LifeApps Digital Media Inc.
|
(Formerly Prime Time Travel Inc.)
|
(A Development Stage Company)
|
Condensed Consolidated Balance Sheets
|
|
September 30
|
|
|
December 31,
|
|
|
2012
|
|
|
2011
|
|
|
(Unaudited)
|
|
|
(Audited)
|
|
Assets
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash
|
|
$
|
975,598
|
|
|
$
|
698
|
|
Prepaid expenses
|
|
|
500
|
|
|
|
10,000
|
|
Other current assets
|
|
|
3,930
|
|
|
|
-
|
|
Total current assets
|
|
|
980,028
|
|
|
|
10,698
|
|
Intangible asset, net of amortization
|
|
|
3,760
|
|
|
|
4,531
|
|
Total Assets
|
|
$
|
983,788
|
|
|
$
|
15,229
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
3,194
|
|
|
$
|
425
|
|
Accrued liabilities
|
|
|
2,920
|
|
|
|
-
|
|
Amount due shareholder
|
|
|
6,834
|
|
|
|
10,784
|
|
Total current liabilities
|
|
|
12,948
|
|
|
|
11,209
|
|
|
|
|
|
|
|
|
|
|
Stockholders'' Equity
|
|
|
|
|
|
|
|
|
Preferred stock, $.001 par value, none issued or outstanding
|
|
|
|
|
|
|
|
|
Common stock, $0.001 par value, 300,000,000 shares authorized, 75,700,000 and 40,000,000 shares issued and outstanding, as of September 30, 2012 and December 31, 2011, respectively
|
|
|
75,700
|
|
|
|
40,000
|
|
Additional paid in capital
|
|
|
1,111,779
|
|
|
|
7,479
|
|
Deficit accumulated during development stage
|
|
|
(216,639
|
)
|
|
|
(43,459
|
)
|
Total stockholders’ equity
|
|
|
970,840
|
|
|
|
4,020
|
|
Total Liabilities and Stockholders’ Equity
|
|
$
|
983,788
|
|
|
$
|
15,229
|
|
See the accompanying notes to the financial statements
LifeApps Digital Media Inc.
|
(Formerly Prime Time Travel Inc.)
|
(A Development Stage Company)
|
Condensed Consolidated Statements of Operations
|
(Unaudited)
|
|
|
Nine months ended
September 30,
|
|
|
Three months ended
September 30,
|
|
|
For the period from July 15, 2009 (Inception) through
September 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
Revenue
|
|
$
|
1,706
|
|
|
$
|
2,457
|
|
|
$
|
440
|
|
|
$
|
596
|
|
|
$
|
6,146
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
|
21,970
|
|
|
|
-
|
|
|
|
21,970
|
|
|
|
-
|
|
|
|
21,970
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit (loss)
|
|
|
(20,264
|
)
|
|
|
2,457
|
|
|
|
(21,530
|
)
|
|
|
596
|
|
|
|
(15,824
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
146,460
|
|
|
|
4,874
|
|
|
|
67,667
|
|
|
|
1,943
|
|
|
|
189,829
|
|
Amortization
|
|
|
2,401
|
|
|
|
2,265
|
|
|
|
891
|
|
|
|
755
|
|
|
|
6,931
|
|
Total operating expenses
|
|
|
148,861
|
|
|
|
7,139
|
|
|
|
68,558
|
|
|
|
2,698
|
|
|
|
196,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
(169,125
|
)
|
|
|
(4,682
|
)
|
|
|
(90,088
|
)
|
|
|
(2,102
|
)
|
|
|
(212,584
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
4,055
|
|
|
|
-
|
|
|
|
2,685
|
|
|
|
-
|
|
|
|
4,055
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
|
|
$
|
(173,180
|
)
|
|
|
(4,682
|
)
|
|
$
|
(92,773
|
)
|
|
$
|
(2,102
|
)
|
|
$
|
(216,639
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share information - Basic and fully diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
41,422,825
|
|
|
|
40,000,000
|
|
|
|
44,268,478
|
|
|
|
40,000,000
|
|
|
|
40,355,507
|
|
Net (loss) per share
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.01
|
)
|
See the accompanying notes to the financial statements
LifeApps Digital Media Inc.
