Elray Resources (ELRA) 10-Q 16 May 16 2016 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2016	May. 10, 2016
Document And Entity Information
Entity Registrant Name	ELRAY RESOURCES, INC.
Entity Central Index Key	1,402,371
Document Type	10-Q
Document Period End Date	Mar. 31, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer	No
Is Entity a Voluntary Filer	No
Is Entity's Reporting Status Current	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		640,191,880
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2,016

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Current assets:
Cash	$ 189,863	$ 111,133
Accounts receivable	1,164,532	310,500
Other receivables	131,599	131,599
Prepaid expenses	11,312	11,414
Total current assets	1,497,306	564,646
Rent deposit	7,535	7,535
Other asset	5,000	5,000
Total assets	1,509,841	577,181
Current liabilities:
Accounts payable and accrued liabilities	1,410,084	1,400,492
Accounts payable - related parties	2,880,092	1,699,415
Advances from shareholders	58,491	58,491
Settlement payable	2,162,159	2,163,092
Notes payable	132,929	188,286
Convertible notes payable, net of discounts	2,655,242	2,474,637
Derivative liabilities - note conversion feature	2,766,617	2,985,575
Total liabilities	$ 12,065,614	$ 10,969,988
Commitments and contingencies
Shareholders' deficit:
Common stock, par value $0.001, 1,500,000,000 shares authorized, 159,976,262 and 51,885,020 shares issued and outstanding, respectively	$ 159,976	$ 51,885
Additional paid-in capital	17,524,889	17,586,393
Subscription receivable	(75,672)	(75,672)
Accumulated deficit	(28,364,049)	(28,154,496)
Total shareholders' deficit	(10,555,773)	(10,392,807)
Total liabilities and shareholders' deficit	$ 1,509,841	$ 577,181
Series A Convertible Preferred Stock [Member]
Shareholders' deficit:
Preferred stock
Series B Convertible Preferred Stock [Member]
Shareholders' deficit:
Preferred stock	$ 192,000	$ 192,000
Series C Preferred Stock [Member]
Shareholders' deficit:
Preferred stock	$ 7,083	$ 7,083

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2016	Dec. 31, 2015
Common Stock; Par Value	$ 0.001	$ 0.001
Common Stock; Shares Authorized	1,500,000,000	1,500,000,000
Common Stock; Shares Issued	159,976,262	51,885,020
Common Stock; Shares Outstanding	159,976,262	51,885,020
Series A Convertible Preferred Stock [Member]
Preferred Stock; Par Value	$ 0.001	$ 0.001
Preferred Stock; Shares Authorized	300,000,000	300,000,000
Preferred Stock; Shares Issued	0	0
Preferred Stock; Shares Outstanding	0	0
Series B Convertible Preferred Stock [Member]
Preferred Stock; Par Value	$ 0.001	$ 0.001
Preferred Stock; Shares Authorized	280,000,000	280,000,000
Preferred Stock; Shares Issued	280,000,000	280,000,000
Preferred Stock; Shares Outstanding	280,000,000	280,000,000
Series C Preferred Stock [Member]
Preferred Stock; Par Value	$ 0.001	$ 0.001
Preferred Stock; Shares Authorized	10,000,000	10,000,000
Preferred Stock; Shares Issued	2,083,333	2,083,333
Preferred Stock; Shares Outstanding	2,083,333	2,083,333

Consolidated Statements of Oper

Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Consolidated Statements Of Operations
Revenues	$ 1,376,932	$ 130,704
Operating expenses:
Software usage costs	1,156,255
General and administrative expenses	$ 385,202	$ 361,186
Amortization of intangible assets		288,977
Total operating expenses	$ 1,541,457	650,163
Loss from operations	(164,525)	(519,459)
Other income (expense):
Interest expense	(226,255)	(524,478)
Unrealized gain (loss) on derivative liability - note conversion feature	186,963	(145,376)
Loss on settlement of accounts payable	(5,736)	(90,674)
Total other income (expense)	(45,028)	(760,528)
Net loss	$ (209,553)	$ (1,279,987)
Net loss per common share - basic and diluted	$ 0	$ (23.55)
Weighted average common shares outstanding - basic and diluted	99,026,812	54,349

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Cash flows from operating activities:
Net loss	$ (209,553)	$ (1,279,987)
Adjustments to reconcile net loss to cash used in operations activities:
Stock-based compensation		6,150
Amortization of intangible assets		288,977
Amortization of debt discount	$ 187,853	461,265
Non-cash interest expense related to conversion feature of notes payable		42,743
Unrealized (gain) loss on derivative liabilities - note conversion feature	$ (186,963)	145,376
Loss on settlement of accounts payable	5,736	90,674
Changes in operating assets and liabilities:
Accounts receivable	(854,032)	5,078
Prepaid expense	102	(5,000)
Accounts payable and accrued liabilities	10,267	66,103
Accounts payable - related parties	1,180,677	152,387
Net cash provided by (used in) operating activities	$ 134,087	(26,234)
Cash flows from financing activities:
Proceeds from convertible notes payable		$ 40,000
Repayment of short-term notes payable	$ (55,357)
Net cash provided by (used in) financing activities	(55,357)	$ 40,000
Net increase (decrease) in cash	78,730	13,766
Cash at beginning of period	111,133	27,447
Cash at end of period	$ 189,863	$ 41,213
Supplemental disclosure of cash flow information:
Cash paid for interest
Cash paid for taxes
Non-cash investing and financing activities:
Common stock issued for conversion of debt		$ 903,589
Debt discount-derivative liability on note conversion feature		$ 40,000

