UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

ANNUAL REPORT PURSUANT TO SECTION 12(g) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended March 31, 2015

 

Commission file number: 333-156832

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

 

 

WRIT MEDIA GROUP, INC.

 

a Delaware corporation

 

8200 Wilshire Boulevard,

Suite 200

Beverly Hills, CA  90211

310.461.3737

 

 

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. [ ] Yes [x] No

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act from their obligations under those Sections. [ ] Yes [x] No

 

Indicate by check mark whether the registrant 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). [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). [x] Yes [ ] No

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K. [X]

 

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 [ ] (Do not check if a smaller reporting company) Smaller reporting company [x]

 

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

 

The aggregate market value of the voting common equity held by non-affiliates, computed by reference to the average bid and asked price of such common equity, as of the last business day of our most recently completed fiscal year, was approximately $457,864.

 

The number of shares outstanding of our Common Stock is 2,309,056 as of December 14, 2015.

 

The number of shares outstanding of our Preferred Stock is 7,500 as of December 14, 2015.

 

There are no other classes of stock.

 



 

 

TABLE OF CONTENTS

 

        Page
PART I  
             
ITEM 1.   Business.     3  
             
ITEM 1A.   Risk factors.     3  
             
ITEM 1B.   Unresolved staff comments.     6  
             
ITEM 2.   Properties.     6  
             
ITEM 3.   Legal proceedings.     6  
             
PART II  
             
ITEM 5.   Market for registrant's common equity, related Stockholder matters and issuer purchases of equity securities.     7  
             
ITEM 6.   Selected Financial Data     9  
             
ITEM 7.   Management's discussion and analysis of financial condition and results of operations.     9  
             
ITEM 7A   Quantitative and qualitative disclosures about market risk.     15  
             
ITEM 8   Financial statements and supplementary data     16  
    Consolidated Balance Sheets     17  
    Consolidated Statements of Operations     18  
    Consolidated Statements of Changes in Shareholders’ Deficit     19  
    Consolidated Statements of Cash Flows     20  
    Note to Consolidated Financial Statements     21  
             
ITEM 9   Changes in and disagreements with accountants on accounting and financial disclosure.     33  
             
ITEM 9A.   Controls and Procedures.     33  
             
ITEM 9B.    Other Information     34  
             
PART III
             
ITEM 10.   Directors, executive officers, and corporate governance     35  
             
ITEM 11.   Executive compensation.     36  
             
ITEM 12.   Security ownership of certain beneficial owners and management and related stockholder matters.     37  
             
ITEM 13.   Certain relationships and related transactions, and director independence     38  
             
ITEM 14.   Principal accountant fees and services.     39  
             
ITEM 15.   Exhibits and financial statement schedules.     39  

 

PART I

 

ITEM 1.   BUSINESS.

 

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.

 

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 2014 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 in the 4th quarter of 2014, lack of operating capital caused the Company to temporarily halt software development funding, which delayed the Company’s overall gaming product release schedule. This temporary reduction in operating capital was due to mainly to regulatory delays encountered in structuring WRIT’s equity-line financing, and the Company’s difficulty in raising alternative investment capital, due to its sub-penny share price at the time.

 

On January 22, 2014, the Company changed the name of the corporation to WRIT Media Group, Inc., and authorized a 1 for 1,000 reverse split of the Company’s issued and outstanding shares of Common Stock. The name change was authorized to encompass the Company's broadened activities, including additional business plans and models, and the acquisition and formation of new subsidiaries. The equity restructuring was authorized to achieve the following: (a) price per share -- the rollback will increase the price per share to above $0.01, sub-penny markets are getting harder to trade and next to impossible to finance; (b) funding -- with a sub penny share price the Company was unable to fund because of dilution, post rollback the share price should be well above $0.01 and allow management to close on numerous funding opportunities that have been presented; (c) larger potential audience -- with a higher share price the Company will have access to investors who do not trade sub penny stocks such as institutions and Europeans; (d) listing in Europe -- the Company will now be able to list its common shares for trading on a European Stock Exchange, as co-listings in Europe are not accepted with a sub penny share price; and (e) acquisitions -- the Company will be able to use common shares to acquire larger assets and other industry related companies. 

 

On January 16, 2014 WRIT’s Equity Line Financing (“ELF”) agreement with Dutchess Opportunity Fund II, and its corresponding S1 registration statement, was declared effective by the SEC. The ELF agreement, executed in September 2013, allows but does not require WRIT to sell up to US$10,000,000 of common stock to Dutchess at a 5% discount to market price, during the 36 month term.Compared to the Company’s convertible debt financing, ELFs provide a lower discount to market that minimize dilution while increasing operating capital. This additional financing source allowed the company to reduce debt and reduce the balance of the more expensive convertible notes that were outstanding during the last quarter of the fiscal year. As of March 31, 2014, 21,829 common shares were sold generating a net amount to the company of $4,023.

 

On February 4, 2014 the Company completed its administrative and legal work with the Depository Trust & Clearing Corporation ("DTCC") and the DTCC's long-standing "Administrative Chill" on clearing WRIT stock certificates was removed. DTCC resumed accepting deposits of the Company's common stock for book entry transfer services. As a result, shareholders with online brokerage accounts at firms such as Scottrade, ETRADE, TD Ameritrade and other full service brokerage firms are allowed to deposit new shares of WRIT's common stock in the electronic system that controls clearance and settlement. The reinstatement of the DTC depository services is an instrumental and enormous accomplishment for WRIT, which greatly reduced the costs and expenses associated with private equity investments in the Company.

 

In September 2014 the Company launched two online point of sale platforms; www.RetroInfinity.com and www.AmigaGamesInc.com to market its “retro” gaming titles directly to consumers. Both sales platforms initially offer only downloads for windows based computers. The online store launch was completed in conjunction with an initial marketing program which featured NASCAR, the RWR Retro Infinity NASCAR race team, and the “Drive to Championship Weekend” branding program. In December 2014 the Company intended to launch additional titles on additional mobile platforms, such as Windows phone, iOS, and Android platforms, so that the video game titles can be downloaded as Apps on various mobile devices, the Company experienced additional financing delays which interrupted software development and caused the Company to reschedule the anticipated release on mobile platforms into 2015. The online store launch generated an increase in consumer traffic to the Company’s websites and created awareness in the Company’s product, but generated minimal sales, most consumers were interested only in the mobile versions of the gaming titles, which were not yet available and still in development.

