ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION and RESULTS OF OPERATIONS.
Special Note Regarding Forward Looking Statements
In addition to historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We use words such as "believe," "expect," "anticipate," "project," "target," "plan," "optimistic," "intend," "aim," "will" or similar expressions which are intended to identify forward-looking statements. Such statements include, among others, those concerning market and industry segment growth and demand and acceptance of new and existing products; any projections of sales, earnings, revenue, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements regarding future economic conditions or performance; as well as all assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those identified in Item 1A "Risk Factors" in our annual report on Form 10-K for fiscal year ended March 31, 2016, as well as assumptions, which, if they were to ever materialize or prove incorrect, could cause the results of the Company to differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements made by penny stock issuers are excluded from the safe harbors in Section 27A of the Securities Act of 1933 and in Section 21E of the Securities Exchange Act of 1934.
Readers are urged to carefully review and consider the various disclosures made by us in this report and our other filings with the Security and Exchange Commission ("SEC"). These reports attempt to advise interested parties of the risks and factors that may affect our business, financial condition and results of operations and prospects. The forward-looking statements made in this report speak only as of the date hereof and we disclaim any obligation, except as required by law, to provide updates, revisions or amendments to any forward-looking statements to reflect changes in our expectations or future events.
Overview
WRIT Media Group, Inc. ("we", "us", "our", "WRIT", or the "Company") was incorporated as Writers' Group Film Corp. in Delaware on March 9, 2007 to produce films, television programs and similar entertainment programs for various media formats.
Front Row Networks ("FRN") was incorporated on July 27, 2010 in the State of Nevada. The Company is a content creation company which was launched to produce, acquire, license, and distribute music-related content in 3D and ultra-high definition (4K) for initial worldwide digital broadcast into digitally-enabled movie theaters. Through the distribution of music-related "alternative content," the Company intends to present live concerts, music documentaries, and other music-related content at affordable prices, to a massive fan base worldwide in a cost-effective manner. The Company intends to shift its focus from 3D to developing ultra-high definition (4K) content for distribution in the Americas and Asia. In some cases, Front Row Networks will also sell merchandising and other products, bolstered by both in-theater and in-App advertising, tailored around each Artist and/or event, to maximize potential merchandising and sponsorship revenues.
In February 2011, FRN completed a reverse acquisition transaction through a share exchange with WRIT, whereby WRIT acquired 100% of the issued and outstanding capital stock of FRN in exchange for 100,000 shares of the Common Stock of WRIT. As a result of the reverse acquisition, FRN became WRIT's wholly-owned subsidiary and the former FRN's shareholders became controlling stockholders of WRIT. The share exchange transaction with WRIT was treated as a reverse acquisition, with FRN as the accounting acquirer and WRIT as the acquired party.
Consequently, the assets and liabilities and the historical operations were reflected in the consolidated financial statements for periods prior to the Share Exchange Agreement were those of FRN and will be recorded at the historical cost basis. After the completion of the Share Exchange Agreement, the Company's consolidated financial statements included the assets and liabilities of both FRN and WRIT, the historical operations of FRN and the operations of WRIT from the closing date of the Share Exchange Agreement.
On July 7, 2011, we modified our February 2011 Share Exchange Agreement and agreed to assume $100,000 in new debt which is shown as a reduction of our Paid-In Capital.
While the core business of Front Row Networks remains the licensing, production, acquisition and distribution of music-related content and programming, the core business is dependent upon negotiating and financing projects with schedules that are solely determined by third parties, such as Artists and rights owners. In order to secure less cyclical entertainment product, the Company sought to license or purchase entertainment content that could be easily secured and distributed through the multiple distribution arrangements already established by the Company and via the rapidly growing marketplace represented by consumers of mobile, internet, and TV set-top devices. To reach this goal during the fiscal year, the Company set out to acquire exclusive branded content and entertainment programming, and achieved this goal through the acquisition of Amiga Games Inc.
On August 19, 2013, the Company completed an acquisition transaction through a share exchange with Amiga Games Inc., whereby WRIT acquired 100% of the issued and outstanding capital stock, assets, and trademarks of Amiga Games Inc. in exchange for 500,000 shares of the Common Stock of WRIT. As a result of the acquisition, Amiga Games Inc. became WRIT's wholly-owned subsidiary.
Amiga Games Inc. licenses classic pre-Windows computer game libraries and adapts and republishes the most popular titles for smartphones, modern game consoles, PCs, tablets, and other television streaming devices. WRIT also established a new company, Retro Infinity Inc., to publish and brand games that were not originally released for Amiga brand computers. The two companies tap into the growing "retro gaming" marketplace, building on the "Amiga", "Atari", and "MS-DOS" brands, delivering retro-gaming titles adapted for modern devices as well as merchandise featuring brands and characters from the games.
During the fiscal year, Amiga Games Inc. and Retro Infinity Inc. entered several marketing and distribution agreements, including those with Microsoft Corporation and Roku Inc. Both agreements include minimum guarantees, defined as advances against future sales. Additionally, the Retro Infinity Inc. licensed dozens of classic games for distribution via the Windows 8, Roku player, iOS (Apple), and Android platforms. Although it was the Company's strategic goal to distribute a broad range of video game titles on the Windows 8 and iOS platforms during the 4th quarter of 2014, lack of operating capital caused the Company to temporarily halt software development funding, which delayed the Company's overall gaming product release schedule. This temporary reduction in operating capital was due to mainly to regulatory delays encountered in structuring WRIT's equity-line financing, and the Company's difficulty in raising alternative investment capital, due to its sub-penny share price at the time.
On January 22, 2014, the Company changed the name of the corporation to WRIT Media Group, Inc., and authorized a 1 for 1,000 reverse split of the Company's issued and outstanding shares of Common Stock. The name change was authorized to encompass the Company's broadened activities, including additional business plans and models, and the acquisition and formation of new subsidiaries. The equity restructuring was authorized to achieve the following: (a) price per share -- the rollback will increase the price per share to above $0.01, sub-penny markets are getting harder to trade and next to impossible to finance; (b) funding -- with a sub penny share price the Company was unable to fund because of dilution, post rollback the share price should be well above $0.01 and allow management to close on numerous funding opportunities that have been presented; (c) larger potential audience -- with a higher share price the Company will have access to investors who do not trade sub penny stocks such as institutions and Europeans; (d) listing in Europe -- the Company will now be able to list its common shares for trading on a European Stock Exchange, as co-listings in Europe are not accepted with a sub penny share price; and (e) acquisitions -- the Company will be able to use common shares to acquire larger assets and other industry related companies.
On January 16, 2014 WRIT's Equity Line Financing ("ELF") agreement with Dutchess Opportunity Fund II, and its corresponding S1 registration statement, was declared effective by the SEC. The ELF agreement, executed in September 2013, allows but does not require WRIT to sell up to US$10,000,000 of common stock to Dutchess at a 5% discount to market price, during the 36 month term. Compared to the Company's convertible debt financing, ELFs provide a lower discount to market that minimize dilution while increasing operating capital. This additional financing source allowed the company to reduce debt and reduce the balance of the more expensive convertible notes that were outstanding during the last quarter of the fiscal year.
On February 4, 2014 the Company completed its administrative and legal work with the Depository Trust & Clearing Corporation ("DTCC") and the DTCC's long-standing "Administrative Chill" on clearing WRIT stock certificates was removed. DTCC resumed accepting deposits of the Company's common stock for book entry transfer services. As a result, shareholders with online brokerage accounts at firms such as Scottrade, ETRADE, TD Ameritrade and other full service brokerage firms are allowed to deposit new shares of WRIT's common stock in the electronic system that controls clearance and settlement. The reinstatement of the DTC depository services is an instrumental and enormous accomplishment for WRIT, which greatly reduced the costs and expenses associated with private equity investments in the Company.
In September 2014 the Company launched two online point of sale platforms; www.RetroInfinity.com and www.AmigaGamesInc.com to market its "retro" gaming titles directly to consumers. Both sales platforms initially offer only downloads for windows based computers. The online store launch was completed in conjunction with an initial marketing program which featured NASCAR, the RWR Retro Infinity NASCAR race team, and the "Drive to Championship Weekend" branding program. In December 2014 the Company intended to launch additional titles on additional mobile platforms, such as Windows phone, iOS, and Android platforms, so that the video game titles can be downloaded as Apps on various mobile devices, the Company experienced additional financing delays which interrupted software development and caused the Company to reschedule the anticipated release on mobile platforms into 2015. The online store launch generated an increase in consumer traffic to the Company's websites and created awareness in the Company's product, but generated minimal sales, most consumers were interested only in the mobile versions of the gaming titles, which were not yet available.
The websites are currently being modified to accept payment for crowdfunding transactions, and we launched the Retro Infinity/Amiga Games crowdfunding platform, supported by a social marketing campaign, in the 3rd quarter of 2015. The initial crowdfunding campaign was not successful, so the Company is seeking additional financing from strategic partners that will allow the Company to resume and complete software development, and commence product marketing activities.
On June 25, 2015, the Company authorized a 1 for 200 reverse split of the Company's issued and outstanding shares of Common Stock. The equity restructuring was authorized to achieve the following: (a) price per share -- the rollback will increase the price per share to above $0.01, sub-penny markets are getting harder to trade and next to impossible to finance; (b) funding -- with a sub penny share price the Company was unable to fund because of dilution, post rollback the share price should be well above $0.01 and allow management to close on numerous funding opportunities that have been presented; (c) larger potential audience -- with a higher share price the Company will have access to investors who do not trade sub penny stocks such as institutions and Europeans; (d) listing in Europe -- the Company will now be able to list its common shares for trading on a European Stock Exchange, as co-listings in Europe are not accepted with a sub penny share price; and (e) acquisitions -- the Company will be able to use common shares to acquire larger assets and other industry related companies.
On June 20, 2016 WRIT Media Group, Inc. acquired Pandora Venture Capital Corp, a Florida based company that develops digital currency, Blockchain technology, and digital currency trading software. The Company acquired Pandora Venture Capital Corp through the issuance of 14,000,000 restricted shares of its Common Stock to the shareholders of Pandora, in exchange for all issued and outstanding shares of Pandora, making Pandora a wholly-owned subsidiary of WRIT Media Group, Inc. Financial statements of Pandora Venture Capital Corp are not being included with this filing, but will be filed in our next 10-Q filing.
We believe WRIT is well positioned to benefit from the developing market and growth in digital currency trading platforms and products, and block chain technology applications, and intend to continue to look for opportunities to explore business relationships with entities that have the resources to offer financing, licensing, distribution and marketing of WRIT's product.