|
(Formerly Prime Time Travel Inc.)
|
(A Development Stage Company)
|
Condensed Consolidated
Statements of Cash Flows
|
(Unaudited)
|
|
|
|
|
|
|
|
|
For the period from
|
|
|
|
For the nine months ended
September 30,
|
|
|
July 15, 2009
(Inception) through
September 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
Cash flow from operating activities:
|
|
|
|
|
|
|
|
|
|
Net loss for the period
|
|
$
|
(173,180
|
)
|
|
$
|
(4,682
|
)
|
|
$
|
(216,639
|
)
|
Adjustments to reconcile net loss to net cash used in
|
|
|
|
|
|
|
|
|
|
|
|
|
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
|
|
|
2,401
|
|
|
|
2,265
|
|
|
|
6,931
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
|
9,500
|
|
|
|
-
|
|
|
|
(500
|
)
|
Other current assets
|
|
|
(3,930
|
)
|
|
|
-
|
|
|
|
(3,930
|
)
|
Accounts payable
|
|
|
2,769
|
|
|
|
-
|
|
|
|
2,769
|
|
Accrued expenses
|
|
|
2,920
|
|
|
|
-
|
|
|
|
3,345
|
|
Net cash used in operations
|
|
|
(159,520
|
)
|
|
|
(2,417
|
)
|
|
|
(208,024
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of domain names
|
|
|
(1,630
|
)
|
|
|
-
|
|
|
|
(10,691
|
)
|
Net Cash used in investing activities
|
|
|
(1,630
|
)
|
|
|
-
|
|
|
|
(10,691
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of common stock
|
|
|
1,140,000
|
|
|
|
-
|
|
|
|
1,140,000
|
|
Additional contributed capital
|
|
|
-
|
|
|
|
2,599
|
|
|
|
47,479
|
|
Cash overdraft
|
|
|
-
|
|
|
|
396
|
|
|
|
396
|
|
Repayment of cash overdraft
|
|
|
-
|
|
|
|
-
|
|
|
|
(396
|
)
|
Advance from stockholder
|
|
|
29,500
|
|
|
|
684
|
|
|
|
42,184
|
|
Repayment of advances from stockholder
|
|
|
(33,450
|
)
|
|
|
(1,900
|
)
|
|
|
(35,350
|
)
|
Net cash provided by financing activities
|
|
|
1,136,050
|
|
|
|
1,779
|
|
|
|
1,194,313
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash
|
|
|
974,900
|
|
|
|
(638
|
)
|
|
|
975,598
|
|
Cash at beginning of period
|
|
|
698
|
|
|
|
638
|
|
|
|
-
|
|
Cash at end of period
|
|
$
|
975,598
|
|
|
$
|
-
|
|
|
$
|
975,598
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
4,055
|
|
|
$
|
-
|
|
|
$
|
4,055
|
|
See the accompanying notes to the financial statements
LifeApps Digital Media Inc.
(Formerly Prime Time Travel Inc.)
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1. Nature of Business
LifeApps Digital Media Inc., which was formerly known as Prime Time Travel Inc., (“we,” “us,” “our,” "LFAP" and the “Company”) was incorporated on November 23, 2010 in the State of Delaware. The Company was originally formed as a sports travel company that created and managed trips to destinations for youth basketball teams. As the result of a merger, more fully described below, we are now engaged in business to operate as a digital media company focusing on health, fitness and sports digital publications and next-generation social networks.
We are in the development stage as defined under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 915 Development Stage Entities (“ASC915”). We have not generated any significant revenue to date and consequently our operations are subject to all risks inherent in the establishment of a new business enterprise. Our operations have been limited to acquiring the necessary technology to begin offering health, fitness and sports digital publications in the form of a web-site and cross platform applications for mobile and tablet devices.