 

 

The websites are currently being modified to accept payment for crowdfunding transactions, and we launched the Retro Infinity/Amiga Games crowdfunding platform, supported by a social marketing campaign, in the 3rd quarter of 2015. The initial crowdfunding campaign was not successful, so the Company is seeking additional financing from strategic partners that will allow the Company to resume and complete software development, and commence product marketing activities.

 

On June 25, 2015, the Company authorized a 1 for 200 reverse split of the Company’s issued and outstanding shares of Common Stock. The equity restructuring was authorized to achieve the following: (a) price per share -- the rollback will increase the price per share to above $0.01, sub-penny markets are getting harder to trade and next to impossible to finance; (b) funding -- with a sub penny share price the Company was unable to fund because of dilution, post rollback the share price should be well above $0.01 and allow management to close on numerous funding opportunities that have been presented; (c) larger potential audience -- with a higher share price the Company will have access to investors who do not trade sub penny stocks such as institutions and Europeans; (d) listing in Europe -- the Company will now be able to list its common shares for trading on a European Stock Exchange, as co-listings in Europe are not accepted with a sub penny share price; and (e) acquisitions -- the Company will be able to use common shares to acquire larger assets and other industry related companies. 

 

We believe WRIT is well positioned to benefit from the market growth and increased demand for mobile gaming content, and intend to continue to look for opportunities to finance and complete its software development so that it can distribute 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.

 

ITEM 1A.  RISK FACTORS.

 

1.   Our auditor has expressed substantial doubt regarding our ability to continue as a going concern.

 

We continue to incur losses in our operations. While we expect to generate revenues within the next fiscal year, there is no assurance that we will be successful. 

 

2.   The creation of content for the entertainment industry is highly competitive and we will be competing with companies with much greater resources than we have.

 

The business in which we engage is significantly competitive.  Each of our primary business operations is subject to competition from companies which, in some instances, have greater development, production, and distribution and capital resources than us. We compete for relationships with a limited supply of facilities and talented creative personnel to produce our films.  We will compete with major entertainment companies, such as Sony, Warner Brothers, Disney, AEG, Live Nation, Electronic Arts, Ubisoft, and others for content. We also anticipate that we will compete with a large number of United States-based and international distributors and sub-distributors of alternative content including divisions of Sony/MGM, Cinedigm Digital Cinema Corp., NCM Fathom, and Screenvision in the production of music-related and event content that may be expected to appeal to national and international audiences.  Additionally, our video games will compete with thousands of other “Apps” which are available in the App stores of Apple, Samsung, Microsoft and other mobile stores. More generally, we anticipate we will compete with various other leisure-time activities, such as home videos, movie theaters, personal computers and other alternative sources of entertainment.

 

The production and distribution of music-content and mobile Apps are significantly competitive businesses, as they compete with each other, in addition to other forms of entertainment and leisure activities.  There will be a proliferation of free TV broadcasters, cable and emerging HD cable channels, and mobile streaming providers looking to acquire content, which may not include music-related content or video games.

 

There is also active competition among all companies in the entertainment and related industries for services of software developers, producers, directors, musicians and other Artists, and for the acquisition of entertainment properties.  The increased number of entertainment offerings in the United States and abroad has resulted in increased competition for audience attention and may have an effect on the Company’s ability to acquire and produce product. Revenues for any entertainment products depend in part on general economic conditions, but the competitive situation of an entertainment product offering is still greatly affected by the quality of, and public response to, the entertainment product that the artist makes available to the marketplace.

 

There is strong competition throughout the converging mobile device and television industries, from cable providers, handset and tablet manufactures, major motion picture studios, video game publishers, and other independent technology companies, as well as from new entertainment content and viewing opportunities that have not yet reached the market.

 

3.   Audience acceptance of our content will determine our success, and the prediction of such acceptance is inherently risky.

 

We believe that our live concert theatrical success will be dependent upon general public acceptance, marketing, advertising and the quality of the production.  The Company's production will compete with numerous independent and foreign productions, in addition to productions produced and distributed by a number of major domestic companies, many of which are divisions of conglomerate corporations with assets and resources substantially greater than that of ours.  Our management believes that in recent years with the current promotion of 3D and 4K movies and equipment, and with the rapid growth rate in available mobile apps, that there has been an increase in competition in virtually all facets of our business. The growth of mobile content, pay-per-view television, and home video streaming products may have an effect upon theater attendance and non-theatrical motion picture distribution. As we may distribute productions to all of these markets, it is not possible to determine how our business will be affected by the developments, and accordingly, the resultant impact on our financial statements.  Moreover, audience acceptance can be affected by any number of things over which we cannot exercise control, such as a shift in leisure time activities or audience acceptance of a particular style of music or artist.

 

4.   The competition for booking screens may have an adverse effect on theatrical revenues.

 

In the distribution of motion pictures, there is very active competition to obtain bookings of pictures in theaters and television networks and stations throughout the world.  A number of major motion picture companies have acquired motion picture theaters.  Such acquisitions may have an adverse effect on our distribution endeavors and our ability to book certain theaters which, due to their prestige, size and quality of facilities, are deemed to be especially desirable for motion picture bookings.

 

5. The competition for securing premier placement of mobile apps may have an adverse effect on video gaming revenues.

 

In the distribution of mobile apps, including the Company’s video games, there is very active competition to obtain premiere placement and advertising dollars from mobile manufacturers and service providers throughout the world.  A number of major software publishers have acquired such relationships and opportunities with the major carriers and handset manufacturers.  Such agreements may have an adverse effect on our sales, marketing and distribution endeavors, and our ability to obtain premier App store placement, due to the prestige, size and quality of the established companies’ product lines.

 

6.   We have limited financial resources and there are risks we may be unable to acquire financing when needed.

 

To achieve and maintain competitiveness, we may be required to raise substantial funds.  Our forecast for the period for which our financial resources will be adequate to support our operations involves risks and uncertainties and actual results could fail as a result of a number of factors. We anticipate that we may need to raise additional capital to develop, promote and distribute our product and to acquire property rights of the artists or publishers.  Such additional capital may be raised through public or private financing as well as borrowings and other sources.  Public or private offerings may dilute the ownership interests of our stockholders.  Additional funding may not be available under favorable terms, if at all.  If adequate funds are not available, we may be required to limit our operations significantly or to obtain funds through entering into arrangements with collaborative partners or others that may require us to relinquish rights to certain products and services that we would not otherwise relinquish and thereby reduce revenues to the company. 

 

 

7.   We are at the risk of mobile telephone and internet competition which may develop and the effects of which we cannot predict.

