Notes to Condensed Consolidated Financial Statements
For the period ended February 28, 2017
(Unaudited)
NOTE 1: NATURE OF OPERATIONS AND PRINCIPLES OF CONSOLIDATION
EYE ON MEDIA NETWORK INC. (“EYE” or the “Company”) was incorporated in Florida on August 2, 2013, with an objective to acquire, or merge with, an operating business. On January 22, 2014 the Company acquired an operating company, Eye on South Florida in a reverse merger.
Eye on South Florida, Inc. (EOSF), a corporation, was chartered in the State of Florida on January 18, 2013 as a media organization for the purpose of providing television services as an independent producer and distributor of television programming locally and nationally. The programming is based on content that is produced and filmed in South Florida, on subjects that are relevant to the South Florida area.
As of January 22, 2014, the Company is in the business of providing television services to areas around the state and the country.
These consolidated conensed financial statements include the activity of Eye on South Florida from inception (January 18, 2013) and the activity of Eye on Media Network as of January 22, 2014, the date of the reverse merger. The balance sheet as of February 28, 2017 and August 31, 2016 contains the combined accounts both companies.
All significant intercompany balances and transactions have been elimminated in consolidation.
NOTE 2
: GOING CONCERN
The Company’s consolidated financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating cost and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced, to cease operations.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan to obtain such resources for the Company include, obtaining capital from management and significant stockholders sufficient to meet its minimal operating expenses. However, management cannot provide any assurance that the Company will be successful in accomplishing any of its plans.
There is no assurance that the Company will be able to obtain sufficient additional funds when needed or that such funds, if available will be obtainable on terms satisfactory to the Company. In addition, profitability will ultimately depend upon the level of revenues received from business operations. However, there is no assurance that the Company will attain profitability. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
EYE ON MEDIA NETWORK INC.
Notes to Condensed Consolidated Financial Statements
For the period ended February 28, 2017
(Unaudited)
NOTE
3: SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
Unaudited Interim Financial Statements
The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, the financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The interim financial statements should be read in conjunction with the annual financial statements included in the Form 10K as of August 31, 2016 and filed with the Securities and Exchange Commission on November 14, 2016.
In the opinion of management, all adjustments consisting of normal recurring entries necessary for a fair statement of the periods presented for: (a) the financial position; (b) the result of operations; and (c) cash flows, have been made in order to make the financial statements presented not misleading. The results of operations for such interim periods are not necessarily indicative of operations for a full year.
Basis of Presentation and Use of Estimates
The Company prepares its consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP"), which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Fiscal Year End
The Company elected August 31 as its fiscal year ending date.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. Cash and cash equivalents totaled $2,706 at February 28, 2017 and $2,071 at August 31, 2016.
Credit risk associated with cash deposits are insured under FDIC up to $250,000 per depositor, per FDIC insured bank, per ownership category. At such time, as the Company’s cash deposits exceed FDIC limits, the Company will reassess their credit risk.
Cash Flows Reporting
The Company follows ASC 230, Statement of Cash Flows, for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by ASC 230, Statement of Cash Flows, to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments
Financial Instruments
The Company’s balance sheet includes certain financial instruments, including cash and accounts payable. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization.
ASC 820,
Fair Value Measurements and Disclosures
, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
EYE ON MEDIA NETWORK INC.
Notes to Condensed Consolidated Financial Statements
For the period ended February 28, 2017
(Unaudited)
|
Level 1
|
Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
|
|
|
|
|
Level 2
|
Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
|
|
|
|
|
Level 3
|
Inputs that are both significant to the fair value measurement and unobservable.
|
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of February 28, 2017. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments.
Revenue Recognition
The Company recognizes revenue when it is realized or realizable and earned.