Financial Performance Highlights
The following summarizes certain key financial information for the fiscal year ended March 31, 2016 and for the fiscal year ended March 31, 2015:
|
·
|
Revenues
: Our revenues were $0 and $0 for the fiscal years ended March 31, 2016 and 2015.
|
|
·
|
Net loss
: Net loss was $1,402,141 and $2,203,576 for the fiscal years ended March 31, 2016 and 2015.
|
Results of Operations
The following table sets forth key components of our results of operations for the fiscal years ended March 31, 2016 and 2015.
|
|
|
For the Year
Ended
03/31/2016
|
|
|
For the Year
Ended
03/31/2015
|
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
Wages and benefits
|
|
$
|
300,000
|
|
|
$
|
258,447
|
|
|
Audit and accounting
|
|
|
49,000
|
|
|
|
57,485
|
|
|
Legal fee
|
|
|
31,520
|
|
|
|
38,436
|
|
|
Other general and administrative
|
|
|
328,759
|
|
|
|
1,641,013
|
|
|
Loss from operations
|
|
|
(709,279
|
)
|
|
|
(1,995,381
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(692,862
|
)
|
|
|
(208,195
|
)
|
|
Net loss
|
|
$
|
(1,402,141
|
)
|
|
$
|
(2,203,576
|
)
|
Fiscal Year Ended March 31, 2016 Compared to Fiscal Year Ended March 31, 2015
Revenues.
Revenues remained the same $0 for the fiscal years ended March 31, 2016 and March 31, 2015, the results are due to a decrease in content delivered to customers, and delays in product development.
Wages and benefits.
Wages and benefits expenses increased 16% to $300,000 for the fiscal year ended March 31, 2016 from $258,447 for the fiscal year ended March 31, 2015. The increase is mainly due to an increase in personnel costs during the year. The wages and benefits expenses for the fiscal year ended March 31, 2016 and 2015 include employee stock compensation in the amount of $147,623 and $60,334, respectively.
Audit and accounting.
Audit and accounting expenses decreased 14.8% to $49,000 for the fiscal year ended March 31, 2016, from $57,485 for the fiscal year ended March 31, 2015. The decrease in the audit and accounting expense is mainly related to financing and timing of other transactions for the Company.
Legal fees.
Legal Fees decreased 18% to $31,520 for the fiscal year ended March 31, 2016 from $38,436 for the fiscal year ended March 31, 2015. The decrease in legal fees was related to a decrease in legal expenses related to financing and other transactions for the Company.
Other general and administrative expenses
. Other general and administrative expenses decreased to $328,759 for the fiscal year ended March 31, 2016 from $1,641,013 for the fiscal year ended March 31, 2015. Those expenses consist primarily of company's decrease in business development, consulting fees and other expenses incurred in connection with general operations of Amiga Games Inc.
Loss from operations
. Our loss from operations was $709,279 for the fiscal year ended March 31, 2016 and $1,995,381 for the fiscal year ended March 31, 2015.
Interest expense
. We incurred $692,862 in interest expense for the fiscal year ended March 31, 2016, and $208,195 in interest expense for the fiscal year ended March 31, 2015. The increase in interest expense is mainly due to an increase in additional borrowings, extinguished debt, and debt discount amortization.
Net loss
. As a result of the foregoing factors, we generated a net loss of $1,402,141 and a net loss of $2,203,576 for the fiscal years ended March 31, 2016 and 2015, respectively.
Liquidity and Capital Resources
As reflected in the accompanying consolidated financial statements, the Company has accumulated deficits of $3,185,694 at March 31, 2016 that includes losses of $1,402,141 for the fiscal year ended March 31, 2016, and had accumulated deficits of $1,783,553 at March 31, 2015 that includes losses of $2,203,576 for the fiscal year ended March 31, 2015. The Company also had a working capital deficiency of $619,696 as of March 31, 2016 and $620,060 as of March 31, 2015. These factors raise substantial doubt about the ability of the Company to continue as a going concern. Although management is currently attempting to implement its business plan, and is seeking additional sources of equity or debt financing, there is no assurance these activities will be successful.
As of March 31, 2016 and March 31, 2015, we have $264 and $255 respectively in cash and cash equivalents. The following table provides detailed information about our net cash flow for all financial statement periods presented in this report. To date, we have financed our operations primarily through cash flows from operations, sale of restricted stock through private placements, and borrowings from third and related parties.
|
|
|
For the Year
Ended
3/31/2016
|
|
|
For the Year
Ended
03/31/2015
|
|
|
Net cash used in operating activities
|
|
$
|
(45,433
|
)
|
|
$
|
(345,616
|
)
|
|
Net cash used in investing activities
|
|
|
-
|
|
|
|
(191,230
|
)
|
|
Net cash provided by financing activities
|
|
|
45,442
|
|
|
|
511,291
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
9
|
|
|
|
(25,555
|
)
|
|
Cash and cash equivalents at beginning of the period
|
|
|
255
|
|
|
|
25,810
|
|
|
Cash and cash equivalents at end of the period
|
|
$
|
264
|
|
|
$
|
255
|
|
Operating activities
Cash used in operating activities of $45,433 for the fiscal year ended March 31, 2016 which reflected our net loss of $1,402,141, adjusted for $447,623 of stock based compensation to employees, consultants and other services, $484,511 of amortization of debt discount, $552 of depreciation, an increase in accounts payable of $110,365, and an increase in accrued expenses of $313,802. Additional uses of cash include an increase in prepaid expenses and other assets of $145.
Cash used in operating activities of $345,616 for the fiscal year ended March 31, 2015 which reflected our net loss of $2,203,576 adjusted for non-cash expenses, consisting primarily of $821,235 of impairment of intangible asset, $632,152 of stock based compensation to employees, consultants and other services, $552 of depreciation, and $177,119 of amortization of debt discount. Additional major sources of cash include an increase in accounts payable of $112,900, decrease in prepaid expenses and other assets of $5,292, and an increase in accrued expenses of $108,710.
Investing activities
The net cash used in investing activities is for the fiscal year ended March 31, 2016 was $0 and is primarily due to discontinuation of software development costs. During the fiscal year ended March 31, 2015 there was $191,230 net cash used by our investing activities, primarily due to funds invested in software development costs of $146,170 and cash paid for prior year software development costs of $45,060.
Financing activities
Net cash provided by financing activities of $45,442 and $511,291 for the fiscal years ended March 31, 2016 and March 31, 2015, respectively. During the fiscal year ended March 31, 2016 there were funds borrowed on short term notes payable of $3,000, proceeds from shares issued for cash of $26,500, and borrowing from related parties of $15,942. During the fiscal year ended March 31, 2015 there were funds borrowed on short term notes payable of $12,500, borrowing on convertible debt of $242,500, cash received from subscription receivable of $25,000, advances from related party of $9,510 and proceeds from shares issued for cash of $226,781 offset by payments of short term notes of $5,000.
Loan Commitments
Borrowings from Related Parties
During the year ended March 31, 2016, $15,942 was advanced by Eric Mitchell and the advance is due on demand with 0% interest.
Borrowings from Third Parties
Burnside Digital LLC
On July 22, 2015, the Company converted software development cost incurred on account of $67,024 from Burnside Digital LLC into a Note Payable. The maturity date of this note is December 22, 2015. This loan bears an interest rate of 18% per annum from the date of July 22, 2014. On December 22, 2015, the note was still outstanding and therefore in default. On February 22, 2016, Burnside Digital LLC assigned the note to DK International Investments Corp along with accrued default interest of $34,622 (see Note 4). The maturity date of this amended note is November 4, 2016. This loan bears an interest rate of 8% per annum. The note is convertible into common stock at a price of 45% multiplied by the lowest bid price for the Common Stock during the nine month trading day period ending on the latest complete trading day prior to the conversion date. Additionally, in no event shall the conversion price be less than $0.01. The Company evaluated the application of ASC 470-50 and ASC 470-60 and concluded the addition of a conversion feature constituted a debt extinguishment rather than a troubled debt restructuring. See more discussion about the new debt in Note 4. On February 22, 2016, the principal balance of the note plus interest was paid in its entirety and the note has been surrendered to the Company.
On August 24, 2015, the Company converted software development cost incurred on account of $75,520 from Burnside Digital LLC into a Note Payable. The maturity date of this note is December 24, 2015. This loan bears an interest rate of 18% per annum from the date of August 24, 2014. On December 24, 2015, the note was still outstanding and therefore in default. On February 19, 2016, Burnside Digital LLC assigned the note to DK International Investments Corp along with accrued default interest of $40,109 (see Note 4). The maturity date of this amended note is November 19, 2016. This loan bears an interest rate of 8% per annum. The note is convertible into common stock at a price of 45% multiplied by the lowest bid price for the Common Stock during the three month trading day period ending on the latest complete trading day prior to the conversion date. Additionally, in no event shall the conversion price be less than $0.01. The Company evaluated the application of ASC 470-50 and ASC 470-60 and concluded the addition of a conversion feature constituted a debt extinguishment rather than a troubled debt restructuring. See more discussion about the new debt in Note 4. On February 22, 2016, the principal balance of the note plus interest was paid in its entirety and the note has been surrendered to the Company.
DEVCAP Partners LLC
On August 4, 2015, the Company converted accounts payable of $112,500 from DEVCAP Partners LLC into a Note Payable. The maturity date of this note is December 20, 2015. This loan bears an interest rate of 12% per annum from the date of October 24, 2014 before default. Interest on overdue principal after default accrues at an annual rate of 33%. On December 20, 2015, the note was still outstanding and therefore in default. On February 22, 2016, DEVCAP Partners LLC assigned the note to DK International Investments Corp along with accrued default interest of $86,845 (see Note 4). The maturity date of this amended note is November 22, 2016. This loan bears an interest rate of 8% per annum. The note is convertible into common stock at a price of 55% multiplied by the lowest bid price for the Common Stock during the three month trading day period ending on the latest complete trading day prior to the conversion date. Additionally, in no event shall the conversion price be less than $0.01. The Company evaluated the application of ASC 470-50 and ASC 470-60 and concluded the addition of a conversion feature constituted a debt extinguishment rather than a troubled debt restructuring. See more discussion about the new debt in Note 4. On March 11, 2016, the principal balance of the note plus interest was paid in its entirety and the note has been surrendered to the Company.
Falmouth Street Holdings, LLC
On March 2, 2015, the Company borrowed $7,500 from Falmouth Street Holdings, LLC. The maturity date of this note is August 29, 2015 and this loan bears an interest rate of 12% per annum from the issuance date. The note is still outstanding as of March 31, 2016. As of today the debt is still outstanding and therefore is in default.
KBM Worldwide Inc.
On June 3, 2014, the Company borrowed $53,000 from KBM Worldwide Inc. The maturity date of this note is March 5, 2015. This loan bears an interest rate of 8% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. After 180 days following the date of the note, KBM Worldwide Inc. has the right to convert all or a portion of the remaining outstanding principal amount of this note into shares of the Company's Common Stock. The conversion price will be 55% multiplied by the lowest three trading prices for the Common Stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2015, KBM Worldwide Inc. converted debt principal of $5,735 into 8,193 common shares, bringing the note balance to $47,265. As of today the debt is still outstanding and therefore is in default.