 

The mobile phone application and internet market is new, rapidly evolving and intensely competitive.  We believe that the principal competitive factors in maintaining a mobile telephone application and an internet business are selection, convenience of download and other features, price, speed and accessibility, customer service, quality of image and site content, and reliability and speed of fulfillment.  Although we intend to be able to compete in this market, when new technology is further developed, many potential competitors have longer operating histories, more customers, greater brand recognition, and significantly greater financial, marketing and other resources.  In addition, larger, well-established and well-financed entities may acquire, invest in, or form joint ventures as the Internet, and e-commerce in general, continue to become more widely accepted.

 

In addition, we will face competition on any sale of merchandise that is tailored to an artist, video game publisher, or sponsor.  Many of our existing competitors, in addition to a number of potential new competitors, have significantly greater financial, technical and marketing resources than we do.

 

8.   We are at risk of technological changes to which we may be unable to adapt as swiftly as our competition.

 

We believe that our future success will be partially affected by continued growth in the use of digital, 3D, and ultra-HD broadcasting.  The production, acquisition and distribution of music-related content to movie theaters and by home video retailers, free TV broadcasters, cable, 3D and ultra-HD cable channels, and mobile streaming providers are still relatively new, and predicting the extent of further growth, if any, is difficult. The market for this content is characterized by rapid technological developments, evolving industry standards and customer demands, and frequent new product introductions and enhancements.  Our failure to adapt to any technological developments effectively could adversely affect our business, operating results, and financial condition.

  

9.   The distribution of entertainment content and related materials is at a high risk for piracy which may affect our earnings.

 

The entertainment content distribution industry, including us, may continue to lose an indeterminate amount of revenue as a result of piracy due to unauthorized copying of our product at post production houses, copies of prints in circulation to theaters, unauthorized videotaping at theaters and other illegal means of acquiring our copyrighted material. The USTR has placed Argentina, Brazil, Egypt, Indonesia, Israel, Kuwait, Lebanon, Pakistan, the Philippines, Russia, Ukraine and Venezuela on the 301 Special Watch List for excessive rates of piracy of motion pictures and optical disks. The USTR has placed Azerbaijan, Bahamas, Belarus, Belize, Bolivia, Bulgaria, Colombia, the Dominican Republic, Ecuador, Hungary, Italy, Korea, Latvia, Lithuania, Mexico, Peru, Romania, Taiwan, Tajikistan, Thailand, and Uzbekistan on the watch list for excessive piracy.

 

ITEM 1B.  UNRESOLVED STAFF COMMENTS.

 

We have no unresolved comments from the Securities and Exchange Commission.

 

ITEM 2.   PROPERTIES.

 

We utilize an executive office at 8200 Wilshire Boulevard, Suite 200, Beverly Hills, California  90211.  This space is located near the major production studios in Los Angeles County.  Our rent consists of 200 square feet at $199.00 per month pursuant to a lease for one year.

 

ITEM 3.   LEGAL PROCEEDINGS.

 

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

 

 

PART II

 

ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

 

(a)  Market Price.

 

The Company's common stock is publicly traded in the over-the-counter market in the OTC Markets Group Inc. System under the ticker symbol WRIT. The following table sets forth the reported high and low prices of our common stock for each quarter during the fiscal year ended March 31, 2015 and 2014.  The prices reflect inter-dealer prices without mark-ups mark-downs, or commissions, and may not necessarily reflect actual transactions.

 

Fiscal Year Ended March 31, 2015

 

Quarter   High     Low  
               
First     84.00       8.00  
Second      19.00       3.00  
Third       10.00       1.20  
Fourth      1.90       0.48  

 

Fiscal Year Ended March 31, 2014

 

Quarter     High     Low  
             
First     260.00       80.00  
Second      160.00       40.00  
Third       60.00       20.00  
Fourth      78.00       14.00  

                                                    

The Securities and Exchange Commission adopted Rule 15g-9, which established the definition of a "penny stock," for purposes relevant to the Company, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (i) that a broker or dealer approve a person's account for transactions in penny stocks; and (ii) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person's account for transactions in penny stocks, the broker or dealer must (i) obtain financial information and investment experience and objectives of the person; and (ii) make a reasonable determination that the transactions in penny stocks are suitable for that person and that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the Commission relating to the penny stock market, which, in highlight form, (i) sets forth the basis on which the broker or dealer made the suitability determination; and (ii) that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Disclosure also has to be made about the risks of investing in penny stock in both public offering and in secondary trading, and about commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

 

(b)  Holders.

 

There are 6,408 holders of record of the Company's Common Stock, of which 137 are active holders. 

 

 

Currently, a certain number of our issued and outstanding shares of Common Stock held by non-affiliates are eligible for sale under Rule 144 promulgated under the Securities Act of 1933, as amended, subject to certain limitations included in said Rule. In general, under Rule 144, a person (or persons whose shares are aggregated), who has satisfied a six month holding period, under certain circumstances, has unlimited public resale under said Rule if the seller complies with said Rule.

 

In summary, Rule 144 applies to affiliates (that is, control persons) and non-affiliates when they resell restricted securities (those purchased from the issuer or an affiliate of the issuer in nonpublic transactions) issued by a shell company. Non-affiliates reselling restricted securities, as well as affiliates selling restricted or non-restricted securities, are not considered to be engaged in a distribution and, therefore, are not deemed to be underwriters as defined in Section 2(11) if the seller complies with said Rule.

 

(c)  Dividends.

 

We have declared no stock or cash dividends and we do not intend to declare or pay any dividends in the future.

 

(d)  Application of California law.

 

Section 2115 of the California General Corporation law provides that a corporation incorporated under the laws of a jurisdiction other than California, but which has more than one-half of its "outstanding voting securities" and which has a majority of its property, payroll and sales in California, based on the factors used in determining its income allocable to California on its franchise tax returns, may be required to provide cumulative voting until such time as the Company has its shares listed on certain national securities exchanges, or designated as a national market security on NASDAQ (subject to certain limitations). Accordingly, holders of our Common Stock may be entitled to one vote for each share of Common Stock held and may have cumulative voting rights in the election of directors. This means that holders are entitled to one vote for each share of Common Stock held, multiplied by the number of directors to be elected, and the holder may cast all such votes for a single director, or may distribute them among any number of all of the directors to be elected.

 

(e)  Purchases of Equity Securities.

 

We (and affiliated purchasers) have made no purchases or repurchases of any securities of the Company or any other issuer.

