UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended December 31, 2014

 

 

WRIT MEDIA GROUP, INC.

 

a Delaware corporation

 

8200 Wilshire Boulevard,

Suite 200

Beverly Hills, CA 90211

310.461.3737

 

Commission file number: 333-156832

 

I.R.S. Employer I.D. #: 56-2646829

 

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

 

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

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

 

Large accelerated filer

¨

Accelerated filer 

¨

Non-accelerated filer 

¨

Smaller reporting company

x

(Do not check if a smaller reporting company)

   

 

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

 

The number of shares outstanding of our Common Stock is 38,875,588 as of March 30, 2015.

 

The number of shares outstanding of our Preferred Stock is 10,000 as of March 30, 2015.

 

There are no other classes of stock.

 

 

 

FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

WRIT Media Group, Inc.

Consolidated Balance Sheets

(Unaudited)

 

    December 31,     March 31,  
    2014     2014  

Assets

       
Current Assets        

Cash and cash equivalents

 

$

12,720

   

$

25,810

 

Accounts receivables, net

   

-

     

824

 

Prepaid expense and other assets

   

-

     

3,750

 

Deferred financing costs

   

-

     

1,188

 

Subscription receivable

   

-

     

25,000

 

Total current assets

   

12,720

     

56,572

 
               

Long Term Assets

               

Property, plant and equipment, net

   

1,112

     

1,664

 

Intangible assets - software

   

819,735

     

532,521

 
               

Total Assets

 

$

833,567

   

$

590,757

 
               

Liabilities and Shareholders' Deficit

               

Current Liabilities

               

Accounts payable

 

$

208,316

   

$

100,465

 

Accrued liability

   

29,473

     

9,614

 

Convertible debts, net of unamortized discount of $95,523 and $0, respectively

   

46,402

     

26,707

 

Notes payable

   

95,500

     

45,500

 

Deferred Revenue

   

55,395

     

55,395

 

Total current liabilities

   

435,086

     

237,681

 

Total Liabilities

   

435,086

     

237,681

 
               

Shareholders' Equity

               

Preferred Stock:

               

Series A convertible preferred stock, $.00001 par, 130,000,000 shares authorized, 10,000 shares issued and outstanding

   

-

     

-

 

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, 37,966,497 and 9,282,213 shares issued and outstanding, respectively

   

382

     

93

 

Additional paid in capital

   

1,066,223

   

(67,040

)

Retained Earnings (accumlated deficit)

 

(668,124

)

   

420,023

 

Total shareholders' equity

   

398,481

     

353,076

 

Total Liabilities and Shareholders' Equity

 

$

833,567

   

$

590,757

 

 

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

 

 
2

 

WRIT Media Group, Inc.

Consolidated Statement of Operations

(Unaudited)

 

  For The Three Months
Ended December 31,
  For The Nine Months
Ended December 31,
 
    2014     2013     2014     2013  
                 

Operating Costs and Expenses

               

Wages and benefits

  $

54,900

    $

-

    $

190,947

    $

49,578

 

Audit and accounting

   

22,800

     

21,166

     

44,725

     

51,223

 

Legal fee

   

11,768

     

9,483

     

36,435

     

28,063

 

Other general and administrative

   

71,213

     

70,225

     

708,721

     

221,409

 

Total operating expenses

   

160,681

     

100,874

     

980,828

     

350,273

 
                               

Loss from operations

 

(160,681

)

 

(100,874

)

 

(980,828

)

 

(350,273

)

                               

Other income (expense)

                               

Gain (Loss) from derivative liability

   

-

     

131,937

     

-

     

1,590,246

 

Interest expense

 

(52,162

)

 

(38,094

)

 

(107,319

)

 

(157,034

)

Net income (loss)

  $

(212,843

)

  $

(7,031

)

  $

(1,088,147

)

  $

1,082,939

 
                               

Net income (loss) per share:

                               

Basic

 

$

(0.01

)

 

$

-

   

$

(0.05

)

 

$

0.34

 

Diluted

 

$

(0.01

)

 

$

-

   

$

(0.05

)

 

$

(0.03

)

                               

Weighted average common shares outstanding:

                               

Basic

   

33,849,594

     

4,705,660

     

21,824,268

     

3,193,285

 

Diluted

   

33,849,594

     

4,705,660

     

21,824,268

     

23,294,397

 

 

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

 

 
3

 

WRIT Media Group, Inc.