BASIS OF PRESENTATION AND ACCOU

BASIS OF PRESENTATION AND ACCOUNTING POLICIES	3 Months Ended
	Mar. 31, 2016
Notes to Financial Statements
NOTE 1 - BASIS OF PRESENTATION AND ACCOUNTING POLICIES	Elray Resources, Inc. ("Elray" or the "Company"), a Nevada corporation, formed on December 13, 2006 has been providing The accompanying unaudited interim consolidated financial statements of Elray Resources, Inc. ("Elray" or 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 the Company's annual report for the year ended December 31, 2015 on Form 10-K filed on March 30, 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 consolidated financial statements which would substantially duplicate the disclosure contained in the audited consolidated financial statements for the most recent fiscal year ended December 31, 2015 have been omitted. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the balance sheet. Actual results could differ from those estimates. Cash and Cash Equivalents The Company considers all highly liquid short-term investments purchased with an original maturity of three months or less to be cash equivalents. The Company maintains its cash in institutions insured by the Federal Deposit Insurance Corporation ("FDIC"). Allowance for doubtful accounts The allowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance. The Company determines the allowance based on known troubled accounts, historical experience, and other currently available evidence. As of March 31, 2016 and December 31, 2015, there were no allowances for doubtful accounts. Derivative Instruments Derivatives are measured at their fair value on the balance sheet. In determining the appropriate fair value, the Company uses the Black-Scholes-Merton option pricing model. Changes in fair value are recorded in the statement of operations. Debt Discount Debt discount is amortized over the term of the related debt using the effective interest rate method. Revenues Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is probable. Stock-Based Compensation Stock-based compensation expense is recorded for stock and stock options awarded in return for services rendered. The expense is measured at the grant-date fair value of the award and recognized as compensation expense on a straight-line basis over the service period, which is typically the vesting period. The Company estimates forfeitures that it expects will occur and records expense based upon the number of awards expected to vest. Loss Per Common Share Basic loss per common share has been calculated based on the weighted average number of shares of common stock outstanding during the period. During a loss period, the potentially dilutive securities have an anti-dilutive effect and are not included in the calculation of dilutive net loss per common share. As of March 31, 2016 and 2015, potentially dilutive securities include notes convertible to 12,681,208,148 and 40,880 shares of the Company's common stock, respectively. As of March 31, 2016 and 2015, potentially dilutive securities also include preferred stock convertible to 2,126 and 695 shares of the Company's common stock, respectively. Recent Accounting Pronouncements In May 2014, a pronouncement was issued that creates common revenue recognition guidance for U.S. GAAP and International Financial Reporting Standards. The new guidance supersedes most preexisting revenue recognition guidance. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, with an option to adopt the standard one year earlier. The new standard is to be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. The Company is currently evaluating the impact of the new pronouncement on its financial statements. In February 2016, a pronouncement was issued that creates new accounting and reporting guidelines for leasing arrangements. The new guidance requires organizations that lease assets to recognize assets and liabilities on the balance sheet related to the rights and obligations created by those leases, regardless of whether they are classified as finance or operating leases. Consistent with current guidance, the recognition, measurement, and presentation of expenses and cash flows arising from a lease primarily will depend on its classification as a finance or operating lease. The guidance also requires new disclosures to help financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. The new standard is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, with early application permitted. The new standard is to be applied using a modified retrospective approach. The Company is currently evaluating the impact of the new pronouncement on its financial statements. Elray's management does not believe that any other recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying financial statements. Subsequent Events Elray evaluated subsequent events through the date these financial statements were issued for disclosure purposes.

GOING CONCERN

GOING CONCERN	3 Months Ended
	Mar. 31, 2016
Notes to Financial Statements
NOTE 2 - GOING CONCERN	The accompanying unaudited consolidated financial statements of Elray have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company sustained a net loss of $209,553 for the three months ended March 31, 2016. The Company had a working capital deficit, stockholders' deficit and accumulated deficit of $10,568,307, $10,555,773 and $28,364,049, respectively, at March 31, 2016. These factors raise substantial doubt regarding the Company's ability to continue as a going concern. Without realization of additional capital, it would be unlikely for Elray to continue as a going concern. Elray's management plans on raising cash from public or private debt or equity financing, on an as needed basis, and in the longer term, revenues from the gambling business. Elray's ability to continue as a going concern is dependent on these additional cash financings, and, ultimately, upon achieving profitable operations through the development of its gambling business.

SETTLEMENT PAYABLE

SETTLEMENT PAYABLE	3 Months Ended
	Mar. 31, 2016
Notes to Financial Statements
Note 3 - SETTLEMENT PAYABLE	On December 20, 2013, the Company entered into a settlement agreement with Tarpon Bay Partners LLC ("Tarpon") whereby Tarpon acquired certain notes and accounts payable against the Company in the amount of $2,656,214. Pursuant to the agreement, the Company and Tarpon submitted the settlement agreement to the Circuit Court of the Second Judicial Circuit, Leon County, Florida for a hearing on the fairness of the agreement and the exemption from registration under the Securities Act of 1933 for the shares that will be issued to Tarpon for resale ("Settlement Shares"). 75% of the proceeds less all applicable fees and charges from the resale of the Settlement Shares will be remitted to the original claim holders of the Company ("Remittance Amount"). The Company agreed to issue sufficient shares to generate proceeds such that the aggregate Remittance Amount equals $2,656,214. Additionally, the Company agreed to issue a convertible note of $132,000, maturing in 6 months and convertible to the Company's common stock at a 50% of the lowest closing bid price for the 20 days prior to the conversion. The settlement agreement was effective on January 27, 2014 when the court granted approval. On December 29, 2015, the Company issued Tarpon 4,101,000 shares which were sold during the three months ended March 31, 2016. During the three months ended March 31, 2016, the Company issued Tarpon 5,136,000 common shares which have been sold entirely. Net proceeds from the sale amounted to $933 was remitted to the original claim holders. As of March 31, 2016, the Company has settlement payable of $2,162,159.