On July 29, 2014, the Company borrowed a convertible promissory note of $32,500 from KBM Worldwide, Inc. The maturity date of this note is May 1, 2015. This loan bears an interest rate of 8% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. After 180 days following the date of the note, KBM Worldwide Inc. has the right to convert all or a portion of the remaining outstanding principal amount of this note into shares of the Company's Common Stock. The conversion price is 55% multiplied by the average of the lowest 3 trading day prices for the Common Stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date. On July 30, 2014, an amendment to the note defined a floor to the conversion price to be $.008 per share. As of March 31, 2015, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.
On September 15, 2014, the Company borrowed a convertible promissory note of $63,000 from KBM Worldwide, Inc. The maturity date of this note is June 17, 2015. This loan bears an interest rate of 8% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. After 180 days following the date of the note, KBM Worldwide Inc. has the right to convert all or a portion of the remaining outstanding principal amount of this note into shares of the Company's Common Stock. The conversion price is 55% multiplied by the average of the lowest 3 trading day prices for the Common Stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2015, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.
Magna Group LLC
On July 10, 2014, the Company borrowed a convertible promissory note of $22,000 from Hanover Holdings I, LLC. The maturity date of this note is July 10, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. An amount equal to $2,500 of the principal balance of the note was converted into 4,545 common shares on February 4, 2015. An amount equal to $3,000 of the principal balance of the note was converted into 8,021 common shares on April 1, 2015. An amount equal to $2,750 of the principal balance of the note was converted into 17,857 common shares on April 27, 2015, leaving a principal balance of $13,750 as of March 31, 2016. As of today the debt is still outstanding and therefore is in default.
On September 10, 2014, the Company borrowed a convertible promissory note of $33,000 from Magna Equities II, LLC. The maturity date of this note is September 10, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2016, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.
On October 28, 2014, the Company borrowed a convertible promissory note of $25,000 from Magna Equities II, LLC. The maturity date of this note is October 28, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2016, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.
On December 17, 2014, the Company borrowed a convertible promissory note of $14,000 from Magna Equities II, LLC. The maturity date of this note is December 17, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2016, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.
S. Karban
On June 9, 2015, the Company borrowed $3,300 from S.Karban and $3,000 was received with the remaining $300 recorded as debt discount. The maturity date of this note is June 22, 2015, and this loan bears an interest rate of 10% per annum from the issuance date. The note is still outstanding as of March 31, 2016. As of today the debt is still outstanding and therefore is in default. During the year ended March 31, 2016, $300 was recorded as amortization of debt discount.
Other Notes
Convertible debts were issued September 2009, bearing interest at a rate of 8% per annum, due in one year, and are convertible at $2.00 per share, and the total balance outstanding as of March 31, 2014 was $3,130. The note is in default. During the year ended March 31, 2015, debt principal of $2,470 and interest of $104 reclassified into note principal were converted into 6,427 common shares. As of March 31, 2016 and 2015, other convertible notes have a principal balance of $660.
Obligations under Material Contracts
Except with respect to the loan obligations disclosed above, we have no obligations to pay cash or deliver cash to any other party.
Inflation
Inflation and changing prices have not had a material effect on our business and we do not expect that inflation or changing prices will materially affect our business in the foreseeable future. However, our management will closely monitor price changes in our industry and continually maintain effective cost controls in operations.
Off Balance Sheet Arrangements
We do not have any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity or capital expenditures or capital resources that is material to an investor in our securities.
Seasonality
Our operating results and operating cash flows historically have not been subject to seasonal variations. This pattern may change, however, as a result of new market opportunities or new product introduction.
Critical Accounting Policies
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial conditions and results of operations and require management's difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management's current judgments. We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements:
|
·
|
Accounts Receivable:
Accounts receivable are recorded at the net invoice value and are not interest bearing. We consider receivables past due based on the contractual payment terms. We perform ongoing credit evaluations of our customers, and generally we do not require collateral on our accounts receivable. We estimate the need for allowances for potential credit losses based on historical collection activity and the facts and circumstances relevant to specific customers and we record a provision for uncollectible accounts when collection is uncertain. To date, we have not experienced significant credit related losses.
|
|
·
|
Revenue Recognition:
The Company follows revenue recognition in two industries, technology and film.
Revenue is measured at the fair value of the consideration received or receivable net of sales tax, trade discounts and customer returns.
Sale of Technology Gaming
Revenue from sale of technology gaming applications is recognized when the following conditions are satisfied:
· Persuasive evidence of an arrangement exists
· Delivery has occurred or services have been rendered
· The seller's price to the buyer is fixed or determinable
· Collectability is reasonably assured
Film Sales
Based on Revenue Recognition Requirement for Film Sales (ASC 926-605-25), we recognize film license revenues when all of the following conditions are met:
- Persuasive evidence of a sale or licensing arrangement with a customer exists
- The film is complete and, in accordance with the terms of the arrangement, has been delivered or is available for immediate and unconditional delivery
- The license period of the arrangement has begun and the customer can begin its exploitation, exhibition, or sale
- The arrangement fee is fixed or determinable
- Collection of the arrangement fee is reasonably assured
|
Recent Accounting Pronouncements
See Note 1. "Organization, Business Operations and Significant Accounting Policies" to our audited consolidated financial statements included elsewhere in this report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To The Board of Directors and Shareholders
WRIT Media Group, Inc.
Beverly Hills, California
We have audited the accompanying consolidated balance sheets of WRIT Media Group, Inc. and its wholly owned subsidiaries (collectively, the "Company") as of March 31, 2016 and 2015, the related consolidated statements of operations, cash flows and changes in shareholders' deficit for the years then ended. These consolidated financial statements are the responsibility of Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatements. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of WRIT Media Group, Inc. and its wholly owned subsidiaries as of March 31, 2016 and 2015, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has suffered losses from operations, which raises substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters are described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
MaloneBailey, LLP
www.malonebailey.com
Houston, Texas
August 15, 2016
|
WRIT Media Group, Inc.
|
|
Consolidated Balance Sheets
|
|
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Assets
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
264
|
|
|
$
|
255
|
|
|
Prepaid expense and other assets
|
|
|
615
|
|
|
|
470
|
|
|
Total current assets
|
|
|
879
|
|
|
|
725
|
|
|
|
|
|
|
|
|
|
|
|
|
Long Term Assets
|
|
|
|
|
|
|
|
|
|
Property, pland and equipment, net
|
|
|
560
|
|
|
|
1,112
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
1,439
|
|
|
$
|
1,837
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders' Deficit
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
126,550
|
|
|
$
|
198,349
|
|
|
Accounts payable, related party
|
|
|
-
|
|
|
|
112,500
|
|
|
Accrued liability
|
|
|
173,203
|
|
|
|
106,442
|
|
|
Convertible debts, net of unamortized discount of $0 and $103,836, respectively
|
|
|
229,175
|
|
|
|
131,089
|
|
|
Notes payable
|
|
|
10,800
|
|
|
|
7,500
|
|
|
Due to related parties
|
|
|
25,452
|
|
|
|
9,510
|
|
|
Deferred Revenue
|
|
|
55,395
|
|
|
|
55,395
|
|
|
Total current liabilities
|
|
|
620,575
|
|
|
|
620,785
|
|
|
Total Liabilities
|
|
|
620,575
|
|
|
|
620,785
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' Deficit
|
|
|
|
|
|
|
|
|
|
Preferred Stock:
|
|
|
|
|
|
|
|
|
|
Series A convertible preferred stock, $.00001 par, 130,000,000 shares authorized, 2,500 and 10,000 shares issued and outstanding, respectively
|
|
|
-
|
|
|
|
-
|
|
|
Series B convertible preferred stock, $.00001 par, 70,000,000 shares authorized, none issued and outstanding
|
|
|
-
|
|
|
|
-
|
|
|
Series C convertible preferred stock, $.00001 par, 20,000,000 shares authorized, none issued and outstanding
|
|
|
-
|
|
|
|
-
|
|
|
Common stock, $0.00001 par, 20,000,000,000 shares authorized, 16,810,994 and 194,378 shares issued and outstanding, respectively
|
|
|
168
|
|
|
|
2
|
|
|
Additional paid in capital
|
|
|
2,566,390
|
|
|
|
1,164,603
|
|
|
Accumulated deficit
|
|
|
(3,185,694
|
)
|
|
|
(1,783,553
|
)
|
|
Total shareholders' deficit
|
|
|
(619,136
|
)
|
|
|
(618,948
|
)
|
|
Total Liabilities and Shareholders' Deficit
|
|
$
|
1,439
|
|
|
$
|
1,837
|
|
The accompanying notes are an integral part of these consolidated financial statements.
|
WRIT Media Group, Inc.
|
|
Consolidated Statements of Operations
|
|
|
|
|
|
For The Years Ended March 31,
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Operating Costs and Expenses
|
|
|
|
|
|
|
|
Intangible asset impairment expense
|
|
$
|
-
|
|
|
$
|
821,235
|
|
|
General and administrative
|
|
|
709,279
|
|
|
|
1,174,146
|
|
|
Total operating expenses
|
|
|
709,279
|
|
|
|
1,995,381
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(709,279
|
)
|
|
|
(1,995,381
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Other expense
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(692,862
|
)
|
|
|
(208,195
|
)
|
|
Net loss
|
|
$
|
(1,402,141
|
)
|
|
$
|
(2,203,576
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.34
|
)
|
|
$
|
(16.99
|
)
|
|
Diluted
|
|
$
|
(0.34
|
)
|
|
$
|
(16.99
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
4,087,287
|
|
|
|
129,708
|
|
|
Diluted
|
|
|
4,087,287
|
|
|
|
129,708
|
|
The accompanying notes are an integral part of these consolidated financial statements.