The Company considers revenue realized or realizable and earned when all of the following criteria are met:
|
o
|
persuasive evidence of an arrangement exists
|
|
|
|
|
o
|
the product has been shipped or the services have been rendered to the customer
|
|
|
|
|
o
|
the sales price is fixed or determinable
|
|
|
|
|
o
|
collectability is reasonably assured.
|
The Company generates revenue through four processes: (1) Media Production, (2) Commercial Production, Distribution and (3) Advertising Sales and Distribution (4) Live Broadcasting of Events.
|
·
|
Revenue for media production of original content. The company recognizes a sale when the production is completed and ready for distribution. The burden of distribution and risk of loss has passed to the customer.
|
|
|
|
|
·
|
Revenue for production of television grade HD Commercials. Revenue is recognized when the services have been performed and passed on to the customer.
|
|
|
|
|
·
|
Revenue for distribution of commercials and content service fees is recognized ratably over the term of the advertising agreement.
|
|
|
|
|
·
|
Revenue for live broadcasting of original content. The company recognizes a sale when the live broadcast / production is contracted and completed. The burden of distribution and risk of loss has passed to the customer.
|
Property and Equipment
Property and equipment is stated at cost. Depreciation is computed by the straight-line method over estimated useful lives.
Long-lived assets such as property, equipment and identifiable intangibles are reviewed for impairment at least annually or whenever facts and circumstances indicate that the carrying value may not be recoverable. When required, impairment losses on assets to be held and used are recognized based on the fair value of the asset. The fair value is determined based on estimates of future cash flows, market value of similar assets, if available, or independent appraisals, if required. If the carrying amount of the long-lived asset is not recoverable, an impairment loss is recognized for the difference between the carrying amount and fair value of the asset. The Company recognized impairment losses of $335,668 and $0 for the periods ending February 28, 2017 and August 31, 2016, respectively.
EYE ON MEDIA NETWORK INC.
Notes to Condensed Consolidated Financial Statements
For the period ended February 28, 2017
(Unaudited)
Deferred Income Taxes and Valuation Allowance
The Company accounts for income taxes under ASC 740,
Income Taxes
. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. No deferred tax assets or liabilities were recognized as of February 28, 2017.
Net Income (Loss) Per Common Share
Net income (loss) per share is calculated in accordance with ASC 260, “Earnings Per Share.” The weighted-average number of common shares outstanding during each period is used to compute basic earning or loss per share. Diluted earnings or loss per share is computed using the weighted average number of shares and diluted potential common shares outstanding. Dilutive potential common shares are additional common shares assumed to be exercised.
Basic net income (loss) per common share is based on the weighted average number of shares of common stock outstanding at February 28, 2017. At February 28, 2017, there were 50,000,000 of preferred convertible shares that were not included because they would be anti-dilutive.
Share-Based Expense
ASC 718,
Compensation – Stock Compensation
, prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).
The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50,
Equity – Based Payments to Non-Employees.
Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable:(a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.
Share-based expense for the six months ended February 28, 2017 and 2016 was $0 and $311,000 respectively.
Recent Accounting Pronouncements
From time to time, new accounting pronouncements are issued that we adopt as of the specified effective date. We believe that the impact of recently issued standards that are not yet effective may have an impact on our results of operations and financial statements.
ASU Update 2014-09
Revenue from Contracts with Customers
(Topic 606) issued May 28, 2014 by FASB and IASB converged guidance on recognizing revenue in contracts with customers on an effective date after December 31, 2017 will be evaluated as to impact and implemented accordingly.
ASU Update 2014-15
Presentation of Financial Statements – Going Concern
(Sub Topic 205-40) issued August 27, 2014 by FASB defines management’s responsibility to evaluate whether there is a substantial doubt about an organization’s ability to continue as a going concern. The additional disclosure required is effective after December 31, 2016 and will be evaluated as to impact and implemented accordingly.
EYE ON MEDIA NETWORK INC.
Notes to Condensed Consolidated Financial Statements
For the period ended February 28, 2017
(Unaudited)
NOTE
4:
PROPERTY, PLANT AND EQUIPMENT
The Company has capitalized costs for property, plant and equipment as follows:
|
|
February 28,
2017
|
|
|
August 31,
2016
|
|
Production equipment
|
|
$
|
1,715,480
|
|
|
$
|
1,715,480
|
|
Office furniture and equipment
|
|
|
7,899
|
|
|
|
7,899
|
|
Leasehold improvements
|
|
|
34,321
|
|
|
|
34,321
|
|
Vehicles
|
|
|
248,995
|
|
|
|
324,104
|
|
|
|
|
2,006,695
|
|
|
|
2,081,804
|
|
Accumulated depreciation
|
|
|
1,512,760
|
|
|
|
1,090,118
|
|
|
|
$
|
493,935
|
|
|
$
|
991,686
|
|
Depreciation for the six months ended February 28, 2017 and 2016 was $162,083, and $176,803, respectively. Depreciation for the three months ended February 28, 2017 and 2016 was $84,797 and $92,006 respectively.