 

(f)  Securities Authorized for Issuance under an Equity Compensation Plan.

 

We have not authorized the issuance of any of our securities in connection with any form of equity compensation plan.

 

(g)  Recent Sale of Unregistered Securities

 

During the year ended March 31, 2015, the Company issued 17,641 shares for cash totaling $226,781 and issued 95,148 shares of common stock to employees and third party consultants as compensation, with the fair value of the shares determined to be $640,625. The sale and issuance of the shares was exempt from registration under the Securities Act of 1933, as amended, by virtue of section 4(2) as a transaction not involving a public offering.  Each shareholder had acquired the shares for investment and not with a view to distribution to the public. All of these shares had been issued for investment purposes in a "private transaction" and were "restricted" shares as defined in Rule 144 under the Securities Act of 1933, as amended.

 

ITEM 6.   SELECTED FINANCIAL DATA.

 

Not applicable to smaller reporting companies.

 

 

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION and RESULTS OF OPERATIONS.

 

Special Note Regarding Forward Looking Statements

 

In addition to historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We use words such as “believe,” “expect,” “anticipate,” “project,” “target,” “plan,” “optimistic,” “intend,” “aim,” “will” or similar expressions which are intended to identify forward-looking statements. Such statements include, among others, those concerning market and industry segment growth and demand and acceptance of new and existing products; any projections of sales, earnings, revenue, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements regarding future economic conditions or performance; as well as all assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those identified in Item 1A “Risk Factors” in our annual report on Form 10-K for fiscal year ended March 31, 2015, as well as assumptions, which, if they were to ever materialize or prove incorrect, could cause the results of the Company to differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements made by penny stock issuers are excluded from the safe harbors in Section 27A of the Securities Act of 1933 and in Section 21E of the Securities Exchange Act of 1934.

 

Readers are urged to carefully review and consider the various disclosures made by us in this report and our other filings with the Security and Exchange Commission (“SEC”). These reports attempt to advise interested parties of the risks and factors that may affect our business, financial condition and results of operations and prospects. The forward-looking statements made in this report speak only as of the date hereof and we disclaim any obligation, except as required by law, to provide updates, revisions or amendments to any forward-looking statements to reflect changes in our expectations or future events.

 

Overview

 

WRIT Media Group, Inc. (“we”, “us”, “our”, “WRIT”, or the “Company”) was incorporated as Writers’ Group Film Corp. in Delaware on March 9, 2007 to produce films, television programs and similar entertainment programs for various media formats.

 

Front Row Networks (“FRN”) was incorporated on July 27, 2010 in the State of Nevada. The Company is a content creation company which 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.

 

Consequently, the assets and liabilities and the historical operations were reflected in the consolidated financial statements for periods prior to the Share Exchange Agreement were those of FRN and will be recorded at the historical cost basis. After the completion of the Share Exchange Agreement, the Company’s consolidated financial statements included the assets and liabilities of both FRN and WRIT, the historical operations of FRN and the operations of WRIT from the closing date of the Share Exchange Agreement.

 

 

On July 7, 2011, we modified our February 2011 Share Exchange Agreement and agreed to assume $100,000 in new debt which is shown as a reduction of our Paid-In Capital.

 

While the core business of Front Row Networks remains the licensing, production, acquisition and distribution of music-related content and programming, the core business is dependent upon negotiating and financing projects with schedules that are solely determined by third parties, such as Artists and rights owners. In order to secure less cyclical entertainment product, the Company sought to license or purchase entertainment content that could be easily secured and distributed through the multiple distribution arrangements already established by the Company and via the rapidly growing marketplace represented by consumers of mobile, internet, and TV set-top devices. To reach this goal during the fiscal year, the Company set out to acquire exclusive branded content and entertainment programming, and achieved this goal through the acquisition of Amiga Games Inc.

 

On August 19, 2013, the Company completed an acquisition transaction through a share exchange with Amiga Games Inc., whereby WRIT acquired 100% of the issued and outstanding capital stock, assets, and trademarks of Amiga Games Inc. in exchange for 500,000 shares of the Common Stock of WRIT. As a result of the acquisition, Amiga Games Inc. became WRIT’s wholly-owned subsidiary.

 

Amiga Games Inc. licenses classic pre-Windows computer game libraries and adapts and republishes the most popular titles for smartphones, modern game consoles, PCs, tablets, and other television streaming devices. WRIT also established a new company, Retro Infinity Inc., to publish and brand games that were not originally released for Amiga brand computers. The two companies tap into the growing “retro gaming” marketplace, building on the "Amiga", “Atari”, and “MS-DOS” brands, delivering retro-gaming titles adapted for modern devices as well as merchandise featuring brands and characters from the games.

 

During the fiscal year, Amiga Games Inc. and Retro Infinity Inc. entered several marketing and distribution agreements, including those with Microsoft Corporation and Roku Inc. Both agreements include minimum guarantees, defined as advances against future sales. Additionally, the Retro Infinity Inc. licensed dozens of classic games for distribution via the Windows 8, Roku player, iOS (Apple), and Android platforms. Although it was the Company’s strategic goal to distribute a broad range of video game titles on the Windows 8 and iOS platforms during the 4th quarter of 2014, lack of operating capital caused the Company to temporarily halt software development funding, which delayed the Company’s overall gaming product release schedule. This temporary reduction in operating capital was due to mainly to regulatory delays encountered in structuring WRIT’s equity-line financing, and the Company’s difficulty in raising alternative investment capital, due to its sub-penny share price at the time.

 

On January 22, 2014, the Company changed the name of the corporation to WRIT Media Group, Inc., and authorized a 1 for 1,000 reverse split of the Company’s issued and outstanding shares of Common Stock. The name change was authorized to encompass the Company's broadened activities, including additional business plans and models, and the acquisition and formation of new subsidiaries. The equity restructuring was authorized to achieve the following: (a) price per share -- the rollback will increase the price per share to above $0.01, sub-penny markets are getting harder to trade and next to impossible to finance; (b) funding -- with a sub penny share price the Company was unable to fund because of dilution, post rollback the share price should be well above $0.01 and allow management to close on numerous funding opportunities that have been presented; (c) larger potential audience -- with a higher share price the Company will have access to investors who do not trade sub penny stocks such as institutions and Europeans; (d) listing in Europe -- the Company will now be able to list its common shares for trading on a European Stock Exchange, as co-listings in Europe are not accepted with a sub penny share price; and (e) acquisitions -- the Company will be able to use common shares to acquire larger assets and other industry related companies. 