For the Fiscal Years Ended March 31, 2016 and March 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
Total
|
|
|
|
|
Common Stock
|
|
|
Preferred Stock - Series A
|
|
|
Paid-in
|
|
|
Accumulated
|
|
|
Shareholders'
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Deficit
|
|
|
Balance at March 31, 2014
|
|
|
46,411
|
|
|
$
|
-
|
|
|
|
10,000
|
|
|
$
|
-
|
|
|
$
|
(66,947
|
)
|
|
$
|
420,023
|
|
|
$
|
353,076
|
|
|
Shares issued for convertible notes
|
|
|
35,172
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
83,190
|
|
|
|
|
|
|
|
83,191
|
|
|
Shares issued for cash
|
|
|
17,647
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
226,781
|
|
|
|
|
|
|
|
226,781
|
|
|
Shares issued for services
|
|
|
95,148
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
640,624
|
|
|
|
|
|
|
|
640,625
|
|
|
Discount on issuance of
convertible note payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
280,955
|
|
|
|
|
|
|
|
280,955
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,203,576
|
)
|
|
|
(2,203,576
|
)
|
|
Balance at March 31, 2015
|
|
|
194,378
|
|
|
$
|
2
|
|
|
|
10,000
|
|
|
$
|
-
|
|
|
$
|
1,164,603
|
|
|
$
|
(1,783,553
|
)
|
|
$
|
(618,948
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for convertible notes
|
|
|
6,109,019
|
|
|
|
61
|
|
|
|
|
|
|
|
|
|
|
|
425,138
|
|
|
|
|
|
|
|
425,199
|
|
|
Shares issued for cash
|
|
|
250,066
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
26,497
|
|
|
|
|
|
|
|
26,500
|
|
|
Shares issued for services, accrued compensation and accounts payable
|
|
|
1,450,821
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
569,865
|
|
|
|
|
|
|
|
569,879
|
|
|
Conversion of preferred stock to common stock
|
|
|
8,796,697
|
|
|
|
88
|
|
|
|
(7,500
|
)
|
|
|
|
|
|
|
(88
|
)
|
|
|
|
|
|
|
-
|
|
|
Discount on issuance of convertible note payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
380,375
|
|
|
|
|
|
|
|
380,375
|
|
|
Roundup issuance due to the reverse split
|
|
|
10,013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,402,141
|
)
|
|
|
(1,402,141
|
)
|
|
Balance at March 31, 2016
|
|
|
16,810,994
|
|
|
$
|
168
|
|
|
|
2,500
|
|
|
$
|
-
|
|
|
$
|
2,566,390
|
|
|
$
|
(3,185,694
|
)
|
|
$
|
(619,136
|
)
|
The accompanying notes are an integral part of these consolidated financial statements.
|
|
|
For The Year Ended March 31,
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Cash Flows From Operating Activities
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(1,402,141
|
)
|
|
$
|
(2,203,576
|
)
|
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
552
|
|
|
|
552
|
|
|
Shares issued for services
|
|
|
447,623
|
|
|
|
632,152
|
|
|
Amortization of debt discount
|
|
|
484,511
|
|
|
|
177,119
|
|
|
Impairment of intagible asset
|
|
|
-
|
|
|
|
821,235
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Prepaid expenses and other assets
|
|
|
(145
|
)
|
|
|
5,292
|
|
|
Accounts payable
|
|
|
110,365
|
|
|
|
400
|
|
|
Accounts payable, related party
|
|
|
-
|
|
|
|
112,500
|
|
|
Accrued liabilities
|
|
|
313,802
|
|
|
|
108,710
|
|
|
Net cash used in operating activities
|
|
|
(45,433
|
)
|
|
|
(345,616
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities
|
|
|
|
|
|
|
|
|
|
Cash paid for software development costs and license
|
|
|
-
|
|
|
|
(146,170
|
)
|
|
Cash paid for software development costs incurrred on account in prior year
|
|
|
-
|
|
|
|
(45,060
|
)
|
|
Net cash used in investing activities
|
|
|
-
|
|
|
|
(191,230
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities
|
|
|
|
|
|
|
|
|
|
Advances from related party, net
|
|
|
15,942
|
|
|
|
9,510
|
|
|
Cash received from subscription receivable
|
|
|
-
|
|
|
|
25,000
|
|
|
Proceeds from sale of stock
|
|
|
26,500
|
|
|
|
226,781
|
|
|
Borrowing on short term notes payable
|
|
|
3,000
|
|
|
|
12,500
|
|
|
Borrowing on convertible debt
|
|
|
-
|
|
|
|
242,500
|
|
|
Payment of short-term notes payable
|
|
|
-
|
|
|
|
(5,000
|
)
|
|
Net cash provided by financing activities
|
|
|
45,442
|
|
|
|
511,291
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
9
|
|
|
|
(25,555
|
)
|
|
Cash and cash equivalents, beginning of period
|
|
|
255
|
|
|
|
25,810
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
264
|
|
|
$
|
255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclsoure information:
|
|
|
|
|
|
|
|
|
|
Income taxes paid
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Interest paid
|
|
$
|
2,829
|
|
|
$
|
6,119
|
|
|
Non-cash financing activities:
|
|
|
|
|
|
|
|
|
|
Reclassification of account payable to debt
|
|
$
|
255,044
|
|
|
$
|
-
|
|
|
Common shares issued for convertible debt and accrued interest
|
|
$
|
425,199
|
|
|
$
|
83,191
|
|
|
Software development cost incurred on account
|
|
$
|
-
|
|
|
$
|
142,544
|
|
|
Accrued interest enrolled into debt
|
|
$
|
161,576
|
|
|
$
|
2,292
|
|
|
Common shares issued for accrued compensation
|
|
$
|
82,636
|
|
|
$
|
8,473
|
|
|
Discount on issuance of convertible note payable
|
|
$
|
380,375
|
|
|
$
|
280,955
|
|
|
Common shares issued for accounts payable
|
|
|
39,620
|
|
|
|
-
|
|
|
Conversion from Series A preferred stock to common stock
|
|
$
|
88
|
|
|
$
|
-
|
|
The accompanying notes are an integral part of these consolidated financial statements.
WRIT MEDIA GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – ORGANIZATION, BUSINESS OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
Organization and Business Operations
WRIT Media Group, Inc. ("we", "our", "WRIT" or the "Company") was incorporated in Delaware on March 9, 2007 to produce films, television programs and similar entertainment programs for various media formats. The Company has three wholly owned subsidiaries: Front Row Networks, Inc., Amiga Games, Inc., and Retro Infinity, Inc.
Front Row Networks, Inc. is a content creation company which produces, acquires and distributes live concerts in 3D for initial worldwide digital broadcast into digitally-enabled movie theaters, TV and mobile streaming providers.
On August 19, 2013, the Company acquired certain software through the purchase of 100% of Amiga Games Inc. in exchange for 500,000 shares. Amiga Games Inc. became WRIT's wholly-owned subsidiary.
Amiga Games Inc. licenses classic pre-Windows computer game libraries and adapts and republishes the most popular titles for smartphones, modern game consoles, PCs, tablets, and other television streaming devices.
WRIT also established a new company, Retro Infinity Inc., to publish and brand games that were not originally released for Amiga brand computers. The two companies tap into the growing "retro gaming" marketplace, building on the "Amiga", "Atari", and "MS-DOS" brands, delivering retro-gaming titles adapted for modern devices as well as merchandise featuring brands and characters from the games.
On January 22, 2014, the Company changed the name of the corporation to WRIT Media Group, Inc.
On June 20, 2016, WRIT Media Group, Inc. acquired Pandora Venture Capital Corp, a Florida based company that develops digital currency, Blockchain technology, and digital currency trading software. The Company acquired Pandora Venture Capital Corp through the issuance of 14,000,000 restricted shares of its Common Stock to the shareholders of Pandora, in exchange for all issued and outstanding shares of Pandora, making Pandora a wholly-owned subsidiary of WRIT Media Group, Inc.
Basis of Presentation and Consolidation
These consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America. The consolidated financial statements include the accounts of the Company and its subsidiaries, Front Row Networks, Inc., Amiga Games, Inc. and Retro Infinity Inc. All significant intercompany balances and transactions have been eliminated.
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 and disclosure of contingent assets and liabilities at the dates of the financial statements and the amount of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made. However, actual results could differ materially from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, demand deposits with banks and liquid investments with an original maturity of three months or less.
Accounts Receivable
Accounts receivable are recorded at the net invoice value and are not interest bearing. We consider receivables past due based on the contractual payment terms. We perform ongoing credit evaluations of our customers, and generally we do not require collateral on our accounts receivable. We estimate the need for allowances for potential credit losses based on historical collection activity and the facts and circumstances relevant to specific customers and we record a provision for uncollectible accounts when collection is uncertain. To date, we have not experienced any credit related losses.
Long Lived Assets
In accordance with ASC 360 "Property Plant and Equipment," the Company reviews the carrying value of intangibles subject to amortization and long-lived assets for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Recoverability of long-lived assets is measured by comparison of its carrying amount to the undiscounted cash flows that the asset or asset group is expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the property, if any, exceeds its fair market value.
Revenue Recognition
The Company follows revenue recognition in two industries, technology and film.
Revenue is measured at the fair value of the consideration received or receivable net of sales tax, trade discounts and customer returns.
Sale of Technology Gaming
Revenue from sale of technology gaming applications is recognized when the following conditions are satisfied:
|
|
·
|
Persuasive evidence of an arrangement exists
|
|
|
|
|
|
|
·
|
Delivery has occurred or services have been rendered
|
|
|
|
|
|
|
·
|
The seller's price to the buyer is fixed or determinable
|
|
|
|
|
|
|
·
|
Collectability is reasonably assured
|
During the year ended March 31, 2016 and 2015, there was no revenue recognized. A development fee from Roku Inc. was recognized as a cash advance of $55,395 was recorded as deferred revenue as of March 31, 2016 and 2015.
Film Sales
Based on Revenue Recognition Requirement for Film Sales (ASC 926-605-25), the Company recognizes film license revenues when all of the following conditions are met:
|
|
-
|
Persuasive evidence of a sale or licensing arrangement with a customer exists
|
|
|
|
|
|
|
-
|
The film is complete and, in accordance with the terms of the arrangement, has been delivered or is available for immediate and unconditional delivery
|
|
|
|
|
|
|
-
|
The license period of the arrangement has begun and the customer can begin its exploitation, exhibition, or sale
|
|
|
|
|
|
|
-
|
The arrangement fee is fixed or determinable
|
|
|
|
|
|
|
-
|
Collection of the arrangement fee is reasonably assured
|
Income Taxes
The Company accounts for income taxes in accordance with ASC 740, which requires an asset and liability approach for financial accounting and reporting for income taxes and allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain.
Software Development Costs
The Company accounts for software development costs in accordance with ASC 985-20, "Costs of Computer Software to be Sold, Leased, or Otherwise Marketed". Costs incurred prior to the establishment of technological feasibility are expensed as incurred as research and development costs. Costs incurred after establishing technological feasibility and before the product is released for sale to customers are capitalized.
Stock-based Compensation
Accounting Standards Codification ("ASC") 718, "Accounting for Stock-Based Compensation" established financial accounting and reporting standards for stock-based compensation plans. It defines a fair value based method of accounting for an employee stock option or similar equity instrument. The Company accounts for compensation cost for stock option plans and for share based payments to non-employees in accordance with ASC 718. Accordingly, employee share-based payment compensation is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the requisite service period. Additionally, share-based awards to non-employees are expensed over the period in which the related services are rendered at their fair value. The Company accounts for share based payments to non-employees in accordance with ASC 505-50 "Accounting for Equity Instruments Issued to Non-Employees for Acquiring, or in Conjunction with Selling, Goods or Services".