NOTES PAYABLE

NOTES PAYABLE	3 Months Ended
	Mar. 31, 2016
Notes to Financial Statements
NOTE 4 - NOTES PAYABLE	Notes payable Notes payable at March 31, 2016 and December 31, 2015 consisted of the following: Final Maturity Interest Rate March 31, 2016 December 31, 2015 Morchester International Limited July 14, 2012 15 % 35,429 35,429 Morchester International Limited July 14, 2012 8 % 10,000 10,000 PowerUp Lending Group, Ltd August 15, 2016 43 % 59,524 96,428 PowerUp Lending Group, Ltd August 5, 2016 54 % 27,976 46,429 Total $ 132,929 $ 188,286 On December 9, 2011, Elray entered into an Amended Splitrock Agreement whereby the Company acquired certain assets and liabilities of Splitrock. As part of the liabilities assumed in terms of the Amended Splitrock Agreement, the Company assumed notes payable of $292,929 bearing interest of 8% or 15% per annum. On January 27, 2014, the court granted an approval of the settlement agreement with Tarpon whereby the Company would issue shares to Tarpon for resale to pay off certain liabilities. As a result, principal of $247,500 and associated accrued interest acquired by Tarpon were reclassified to settlement payable. The remaining notes not purchased by Tarpon are currently in default. On October 19, 2015, the Company entered into a loan agreement with PowerUp Lending Group, Ltd. ("PowerUp") for $125,000. Total repayment amount for the loan is $168,750. The loan is payable daily at $804. On December 10, 2015, the Company entered into another loan agreement with PowerUp for $50,000. Total repayment amount for the loan is $67,500. The loan is payable daily at $402. Convertible notes payable Convertible notes payable, at March 31, 2016 and December 31, 2015 consisted of the following: Interest Rate March 31, 2016 December 31, 2015 JSJ Investments, Inc. 10%~12 % 133,293 133,293 LG Capital Funding, LLC 8 % 25,000 28,250 WHC Capital, LLC 12 % 116,936 116,936 Beaufort Capital Partners, LLC 12 % 10,966 10,966 Tangiers Investment Group, LLC 0%~10 % 65,675 69,356 GSM Fund Management, LLC 12 % 48,349 48,666 Auctus Private Equity Fund, LLC 8 % 40,000 40,000 Microcap Equity Group, LLC 10 % 18,892 18,892 Virtual Technology Group, Ltd 0 % 481,500 481,500 Gold Globe Investment Ltd 0 % 2,324,000 2,324,000 Vista Capital Investments, LLC 12 % 5,800 5,800 Subtotal 3,270,411 3,277,659 Debt discount (615,169 ) (803,022 ) Total $ 2,655,242 $ 2,474,637 JSJ Investments, Inc. On May 31, 2013, the Company entered into a convertible promissory note with JSJ for $50,000. The note matured on December 2, 2013. The note holder has the option to convert the note to common shares in the Company at a discount of 50% of the average closing price over the last 120 days prior to conversion, or the average closing price over the last seven days prior to conversion. As of March 31, 2016, the remaining principal of $10,670 has not been converted. On August 21, 2014, the Company entered into a convertible promissory note with JSJ for $50,000 cash. The note matured on February 21, 2015. Upon the maturity, the note has a cash redemption premium of 150% of the principal amount. The note is convertible to the Company's common shares at a discount of 60% of the average of the three lowest bids on the twenty days before the date this note is executed, or 60% of the average of the three lowest bids during the twenty trading days preceding the delivery of any conversion notice, whichever is lower. The note is currently in default and has a default interest rate of 20% per annum. As of March 31, 2016, balance of this note was $50,000. On January 20, 2015, the Company entered into a convertible promissory note with JSJ for $40,000. The note bears interest at 12% and matures on July 20, 2015. Upon the maturity, the note has a cash redemption premium of 150% of the principal amount. The note is convertible to the Company's common shares at a discount of 60% of the lowest trading price on the twenty days before the date this note is executed, or 60% of the lowest trading price during the twenty trading days preceding the delivery of any conversion notice, whichever is lower. The note is currently in default. As of March 31, 2016, balance of this note was $40,000. On January 20, 2015, the Company entered into a convertible promissory note with JSJ for $60,000, which was issued in exchange for a portion of the promissory note issued to VTG on January 23, 2014. The note bears interest at 12% and matures on January 20, 2015. JSJ has the right to convert the balance outstanding into the Company's common stock at a rate equal to 50% of the lowest trading price on the twenty days before the date this note is executed, or 50% of the lowest trading price during the twenty trading days preceding the delivery of any conversion notice, whichever is lower. The Company recorded a loss on extinguishment of debt of $441 related to the exchange. As of March 31, 2016, balance of this note was $32,623. LG Capital Funding, LLC On November 10, 2014, the Company entered into a convertible promissory note with LG for $37,000. The note matures on November 10, 2015. LG has the right after a period of 180 days to convert the balance outstanding into the Company's common stock at a rate equal to 50% of the average lowest three trading prices during the fifteen trading days prior to the conversion date. During the three months ended March 31, 2016, the Company issued 37,759,200 shares of common stock for the conversion of this note in the amount of $3,250 and accrued interest of $334. The note is currently in default and has a default interest rate of 24% per annum. WHC Capital, LLC On September 23, 2014, the Company entered into a convertible promissory note with WHC Capital, LLC ("WHC") for $75,000. The note bears interest at 12% and matures on September 23, 2015. WHC has the right at any time during the period beginning on the date of this note to convert the balance outstanding into the Company's common stock at a rate equal to 50% of the lowest intra-day trading price during the fifteen trading days prior to the conversion date. On September 23, 2015, the Company failed to repay the outstanding balance of this note and a penalty of $41,978 was added to the outstanding balance pursuant to the note terms. This note is currently in default and has a default interest rate of 22% per annum. Beaufort Capital Partners, LLC On September 2, 2014, the Company entered into a convertible promissory note with Beaufort Capital Partners, LLC ("Beaufort") for $21,000. The note matured on March 2, 2015. Beaufort has the right after the maturity date to convert the balance outstanding into the Company's common stock at a rate equal to 50% of the lowest trading prices during the fifteen trading days prior to the conversion