Consolidated Statement of Cash Flows

(Unaudited)

 

    For The Nine Months
Ended December 31,
 
    2014     2013  
         

Cash Flows From Operating Activities

       

Net Income (Loss)

 

$

(1,088,147

)

  $

1,082,939

 

Adjustments to reconcile net income (loss) to net cash used in operating activities:

               

Depreciation

   

552

     

-

 

Amortization of debt discount

   

89,932

     

150,502

 

Shares issued for services

   

632,152

     

87,624

 

Gain on Derivative Liability

   

-

   

(1,590,246

)

Amortization of deferred financing costs

   

-

     

7,312

 

Amortization of intangibles

   

-

     

8,406

 

Changes in operating assets and liabilities:

               

Account receivable and related party receivable

   

2,034

   

(300

)

Prepaid expenses and other assets

   

4,938

   

(2,040

)

Accounts payable

 

(9,170

)

   

95,249

 

Accrued liabilities

   

31,741

     

44,657

 

Net cash used in operating activities

 

(335,968

)

 

(115,897

)

               

Cash Flows From Investing Activities

               

Cash paid for software development costs and license

 

(126,343

)

 

(40,000

)

Cash paid for software development costs incurred on account in prior year

 

(45,060

)

   

-

 

Purchase of computer hardware

         

(1,664

)

Net cash used in investing activities

 

(171,403

)

 

(41,664

)

               

Cash Flows From Financing Activities

               

Cash received from subscription receivable

   

25,000

     

-

 

Proceeds from sale of stock

   

226,781

     

55,000

 

Borrowing on debt

   

100,500

     

58,000

 

Borrowing on convertible debts

   

147,000

     

55,500

 

Principal payments on debt

 

(5,000

)

 

(4,500

)

Payment on related party debt, net

   

-

   

(2,356

)

Payment of deferred financing costs

   

-

   

(5,000

)

Net cash provided by financing activities

   

494,281

     

156,644

 
               

Net decrease in cash and cash equivalents

 

(13,090

)

 

(917

)

Cash and cash equivalents, beginning of period

   

25,810

     

1,143

 

Cash and cash equivalents, end of period

 

$

12,720

   

$

226

 
               

Supplemental disclosure information:

               

Income taxes paid

 

$

-

   

$

-

 

Interest paid

 

$

6,121

   

$

-

 

Non-cash financing activities:

               

Software development cost incurred on account

 

$

160,871

   

$

-

 

Stock issued for accrued compensation

 

$

8,473

    $

-

 

Common Shares issued for convertible debt and accrued interest

 

$

80,691

   

$

139,896

 

Reclassification of accrued interest to convertible debt

 

$

2,292

   

$

-

 

Common Shares issued for acquisition Amiga Games, Inc.

 

$

-

   

$

400,000

 

Debt discount resulting from recognition of derivative liability

 

$

-

   

$

160,062

 

Reclassification of derivative liabilities to additional paid in capital

 

$

-

   

$

(1,649,609

)

Reclassification of debt to additional paid in capital due to beneficial conversion feature

 

$

185,455

   

$

-

 

Conversion from Series B preferred stock to common stock

 

$

-

   

$

1,000

 

Cancellation of shares

  $ -    

$

(100

)

Common Shares issued for prior year accrued interest

 

$

-

   

$

3,517

 

Purchases of fixed assets on account

 

$

-

   

$

48,061

 

 

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

 

 
4

 

WRIT MEDIA GROUP, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2014

 

NOTE 1 – ORGANIZATION, BUSINESS OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

 

Organization and Business Operations

 

WRIT Media Group, Inc. (“we”, “our”, “WRIT” or the “Company”) (formerly Writers’ Group Film Corp.) 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.

 

The accompanying unaudited interim financial statements of WRIT Media Group, Inc. have been prepared in accordance with accounting principles generally accepted in the United States of America and rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s annual report on Form 10-K for the initial period ended March 31, 2014 as filed with the SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the consolidated financial statements which would substantially duplicate the disclosure contained in the audited financial statements as reported in the annual report on Form 10-K have been omitted.