 

On January 16, 2014 WRIT’s Equity Line Financing (“ELF”) agreement with Dutchess Opportunity Fund II, and its corresponding S1 registration statement, was declared effective by the SEC. The ELF agreement, executed in September 2013, allows but does not require WRIT to sell up to US$10,000,000 of common stock to Dutchess at a 5% discount to market price, during the 36 month term. Compared to the Company’s convertible debt financing, ELFs provide a lower discount to market that minimize dilution while increasing operating capital. This additional financing source allowed the company to reduce debt and reduce the balance of the more expensive convertible notes that were outstanding during the last quarter of the fiscal year.

 

On February 4, 2014 the Company completed its administrative and legal work with the Depository Trust & Clearing Corporation ("DTCC") and the DTCC's long-standing "Administrative Chill" on clearing WRIT stock certificates was removed. DTCC resumed accepting deposits of the Company's common stock for book entry transfer services. As a result, shareholders with online brokerage accounts at firms such as Scottrade, ETRADE, TD Ameritrade and other full service brokerage firms are allowed to deposit new shares of WRIT's common stock in the electronic system that controls clearance and settlement. The reinstatement of the DTC depository services is an instrumental and enormous accomplishment for WRIT, which greatly reduced the costs and expenses associated with private equity investments in the Company.

 

In September 2014 the Company launched two online point of sale platforms; www.RetroInfinity.com and www.AmigaGamesInc.com to market its “retro” gaming titles directly to consumers. Both sales platforms initially offer only downloads for windows based computers. The online store launch was completed in conjunction with an initial marketing program which featured NASCAR, the RWR Retro Infinity NASCAR race team, and the “Drive to Championship Weekend” branding program. In December 2014 the Company intended to launch additional titles on additional mobile platforms, such as Windows phone, iOS, and Android platforms, so that the video game titles can be downloaded as Apps on various mobile devices, the Company experienced additional financing delays which interrupted software development and caused the Company to reschedule the anticipated release on mobile platforms into 2015. The online store launch generated an increase in consumer traffic to the Company’s websites and created awareness in the Company’s product, but generated minimal sales, most consumers were interested only in the mobile versions of the gaming titles, which were not yet available.

 

The websites are currently being modified to accept payment for crowdfunding transactions, and we launched the Retro Infinity/Amiga Games crowdfunding platform, supported by a social marketing campaign, in the 3rd quarter of 2015. The initial crowdfunding campaign was not successful, so the Company is seeking additional financing from strategic partners that will allow the Company to resume and complete software development, and commence product marketing activities.

 

On June 25, 2015, the Company authorized a 1 for 200 reverse split of the Company’s issued and outstanding shares of Common Stock. The equity restructuring was authorized to achieve the following: (a) price per share -- the rollback will increase the price per share to above $0.01, sub-penny markets are getting harder to trade and next to impossible to finance; (b) funding -- with a sub penny share price the Company was unable to fund because of dilution, post rollback the share price should be well above $0.01 and allow management to close on numerous funding opportunities that have been presented; (c) larger potential audience -- with a higher share price the Company will have access to investors who do not trade sub penny stocks such as institutions and Europeans; (d) listing in Europe -- the Company will now be able to list its common shares for trading on a European Stock Exchange, as co-listings in Europe are not accepted with a sub penny share price; and (e) acquisitions -- the Company will be able to use common shares to acquire larger assets and other industry related companies. 

 

We believe WRIT is well positioned to benefit from the market growth and increased demand for mobile gaming content, and intend to continue to look for opportunities to finance and complete its software development so that it can distribute both music and video game content, though acquisitions and licensing arrangements. Throughout the year, the Company also intends to continue to explore new technologies and business relationships with entities that have the resources to offer financing, distribution and marketing of WRIT’s product.

 

Financial Performance Highlights

 

The following summarizes certain key financial information for the fiscal year ended March 31, 2015 and for the fiscal year ended March 31, 2014:

 

Revenues: Our revenues were $0 and $11,000 for the fiscal years ended March 31, 2015 and 2014.
Net income (loss): Net income (loss) was $(2,203,576) and $1,044,284 for the fiscal years ended March 31, 2015 and 2014.

  

 

Results of Operations

 

The following table sets forth key components of our results of operations for the fiscal years ended March 31, 2015 and 2014.

 

   

For the Year

Ended

03/31/2015

 

For the Year Ended

03/31/2014

                 
Total Revenue   $ —       $ 11,000  
Operating Expenses:                
Wages and benefits     258,447       210,578  
Audit and accounting     57,485       34,989  
Legal fee     38,436       2,915  
Other general and administrative     1,641,013       249,768  
Loss from operations     (1,995,381 )     (487,250 )
Other income     —         (3,000 )
Gain (loss) on derivative liability     —         1,715,954  
Interest expense     (208,195 )     (187,420 )
Net income (loss)   $ (2,203,576 )   $ 1,044,284  

 

Fiscal Year Ended March 31, 2015 Compared to Fiscal Year Ended March 31, 2014

 

Revenues. Revenues decreased to $0 for the fiscal year ended March 31, 2015 from $11,000 for the fiscal year ended March 31, 2014, due to a decrease in content delivered to customers, due to delays in software development, as compared to the available produced and acquired content available for distribution for the prior year.

 

Wages and benefits.  Wages and benefits expenses increased 22.7% to $258,447 for the fiscal year ended March 31, 2015 from $210,578 for the fiscal year ended March 31, 2014. The increase is mainly due to an increase in personnel costs during the year. The wages and benefits expenses for the fiscal year ended March 31, 2015 and 2014 include employee stock compensation in the amount of $60,334 and $165,104, respectively.

 

Audit and accounting. Audit and accounting expenses increased 64% to $57,485 for the fiscal year ended March 31, 2015, from $34,989 for the fiscal year ended March 31, 2014 . The increase in the audit and accounting expense is mainly related to increase in pricing for audit services.

 

Legal fees.  Legal Fees increased 1218.6% to $38,436 for the fiscal year ended March 31, 2015 from $2,915 for the fiscal year ended March 31, 2014. The increase in legal fees was related to an increase in legal expenses related to financing and other transactions for the Company.

 

Other general and administrative expenses. Other general and administrative expenses increased to $1,641,013 for the fiscal year ended March 31, 2015 from $249,768 for the fiscal year ended March 31, 2014. Those expenses consist primarily of company’s increase in business development, consulting fees and other expenses incurred in connection with general operations of Amiga Games Inc., and an intangible asset impairment expense of $821,235.