date. Under certain conditions, the conversion price would be reset to $0.0001 or 65% off the lowest price of the previous five trading days. This note is currently in default. Tangiers Investment Group, LLC On October 13, 2014, the Company entered into a convertible promissory note with Tangiers Investment Group LLC ("Tangiers") for $55,000. The note matures on October 13, 2015. Tangiers has the right after a period of 180 days to convert the balance outstanding into the Company's common stock at a rate equal to 45% of the lowest trading prices during the twenty trading days prior to the conversion date. During the three months ended March 31, 2016, the Company issued 56,016,667 shares of common stock for the conversion of this note in the amount of $3,681. This note is currently in default and has a default interest rate of 20% per annum. On October 13, 2014, the Company entered into a convertible promissory note with Tangiers for $33,000. The note bears interest at 10% and matures on October 13, 2015. Tangiers has the right after a period of 180 days to convert the balance outstanding into the Company's common stock at a rate equal to 45% of the lowest trading prices during the twenty trading days prior to the conversion date. This note is currently in default and has a default interest rate of 20% per annum. GSM Fund Management LLC On January 30, 2015, the Company entered into the assignment and modification agreement to assign $62,500 of the convertible promissory note of VTG dated January 23, 2014 to GSM Fund Management LLC ("GSM"). The note bears interest at 12% and matures on January 30, 2016. GSM has the right after a period of 180 days to convert the balance outstanding into the Company's common stock at a rate equal to 50% of the lowest closing bid price in the 15 trading days prior to the conversion date. The Company recorded a loss on extinguishment of debt of $52,364 related to the exchange. During the three month ended March 31, 2016, the Company issued 6,334,375 shares of common stock for the conversion of this note in the amount of $317. The note is currently in default and has a default interest rate of 18%. Auctus Private Equity Fund LLC On November 7, 2014, the Company entered into a convertible promissory note with Auctus Private Equity Fund LLC ("Auctus") for $40,000. The note matures on August 7, 2015. Auctus has the right after a period of 180 days to convert the balance outstanding into the Company's common stock at a rate equal to 50% of the average of the lowest two trading prices during the twenty-five trading days prior to the conversion date. During the three months ended March 31, 2016, the Company issued 2,845,000 shares of common stock for the conversion of accrued interest in the amount of $341. Microcap Equity Group, LLC On February 23, 2015, the Company entered into a convertible promissory note with Microcap Equity Group LLC ("Microcap") for $20,000, which was issued in exchange for a portion of the promissory note issued to VTG on January 23, 2014. The note matures on January 23, 2017. Microcap has the right to convert the balance outstanding into the Company's common stock at a rate equal to 40% of the lower of the lowest bid price during the thirty trading days prior to the conversion date, or the lowest bid price on the day that the converted shares are cleared for physical delivery. The Company recorded a loss on extinguishment of debt of $28,213 related to the exchange. Virtual Technology Group, Ltd On January 23, 2014, the Company entered into a convertible promissory note with VTG for $1,500,000. VTG has the right after a period of 180 days to convert the balance outstanding into the Company's common stock at a rate equal to 100% of the average of the closing bid prices for the seven trading days prior to the conversion date when the Company's shares are traded in the OTCQB or during the ten trading days prior to the conversion date when the Company's shares are traded on another other exchange. On November 10, 2014, $50,000 of this note was replaced with a note issued to LG. On January 20, January 23 and January 30, 2015, $60,000, $20,000 and $62,500 of this note were replaced with notes issued to JSJ, Microcap and GSM. Gold Globe Investments Ltd On January 23, 2014, the Company entered into a convertible promissory note with GGIL for $2,800,000. GGIL has the right after a period of 180 days to convert the balance outstanding into the Company's common stock at a rate equal to 100% of the average of the lowest three trading prices during the seven trading days prior to the conversion date when the Company's shares are traded in the OTCQB or during the ten trading days prior to the conversion date when the Company's shares are traded on another exchange. On December 3, 2014, $45,000 of this note was replaced with a note issued to Tangiers. Vista Capital Investments, LLC On April 15, 2014, the Company entered into a convertible promissory note with Vista Capital Investments, LLC ("Vista") for $250,000. The note has an original issuance discount of $25,000. The note matures 2 years from the date of each payment of the principal from Vista. In the event that the note remains unpaid at maturity date, the outstanding balance shall immediately increase to 120% of the outstanding balance. Vista has the right to convert the outstanding balance into the Company's common stock at a rate equal to the lesser of $0.008 per share or 60% of the lowest trade occurring during the twenty-five consecutive trading days preceding the conversion date. Due to certain events that occurred during 2014, the conversion price has been reset to $0.005 per share or 50% of the lowest trade occurring during the twenty-five consecutive trading days preceding the conversion date. Pursuant to the agreement, if the conversion price calculated under this agreement is less than $0.01 per share, the principal amount outstanding shall increase by $10,000 ("Sub-Penny"). $25,000 net proceeds were received on April 23, 2014. The remaining fund of this note has not been received. Debt Discount The table below presents the changes of the debt discount during the three months ended March 31, 2016: Amount December 31, 2015 $ 803,022 Amortization (187,853 ) March 31, 2016 $ 615,169 Loans from shareholders On September 5, 2008, Elmside Pty Ltd, a company related to a former director, agreed to an interest free loan of $55,991 to the Company on an as-needed basis to fund the business operations and expenses of the Company until December 9, 2011, the due date of the loan. The note is in default. During the year ended December 31, 2014, the Company received a loan of $2,500 from its officer to open a new bank account. As of March 31, 2016, the Company has not repaid the loan.