Embedded Conversion Feature
The Company has issued convertible instruments which contain embedded conversion features. The Company evaluates the embedded conversion feature within its convertible debt instruments under ASC 815-15 and ASC 815-40 to determine if the conversion feature meets the definition of a liability and therefore need to bifurcate the conversion feature and account for it as a separate derivative liability.
If the embedded conversion feature does not meet the definition of a liability, the Company evaluated the conversion feature under ASC 815-40 for a beneficial conversion feature at inception. The effective conversion price was then computed based on the allocation of the proceeds to the convertible debt to determine if a beneficial conversion feature exists. The effective conversion price was compared to the market price on the date of the original note and was deemed to be less than the market value of the Company's stock at the inception of the note. A beneficial conversion feature was recognized and gave rise to a debt discount that is amortized over the stated maturity of the convertible debt instrument or the earliest potential conversion date.
If the embedded conversion feature meets the definition of a liability, it requires bifurcation of the conversion feature from the debt and accounting for the conversion feature as a derivative contract liability with changes in fair value recorded in the Consolidated Statements of Operations.
Beneficial Conversion Features
The intrinsic value of a beneficial conversion feature inherent to a convertible note payable, which is not bifurcated and accounted for separately from the convertible note payable and may not be settled in cash upon conversion, is treated as a discount to the convertible note payable. This discount is amortized over the period from the date of issuance to the date the note is due using the effective interest method. If the note payable is retired prior to the end of its contractual term, the unamortized discount is expensed in the period of retirement to interest expense. In general, the beneficial conversion feature is measured by comparing the effective conversion price, after considering the relative fair value of detachable instruments included in the financing transaction, if any, to the fair value of the common shares at the commitment date to be received upon conversion.
Net Loss per Share
In accordance with ASC 260 "Earnings per Share," basic net loss per common share is computed by dividing net loss for the period by the weighted average number of common shares outstanding during the period. Diluted net income/(loss) per share is computed by dividing the net income/(loss) for the period by the weighted average number of common and common equivalent shares, such as stock options and warrants, outstanding during the period. Such common equivalent shares have not been included in the computation of net loss per share as their effect would be anti-dilutive.
Fair Value Measurements
As defined in ASC 820 "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 defined by ASC 820 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 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars.
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 has no financial instruments at March 31, 2016 and 2015 that are required to be fair valued on a recurring basis.
The Company considers the carrying values of cash and cash equivalents, prepaid expenses and other assets, and accounts payable and accrued liability to approximate the fair value for these accounts because of the short period of time since origination or the short period of time between origination of the instruments and their expected realization.
Related Parties
A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.
Reclassifications
Certain prior year amounts have been combined and reclassified to conform to the current year presentation.
Recent Accounting Pronouncements
We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.
NOTE 2 – GOING CONCERN
As reflected in the accompanying consolidated financial statements, the Company has accumulated deficits of $3,185,694 at March 31, 2016 that includes losses of $1,402,141 for the fiscal year ended March 31, 2016 and a working capital deficiency of $619,696. At March 31, 2015 the Company had accumulated deficits of $1,783,553 that includes losses of $2,203,576 for the fiscal year ended March 31, 2015 and a working capital deficiency of $620,060. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The consolidated financial statements have been prepared on a going concern basis and do not include any adjustments that might result from outcome of this uncertainty.
Although management is currently attempting to implement its business plan, and is seeking additional sources of equity or debt financing, there is no assurance these activities will be successful.
NOTE 3 – NOTES PAYABLE
Note payable consists of the following:
|
|
|
March 31,
2016
|
|
|
March 31,
2015
|
|
|
Note payable, net of debt discount of $0 and $0 respectively
|
|
$
|
10,800
|
|
|
$
|
7,500
|
|
FOR THE YEAR ENDED MARCH 31, 2016
Burnside Digital LLC
On July 22, 2015, the Company converted software development cost incurred on account of $67,024 from Burnside Digital LLC into a Note Payable. The maturity date of this note is December 22, 2015. This loan bears an interest rate of 18% per annum from the date of July 22, 2014. On December 22, 2015, the note was still outstanding and therefore in default. On February 22, 2016, Burnside Digital LLC assigned the note to DK International Investments Corp along with accrued default interest of $34,622 (see Note 4). The maturity date of this amended note is November 4, 2016. This loan bears an interest rate of 8% per annum. The note is convertible into common stock at a price of 45% multiplied by the lowest bid price for the Common Stock during the nine month trading day period ending on the latest complete trading day prior to the conversion date. Additionally, in no event shall the conversion price be less than $0.01. The Company evaluated the application of ASC 470-50 and ASC 470-60 and concluded the addition of a conversion feature constituted a debt extinguishment rather than a troubled debt restructuring. See more discussion about the new debt in Note 4. On February 22, 2016, the principal balance of the note plus interest was paid in its entirety and the note has been surrendered to the Company.
On August 24, 2015, the Company converted software development cost incurred on account of $75,520 from Burnside Digital LLC into a Note Payable. The maturity date of this note is December 24, 2015. This loan bears an interest rate of 18% per annum from the date of August 24, 2014. On December 24, 2015, the note was still outstanding and therefore in default. On February 19, 2016, Burnside Digital LLC assigned the note to DK International Investments Corp along with accrued default interest of $40,109 (see Note 4). The maturity date of this amended note is November 19, 2016. This loan bears an interest rate of 8% per annum. The note is convertible into common stock at a price of 45% multiplied by the lowest bid price for the Common Stock during the three month trading day period ending on the latest complete trading day prior to the conversion date. Additionally, in no event shall the conversion price be less than $0.01. The Company evaluated the application of ASC 470-50 and ASC 470-60 and concluded the addition of a conversion feature constituted a debt extinguishment rather than a troubled debt restructuring. See more discussion about the new debt in Note 4. On February 22, 2016, the principal balance of the note plus interest was paid in its entirety and the note has been surrendered to the Company.
DEVCAP Partners LLC
On August 4, 2015, the Company converted accounts payable of $112,500 from DEVCAP Partners LLC into a Note Payable. The maturity date of this note is December 20, 2015. This loan bears an interest rate of 12% per annum from the date of October 24, 2014 before default. Interest on overdue principal after default accrues at an annual rate of 33%. On December 20, 2015, the note was still outstanding and therefore in default. On February 22, 2016, DEVCAP Partners LLC assigned the note to DK International Investments Corp along with accrued default interest of $86,845 (see Note 4). The maturity date of this amended note is November 22, 2016. This loan bears an interest rate of 8% per annum. The note is convertible into common stock at a price of 55% multiplied by the lowest bid price for the Common Stock during the three month trading day period ending on the latest complete trading day prior to the conversion date. Additionally, in no event shall the conversion price be less than $0.01. The Company evaluated the application of ASC 470-50 and ASC 470-60 and concluded the addition of a conversion feature constituted a debt extinguishment rather than a troubled debt restructuring. See more discussion about the new debt in Note 4. On March 11, 2016, the principal balance of the note plus interest was paid in its entirety and the note has been surrendered to the Company.
Falmouth Street Holdings, LLC
On March 2, 2015, the Company borrowed $7,500 from Falmouth Street Holdings, LLC. The maturity date of this note is August 29, 2015 and this loan bears an interest rate of 12% per annum from the issuance date. The note is still outstanding as of March 31, 2016. As of today the debt is still outstanding and therefore is in default.
S. Karban
On June 9, 2015, the Company borrowed $3,300 from S.Karban and $3,000 was received with the remaining $300 recorded as debt discount. The maturity date of this note is June 22, 2015, and this loan bears an interest rate of 10% per annum from the issuance date. The note is still outstanding as of March 31, 2016. As of today the debt is still outstanding and therefore is in default. During the year ended March 31, 2016, $300 was recorded as amortization of debt discount.
FOR THE YEAR ENDED MARCH 31, 2015
Falmouth Street Holdings, LLC
On March 2, 2015, the Company borrowed $7,500 from Falmouth Street Holdings, LLC. The maturity date of this note is August 29, 2015 and this loan bears an interest rate of 12% per annum from the issuance date. The note is still outstanding as of March 31, 2015. As of today the debt is still outstanding and therefore is in default.
SCHU Mortgage & Capital, Inc.
On February 18, 2014, the Company borrowed $15,000 from SCHU Mortgage & Capital, Inc. The maturity date of this note is August 18, 2014 and this loan bears an interest rate of 8% per annum from the issuance date. On July 10, 2014, SCHU Mortgage & Capital, Inc. sold and assigned its $15,000 note to Magna Group LLC, along with accrued interest of $465. See discussion on the new Magna note in note 4.
SFH Capital LLC
On October 22, 2013, the Company borrowed $14,000 from SFH Capital LLC. The maturity date of this note was October 22, 2014 and this loan bears an interest rate of 12% per annum from the issuance date. On June 6, 2014 the Company entered into a debt modification agreement with the debt holder. The modified note was convertible into common stock at a price of $10.00, with an extend maturity date of January 6, 2015, and there were no other changes to the original terms of the promissory note. The principal amount of the modified note was $15,045 on June 6, 2014, with the accrued interest owed on the old debt included in the principal of the new debt.
On October 29, 2013, the Company borrowed $4,000 from SFH Capital LLC. The maturity date of this note was October 29, 2014 and this loan bears an interest rate of 8% per annum from the issuance date. On June 6, 2014 the Company entered into a debt modification agreement with the debt holder. The modified note was convertible into common stock at a price of $10.00, bears an extend maturity date of January 6, 2015, and there were no other changes to the original terms of the promissory note. The principal amount of the modified note was $4,193 on June 6, 2014, with the accrued interest owed on the old debt included in the principal of the new debt.
On December 11, 2013, the Company borrowed $12,500 from SFH Capital LLC. The maturity date of this note was December 11, 2014 and this loan bears an interest rate of 8% per annum from the issuance date. On June 6, 2014 the Company entered into a debt modification agreement with the debt holder. The modified note was convertible into common stock at a price of $10.00, bears an extend maturity date of January 6, 2015, and there were no other changes to the original terms of the promissory note. The principal amount of the modified note was $12,985 on June 6, 2014, with the accrued interest owed on the old debt included in the principal of the new debt.
See accounting treatment for the new SFH Capital LLC notes in note 4
Mr. J. Shaw
On April 1, 2014, the Company borrowed $5,000 from J. Shaw. The maturity date of this note is May 1, 2014, and this loan bears an interest rate of 0% per annum from the issuance date. On April 23, 2014, the principal balance of the note was paid in its entirety and the note has been surrendered to the Company.