 

NOTE 2 – GOING CONCERN

 

As reflected in the accompanying consolidated financial statements, the Company has an accumulated deficit of $668,124, which includes a loss of $1,088,147 at December 31, 2014 and a working capital deficiency of $422,366. 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

 

Notes payable consists of the following:

 

    December 31,
2014
  March 31,
2014
 

 

 

 

 

 

Notes payable, net of debt discount of $0 and $0 respectively

 

$

95,500

   

$

45,500

 

 

 
5

 

Mr. John L. Shaw

 

On April 1, 2014, the Company borrowed $5,000 from John L. 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.

 

KBM Worldwide Inc.

 

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 $.00004 per share. As of December 31, 2014, the note is not convertible yet and still outstanding.

 

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 $.00004 per share. As of December 31, 2014, the note is not convertible yet and still outstanding.

 

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 is 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 is convertible into common stock at a price of $0.05, 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 is 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 is convertible into common stock at a price of $0.05, 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 $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 is 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 is convertible into common stock at a price of $0.05, 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 $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.

 

 
6

 

NOTE 4 – CONVERTIBLE DEBT

 

Convertible debts outstanding, net of debt discount of $0 on March 31, 2014

 

$

26,707

 

Add: Issuance of convertible debt

   

147,000

 

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

 

(185,455

)

Less: principal converted into common stock

 

(79,574

)

Add: amortization of debt discount

   

89,932

 

Convertible debt outstanding, net of debt discount of $95,523 on December 31, 2014

 

$

46,402

 

 

During the nine months ended December 31, 2014, $79,574 of convertible debts with accrued interest of $1,117 was converted into 6,125,399 shares of common stock.

 

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 $0.00004. An amount equal to $2,577 of the principal balance of the note was converted into 48,858 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 242,891 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 $0.00004. An amount equal to $3,500 of the principal balance of the note was converted into 276,680 common shares on September 15, 2014. On October 10, 2014 and October 22, 2014, Magna Group converted $6,500 of the convertible note into 784,158 common shares. On November 26, 2014, Magna Group converted $3,077 principal amount and $872.33 interest amount of the convertible note into 569,889 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 $.00004 per share. On August 18, 2014 $5,465 of the principal balance was converted into 198,727 common shares. On August 26, 2014, $5,000 of the principal balance was converted into 195,084 common shares. On September 2, 2014, $5,000 of the principal balance plus interest of $155 was converted into 288,373 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 $.00004 per share. As of December 31, 2014, the note is not converted yet and is still outstanding.

 

 
7

 

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 $.00004 per share. As of December 31, 2014, the note is not converted yet and is still outstanding.

  

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 $.00004 per share. As of December 31, 2014, the note is not converted yet and is still outstanding.

 

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 $.00004 per share. As of December 31, 2014, the note is not converted yet and is still outstanding.

 

The Company evaluated the embedded conversion feature within the above Magna convertible notes 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 note payable and a total debt discount of $126,010 was recorded on the Magna notes. During the nine months ended December 31, 2014, debt discount of $62,328 was amortized, and the unamortized debt discount is $63,682 as of December 31, 2014.

 

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 $.00004 per share. The note became convertible on 11/30/2014. On December 23, 2014, $5,735 of debt was converted for 1,638,571 shares of common stock. As of December 31, 2014, the remaining $47,265 balance on the note is outstanding. The note is in default as of the March 30, 2015.

 

The Company evaluated the embedded conversion feature within the above KBM Worldwide convertible notes 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 on the date the note became convertible. The Company accounted for the intrinsic value of a Beneficial Conversion Feature inherent to the convertible note payable and a debt discount of $53,000 was recorded on the KBM Worldwide notes. During the nine months ended December 31, 2014, debt discount of $21,159 was amortized, and the unamortized debt discount is $31,841 as of December 31, 2014.

 

SFH Capital LLC

 

On October 22, 2013, the Company borrowed $14,000 from SFH Capital LLC. The maturity date of this note is 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 is convertible into common stock at a price of $0.05, 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 300,896 common shares. The note was paid off in full and the note has been surrendered to the Company.

 

 
8

 

On October 29, 2013, the Company borrowed $4,000 from SFH Capital LLC. The maturity date of this note is 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 is convertible into common stock at a price of $0.05, 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 83,858 common shares. The note was paid off in full and the note has been surrendered to the Company.