DERIVATIVE LIABILITIES - NOTE C

DERIVATIVE LIABILITIES - NOTE CONVERSION FEATURE	3 Months Ended
	Mar. 31, 2016
Notes to Financial Statements
NOTE 5 - DERIVATIVE LIABILITIES - NOTE CONVERSION FEATURE	Due to the conversion features contained in the convertible notes issued, the actual number of shares of common stock that would be required if a conversion of the note as further described in Note 5 was made through the issuance of the Company's common stock cannot be predicted, and the Company could be required to issue an amount of shares that may cause it to exceed its authorized share amount. As a result, the conversion feature requires derivative accounting treatment and will be bifurcated from the note and "marked to market" each reporting period through the income statement. The fair value of the conversion future of these notes was recognized as a derivative liability instrument and will be measured at fair value at each reporting period. The Company remeasured the fair value of the instrument as of March 31, 2016, and recorded an unrealized gain of $186,963for the three months ended March 31, 2016. The Company determined the fair values of these liabilities using a Black-Scholes valuation model with the following assumptions: December 31, 2015 Various Dates in 2016 March 31, 2016 Stock price on measurement date $ 0.0006 $ 0.0002 ~ $0.0006 $ 0.0003 Exercise price $ 0.00024~$0.0006 $ 0.00004~$0.0001 $ 0.00012~$0.0003 Discount rate 0.14%~0.65 % 0.09%~0.49 % 0.18%~0.59 % Expected volatility 282 % 277%~281 % 277 % Expected dividend yield 0.00 % 0.00 % 0.00 % The following table provides a summary of the changes in fair value of the derivative financial instruments measured at fair value on a recurring basis using significant unobservable inputs: Fair value at December 31, 2015 $ 2,985,575 Reclassification to equity (31,995 ) Change in fair value of derivative liabilities (186,963 ) Fair value at March 31, 2016 $ 2,766,617

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	3 Months Ended
	Mar. 31, 2016
Notes to Financial Statements
NOTE 6 - COMMITMENTS AND CONTINGENCIES	Legal Proceedings From time to time, we may be party to litigation or other legal proceedings that we consider to be a part of the ordinary course of our business. We are not involved currently in legal proceedings other than those detailed below that could reasonably be expected to have a material adverse effect on our business, prospects, financial condition or results of operations. We may become involved in material legal proceedings in the future. Commitments and Contingencies On July 1, 2013, the Company entered into a lease agreement for office space in Australia. The agreement, as amended, expires on October 31, 2016 . Rent is approximately $42,000 per year and the Company paid a $7,535 security deposit.

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS	3 Months Ended
	Mar. 31, 2016
Notes to Financial Statements
NOTE 7 - RELATED PARTY TRANSACTIONS	As of March 31, 2016 and December 31, 2015, loans from Elmside, a shareholder, were $55,991. The loans are currently in default. As of March 31, 2016 and December 31, 2015, the Company had accounts payable of $2,776,592 and $1,604,915, respectively, to its chief executive officer and a company owned by the chief executive officer for reimbursement of expense, compensation, and liabilities assumed from Splitrock. On May 15, 2013, the Company entered into an agreement with Jay Goodman, son of the Company's chief executive officer, to provide consulting services assisting the Company with data segmentation, financial and statistical services. In consideration for such services, the Company pays $3,000 per month to Jay Goodman. As of March 31, 2016 and December 31, 2015, the Company has a $103,500 and $94,500 payable to Jay Goodman, respectively.