NOTE 4 – CONVERTIBLE DEBT
|
Convertible debt outstanding, net of debt discount of $0, on March 31, 2014
|
|
$
|
26,707
|
|
|
Add: issuance of convertible debt
|
|
|
242,500
|
|
|
Add: reclassification from non-convertible debts to convertible debts
|
|
|
45,500
|
|
|
Add: reclassification from accrued interest to convertible debts
|
|
|
2,292
|
|
|
Less: debt discount originated from beneficial conversion feature
|
|
|
(280,955
|
)
|
|
Less: principal converted into common stock
|
|
|
(82,074
|
)
|
|
Add: amortization of debt discount
|
|
|
177,119
|
|
|
Convertible debt outstanding, net of debt discount of $103,836 on March 31, 2015
|
|
$
|
131,089
|
|
|
|
|
|
|
|
|
Add: reclassification from non-convertible debts to convertible debts
|
|
|
255,044
|
|
|
Add: reclassification from accrued interest to convertible debts
|
|
|
161,576
|
|
|
Less: debt discount originated from beneficial conversion feature
|
|
|
380,375
|
|
|
Less: principal converted into common stock
|
|
|
(422,370
|
)
|
|
Add: amortization of debt discount
|
|
|
484,211
|
|
|
Convertible debt outstanding, net of debt discount of $0 on March 31, 2016
|
|
$
|
229,175
|
|
During the year ended March 31, 2016, $422,370 of convertible debts with accrued interest of $2,829 was converted into 6,109,019 shares of common stock.
During the year ended March 31, 2015, $82,074 of convertible debts with accrued interest of $1,118 was converted into 35,172 shares of common stock.
FOR THE YEAR ENDED MARCH 31, 2016
Magna Group LLC/Hanover Holdings
On July 10, 2014, the Company borrowed a convertible promissory note of $22,000 from Hanover Holdings I, LLC. The maturity date of this note is July 10, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. An amount equal to $2,500 of the principal balance of the note was converted into 4,545 common shares on February 4, 2015, leaving a principal balance of $19,500 as of March 31, 2015. An amount equal to $3,000 of the principal balance of the note was converted into 8,021 common shares on April 1, 2015. An amount equal to $2,750 of the principal balance of the note was converted into 17,857 common shares on April 27, 2015, leaving a principal balance of $13,750 as of March 31, 2016. As of today the debt is still outstanding and therefore is in default.
On September 10, 2014, the Company borrowed a convertible promissory note of $33,000 from Magna Equities II, LLC. The maturity date of this note is September 10, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2016, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.
On October 28, 2014, the Company borrowed a convertible promissory note of $25,000 from Magna Equities II, LLC. The maturity date of this note is October 28, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2016, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.
On December 17, 2014, the Company borrowed a convertible promissory note of $14,000 from Magna Equities II, LLC. The maturity date of this note is December 17, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2016, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.
The Company evaluated the embedded conversion feature within the above Magna convertible notes payable under ASC 815-15 and ASC 81 -40 and determined embedded conversion feature does not meet the definition of a liability. Then the Company evaluated the conversion feature for a beneficial conversion feature at inception. The Company accounted for the intrinsic value of a Beneficial Conversion Feature inherent to the convertible notes payable and a total debt discount of $126,010 was recorded on the Magna notes. During the year ended March 31, 2016, debt discount of $41,615 was amortized, and the unamortized debt discount is $0 as of March 31, 2016.
KBM Worldwide Inc.
On June 3, 2014, the Company borrowed $53,000 from KBM Worldwide Inc. The maturity date of this note is March 5, 2015. This loan bears an interest rate of 8% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. After 180 days following the date of the note, KBM Worldwide Inc. has the right to convert all or a portion of the remaining outstanding principal amount of this note into shares of the Company's Common Stock. The conversion price will be 55% multiplied by the lowest three trading prices for the Common Stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2016, KBM Worldwide Inc. had converted debt principal of $5,735 into 8,193 common shares, bringing the note balance to $47,265. As of today the debt is still outstanding and therefore is in default.
On July 29, 2014, the Company borrowed a convertible promissory note of $32,500 from KBM Worldwide, Inc. The maturity date of this note is May 1, 2015. This loan bears an interest rate of 8% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. After 180 days following the date of the note, KBM Worldwide Inc. has the right to convert all or a portion of the remaining outstanding principal amount of this note into shares of the Company's Common Stock. The conversion price is 55% multiplied by the average of the lowest 3 trading day prices for the Common Stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date. On July 30, 2014, an amendment to the note defined a floor to the conversion price to be $.008 per share. As of March 31, 2016, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.
On September 15, 2014, the Company borrowed a convertible promissory note of $63,000 from KBM Worldwide, Inc. The maturity date of this note is June 17, 2015. This loan bears an interest rate of 8% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. After 180 days following the date of the note, KBM Worldwide Inc. has the right to convert all or a portion of the remaining outstanding principal amount of this note into shares of the Company's Common Stock. The conversion price is 55% multiplied by the average of the lowest 3 trading day prices for the Common Stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2016, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.
The Company evaluated the embedded conversion feature within the above KBM convertible notes payable under ASC 815-15 and ASC 81 -40 and determined embedded conversion feature does not meet the definition of a liability. Then the Company evaluated the conversion feature for a beneficial conversion feature at inception. The Company accounted for the intrinsic value of a Beneficial Conversion Feature inherent to the convertible notes payable and a total debt discount of $148,500 was recorded on the KBM notes. During the year ended March 31, 2016, debt discount of $62,221 was amortized, and the unamortized debt discount is $0 as of March 31, 2016.
DK International Investments Corp
On February 22, 2016, Burnside Digital LLC assigned the note to DK International Investments Corp along with accrued default interest of $34,622 (see Note 3). The maturity date of this amended note is November 4, 2016. This loan bears an interest rate of 8% per annum. The note is convertible into common stock at a price of 45% multiplied by the lowest bid price for the Common Stock during the nine month trading day period ending on the latest complete trading day prior to the conversion date. Additionally, in no event shall the conversion price be less than $0.01. On February 22, 2016, DK International Investments Corp. converted $101,646 of principal and $799 of interest into 1,138,278 common shares. This note has been converted in its entirety and has been surrendered to the Company.
On February 19, 2016, Burnside Digital LLC assigned the note to DK International Investments Corp along with accrued default interest of $40,109 (see Note 3). The maturity date of this amended note is November 19, 2016. This loan bears an interest rate of 8% per annum. The note is convertible into common stock at a price of 45% multiplied by the lowest bid price for the Common Stock during the three month trading day period ending on the latest complete trading day prior to the conversion date. Additionally, in no event shall the conversion price be less than $0.01. On February 22, 2016, DK International Investments Corp. converted $115,629 of principal and $179 of interest into 1,286,754 common shares. This note has been converted in its entirety and has been surrendered to the Company.
On February 22, 2016, DEVCAP Partners LLC assigned the note to DK International Investments Corp along with accrued default interest of $86,845 (see Note 3). The maturity date of this amended note is November 22, 2016. This loan bears an interest rate of 8% per annum. The note is convertible into common stock at a price of 55% multiplied by the lowest bid price for the Common Stock during the three month trading day period ending on the latest complete trading day prior to the conversion date. . On March 7, 2016, DK International Investments Corp. converted $75,000 of principal into 1,363,636 common shares. On March 9, 2016, DK International Investments Corp. converted $55,000 of principal into 1,000,000 common shares. On March 11, 2016, DK International Investments Corp. converted $69,345 of principal and $1,851 of interest into 1,294,473 common shares. This note has been converted in its entirety and has been surrendered to the Company.
The Company evaluated the application of ASC 470-50 and ASC 470-60 and concluded the addition of a conversion feature constituted a debt extinguishment rather than a troubled debt restructuring, with the old debt written off and the new debt initially recorded at fair value with a new effective interest rate. The Company evaluated the embedded conversion feature within the three modified DK International convertible notes payable under ASC 815-15 and ASC 815-40 and determined embedded conversion feature does not meet the definition of a liability. Then the Company evaluated the conversion feature for a beneficial conversion feature at inception. The Company accounted for the intrinsic value of a Beneficial Conversion Feature inherent to the convertible notes payable and a total debt discount of $380,375 was recorded on the DK International notes. During the year ended March 31, 2016, debt discount of $380,375 was amortized, and the unamortized debt discount is $0 as of March 31, 2016.
Other Convertible Notes
Convertible debts were issued September 2009, bearing interest at a rate of 8% per annum, due in one year, and are convertible at $2.00 per share, and the total balance outstanding as of March 31, 2015 was $660. The note is in default. As of March 31, 2016, other convertible notes have a principal balance of $660.
FOR THE YEAR ENDED MARCH 31, 2015
Magna Group LLC/Hanover Holdings
On March 17, 2014, Nancy Louise Jones assigned her $12,000 note to Magna Group LLC, along with accrued interest of $1,077. The maturity date of this amended note is March 17, 2015. This loan bears an interest rate of 12% per annum. The note is convertible into common stock at a price of 55% multiplied by the lowest volume weighted average price for the Common Stock during the five trading day period ending on the latest complete trading day prior to the conversion date. Additionally, in no event shall the conversion price be less than $0.008. An amount equal to $2,577 of the principal balance of the note was converted into 244 common shares on March 21, 2014. On April, 4 2014 and April 21, 2014, Magna Group LLC converted $10,500 of the convertible note dated March 17, 2014 into 1,215 common shares. This note has been converted in its entirety and has been surrendered to the Company.
On March 17, 2014, a convertible note was issued with Magna Group, LLC in the amount of $13,077
.
The notes bears interest of 12% per annum, and is due on March 17, 2015 and is convertible into common shares at a price of 55% multiplied by the lowest volume weighted average price for the Common Stock during the five trading day period ending on the latest complete trading day prior to the conversion date. Additionally, in no event shall the conversion price be less than $0.008. An amount equal to $3,500 of the principal balance of the note was converted into 1,383 common shares on September 15, 2014. On October 10, 2014 and October 22, 2014, Magna Group converted $6,500 of the convertible note into 3,921 common shares. On November 26, 2014, Magna Group converted $3,077 principal amount and $872.33 interest amount of the convertible note into 2,849 common shares. This note has been converted in its entirety and has been surrendered to the Company.
On July 10, 2014, SCHU Mortgage & Capital, Inc. sold and assigned its $15,000 note to Magna Group LLC, along with accrued interest of $465 (see Note 3). On that same date, the Company amended the related debt agreement with the note holder. The maturity date of this amended note is July 10, 2015. This loan bears an interest rate of 12% per annum. The note is convertible into common stock at a price of 55% multiplied by the lowest volume weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. On August 18, 2014 $5,465 of the principal balance was converted into 994 common shares. On August 26, 2014, $5,000 of the principal balance was converted into 975 common shares. On September 2, 2014, $5,000 of the principal balance plus interest of $155 was converted into 1,442 common shares. This note has been converted in its entirety and has been surrendered to the Company.
The Company evaluated the application of ASC 470-50 and ASC 470-60 and concluded the assignment constituted a debt extinguishment, with the old debt written off and the new debt initially recorded at fair value with a new effective interest rate.