Reorganization and recapitalization
On September 20, 2012 we entered into a Merger Agreement whereby, we acquired 100% of the issued and outstanding stock of LifeApps Inc. (“LifeApps”), a Nevada corporation, in exchange for 40,000,000 shares of our $0.001 par value common stock (the “Merger”). We will continue the existing business operations of LifeApps as our wholly owned subsidiary.
In conjunction with the Merger and immediately following the Merger, we split off (the “Split-Off”) our wholly owned subsidiary, Prime Time Split Corp., a Delaware corporation (“Split Corp.”). The Split-Off was accomplished through the exchange of 90,000,000 shares of our common stock held by the prior Chief Executive Officer and a significant shareholder for all of the issued and outstanding shares of common stock of Split Corp. All of the assets and liabilities of LFAP immediately following the Merger, excluding any LifeApps assets and liabilities assumed in the Merger, were transferred to Split Corp. We executed a Split-Off Agreement and General Release Agreement with the Split-Off Shareholder.
For financial reporting purposes, the transaction will be accounted for as a “reverse merger” rather than a business combination, because the sellers of LifeApps effectively control the combined companies immediately following the transaction. As such, LifeApps is deemed to be the accounting acquirer in the transaction and, consequently, the transaction is being treated as a reverse acquisition by LifeApps. Accordingly, the assets and liabilities and the historical operations, from its inception July 15, 2009, that will be reflected in our ongoing financial statements will be those of LifeApps and will be recorded at the historical cost basis of LifeApps. The Company’s assets, liabilities and results of operations will be consolidated with the assets, liabilities and results of operations of LifeApps after consummation of the transaction. Our historic capital accounts will be retroactively adjusted to reflect the equivalent number of shares issued by it in the transaction while LifeApps historical retained earnings will be carried forward. Our historical financial statements before the transaction will be replaced with the historical financial statements of LifeApps before the transaction in all future filings with the Securities and Exchange Commission, or SEC. The Merger is intended to be treated as a tax-free exchange under Section 368(a) of the Internal Revenue Code of 1986, as amended.
Note 2. Summary of Significant Accounting Policies
Intangible
Intangible assets are comprised of internet domain name cost, net of amortization. The internet domain name costs are being amortized over the expected useful life of the domain name which we estimate to be is three years from the date of registering the domain name. In accordance with ASC Topic 350
Intangibles – Goodwill and Other
(“ASC 350”), the costs to obtain and register an internet domain shall be capitalized.
LifeApps Digital Media Inc.
(Formerly Prime Time Travel Inc.)
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Long-Lived Assets
In accordance with ASC 350, an intangible asset that is subject to amortization shall be reviewed for impairment in accordance with the ASC Topic 360
Property, Plant and Equipment
(“ASC 360”). Under ASC 360, long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized as the amount by which the carrying amount of the asset exceeds the fair value of the asset. Fair value is determined using forecasted cash flows discounted using an estimated average cost of capital. There has been no impairment as of December 31, 2011 or 2010.
Use of Estimates
The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheets and revenues and expenses during the years reported. Actual results may differ from these estimates.
Fair Value Measurement
ASC Topic 820,
Fair Value Measurements and Disclosures
(“ASC 820”), provides a comprehensive framework for measuring fair value and expands disclosures which are required about fair value measurements. Specifically, ASC 820 sets forth a definition of fair value and establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. ASC 820 defines the hierarchy as follows:
Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the New York Stock Exchange.
Level 2 - Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts or priced with models using highly observable inputs.
Level 3 - Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value of financial transmission rights.
Our financial instruments consist of accounts payable, accrued expenses and amounts due to shareholder. The carrying value of accounts payable, accrued expenses and amounts due to shareholder approximates its fair value due to their short maturity.