EQUITY

EQUITY	3 Months Ended
	Mar. 31, 2016
Notes to Financial Statements
NOTE 8 - EQUITY	Preferred Stock – Series A On May 3, 2012, the Company authorized the creation of 300,000,000 shares of Series A preferred stock. The Class A Preferred Series shares are convertible at arate of 0.0003 common shares for each Series A Preferred Share. As of March 31, 2016 and December 31, 2015, there were no Series A Preferred Stock outstanding. Preferred Stock – Series B On July 1, 2012, the Company authorized the creation of 100,000,000 shares of Series B preferred stock. On September 24, 2012, the authorized Series BPreferred Stock was increased from 100,000,000 to 280,000,000. The Series B Preferred stock is convertible at a rate of0.000000003 common stock for eachSeries B Preferred stock. On July 14, 2013, the Company entered into a 12-month consultancy agreement with VTG to assist the Company in developing marketing and supporting the technology of virtual online horse racing products and to provide the Company the exclusive use right to certain website domains. In consideration for such services and domains, the Company issued 192,000,000 Series B Preferred shares to VTG. The 192,000,000 Series B Preferred stock have been recorded at their estimated market value of $43,031. Preferred Stock – Series C On June 20, 2014, the Company authorized the creation of 10,000,000 shares of Series C preferred stock. The Series C preferred shares are convertible at a rate of 0.0003 common shares for each Series C Preferred Share. On September 18, 2014, the Company entered into an agreement to acquire a 25% interest in Global Tech Software Solutions LLC doing business as Golden Galaxy ("Golden Galaxy") which operates online casinos. Under the terms of the purchase agreement, the Company will be entitled to 1% of the gross wagering generated by Golden Galaxy. In consideration for the purchase, the Company issued 5,000,000 shares of the Company's Series C preferred stock in June 2015 and recorded $5,000 of other asset. On April 1, 2015, the Company terminated the agreement and stopped receiving 1% of the gross wagering generated by Golden Galaxy. On September 18, 2014, the Company entered into an agreement with Yangjiu Xie, owner of Asialink Treasure Limited ("ATL"). Pursuant to the agreement, the Company issued 2,083,333 shares of its Series C preferred stock as part of the consideration to acquire 49% of the outstanding shares of ATL in a series of transactions. These shares were recorded at their par value of $2,083 with a subscription receivable at the same amount. The Company has not received thecertificate of ownership from ATL. Common Stock During the three months ended March 31, 2016, the Company issued 102,955,242 shares of common stock for the conversion of notes payable and accrued interest of $7,248 and $675, respectively. See Note 5. On December 29, 2015, the Company issued Tarpon 4,101,000 shares which were sold during the three months ended March 31, 2016. During the three months ended March 31, 2016, the Company issued Tarpon 5,136,000 shares of its common stock, respectively according to the settlement agreement discussed in Note 3. These shares were valued at $6,669 based on the market price on the issuance date. $933 net proceeds from the sale were used to pay the original creditors of the claims Tarpon acquired. The remaining $5,736 was recorded as loss on settlement.

CONCENTRATIONS

CONCENTRATIONS	3 Months Ended
	Mar. 31, 2016
Notes to Financial Statements
Note 9 - CONCENTRATIONS	The Company's revenues for the three months ended March 31, 2016 were from one customer. As of March 31, 2016, the aggregate amount due was $1,296,131.The Company's software usage cost for the three months ended March 31, 2016 was all related to charges pass through to Elray by an entity controlled by the Company's chief executive officer.

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	3 Months Ended
	Mar. 31, 2016
Notes to Financial Statements
NOTE 10 - SUBSEQUENT EVENTS	On April 6, 2016, the Company filed a certificate of Amendment with the Nevada Secretary of State to increase authorized number of common stock from 1 billion shares to 1.5 billion. On April 19, 2016, the Company issued 233,333,334 shares of common stock to settle accounts payable of $90,000 to Mr. Goodman. Subsequent to March 31, 2016 the Company issued 246,882,284 common shares for conversion of $19,874 note principal and $720 accrued interest.

BASIS OF PRESENTATION AND ACC16

BASIS OF PRESENTATION AND ACCOUNTING POLICIES (Policies)	3 Months Ended
	Mar. 31, 2016
Basis Of Presentation And Accounting Policies Policies
Use of Estimates	The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the balance sheet. Actual results could differ from those estimates.
Cash and Cash Equivalent	The Company considers all highly liquid short-term investments purchased with an original maturity of three months or less to be cash equivalents. The Company maintains its cash in institutions insured by the Federal Deposit Insurance Corporation ("FDIC").
Allowance for doubtful accounts	The allowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance. The Company determines the allowance based on known troubled accounts, historical experience, and other currently available evidence. As of March 31, 2016 and December 31, 2015, there were no allowances for doubtful accounts.
Derivative Instruments	Derivatives are measured at their fair value on the balance sheet. In determining the appropriate fair value, the Company uses the Black-Scholes-Merton option pricing model. Changes in fair value are recorded in the statement of operations.
Debt Discount	Debt discount is amortized over the term of the related debt using the effective interest rate method.
Revenues	Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is probable.
Stock-Based Compensation	Stock-based compensation expense is recorded for stock and stock options awarded in return for services rendered. The expense is measured at the grant-date fair value of the award and recognized as compensation expense on a straight-line basis over the service period, which is typically the vesting period. The Company estimates forfeitures that it expects will occur and records expense based upon the number of awards expected to vest.
Loss Per Common Share	Basic loss per common share has been calculated based on the weighted average number of shares of common stock outstanding during the period. During a loss period, the potentially dilutive securities have an anti-dilutive effect and are not included in the calculation of dilutive net loss per common share. As of March 31, 2016 and 2015, potentially dilutive securities include notes convertible to 12,681,208,148 and 40,880 shares of the Company's common stock, respectively. As of March 31, 2016 and 2015, potentially dilutive securities also include preferred stock convertible to 2,126 and 695 shares of the Company's common stock, respectively.
Recently Issued Accounting Standards	In May 2014, a pronouncement was issued that creates common revenue recognition guidance for U.S. GAAP and International Financial Reporting Standards. The new guidance supersedes most preexisting revenue recognition guidance. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, with an option to adopt the standard one year earlier. The new standard is to be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. The Company is currently evaluating the impact of the new pronouncement on its financial statements. In February 2016, a pronouncement was issued that creates new accounting and reporting guidelines for leasing arrangements. The new guidance requires organizations that lease assets to recognize assets and liabilities on the balance sheet related to the rights and obligations created by those leases, regardless of whether they are classified as finance or operating leases. Consistent with current guidance, the recognition, measurement, and presentation of expenses and cash flows arising from a lease primarily will depend on its classification as a finance or operating lease. The guidance also requires new disclosures to help financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. The new standard is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, with early application permitted. The new standard is to be applied using a modified retrospective approach. The Company is currently evaluating the impact of the new pronouncement on its financial statements. Elray's management does not believe that any other recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying financial statements.
Subsequent Events	Elray evaluated subsequent events through the date these financial statements were issued for disclosure purposes.