On July 10, 2014, the Company borrowed a convertible promissory note of $22,000 from Hanover Holdings I, LLC. The maturity date of this note is July 10, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. An amount equal to $2,500 of the principal balance of the note was converted into 4,545 common shares on February 4, 2015, leaving a principal balance of $19,500 as of March 31, 2015. As of today the debt is still outstanding and therefore is in default.
On September 10, 2014, the Company borrowed a convertible promissory note of $33,000 from Magna Equities II, LLC. The maturity date of this note is September 10, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2015, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.
On October 28, 2014, the Company borrowed a convertible promissory note of $25,000 from Magna Equities II, LLC. The maturity date of this note is October 28, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2015, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.
On December 17, 2014, the Company borrowed a convertible promissory note of $14,000 from Magna Equities II, LLC. The maturity date of this note is December 17, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2015, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.
The Company evaluated the embedded conversion feature within the above Magna convertible notes payable under ASC 815-15 and ASC 81 -40 and determined embedded conversion feature does not meet the definition of a liability. Then the Company evaluated the conversion feature for a beneficial conversion feature at inception. The Company accounted for the intrinsic value of a Beneficial Conversion Feature inherent to the convertible notes payable and a total debt discount of $126,010 was recorded on the Magna notes. During the year ended March 31, 2015, debt discount of $84,395 was amortized, and the unamortized debt discount is $41,615 as of March 31, 2015.
KBM Worldwide Inc.
On June 3, 2014, the Company borrowed $53,000 from KBM Worldwide Inc. The maturity date of this note is March 5, 2015. This loan bears an interest rate of 8% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. After 180 days following the date of the note, KBM Worldwide Inc. has the right to convert all or a portion of the remaining outstanding principal amount of this note into shares of the Company's Common Stock. The conversion price will be 55% multiplied by the lowest three trading prices for the Common Stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2015, KBM Worldwide Inc. converted debt principal of $5,735 into 8,193 common shares, bringing the note balance to $47,265. As of today the debt is still outstanding and therefore is in default.
On July 29, 2014, the Company borrowed a convertible promissory note of $32,500 from KBM Worldwide, Inc. The maturity date of this note is May 1, 2015. This loan bears an interest rate of 8% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. After 180 days following the date of the note, KBM Worldwide Inc. has the right to convert all or a portion of the remaining outstanding principal amount of this note into shares of the Company's Common Stock. The conversion price is 55% multiplied by the average of the lowest 3 trading day prices for the Common Stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date. On July 30, 2014, an amendment to the note defined a floor to the conversion price to be $.008 per share. As of March 31, 2015, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.
On September 15, 2014, the Company borrowed a convertible promissory note of $63,000 from KBM Worldwide, Inc. The maturity date of this note is June 17, 2015. This loan bears an interest rate of 8% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. After 180 days following the date of the note, KBM Worldwide Inc. has the right to convert all or a portion of the remaining outstanding principal amount of this note into shares of the Company's Common Stock. The conversion price is 55% multiplied by the average of the lowest 3 trading day prices for the Common Stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2015, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.
The Company evaluated the embedded conversion feature within the above KBM convertible notes payable under ASC 815-15 and ASC 81 -40 and determined embedded conversion feature does not meet the definition of a liability. Then the Company evaluated the conversion feature for a beneficial conversion feature at inception. The Company accounted for the intrinsic value of a Beneficial Conversion Feature inherent to the convertible notes payable and a total debt discount of $148,500 was recorded on the KBM notes. During the year ended March 31, 2015, debt discount of $86,279 was amortized, and the unamortized debt discount is $62,221 as of March 31, 2015.
SFH Capital LLC
On October 22, 2013, the Company borrowed $14,000 from SFH Capital LLC. The maturity date of this note was October 22, 2014 and this loan bears an interest rate of 12% per annum from the issuance date. On June 6, 2014 the Company entered into a debt modification agreement with the debt holder. The modified note was convertible into common stock at a price of $10.00, with an extend maturity date of January 6, 2015, and there were no other changes to the original terms of the promissory note. The principal amount of the modified note was $15,045 and on June 6, 2014, it was converted into 1,504 common shares. The note was paid off in full and the note has been surrendered to the Company at March 31, 2015.
On October 29, 2013, the Company borrowed $4,000 from SFH Capital LLC. The maturity date of this note was October 29, 2014 and this loan bears an interest rate of 8% per annum from the issuance date. On June 6, 2014 the Company entered into a debt modification agreement with the debt holder. The modified note was convertible into common stock at a price of $10.00, bears an extend maturity date of January 6, 2015, and there were no other changes to the original terms of the promissory note. The principal amount of the modified note was $4,193 and on June 9, 2014, it was converted into 419 common shares. The note was paid off in full and the note has been surrendered to the Company at March 31, 2015.
On December 11, 2013, the Company borrowed $12,500 from SFH Capital LLC. The maturity date of this note was December 11, 2014 and this loan bears an interest rate of 8% per annum from the issuance date. On June 6, 2014 the Company entered into a debt modification agreement with the debt holder. The modified note was convertible into common stock at a price of $10.00, bears an extend maturity date of January 6, 2015, and there were no other changes to the original terms of the promissory note. The principal amount of the modified note was $12,985 and on June 10, 2014, SFH Capital LLC converted $10,000 of the convertible note into 1,000 common shares. On September 15, 2014, SFH Capital LLC converted $2,985 of principal balance plus $91 of interest of the convertible note into 305 common shares. The note was paid off in full and the note has been surrendered to the Company at March 31, 2015.
The Company evaluated the application of ASC 470-50 and ASC 470-60 and concluded the addition of a conversion feature constituted a debt extinguishment rather than a troubled debt restructuring, with the old debt written off and the new debt initially recorded at fair value with a new effective interest rate. The Company evaluated the embedded conversion feature within the three modified SFH convertible notes payable under ASC 815-15 and ASC 815-40 and determined embedded conversion feature does not meet the definition of a liability. Then the Company evaluated the conversion feature for a beneficial conversion feature at inception. The Company accounted for the intrinsic value of a Beneficial Conversion Feature inherent to the convertible notes payable and a debt discount of $3,009, $839, and $2,597 were recorded on each SFH note respectively. During the year ended March 31, 2015, debt discount of $3,009, $839, and $2,597 were fully amortized on the first, second and third SFH notes, respectively, since they were fully converted. The unamortized debt discount is $0 as of March 31, 2015
Other Convertible Notes
Convertible debts were issued September 2009, bearing interest at a rate of 8% per annum, due in one year, and are convertible at $2.00 per share, and the total balance outstanding as of March 31, 2014 was $3,130. The note is in default. During the year ended March 31, 2015, debt principal of $2,470 and interest of $104 reclassified into note principal were converted into 6,427 common shares. As of March 31, 2015, other convertible notes have a principal balance of $660.
NOTE 5 – PREFERRED STOCK
Each share of Series A preferred stock is convertible at any time into the number of common shares equal to four times the sum of all outstanding common and Series B and Series C preferred shares at the time of conversion divided by the number of Series A preferred shares. Series A shareholders may receive dividends as declared by the Board. The Company has 2,500 and 10,000 Series A preferred shares outstanding at March 31, 2016 and 2015.
On June 15, 2015, EAM Delaware LLC, a Delaware Limited Liability company controlled by Eric Mitchell, the current President and Chairman of WRIT Media Group, Inc., converted 2,500 Preferred Series A shares into 1,133,030 common shares.
On January 25, 2016, EAM Delaware LLC, a Delaware limited Liability Company controlled by Eric Mitchell, the current President and Chairman of WRIT Media Group, Inc., converted 5,000 Preferred Series A shares into 7,663,667 common shares.
Each share of Series B preferred stock is convertible into the number of common shares equal to the designated $2 initial price of the Series B preferred stock divided by one hundred times the par value of the common stock subject to adjustments as may be determined by the Board of Directors from time to time. Series B shareholders may receive dividends as declared by the Board. The Company has no Series B shares outstanding at March 31, 2016 and 2015.
Each share of Series C preferred stock is convertible at any time into 500 common shares. Series C holders may receive dividends as declared by the Board. The Company has no Series C shares outstanding at March 31, 2016 and 2015.
The Company evaluated the application of ASC 815-15 and ASC 815-40 for the embedded conversion feature of preferred stock listed above and concluded the embedded conversion option should be classified as equity.
NOTE 6 – EQUITY
On June 25, 2015, shareholders approved of a 1 for 200 reverse split of the Company's issued and outstanding common shares. The Company accounted for the reverse stock split retrospectively and is presented accordingly in the Company's financial statements as of March 31, 2016, and 2015.
For the Year Ended March 31, 2016:
Shares issued for convertible notes:
During the year ended March 31, 2016, $422,370 of convertible debts with accrued interest of $2,829 was converted into 6,109,019 shares of common stock. See Note 4.
Common Shares issued for cash
During the year ended March 31, 2016, the Company issued 250,066 common shares for cash totaling $26,500.
Common Shares issued for services and accounts payable
During the year ended March 31, 2016, the Company issued 579,017 shares to Eric Mitchell, the Company CEO and CFO, as compensation at their fair value of $194,548.
During the year ended March 31, 2016, the Company issued 771,028 shares to third party consultants as compensation at their fair value of $292,695, out of which $39,620 was included in prior year accounts payable.
Common Shares issued for accrued compensation
During the year ended March 31, 2016, the Company issued 100,776 shares to Eric Mitchell, the Company CEO and CFO, to settle accrued compensation of $82,636. The fair value of the shares was determined to be $82,636, resulting in no loss on settlement.
Common Shares issued for convertible Series A Preferred stock:
During the year ended March 31, 2016, EAM Delaware LLC, a Delaware limited Liability Company controlled by Eric Mitchell, the current President and Chairman of WRIT Media Group, Inc., converted 7,500 Preferred Series A shares into 8,796,697 common shares.
Warrants Issued
Under a subscription agreement dated March 18, 2014, the Company issued 3,125 restricted common shares to Irwin Zalcberg for cash totaling $50,000. Along with the subscription agreement, the Company issued warrants to purchase 3,125 shares of common stock. The warrants expire 2 years after issuance and have an exercise price of $24.00. The warrants do not entitle the holder to any voting rights or other rights as a shareholder of the Company. As of March 31, 2016, the warrants remain un-exercised and have been forfeited.
Under a subscription agreement dated April 21, 2014, the Company issued 16,667 restricted common shares to Irwin Zalcberg for cash totaling $200,000. Along with the subscription agreement, the Company issued warrants to purchase 20,833 shares of common stock. The warrants expire 2 years after issuance and have an exercise price of $50.00. The warrants do not entitle the holder to any voting rights or other rights as a shareholder of the Company. As of March 31, 2016, the warrants remain un-exercised.