 

Loss from operations. Our loss from operations was $1,995,381 for the fiscal year ended March 31, 2015 and $487,250 for the fiscal year ended March 31, 2014.

 

Gain or loss from derivative liability. We recorded no gain or loss from derivative liability for the fiscal year ended March 31, 2015 and $1,715,954 for the fiscal year ended March 31, 2014, which is discussed in more detail in Note 5 “Derivative Liabilities” to our consolidated financial statements.

 

 

Interest expense. We incurred $208,195 in interest expense for the fiscal year ended March 31, 2015, and $187,420 in interest expense for the fiscal year ended March 31, 2014. The increase in interest expense is mainly due to an increase in additional borrowings, extinguished debt, and debt discount amortization.

 

Net income (loss). As a result of the foregoing factors, we generated a net loss of $2,203,576 and net income of $1,044,284 for the fiscal years ended March 31, 2015 and 2014, respectively.

 

Liquidity and Capital Resources

 

As reflected in the accompanying consolidated financial statements, the Company has accumulated deficits of $1,783,553 at March 31, 2015 that includes losses of $2,203,576 for the fiscal year ended March 31, 2015, and had retained earnings $420,023 at March 31, 2014 that includes net income of $1,044,284 for the fiscal year ended March 31, 2014. The Company also had a working capital deficiency of $620,060 as of March 31, 2015 and $181,109 as of March 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 March 31, 2015 and March 31, 2014, we have $255 and $25,810 respectively in cash and cash equivalents. The following table provides detailed information about our net cash flow for all financial statement periods presented in this report. To date, we have financed our operations primarily through cash flows from operations, sale of restricted stock through private placements, and borrowings from third and related parties.

 

   

For the Year

Ended

3/31/2015

 

For the Year Ended

 03/31/2014

                 
Net cash used in operating activities   $ (345,616 )   $ (175,463 )
Net cash used in investing activities     (191,230 )     (89,125 )
Net cash provided by financing activities     511,291       289,255  
Net increase (decrease) in cash and cash equivalents     (25,555 )     24,667  
Cash and cash equivalents at beginning of the period     25,810       1,143  
Cash and cash equivalents at end of the period   $ 255     $ 25,810  

 

Operating activities

 

Cash used in operating activities of $345,616 for the fiscal year ending March 31, 2015 which reflected our net loss of $2,203,576 adjusted for non-cash expenses, consisting primarily of $821,235 of impairment of intangible asset, $632,152 of stock based compensation to employees, consultants and other services, $552 of depreciation, and $177,119 of amortization of debt discount. Additional major sources of cash include an increase in accounts payable of $112,900, decrease in accounts receivable of $354, decrease in prepaid expense and other assets of $4,938, and an increase in accrued expenses of $108,710.

 

Cash used in operating activities of $175,463 for the fiscal year ending March 31, 2014 reflected our net income of $1,044,284, adjusted for non-cash expenses, consisting primarily of $1,715,954 of gain on derivative liability, $258,418 of stock based compensation to employees, consultants and other services, $173,376 of amortization of debt discount, $7,312 of amortization of deferred financing costs and gain on settlement of $28,468. Additional major sources of cash include increases in accounts payable of $23,885, increase in accrued expenses of $8,629, and an increase in deferred revenue of $55,395. Uses of cash included an increase in accounts receivables of $300 and an increase in prepaid expenses and other assets of $2,040. 

 

 

Investing activities

 

The net cash used in investing activities is for the fiscal year ended March 31, 2015 was $191,230 and is primarily due to funds invested in software development costs of $146,170 and cash paid for prior year software development costs of $45,060. During the fiscal year ended March 31, 2014 there was $89,125 net cash used by our investing activities, primarily due to funds invested in software development costs of $87,461 and purchases of technology hardware of $1,664.

 

Financing activities

 

Net cash provided by financing activities of $511,291 and $289,255 for the fiscal years ended March 31, 2015 and March 31, 2014, respectively. During the fiscal year ended March 31, 2015 there were funds borrowed on short term notes payable of $12,500, borrowing on convertible debt of $242,500, cash received from subscription receivable of $25,000, advances from related party of $9,510 and proceeds from shares issued for cash of $226,781 offset by payments of short term notes of $5,000. During the fiscal year ended March 31, 2014 there were funds borrowed on short term notes payable of $61,500, borrowing on convertible debt of $80,077 and proceeds from shares issued for cash of $222,774 offset by payments to related parties of $2,896, payments of short term notes of $6,000, payments of convertible debt of $61,200 and payments of $5,000 for deferred financing costs.

 

Loan Commitments

 

Borrowings from Related Parties

 

During the year ended March 31, 2015, $9,510 was advanced by Eric Mitchell and the advance is due on demand with 0% interest.

 

Borrowings from Third Parties

  

Falmouth Street Holdings, LLC

 

On March 2, 2015, the Company borrowed $7,500 from Falmouth Street Holdings, LLC. The maturity date of this note is August 29, 2015 and this loan bears an interest rate of 12% per annum from the issuance date. The note is still outstanding as of March 31, 2015. As of today the debt is still outstanding and therefore is in default.

 

SCHU Mortgage & Capital, Inc.

 

On February 18, 2014, the Company borrowed $15,000 from SCHU Mortgage & Capital, Inc. The maturity date of this note is August 18, 2014 and this loan bears an interest rate of 8% per annum from the issuance date. On July 10, 2014, SCHU Mortgage & Capital, Inc. sold and assigned its $15,000 note to Magna Group LLC, along with accrued interest of $465. See discussion on the new Magna note in note 4.

 

SFH Capital LLC

 

On October 22, 2013, the Company borrowed $14,000 from SFH Capital LLC. The maturity date of this note was October 22, 2014 and this loan bears an interest rate of 12% per annum from the issuance date. On June 6, 2014 the Company entered into a debt modification agreement with the debt holder. The modified note was convertible into common stock at a price of $10.00, with an extend maturity date of January 6, 2015, and there were no other changes to the original terms of the promissory note. The principal amount of the modified note was $15,045 on June 6, 2014, with the accrued interest owed on the old debt included in the principal of the new debt.

 

 

On October 29, 2013, the Company borrowed $4,000 from SFH Capital LLC. The maturity date of this note was October 29, 2014 and this loan bears an interest rate of 8% per annum from the issuance date. On June 6, 2014 the Company entered into a debt modification agreement with the debt holder. The modified note was convertible into common stock at a price of $10.00, bears an extend maturity date of January 6, 2015, and there were no other changes to the original terms of the promissory note. The principal amount of the modified note was $4,193 on June 6, 2014, with the accrued interest owed on the old debt included in the principal of the new debt.