NOTES PAYABLE (Tables)

NOTES PAYABLE (Tables)	3 Months Ended
	Mar. 31, 2016
Notes Payable Tables
Notes Payable	Final Maturity Interest Rate March 31, 2016 December 31, 2015 Morchester International Limited July 14, 2012 15 % 35,429 35,429 Morchester International Limited July 14, 2012 8 % 10,000 10,000 PowerUp Lending Group, Ltd August 15, 2016 43 % 59,524 96,428 PowerUp Lending Group, Ltd August 5, 2016 54 % 27,976 46,429 Total $ 132,929 $ 188,286
Convertible Notes Payable	Interest Rate March 31, 2016 December 31, 2015 JSJ Investments, Inc. 10%~12 % 133,293 133,293 LG Capital Funding, LLC 8 % 25,000 28,250 WHC Capital, LLC 12 % 116,936 116,936 Beaufort Capital Partners, LLC 12 % 10,966 10,966 Tangiers Investment Group, LLC 0%~10 % 65,675 69,356 GSM Fund Management, LLC 12 % 48,349 48,666 Auctus Private Equity Fund, LLC 8 % 40,000 40,000 Microcap Equity Group, LLC 10 % 18,892 18,892 Virtual Technology Group, Ltd 0 % 481,500 481,500 Gold Globe Investment Ltd 0 % 2,324,000 2,324,000 Vista Capital Investments, LLC 12 % 5,800 5,800 Subtotal 3,270,411 3,277,659 Debt discount (615,169 ) (803,022 ) Total $ 2,655,242 $ 2,474,637
Changes of debt discount	Amount December 31, 2015 $ 803,022 Amortization (187,853 ) March 31, 2016 $ 615,169

DERIVATIVE LIABILITIES (Tables)

DERIVATIVE LIABILITIES (Tables)	3 Months Ended
	Mar. 31, 2016
Derivative Liabilities Tables
Fair Value of the Liabilites using a Black-Scholes Valuation method	December 31, 2015 Various Dates in 2016 March 31, 2016 Stock price on measurement date $ 0.0006 $ 0.0002 ~ $0.0006 $ 0.0003 Exercise price $ 0.00024~$0.0006 $ 0.00004~$0.0001 $ 0.00012~$0.0003 Discount rate 0.14%~0.65 % 0.09%~0.49 % 0.18%~0.59 % Expected volatility 282 % 277%~281 % 277 % Expected dividend yield 0.00 % 0.00 % 0.00 %
Changes in fair value of the derivative financial instruments measured at fair value on a recurring basis	Fair value at December 31, 2015 $ 2,985,575 Reclassification to equity (31,995 ) Change in fair value of derivative liabilities (186,963 ) Fair value at March 31, 2016 $ 2,766,617

BASIS OF PRESENTATION AND ACC19

BASIS OF PRESENTATION AND ACCOUNTING POLICIES (Details Narrative) - shares	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Basis Of Presentation And Accounting Policies Details Narrative
Potentially dilutive securities include notes convertible	12,681,208,148	40,880
Potentially dilutive securities include preferred stock convertible	2,126		695

GOING CONCERN (Details Narrativ

GOING CONCERN (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Going Concern Details Narrative
Net loss	$ (209,553)	$ (1,279,987)
Net working capital deficit	(10,568,307)
Stockholders' deficit	(10,555,773)		$ (10,392,807)
Accumulated deficit	$ (28,364,049)		$ (28,154,496)

SETTLEMENT PAYABLE (Details Nar

SETTLEMENT PAYABLE (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Settlement Payable Details Narrative
Issuance of shares for settlement of debt	5,136,000
Net proceeds from the sale	$ 933
Settlement payable	$ 2,162,159	$ 2,163,092

NOTES PAYABLE (Details)

NOTES PAYABLE (Details) - USD ($)	3 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Notes Payable	$ 132,929	$ 188,286
Morchester International Limited
Final Maturity	Jul. 14, 2012
Interest Rate	15.00%
Notes Payable	$ 35,429	35,429
Morchester International Limited
Final Maturity	Jul. 14, 2012
Interest Rate	8.00%
Notes Payable	$ 10,000	10,000
PowerUp Lending Group, Ltd. [Member]
Final Maturity	Aug. 15, 2016
Interest Rate	43.00%
Notes Payable	$ 59,524	96,428
PowerUp Lending Group, Ltd. [Member]
Final Maturity	Aug. 5, 2016
Interest Rate	54.00%
Notes Payable	$ 27,976	$ 46,429

NOTES PAYABLE (Details 1)