 

On December 11, 2013, the Company borrowed $12,500 from SFH Capital LLC. The maturity date of this note is 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 is convertible into common stock at a price of $0.05, 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 200,000 common shares. On September 15, 2014, $2,985 of the principal balance plus interest of $90 was converted into 60,972 shares of Common Stock. The note was paid off in full and the note 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 SFH convertible notes under ASC 815-15 and ASC 815-40 and determined embedded conversion feature does not meet the definition of a liability.

 

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 note payable and a debt discount of $3,009, $839, and $2,597 were recorded on each SFH note respectively. During the nine months ended December 31, 2014, 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 December 31, 2014.

 

Other Convertible Notes

 

Convertible debts were issued September 2009, and March 2010, bearing interest at a rate of 8% per annum, due in one year, and are convertible at $0.00001 per share, and the total balance outstanding as of March 31, 2014 was $3,130. During the nine months ended December 31, 2014, note principal of $2,470 and interest of $104 reclassified to note principal were converted into 1,285,300 common shares. As of December 31, 2014, other convertible notes have a total outstanding balance of $660.

 

NOTE 5 – EQUITY

 

Common Shares issued for convertible notes and accrued interest

 

During the nine months ended December 31, 2014, convertible debt principal along with accrued interest of $80,691 was converted into 6,125,399 common shares. See Note 4.

 

Common Shares issued for cash

 

During the nine months ended December 31, 2014, the Company issued 3,529,370 common shares for cash totaling $226,781.

 

Common Shares issued for services

 

During the nine months ended December 31, 2014, the Company issued 18,860,055 shares to employees and third party consultants as compensation at their fair value of $632,152.

 

 
9

 

Common Shares issued for accrued compensation

 

During the nine months ended December 31, 2014, the Company issued 169,460 shares to one employee 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 nine months ended December 31, 2014, 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 April 21, 2014, the Company issued 3,333,333 common shares to Irwin Zalcberg for cash totaling $200,000. Along with the subscription agreement, the Company issued warrants to purchase 4,166,667 shares. The warrants expire 2 years after issuance and have an exercise price of $0.25. 

 

The following table summarizes the Company’s warrant activity for the nine months ended December 31, 2014:

 

    Number of
Units
    Weighted-Average Exercise Price     Weighted-Average Remaining Contractual Term (in years)     Intrinsic
Value
 

Outstanding at March 31, 2014

   

625,000

   

$

0.12

     

1.21

   

$

-

 

Issuances

   

4,166,667

     

0.25

     

1.30

     

-

 

Exercises

   

-

     

-

     

-

     

-

 

Forfeitures

   

-

     

-

     

-

     

-

 

Outstanding at December 31, 2014

   

4,791,667

   

$

0.23

     

1.29

   

$

-

 

 

NOTE 6 – INTANGIBLE ASSETS

 

During the nine months ended December 31, 2014, the Company incurred $261,939 in software development costs to upgrade the acquired software.

 

In addition, the Company paid another $25,275 for intangible assets, the majority of which is for purchase of a software license for $25,000.

 

NOTE 7 – SUBSEQUENT EVENTS

 

During February 2015, Magna Equities II converted debt principal of $2,500 into 909,091 common shares.

 

On March 2, 2015, the Company borrowed $7,500 from Falmouth Street Holdings LLC. The note is payable upon demand by the lender at any time, but shall not be more than six months from the issuance date. This loan bears an interest rate of 12% per annum from the issuance date.

 

 
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ITEM 2. 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, 2013, 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”) (formerly Writers’ Group Film Corp.) was incorporated 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 intends 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. Following an initial theatrical run, or as an initial distribution window, the content will be licensed, in both 2D, 4K and 3D formats, to DVD and Blu-Ray retailers, Free TV broadcasters, cable and emerging 3D cable channels, and mobile streaming providers. 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.

 

 
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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. 

 

 
12

 

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. As of December 31, 2014, 271,670 common shares were sold generating a net amount to the company of $30,805.

 

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, but most consumers were interested only in the mobile versions of the gaming titles, which were not yet available.

 

Upon completion of additional financing that allows the Company to resume software development and product marketing activities, we believe WRIT will be positioned to benefit from the market growth and increased demand for mobile video gaming content that can be enjoyed on mobile phones, tablets and other devices. Barring any additional funding delays, we estimate that the majority of WRIT’s video gaming product will be available for release in the 3rd and 4th quarter of 2015. We intend to continue to look for opportunities to expand WRIT’s business and increase its catalogue of both music and video game content, though acquisitions and licensing arrangements. Throughout the year, the Company also intends to continue to explore business relationships with entities that have the resources to offer financing, distribution and marketing of WRIT’s product.