Impairment of long-lived assets
The Company had tested the four asset groups and determined that impairment indicators were present for the production equipment group, specifically for software, server and vehicle components. As a result, software, server and vehicle were written down to their estimated fair value of $241,656, $97,758 and $55,301, respectively; resulting in an impairment charge of $335,668 for the period ending February 28, 2017.
NOTE
5: ACCOUNTS PAYABLE
At February 28, 2017 and August 31, 2016, accounts payable was $10,584 and $6,625, respectively.
NOTE
6:
EQUITY
Preferred Stock
The Company has been authorized to issue 500,000,000 shares of $.001 par value Preferred Stock. The Board of Directors is expressly vested with the authority to divide any or all of the Preferred Stock into series and to fix and determine the relative rights and preferences of the shares of each series so established, within certain guidelines established in the Articles of Incorporation. As of February 28, 2017 and August 31, 2016 there are 50,000,000 and 50,000,000 shares of Series “A” Convertible Preferred Stock issued and outstanding, respectively.
EYE ON MEDIA NETWORK INC.
Notes to Condensed Consolidated Financial Statements
For the period ended February 28, 2017
(Unaudited)
Common Stock
The Company has been authorized to issue 750,000,000 shares of common stock, $.001 par value. Each share of issued and outstanding common stock shall entitle the holder thereof to fully participate in all shareholder meetings, to cast one vote on each matter with respect to which shareholders have the right to vote, and to share ratably in all dividends and other distributions declared and paid with respect to common stock, as well as in the net assets of the corporation upon liquidation or dissolution.
On September 3, 2015, the Company sold 10,000 shares of common stock to a non-related party in exchange for cash proceeds of $5,000. The shares were issued at $0.50 per share.
On September 18, 2015, the Company sold 50,000 shares of common stock to a non-related party in exchange for cash proceeds of $50,000. The shares were issued at $1.00 per share.
On October 2, 2015, the Company sold 125,000 shares of common stock to a non-related party in exchange for cash proceeds of $50,000. The shares were issued at $0.40 per share.
On January 1, 2016, the Company issued 286,970 shares of common stock to non- related parties in exchange for services. The shares were issued at $1.08 per share and valued at approximately $311,000.
On July 13, 2016, the Company sold 20,000 shares of common stock to a non-related party in exchange for cash proceeds of $5,000. The shares were issued at $0.25 per share.
On August 5, 2016, the Company issued 94,481 shares of common stock to non- related parties in exchange for services. The shares were issued at approximately $0.59 per share and valued at approximately $55,578.
On January 27, 2017, the Company sold 62,500 shares of common stock to a non-related party in exchange for cash proceeds of $2,500. The shares were issued at $0.04 per share.
On February 6, 2017, the Company sold 150,000 shares of common stock to a non-related party in exchange for cash proceeds of $10,000. The shares were issued at $0.066 per share.
As of February 28, 2017, there are 28,789,451 shares of common stock issued and outstanding.
Options and Warrants
There are no warrants or options outstanding to acquire any additional shares of common stock of the Company as of February 28, 2017.
NOTE
7:
RELATED PARTY TRANSACTION
The Company has been provided office space by a member of the Board of Directors at no cost. The management determined that such cost is nominal and did not recognize the rent expense in its financial statements.
The above amount is not necessarily indicative of the amount that would have been incurred had a comparable transaction been entered into with independent parties.
NOTE 8: COMMITMENTS AND CONTINGENCIES
From time to time the Company may be a party to litigation matters involving claims against the Company. Management believes that there are no current matters that would have a material effect on the Company’s financial position or results of operations.
NOTE
9:
SUBSEQUENT EVENTS
Management has evaluated subsequent events through the date the financial statements were available to be issued, considered to be the date of filing with the Securities and Exchange Commission. Based on our evaluation no events have occurred requiring adjustment to or disclosure in the financial statements.