 

On December 11, 2013, the Company borrowed $12,500 from SFH Capital LLC. The maturity date of this note was December 11, 2014 and this loan bears an interest rate of 8% per annum from the issuance date. On June 6, 2014 the Company entered into a debt modification agreement with the debt holder. The modified note was convertible into common stock at a price of $10.00, bears an extend maturity date of January 6, 2015, and there were no other changes to the original terms of the promissory note. The principal amount of the modified note was $12,985 on June 6, 2014, with the accrued interest owed on the old debt included in the principal of the new debt.

 

Mr. J. Shaw

 

On April 1, 2014, the Company borrowed $5,000 from J. Shaw. The maturity date of this note is May 1, 2014, and this loan bears an interest rate of 0% per annum from the issuance date. On April 23, 2014, the principal balance of the note was paid in its entirety and the note has been surrendered to the Company.

 

KBM Worldwide Inc.

 

On June 3, 2014, the Company borrowed $53,000 from KBM Worldwide Inc. The maturity date of this note is March 5, 2015. This loan bears an interest rate of 8% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. After 180 days following the date of the note, KBM Worldwide Inc. has the right to convert all or a portion of the remaining outstanding principal amount of this note into shares of the Company’s Common Stock. The conversion price will be 55% multiplied by the lowest three trading prices for the Common Stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2015, KBM Worldwide Inc. converted debt principal of $5,735 into 8,193 common shares, bringing the note balance to $47,265. As of today the debt is still outstanding and therefore is in default.

 

On July 29, 2014, the Company borrowed a convertible promissory note of $32,500 from KBM Worldwide, Inc. The maturity date of this note is May 1, 2015. This loan bears an interest rate of 8% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. After 180 days following the date of the note, KBM Worldwide Inc. has the right to convert all or a portion of the remaining outstanding principal amount of this note into shares of the Company’s Common Stock. The conversion price is 55% multiplied by the average of the lowest 3 trading day prices for the Common Stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date. On July 30, 2014, an amendment to the note defined a floor to the conversion price to be $.008 per share. As of March 31, 2015, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.

 

On September 15, 2014, the Company borrowed a convertible promissory note of $63,000 from KBM Worldwide, Inc. The maturity date of this note is June 17, 2015. This loan bears an interest rate of 8% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. After 180 days following the date of the note, KBM Worldwide Inc. has the right to convert all or a portion of the remaining outstanding principal amount of this note into shares of the Company’s Common Stock. The conversion price is 55% multiplied by the average of the lowest 3 trading day prices for the Common Stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2015, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.

 

 

Magna Group LLC

 

On March 17, 2014, the Company borrowed a convertible promissory note of $10,500 from Magna Group, LLC. The maturity date of this note is March 17, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. The principal amount of the note was converted into common shares. As of March 31, 2015, the note was paid off in full and the note has been surrendered to the Company.

 

On March 17, 2014, the Company borrowed a convertible promissory note of $13,077 from Magna Group, LLC. The maturity date of this note is March 17, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. The principal amount of the note was converted into common shares. As of March 31, 2015, the note was paid off in full and the note 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. On that same date, the Company amended the related debt agreement with the note holder. The maturity date of this amended note is July 10, 2015. This loan bears an interest rate of 12% per annum. The note is convertible into common stock at a price of 55% multiplied by the lowest volume weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2015, this note has been converted in its entirety and has been surrendered to the Company.

 

On July 10, 2014, the Company borrowed a convertible promissory note of $22,000 from Hanover Holdings I, LLC. The maturity date of this note is July 10, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. An amount equal to $2,500 of the principal balance of the note was converted into 4,545 common shares on February 4, 2015, leaving a principal balance of $19,500 as of March 31, 2015. As of today the debt is still outstanding and therefore is in default.

 

On September 10, 2014, the Company borrowed a convertible promissory note of $33,000 from Magna Equities II, LLC. The maturity date of this note is September 10, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2015, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.

 

On October 28, 2014, the Company borrowed a convertible promissory note of $25,000 from Magna Equities II, LLC. The maturity date of this note is October 28, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2015, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.

 

On December 17, 2014, the Company borrowed a convertible promissory note of $14,000 from Magna Equities II, LLC. The maturity date of this note is December 17, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2015, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.

 

 

Other Notes

 

Convertible debts were issued September 2009, bearing interest at a rate of 8% per annum, due in one year, and are convertible at $2.00 per share, and the total balance outstanding as of March 31, 2014 was $3,130. The note is in default. During the year ended March 31, 2015, debt principal of $2,470 and interest of $104 reclassified into note principal were converted into 6,427 common shares. As of March 31, 2015, other convertible notes have a principal balance of $660.

 

Obligations under Material Contracts

 

Except with respect to the loan obligations disclosed above, we have no obligations to pay cash or deliver cash to any other party.

 

Inflation

 

Inflation and changing prices have not had a material effect on our business and we do not expect that inflation or changing prices will materially affect our business in the foreseeable future. However, our management will closely monitor price changes in our industry and continually maintain effective cost controls in operations.

  

Off Balance Sheet Arrangements

 

We do not have any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity or capital expenditures or capital resources that is material to an investor in our securities.

 

Seasonality

 

Our operating results and operating cash flows historically have not been subject to seasonal variations. This pattern may change, however, as a result of new market opportunities or new product introduction.

 

Critical Accounting Policies

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial conditions and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements:

 

Accounts Receivable: Accounts receivable are recorded at the net invoice value and are not interest bearing. We consider receivables past due based on the contractual payment terms. We perform ongoing credit evaluations of our customers, and generally we do not require collateral on our accounts receivable. We estimate the need for allowances for potential credit losses based on historical collection activity and the facts and circumstances relevant to specific customers and we record a provision for uncollectible accounts when collection is uncertain. To date, we have not experienced significant credit related losses.

 

 

Revenue Recognition:

 

The Company follows revenue recognition in two industries, technology and film.

 

Revenue is measured at the fair value of the consideration received or receivable net of sales tax, trade discounts and customer returns.

