for a convertible promissory note (the "Note"). The Company netted $135,000 after brokerage and legal fees. Additionally, the Company is required to issue to EMA 100,00025,000,000 shares of Common Stock of the DEAC to be issued post the date the Reverse Split is effective.

(b) Second Closing. On or before September 15, 2016 (the "Second Closing"), the Company within three days followingwould acquire an additional total of twenty percent (20%) of the closing dateownership interest of WOD in an equity exchange in which the controlling shareholders of WOD would assign and transfer an additional total of 200 WOD Units to the Company in exchange for an additional 100,000 New DEAC Shares, issued by the Company to the controlling shareholders of WOD.

In addition, the Second Closing would be contingent upon DEAC completing all necessary corporate actions to effect any and all outstanding DEAC corporate matters, including, but not limited to, SEC filing of Form 10K for the period ending December 31, 2015, Form 10Q for period ending March 31, 2016, Form 10Q for period ending June 30, 2016, and other documentation required for DEAC to become a compliant and fully reporting public company (the “SEC Filing”).

(c) Third Closing. On or before October 15, 2016 (the "Third Closing"), the Company would acquire a total of sixty percent (60%) of the ownership interest of WOD remaining in an equity exchange in which the controlling shareholders of WOD would assign and transfer a total of 600 WOD Units to the Company in exchange for a total of 14,800,000 New DEAC Shares, issued by the Company to the controlling shareholders of WOD.

In addition, the Third Closing would be contingent upon WOD completing all necessary corporate actions to effect any and all outstanding WOD corporate matters, including, but not limited to, two years of audit financials for period ending December 31, 2014 and December 31, 2015, and interim reviewed financial for period ending June 30, 2016, including interim reviewed financial for period ending September 30, 2016, in accordance with US GAAP (the “Books and Records”), in form acceptable to DEAC and its auditors. Separately, DEAC must be current with all federal tax return filings for periods ending 2013, 2014 and 2015 on or before the Third Closing.

Further, as a loan fee. condition of the Final Closing, Dr. Ricketts (a Controlling Shareholder) has agreed to the termination of his contractor agreement dated May 18, 2016, as the Chairman and VP of Investor Relations of DEAC, and Mr. Antol (a Controlling Shareholder) has agreed to the termination of his contractor agreement dated May 18, 2016, as the Chief Financial Officer of DEAC, on mutually agreed to terms between DEAC and WOD prior to such closing.

Pursuant to the SPA,each of the closings contemplated, certain officer and director appointments and resignations shall commence on July 14, 2015, we issuedboth the Second Closing and Third and Final Closing.

In the event of a convertible promissory note (the "Note")termination of the Definitive Agreement after the First Closing or Second Closing, the Company is required to EMA, in the original principal amount of $156,500 (the "Note Purchase Price"), which bears interest at 12% per annum. All outstanding principalassign and accrued interest on the Note is duetransfer any and payable on the maturity date, which is July 14, 2016 (the "Note Maturity Date"). EMA may extend the Note Maturity Date by providing us with written notice at least five days before the Note Maturity Date. However, EMA may only extend the Note Maturity Date for up to an additional one-year period. Any amount of principal or interest that is due under the Note, which is not paidall WOD Units held by the Note Maturity Date, will bear interest atCompany back to the ratecontrolling shareholders of 24% per annum until itWOD, and WOD controlling shareholders is paid (the "Note Default Interest"). 

required to assign and transfer any and all New DEAC Shares back to Company. If WOD has arranged and completed any of the Interim Financings, then DEAC shall be required to abide by the terms of the Interim Financings, with neither party having any further obligations to one another thereafter, except as otherwise provided for herein.

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