The following table summarizes the Company's warrant activity for the year ended March 31, 2016:
|
|
|
Number of
Units
|
|
|
Weighted-Average Exercise Price
|
|
|
Weighted-Average Remaining Contractual Term (in years)
|
|
|
Intrinsic
value
|
|
|
Outstanding and exercisable at March 31, 2015
|
|
|
23,958
|
|
|
$
|
46.00
|
|
|
|
1.05
|
|
|
$
|
-
|
|
|
Issuance
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Exercises
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Forfeitures
|
|
|
3,125
|
|
|
|
24.00
|
|
|
|
-
|
|
|
|
-
|
|
|
Outstanding and exercisable at March 31, 2016
|
|
|
20,833
|
|
|
$
|
50.00
|
|
|
|
.06
|
|
|
$
|
-
|
|
For the Year Ended March 31, 2015:
Shares issued for convertible notes:
During the year ended March 31, 2015, $82,074 of convertible debts with accrued interest of $1,118 was converted into 35,172 shares of common stock. See Note 4.
Common Shares issued for cash
During the year ended March 31, 2015, the Company issued 17,647 common shares for cash totaling $226,781.
Common Shares issued for services
During the year ended March 31, 2015, the Company issued 14,007 shares to Eric Mitchell, the Company CEO and CFO, as compensation at their fair value of $51,861.
During the year ended March 31, 2015, the Company issued 80,294 shares to third party consultants as compensation at their fair value of $580,291.
Common Shares issued for accrued compensation
During the year ended March 31, 2015, the Company issued 847 shares to Eric Mitchell, the Company CEO and CFO, to settle accrued compensation of $8,473. The fair value of the shares was determined to be $8,473, resulting in no loss on settlement.
Subscription receivable
During the year ended March 31, 2015, the Company received $25,000 for subscription receivable whereas the shares were issue during the year ended March 31, 2014.
Warrants Issued
Under a subscription agreement dated March 18, 2014, the Company issued 3,125 restricted common shares to Irwin Zalcberg for cash totaling $50,000. Along with the subscription agreement, the Company issued warrants to purchase 3,125 shares of common stock. The warrants expire 2 years after issuance and have an exercise price of $24.00. The warrants do not entitle the holder to any voting rights or other rights as a shareholder of the Company. The warrants remain un-exercised.
Under a subscription agreement dated April 21, 2014, the Company issued 16,667 restricted common shares to Irwin Zalcberg for cash totaling $200,000. Along with the subscription agreement, the Company issued warrants to purchase 20,833 shares of common stock. The warrants expire 2 years after issuance and have an exercise price of $50.00. The warrants do not entitle the holder to any voting rights or other rights as a shareholder of the Company. The warrants remain un-exercised.
The following table summarizes the Company's warrant activity for the year ended March 31, 2015:
|
|
|
Number of
Units
|
|
|
Weighted-Average Exercise Price
|
|
|
Weighted-Average Remaining Contractual Term (in years)
|
|
|
Intrinsic
value
|
|
|
Outstanding and exercisable at March 31, 2014
|
|
|
3,125
|
|
|
$
|
24.00
|
|
|
|
0.97
|
|
|
$
|
-
|
|
|
Issuance
|
|
|
20,833
|
|
|
|
50.00
|
|
|
|
1.06
|
|
|
|
-
|
|
|
Exercises
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Forfeitures
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Outstanding and exercisable at March 31, 2015
|
|
|
23,958
|
|
|
$
|
46.00
|
|
|
|
1.05
|
|
|
$
|
-
|
|
NOTE 7 - ASSETS ACQUISITION AND INTANGIBLE ASSETS
On August 19, 2013, the Company issued 2,500 common shares to acquire software from Amiga Games, Inc. Amiga Games, Inc. licenses classic video game libraries and intends to resurrect classic game titles by giving them new life on today's gaming platforms such as smart phones, PCs, modern game consoles, and tablets. The 2,500 shares were valued using the $160.00 per share closing price on the acquisition date for total purchase price consideration of $400,000.
In addition, during the year ended March 31, 2015 and March 31, 2014, the Company incurred another $263,439 and $132,521 respectively, on software development cost to upgrade the acquired software, and $25,275 for licenses. As of March 31, 2015 total cash paid for software of $191,230 included $45,060 for prior year software costs and $146,170 for current year software costs. As of March 31, 2015, $142,544 of software development costs were incurred on account and recorded in accounts payable.
The following table summarizes the composition of intangible assets as of March 31, 2015.
|
|
Total purchase price of intangible assets as of March 31, 2014
|
|
$
|
400,000
|
|
|
|
|
|
|
|
|
Software development capitalized costs as of March 31, 2014
|
|
|
132,521
|
|
|
|
|
|
|
|
|
Software development capitalized costs as of March 31, 2015
|
|
|
263,439
|
|
|
|
|
|
|
|
|
Licenses
|
|
|
25,275
|
|
|
|
|
|
|
|
|
Total Intangible Assets
|
|
$
|
821,235
|
|
During the year ended March 31, 2015, the Company incurred an impairment of Intangible Assets of $821,235 due to the uncertainty on when the assets can generate revenue.
The following table summarizes the composition of intangible assets as of March 31, 2015.
|
|
Total of intangible assets
|
|
$
|
821,235
|
|
|
|
|
|
|
|
|
Software Asset impairment as of March 31, 2015
|
|
|
(821,235
|
)
|
|
|
|
|
|
|
|
Total Intangible Assets
|
|
$
|
-
|
|
NOTE 8 – CONCENTRATION
For the fiscal year ended March 31, 2016, 100% of the Company's deferred revenue is generated from gaming applications development with two customers, Microsoft Corporation and Roku Inc.
NOTE 9 – RELATED PARTY BALANCES AND TRANSACTIONS
For the Year Ended March 31, 2016:
During the year ended March 31, 2016, the Company incurred $300,000 compensation expense for Eric Mitchell, the Company CEO and CFO. Out of the $300,000 compensation expense, $0 was paid in cash; $194,548 was paid by issuance of common stock while the remaining $105,452 was still not paid. During the year ended March 31, 2016, the Company also issued 100,776 shares to Eric Mitchell, by the Company to settle accrued compensation of $82,636 from prior year. As of March 31, 2016, the accrued compensation owed to Eric Mitchell, is $105,452 (presented as part of accrued liability balance on the accompanying consolidated balance sheets).
During the year ended March 31, 2016, $15,942 was advanced to the Company by Eric Mitchell and the advance is due on demand with 0% interest. As of March 31, 2016, in total $25,452 advances were owed to him.
During the year ended March 31, 2016, DEVCAP Partners owned less than 10% of the Company's issued and outstanding common shares, and is no longer a related party.
For the Year Ended March 31, 2015:
During the year ended March 31, 2015, the Company incurred $270,097 compensation expense for Eric Mitchell, the Company CEO and CFO. Out of the $270,097 compensation expense, $135,600 was paid in cash; $51,861 was paid by issuance of common stock while the remaining $82,636 was still not paid. During the year ended March 31, 2015, the Company also issued 847 shares to Eric Mitchell, the Company to settle accrued compensation of $8,473 from prior year. As of March 31, 2015, the accrued compensation owed to Eric Mitchell, is $82,636 (presented as part of accrued liability balance on the accompanying consolidated balance sheets).
During the year ended March 31, 2015, $9,510 was advanced by Eric Mitchell and the advance is due on demand with 0% interest.
During the year ended March 31, 2015, the Company engaged DEVCAP Partners LLC for marketing and branding services and incurred a total expense of $611,250. Out of $611,250, $498,750 was paid by issuance of 65,625 shares of common stock and the remaining $112,500 was still not paid as of March 31, 2015. Due to the stock issuance for services provided, DEVCAP Partners LLC became majority shareholder, owning more than 10% the Company's issued and outstanding common shares. As of March 31, 2015, the accounts payable balance owed to DEVCAP Partners LLC is $112,500.
NOTE 10 – INCOME TAXES
Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has a net loss of $1,402,141 as of March 31, 2016 and a net loss of $2,203,576 as of March 31, 2015. The following table shows the net deferred tax benefit:
|
|
|
March 31,
2016
|
|
|
March 31,
2015
|
|
|
Deferred Tax Benefit
|
|
$
|
566,776
|
|
|
$
|
348,049
|
|
|
Allowance
|
|
|
(566,776
|
)
|
|
|
(348,049
|
)
|
|
Net Deferred Tax Benefit
|
|
$
|
-
|
|
|
$
|
-
|
|
The tax asset benefits for the net operating losses carried forward for future years are $1,619,000 and $994,000 respectively, for the years ended March 31, 2016 and March 31, 2015, respectively.
Pursuant to ASC 740, the Company is required to compute tax asset benefits for net operating losses carried forward. Potential benefit of net operating losses has not been recognized in these financial statements because the Company cannot be assured it is more likely-than-not it will utilize the net operating losses carried forward in future years which will start to expire in the year of 2031.
Tax returns for the years since 2013 are still open; the provision for unpaid federal income taxes reflected in the balance sheet is adequate to cover any additional assessments resulting from examinations already made or from those to be made by the Service.
NOTE 11 – SUBSEQUENT EVENTS
On April 5, 2016 the Company entered into a debt modification agreement with debt holder S Karban. The modified note is convertible into common stock at a price of $0.10, bears an extend maturity date of October 14, 2016, and an interest rate of 8% per annum. The principal amount of the modified note is $4,475 which includes the original principal balance of $3,300 plus accrued interest of $1,175, and on April 5, 2016, it was converted into 44,750 common shares.
This note has been converted in its entirety and has been surrendered to the Company.
On April 18, 2016, the Company issued 27,966 common shares for cash totaling $2,517.
On June 20, 2016, the Company issued 14,000,000 common shares to acquire the assets of Pandora Venture Capital Corp. Pandora has developed business solutions for digital currency, Blockchain technology, and digital currency trading. Pandora's CrypStock.com is an online platform which allows investors to trade digital currencies similar to a stock exchange. Pandora's Pelecoin digital currency is a product which utilizes unique "value event" emission protocol and can be utilized with trade exchanges, loyalty rewards and a payment support platform. Pandora is also developing an enterprise Blockchain platform that enables institutions to design, deploy, and operate financial networks that can power assets in various markets. The 14,000,000 shares were valued using the $0.34 per share closing price on the acquisition date for total purchase price consideration of $4,760,000.
On June 21, 2016 the Board of Directors of WRIT Media Group, Inc. appointed Boris Nayflish as an independent director to serve on the Board. The appointment was effective as of June 20, 2016. The Board was not required to increase its size due to the existence of vacancies on the Board at the time of appointment. The Board does not expect at this time that Mr. Nayflish will receive any cash or stock compensation as director.
On June 22, 2016, the Company borrowed $5,000 on a note payable with 8% interest rate and maturity date of June 22, 2017.
On July 20, 2016, the Company issued 234,000 common shares for cash totaling $23,400.
On August 4, 2016, the Company borrowed $50,000 from related party EAM Delaware LLC on a note payable with 12% interest rate and maturity date of August 5, 2017.