 

Results of Operations

 

Three Months Ended December 31, 2014 and 2013  

 

Revenues. No revenues were recognized for the three months ended December 31, 2014 and the three months ended December 31, 2013.

 

Wages and benefits. Wages and benefits expenses increased $54,900 and 100% for the three months ended December 31, 2014 as compared to the same period in 2013. The increase is mainly because in the three months ended December 31, 2013, the Company issued common shares in lieu of cash, which was included in other general and administrative expenses.

 

Audit and accounting. Audit and accounting expenses increased $1,634 and 8% for the three months ended December 31, 2014 as compared to the same period in 2013. The increase is mainly related to the fees for 10-Q filings.

 

 
13

 

Legal Fee. Legal fee expenses increased $2,285 and 24% for the three months ended December 31, 2014 as compared to the same period in 2013. The increase in the legal fee expense is mainly related to a small increase in filing fees and increase in regulatory filings.

 

Other general and administrative expenses. Other general and administrative expenses increased $988 and 1% for the three months ended December 31, 2104 and as compared to the same period in 2013. Those expenses consist primarily of company’s business development, consulting fees and other expenses incurred in connection with general operations. The increase is mainly related to the consulting fees related to the fund raising projects and other projects.

 

Loss from operations. Our loss from operations was $160,681 for the three months ended December 31, 2014 and $100,874 for the same period in 2013.

 

Gain or loss from derivative liability. No gain nor loss was recorded from derivative liability for the three months ended December 31, 2014 and a gain of $131,937 from derivative liability for the same period in 2013.

 

Interest expense. We incurred $56,162 in interest expense for the three months ended December 31, 2014 and $38,094 for the same period in 2013. The increase in interest expense is mainly related to the amortization of debt discount.

 

Net income or loss. As a result of the foregoing factors, we generated a net loss of $212,843 for the three months ended December 31, 2014, and we generated a net loss of $7,031 for the same period in 2013.

 

Nine Months Ended December 31, 2014 and 2013

 

Wages and benefits. Wages and benefits expenses increased $141,369 and 285% for the nine months ended December 31, 2014 as compared to the same period in 2013. The increase is mainly related to the general operations and expansion of business.

 

Audit and accounting. Audit and accounting expenses decrease $6,498 and 13% for the nine months ended December 31, 2014 as compared to the same period in 2013. The decrease in the audit and accounting expense is mainly related to cost management of the expenses.

 

Legal fee. Legal fees increased $8,372 and 29.8% for the nine months ended December 31, 2014 as compared to the same period in 2013. The increase in legal fees is mainly related to the cost associated with debt financing.

 

Other general and administrative expenses. Other general and administrative expenses increased $487,312 and 220% for the nine months ended December 31, 2014 as compared to the same period in 2013. Those expenses consist primarily of company’s business development, consulting fees and other expenses incurred in connection with general operations, software development and expansion of business.

 

Loss from operations. Our loss from operations was $980,828 for the nine months ended December 31, 2014 and $350,273 for the same period in 2013.

 

Gain or loss from derivative liability. We recorded no gain nor loss from derivative liability for the nine months ended December 31, 2014. There was a gain from derivative liability of $1,590,246 for the nine months ended December 31, 2013.

 

Interest expense. We incurred $107,319 interest expense for the nine months ended December 31, 2014 and $157,034 for the same period in 2013. The decrease in interest expense is mainly related to the decrease of amortization of debt discount.

 

 
14

 

Net income or loss. As a result of the foregoing factors, we generated a net loss of $1,088,147 for the nine months ended December 31, 2014, and we generated a net gain of $1,082,939 for the same period in 2013. The increase in the net loss is mainly related to the gain from derivative liability generated in 2013 and expansion of business.

 

Liquidity and Capital Resources

 

As reflected in the accompanying consolidated financial statements, the Company has Accumulated Deficit of $668,124 at December 31, 2014 that includes a loss of $212,843 for the three months ended December 31, 2014. The Company also had a working capital deficiency of $422,366 as of December 31, 2014. 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 December 31, 2014 and March 31, 2014, we have $12,720 and $25,810 cash and cash equivalents, respectively. To date, we have financed our operations primarily through cash flows from borrowings from third and related parties.