NOTES PAYABLE (Details 1) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Convertible notes payable	$ 3,270,411	$ 3,277,659
Debt discount	(615,169)	(803,022)
Total	2,655,242	2,474,637
Microcap Equity Group, LLC [Member]
Convertible notes payable	$ 18,892	18,892
Interest Rate	10.00%
Virtual Technology Group, Ltd
Convertible notes payable	$ 481,500	481,500
Interest Rate	0.00%
Gold Globe Investments Ltd
Convertible notes payable	$ 2,324,000	2,324,000
Interest Rate	0.00%
Vista Capital Investments, LLC [Member]
Convertible notes payable	$ 5,800	5,800
Interest Rate	12.00%
JSJ Investments, Inc.
Convertible notes payable	$ 133,293	133,293
JSJ Investments, Inc. | Minimum [Member]
Interest Rate	10.00%
JSJ Investments, Inc. | Maximum [Member]
Interest Rate	12.00%
LG Capital Funding, LLC
Convertible notes payable	$ 25,000	28,250
Interest Rate	8.00%
WHC Capital, LLC.
Convertible notes payable	$ 116,936	116,936
Interest Rate	12.00%
Beaufort Capital Partners, LLC.
Convertible notes payable	$ 10,966	10,966
Interest Rate	12.00%
Tangiers Investment Group, LLC
Convertible notes payable	$ 65,675	69,356
Tangiers Investment Group, LLC | Minimum [Member]
Interest Rate	0.00%
Tangiers Investment Group, LLC | Maximum [Member]
Interest Rate	10.00%
GSM Fund Management, LLC
Convertible notes payable	$ 48,349	48,666
Interest Rate	12.00%
Auctus Private Equity Fund, LLC.
Convertible notes payable	$ 40,000	$ 40,000
Interest Rate	8.00%

NOTES PAYABLE (Details 2)

NOTES PAYABLE (Details 2)	3 Months Ended
	Mar. 31, 2016USD ($)
Notes Payable Details 2
Unamortized Discount, Beginning Balance	$ 803,022
Amortization	(187,853)
Unamortized Discount, Ending Balance	$ 615,169

NOTES PAYABLE (Details Narrativ

NOTES PAYABLE (Details Narrative) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Common Stock; Shares Issued	159,976,262	51,885,020
JSJ Investments, Inc.
Principal note amount	$ 50,000
Remaining amount of note	10,670
JSJ Investments, Inc.
Principal note amount	40,000
JSJ Investments, Inc.
Principal note amount	$ 32,623
LG Capital Funding, LLC
Common Stock; Shares Issued	37,759,200
Accrued interest	$ 334
Common stock issued for conversion of notes	3,250
Tangiers Investment Group, LLC
Common Stock; Shares Issued	56,016,667
Common stock issued for conversion of notes	3,681
GSM Fund Management, LLC
Common Stock; Shares Issued	6,334,375
Common stock issued for conversion of notes	317
Auctus Private Equity Fund, LLC.
Common Stock; Shares Issued	2,845,000
Accrued interest	$ 341

DERIVATIVE LIABILITIES - NOTE26

DERIVATIVE LIABILITIES - NOTE CONVERSION FEATURE (Details) - $ / shares	3 Months Ended	12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Stock price on measurement date	$ 0.0003	$ 0.0006
Expected volatility	277.00%	282.00%
Expected dividend yield	0.00%	0.00%
Minimum [Member]
Exercise Price	$ 0.00012	$ 0.00024
Discount rate	0.18%	0.14%
Maximum [Member]
Exercise Price	$ 0.0003	$ 0.0006
Discount rate	0.59%	0.65%
Various Dates in 2016 [Member]
Expected dividend yield	0.00%
Various Dates in 2016 [Member] | Minimum [Member]
Stock price on measurement date	$ 0.0002
Exercise Price	$ 0.00004
Discount rate	0.09%
Expected volatility	277.00%
Expected dividend yield	0.00%
Various Dates in 2016 [Member] | Maximum [Member]
Stock price on measurement date	$ 0.0006
Exercise Price	$ 0.0001
Discount rate	0.49%
Expected volatility	281.00%
Expected dividend yield	0.00%

DERIVATIVE LIABILITIES - NOTE27

DERIVATIVE LIABILITIES - NOTE CONVERSION FEATURE (Details 1)	3 Months Ended
	Mar. 31, 2016USD ($)
Derivative Liabilities - Note Conversion Feature Details 1
Fair value, Beginning Balance	$ 2,985,575
Reclassification to equity	(31,995)
Change in fair value of derivative liabilities	(186,963)
Fair value, Ending Balance	$ 2,766,617

DERIVATIVE LIABILITIES - NOTE28

DERIVATIVE LIABILITIES - NOTE CONVERSION FEATURE (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Derivative Liabilities - Note Conversion Feature Details Narrative
Unrealized gain (loss) on derivative instrument	$ 186,963	$ (145,376)

RELATED PARTY TRANSACTIONS (Det

RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	Mar. 31, 2016	Dec. 31, 2015	Mar. 31, 2015
Accounts payable - related parties	$ 2,776,592	$ 1,604,915
Jay Goodman [Member]
Accounts payable - related parties	103,500	$ 94,500
Elmside [Member]
Accounts payable - related parties	$ 55,991		$ 55,991

EQUITY (Details Narrative)

EQUITY (Details Narrative)	3 Months Ended
	Mar. 31, 2016USD ($)shares
Common Stock
Stock issued	5,136,000
Shares issued for common stock conversion	102,955,242
Notes payable | $	$ 7,248
Accrued interest | $	$ 675
Tarpon
Stock issued	4,101,000

CONCENTRATIONS (Details Narrati

CONCENTRATIONS (Details Narrative)	3 Months Ended
	Mar. 31, 2016USD ($)
Concentrations Details Narrative
Revenues from three customers	$ 1,296,131