Revenue recognition
Revenue is derived primarily from the sale of software application designed for use on mobile devices such as smart phones and tablets. Revenue is recognized only when persuasive evidence of an arrangement exists, the fee is fixed or determinable, the product or service has been delivered, and collectability is probable.
We sell our software directly via Internet download through third party agents. We recognize revenue when payment is received from the agent. Payment is received net of commission paid to the agent, usually 70% to us and 30% to the agent. We record the net amount received as revenue.
We also publish and sell digital magazines through the internet. Magazines can be purchased as individual volumes or as a subscription. To date we have not had any subscription sales.
LifeApps Digital Media Inc.
(Formerly Prime Time Travel Inc.)
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Cost of Revenue
Cost of revenue includes the cost of amounts paid for articles, photography, editorial and production cost of the magazine.
Research and development, Website Development Costs, and Software Development Costs
All research and development costs are expensed as incurred. Software development costs eligible for capitalization under ASC 350-50,
Website Development Cost
, and ASC 985-20,
Software-Costs of Software to be Sold, Leased or Marketed
, were not material to our financial statements for the nine and three month periods ended September 30, 2012 and 2011. Research and development expenses amounted to $53,373 and $2,331 for nine months ended September 30, 2012 and 2011, respectively, $8,969 and $780 for three months ended September 30, 2012 and 2011, respectively, and $88,299 for the period from inception, July 15, 2009, to September 30, 2012 and were included in general and administrative expenses.
Advertising Costs
The Company recognizes advertising expense when incurred. Advertising expense was $20,257 and $1,599 for nine months ended September 30, 2012 and 2011, respectively, $20,257 and $1,599 for three months ended September 30, 2012 and 2011, respectively, and $24,730 for the period from inception, July 15, 2009, to September 30, 2012.
Income Taxes
The provision for income taxes is determined in accordance with the provisions of ASC Topic 740, Accounting for Income Taxes (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements, uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.
For the nine and three month periods ended September 30, 2012 and 2011 and for the period from July 15, 2009 (inception) to September 30, 2012 we did not have any interest and penalties or any significant unrecognized uncertain tax positions.
Recent Pronouncements
We have reviewed all recently issued, but not yet effective, accounting pronouncements and do not believe the future adoption of any such pronouncements may be expected to cause a material impact on our financial condition or the results of operations.
Note 3. Intangible Assets
As of September 30, 2012 intangible asset consists of internet domain name cost $10,691 less accumulated amortization of $6,931. The amounts carried on the balance sheet represent the cost of acquiring the internet domain names from third parties and the costs relating to the registration of the internet domain names incurred by us.
The amount charged to expenses for amortization of the internet domain names was $2,401 for nine months ended September 30, 2012 and 2011, $891 for three months ended September 30, 2012 and 2011, and $6,931 for the period from inception, July 15, 2009, to September 30, 2012.
LifeApps Digital Media Inc.
(Formerly Prime Time Travel Inc.)
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Estimated future amortization expense related to the intangibles as of September 30, 2012 is as follows:
Year
|
|
Amortization
|
|
2012
|
|
$
|
891
|
|
2013
|
|
|
2,053
|
|
2014
|
|
|
545
|
|
2015
|
|
|
271
|
|
|
|
$
|
3,760
|
|
Note 4. Amount Due Shareholder
Amount due shareholder represents amounts paid on our behalf by a shareholder of the Company. These advances are non-interest bearing and due on demand.
Note 5. Stockholders’ Equity
As stated in Note 1 these financial statements are presented as if the Merger took place at the beginning of the periods presented.
Upon the initial formation of the company, we were authorized to issue 100,000,000 shares of which 5,000,000 shares were to be preferred shares with a par value of $0.000001 per share and 95,000,000 shares were to be common shares with a par value of $0.000001 per share.
No preferred shares were issued.
Prior to the Merger we had issued 8,000,000 shares of the $0.000001 par value common stock.