 

Operating activities

 

Net cash used in operating activities was $335,968 for the nine months ended December 31, 2014. The net cash used in operating activities is primarily due to the net loss of $1,088,147, adjusted for $89,932 amortization of debt discount, $632,152 from stock based services and $552 depreciation. Additional sources of cash include increase in accrued liability of $31,741, decrease in account receivable and related third party receivable of $2,034, and decrease in prepaid expenses and other assets of $4,938. Uses of cash included a decrease in accounts payable of $9,170.

 

Net Cash used in operating activities of $115,897 for the nine months ended December 31, 2013 reflected our net gain of $1,082,939, adjusted for $150,502 amortization of debt discount, a $1,590,246 gain on derivative liability, $87,624 from stock based services, and amortization of $15,718. Additional sources of cash include increase in accrued liability of $44,657 and increase in accounts payable of $95,249. Uses of cash included an increase in accounts receivable of $300 and an increase in prepaid expenses of $2,040.

 

Investing activities

 

During the nine months ended December 31, 2014, the net cash used in investing activities is $171,403 primarily due to cash paid for intangible assets of $126,343 and computer software development costs of $45,060. During the nine months ended December 31, 2013, the net cash used in investing activities is primarily due to cash paid for intangible assets and hardware purchases for an amount of $41,664.

 

Financing activities

 

Net cash provided by financing activities of $494,281 for the nine months ended December 31, 2014 includes funds of borrowing on short term notes and convertible notes of $100,500 and $147,000, respectively and $226,781 in proceeds from shares issued for cash and $25,000 in proceeds from subscription receivable, payment of $5,000 for principal payments on debt.

 

During the nine months ending December 31, 2013, net cash provided by financing activities of $156,644 includes funds of borrowing on short term and convertible notes of $58,000 and $55,500 respectively, and $55,000 in proceeds from shares issued for cash, principal repayment of $4,500 and payment of $5,000 for deferred financing costs, and payment of related party advances of $2,356.

 

Loan Commitments

 

Borrowings from Third Parties

 

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 $.00004 per share. As of December 31, 2014, KBM Worldwide Inc. converted debt principal of $5,735 into 1,638,571 common shares, bringing the note balance to $47,265.

 

 
15

 

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 $.00004 per share. As of December 31, 2014, the note is not converted yet and is still outstanding.

 

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 $.00004 per share. As of December 31, 2014, the note is not convertible yet and is still outstanding.

 

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 $.00004 per share. As of December 31, 2014, the note is not converted yet and is still outstanding.

 

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 $.00004 per share. As of December 31, 2014, the note is not convertible yet and is still outstanding.

 

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 $.00004 per share. As of December 31, 2014, the note is not converted yet and is still outstanding.

 

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 $.00004 per share. As of December 31, 2014, the note is not converted yet and is still outstanding.

 

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.

 

 
16

 

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:

 

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.

 

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.

 

CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures

 

As of the end of the period covered by this Quarterly Report, we conducted an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based on this evaluation, the CEO and CFO concluded that, because of the material weaknesses in our internal control over financial reporting described below, our disclosure controls and procedures were not effective as of December 31, 2014. See our discussion at “Item 9A Controls and Procedures” on Form 10-K for the year ended March 31, 2014.

 

 
17

 

We have noted the following material weaknesses in our control environment: 

 

1. Material weaknesses in Our Control Environment. Our control environment did not sufficiently promote effective internal control over financial reporting throughout the organization. This material weakness exists because of the aggregate effect of multiple deficiencies in internal control which affect our control environment, including: a) the lack of an effective risk assessment process for the identification of fraud risks; b) the lack of an internal audit function or other effective mechanism for ongoing monitoring of the effectiveness of internal controls; c) and insufficient documentation and communication of our accounting policies and procedures as of December 31, 2014.

 

2. Material weaknesses in the staffing of our financial accounting department. Management had engaged an outside consultant to assist in the financial reporting. However, the number of qualified accounting personnel with experience in public company SEC reporting and GAAP is limited. This weakness does not enable us to maintain adequate controls over our financial accounting and reporting processes regarding the accounting for non-routine and non-systematic transactions. There is a risk that a material misstatement of the financial statements could be caused, or at least not be detected in a timely manner, by this shortage of qualified resources.

 

3. Material weaknesses in Segregation of Duties. The limited number of qualified accounting personnel results in an inability to have independent review and approval of financial accounting entries. Furthermore, management and financial accounting personnel have wide-spread access to create and post entries in our financial accounting system. There is a risk that a material misstatement of the financial statements could be caused, or at least not be detected in a timely manner, due to insufficient segregation of duties. Because of its inherent limitation, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management is still determining additional measures to remediate deficiencies related to staffing.

 

Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process certain safeguards to reduce, though not eliminate, this risk. Management is responsible for establishing and maintaining adequate internal control over our financial reporting.

 

Changes in Internal Controls

 

There have been no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

LEGAL PROCEEDINGS

 

There is no litigation pending or threatened by or against the Company.

 

Exhibits.

 

Consolidated Financial statements are included in the body of this report.

 

Exhibit Index:

 

* Rule 15d-14(a) Certifications 

 

Exhibit (31)(i) and (ii)

     

* Section 1350 Certification

 

Exhibit (32)

     

101.INS

 

XBRL Instance Document

     

101.SCH

 

XBRL Taxonomy Extension Schema Document

     

101.CAL

 

XBRL Taxonomy Extension Calculation Linkbase Document

     

101.DEF

 

XBRL Taxonomy Extension Definition Linkbase Document

     

101.LAB

 

XBRL Taxonomy Extension Label Linkbase Document

     

101.PRE

 

XBRL Taxonomy Extension Presentation Linkbase Document

 

 
18

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

WRIT MEDIA GROUP, INC.

 
       

Date: March 30, 2015

By:

/s/ Eric Mitchell

 
   

Eric Mitchell, President and Sole Director

 
       
 

By:

/s/ Eric Mitchell

 
   

Chief Financial Officer and Chief Accounting Officer/Controller

 

 

 

19




 EXHIBIT 31.1

WRIT MEDIA GROUP, INC.

 

a Delaware corporation

 

8200 Wilshire Boulevard,

 

Suite 200

 

Beverly Hills, CA 90211

 

310.461.3737

 

Rule 15d-14(a) Certification

 

I, Eric Mitchell, certify that:

 

1.

I have reviewed this 10-Q of WRIT Media Group, Inc.;

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c.

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d.

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

 

5.

The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 

a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 

b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

 

Date: March 30, 2015

By:

/s/ Eric Mitchell

 
   

Eric Mitchell,

 
   

President, Principal Executive Officer

 

 



EXHIBIT 31.2

 

WRIT MEDIA GROUP, INC.

 

a Delaware corporation

 

8200 Wilshire Boulevard,

 

Suite 200

 

Beverly Hills, CA 90211

 

310.461.3737

 

Rule 15d-14(a) Certification

 

I, Eric Mitchell, certify that:

 

1.

I have reviewed this 10-Q of WRIT Media Group, Inc.;

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c.

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d.

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

 

5.

The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 

a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 

b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

 

Date: March 30, 2015

By:

/s/ Eric Mitchell

 
   

Eric Mitchell,

 
   

Treasurer and Director, Principal Financial Officer

 

 



EXHIBIT 32.1

 

WRIT MEDIA GROUP, INC.

 

8200 Wilshire Boulevard,

 

Suite 200

 

Beverly Hills, CA 90211

 

310.461.3737

 

Section 1350 Certification

 

As Adopted Pursuant To

 

Section 906 Of The Sarbanes-Oxley Act Of 2002

 

Certification of the Principal Executive Officer and Principal Financial Officer

 

In connection with the Form 10-Q of WRIT Media Group, Inc. (the “Company”) for the quarterly period ended December 31 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned Principal Executive Officer and Principal Financial Officer of the Company certifies, to the best knowledge and belief of the signatory, pursuant to Section 1350 of Chapter 63 of title 18 of the United States Code (18 U.S.C. 1350), as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

(1)

The Report fully complies with the requirements of Section 15(d) and Section 12(g) of the Securities Exchange Act of 1934; and

 

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

Date: March 30, 2015

By:

/s/ Eric Mitchell

 
   

Eric Mitchell,

 
   

President, Principal Executive Officer

 
       

Date: March 30, 2015

By:

/s/ Eric Mitchell

 
   

Eric Mitchell,

 
   

Treasurer, Principal Financial Officer

 

 

This certification accompanying the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

 

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