During August 2012, we filed Amended and Restated Certificate of Incorporation with the Delaware Secretary of State to, among other things, (i) change our name from Prime Time Travel, Inc. to LifeApps Digital Media Inc.; (ii) increase our authorized capitalization from 100,000,000 shares, consisting of 95,000,000 shares of common stock, $0.000001 par value per share, and 5,000,000 shares of preferred stock, $0.000001 par value per share, to 310,000,000 shares, consisting of 300,000,000 shares of common stock, $0.001 par value per share, and 10,000,000 shares of blank check preferred stock, $0.001 par value per share; and (iii) limit the liability of our officers and directors to us, our stockholders and our creditors to the fullest extent permitted by Delaware law.
In September 2012, we effected a 15-for-1 forward stock split of our common stock in the form of a dividend with a record date of September 4, 2012 and a payment date of September 5, 2012.
All share amounts in these financial statements give effect to the forward stock split including those applicable to periods prior to the forward stock split.
Concurrently with the closing of the Merger we completed an initial closing of a private offering (the “Offering”) of 5,700,000 units of our securities (the “PPO Units”), at a price of $0.20 per PPO Unit for aggregated consideration of $1,140,000. Each PPO Unit consists of one share of our common stock and a redeemable warrant (the “Investor Warrant”) to purchase one share of our common stock. The Investor Warrants are exercisable for a period of five years at a purchase price of $1.00 per share of our common stock.
The remaining 300,000 PPO Units remaining in the offering +were sold subsequent to the date of these financial statements.
LifeApps Digital Media Inc.
(Formerly Prime Time Travel Inc.)
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The fair value of the Investor Warrants, $1,164,931, was estimated at the date of grant using the Black-Sholes option pricing model with the following assumption:
Expected life (in years)
|
|
|
5
|
|
Volatility
|
|
|
100.00
|
%
|
Risk Free interest rate
|
|
|
0.35
|
%
|
Dividend yield (on common stock)
|
|
|
-
|
|
Note 6. Outstanding Warrants
The following is a summary of outstanding warrants as of September 30 2012:
|
|
Number of warrants
|
|
Exercise price per share
|
|
|
Average remaining
term in years
|
|
|
Aggregate intrinsic
value at date of grant
|
|
Warrants issued in connection with private placement of units
|
|
|
5,700,000
|
|
|
$
|
1.00
|
|
|
|
4.78
|
|
|
$
|
1,164,931
|
|
Note 7. Business Segments
We operate in only one segment and geographic location.
Our sales are normally are made through third party portals.
The following is a breakdown of those portals which account for greater than 10% of our total revenue for the periods:
|
|
Nine months ended September 30,
|
|
|
Three months ended September 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
Customer A
|
|
$
|
1,522
|
|
|
$
|
2,457
|
|
|
$
|
256
|
|
|
$
|
596
|
|
Customer B
|
|
$
|
173
|
|
|
$
|
-
|
|
|
$
|
173
|
|
|
$
|
-
|
|
LifeApps Digital Media Inc.
(Formerly Prime Time Travel Inc.)
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 8. Income Taxes
We account for income taxes in interim periods in accordance with ASC Topic 740, Income Taxes (“ASC 740”). We have determined an estimated annual effective tax rate. The rate will be revised, if necessary, as of the end of each successive interim period during our fiscal year to our best current estimate. As of September 30, 2012, the estimated effective tax rate for the year will be zero.
There are open statutes of limitations for taxing authorities in federal and state jurisdictions to audit our tax returns from 2009 through the current period. Our policy is to account for income tax related interest and penalties in income tax expense in the statement of operations. There have been no income tax related interest or penalties assessed or recorded.
ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This pronouncement also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.
Note 9. Debt Financing
During the nine months ended September 30, 2012, we borrowed and repaid two notes in the aggregate amount of $115,000. The notes bore interest at a rate of 10% per annum. Interest expense paid on the notes was $4,055.
Note 10. Subsequent Events
We evaluated all of our activity and concluded the following subsequent events would require recognition or disclosure in our financial statements.