 

Sale of Technology Gaming

 

Revenue from sale of technology gaming applications is recognized when the following conditions are satisfied:

 

Persuasive evidence of an arrangement exists
Delivery has occurred or services have been rendered
The seller’s price to the buyer is fixed or determinable
Collectability is reasonably assured

 

Film Sales

 

Based on Revenue Recognition Requirement for Film Sales (ASC 926-605-25), we recognize film license revenues when all of the following conditions are met:

 

- Persuasive evidence of a sale or licensing arrangement with a customer exists
- The film is complete and, in accordance with the terms of the arrangement, has been delivered or is available for immediate and unconditional delivery
- The license period of the arrangement has begun and the customer can begin its exploitation, exhibition, or sale
- The arrangement fee is fixed or determinable - Collection of the arrangement fee is reasonably assured

 

Recent Accounting Pronouncements

 

See Note 1. “Organization, Business Operations and Significant Accounting Policies” to our audited consolidated financial statements included elsewhere in this report.

 

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

Not applicable to smaller reporting companies.

 

 

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To The Board of Directors

WRIT Media Group, Inc.

Beverly Hills, California

 

We have audited the accompanying consolidated balance sheets of WRIT Media Group, Inc. and its wholly owned subsidiaries (collectively, the “Company”) as of March 31, 2015 and 2014, the related consolidated statements of operations, cash flows and changes in shareholders’ equity (deficit) for the years then ended. These consolidated financial statements are the responsibility of Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

 

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatements. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of WRIT Media Group, Inc. and its wholly owned subsidiaries as of March 31, 2015 and 2014, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has suffered losses from operations, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

MaloneBailey, LLP

www.malonebailey.com

Houston, Texas

 

December 14, 2015

 

WRIT Media Group, Inc.
Consolidated Balance Sheets
    March 31,   March 31,
    2015   2014
                 
Assets                
Current Assets                
Cash and cash equivalents   $ 255     $ 25,810  
Accounts receivable     470       824  
Prepaid expense and other assets     —         3,750  
Deferred financing costs     —         1,188  
Subscription receivable     —         25,000  
Total current assets     725       56,572  
                 
Long Term Assets                
Property, plant and equipment, net     1,112       1,664  
Intangible assets - software     —         532,521  
                 
Total Assets   $ 1,837     $ 590,757  
                 
Liabilities and Shareholders' Equity (Deficit)                
Current Liabilities                
Accounts payable   $ 198,349     $ 100,465  
Accounts payable, related party     112,500       —    
Accrued liability     106,442       9,614  
Convertible debts, net of unamortized discount of $103,836 and $0, respectively     131,089       26,707  
Notes payable     7,500       45,500  
Due to related parties     9,510       —    
Deferred Revenue     55,395       55,395  
Total current liabilities     620,785       237,681  
Total Liabilities     620,785       237,681  
                 
Shareholders' Equity (Deficit)                
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,  194,378 and 46,411 shares issued and outstanding, respectively     2       —    
Additional paid in capital     1,164,603       (66,947 )
Retained Earnings (Deficit)     (1,783,553 )     420,023  
Total shareholders' equity (deficit)     (618,948 )     353,076  
Total Liabilities and Shareholders' Equity (Deficit)   $ 1,837     $ 590,757  
                 
The accompanying notes are an integral part of these audited consolidated financial statements.

 

WRIT Media Group, Inc.
Consolidated Statements of Operations
 
         
    For The Years Ended March  31,
    2015   2014
 Revenues                
            Third party   $ —       $ 11,000  
 Total revenue     —         11,000  
 Operating Costs and Expenses                
 Intangible asset impairment expense     821,235       —    
 General and administrative     1,174,146       498,250  
 Total operating expenses     1,995,381       498,250  
                 
 Loss from operations     (1,995,381 )     (487,250 )
                 
 Other income (expense)                
 Other income     —         3,000  
 Gain (Loss) from derivative liability     —         1,715,954  
 Interest expense     (208,195 )     (187,420 )
 Net income (loss)     (2,203,576 )     1,044,284  
                 
 Net income (loss) per share:                
 Basic   $ (16.99 )   $ 48.12  
 Diluted   $ (16.99 )   $ 4.96  
                 
 Weighted average common shares outstanding:                
 Basic     129,708       21,700  
 Diluted     129,708       210,736  
                 
The accompanying notes are an integral part of these audited consolidated financial statements.

 

WRIT Media Group, Inc.
Consolidated Statements of Changes in Shareholder's Equity (Deficit)
                                     
For the Fiscal Years Ended March 31, 2015 and March 31, 2014
                                     
                                 
    Common Stock   Preferred Stock - Series A   Preferred Stock - Series B   Additional Retained   Total Shareholders'
    Shares   Amount   Shares   Amount   Shares   Amount   Paid-in Capital   Earnings (Deficit)   Equity (Deficit)
Balance at 3/31/13     7,870       —         10,000       —         10,000       —         409,762       (624,261 )     (214,499 )
Shares issued for convertible notes     13,873       —                                         145,589               145,589  
Shares issued for acquisition     2,500       —                                         400,000               400,000  
Shares issued for services     8,158       —                                         258,418               258,418  
Shares issued for cash     13,428       —                                         247,774               247,774  
Reclassification of derivative to additional paid in capital                                                     (1,528,390 )             (1,528,390 )
Cashless exercise of warrants     132       —                                         —                 —    
Cancellation of shares     (50 )     —                                         (100 )             (100 )
Conversion of preferred stock to common stock     500       —                         (10,000 )             —                 —    
Net Income (Loss)                                                             1,044,284       1,044,284  
Balance at 3/31/14     46,411       —         10,000       —         —         —         (66,947 )     420,023       353,076  
                                                                         
Shares issued for convertible notes     35,172       1                                       83,190               83,191  
Shares issued for cash     17,647       —                                         226,781               226,781  
Shares issued for services     95,148       1                                       640,624               640,625  
Discount on issuance of convertible note payable                                                     280,955               280,955  
Net loss                                                             (2,203,576 )     (2,203,576 )
Balance at 3/31/15     194,378       2       10,000       —         —         —         1,164,603       (1,783,553 )     (618,948 )
                                                                         
The accompanying notes are an integral part of these audited consolidated financial statements.

 

WRIT Media Group, Inc.
Consolidated Statements of Cash Flows
         
         
    For The Year Ended March 31,
    2015   2014
                 
Cash Flows From Operating Activities                
 Net Income (loss)   $ (2,203,576 )   $ 1,044,284  
 Adjustments to reconcile net income (loss) to net cash used in operating activities:                
 Gain on derivative liability     —         (1,715,954 )
 Depreciation     552       —    
 Shares issued for services     632,152       258,418  
 Amortization of debt discount     177,119       173,376  
 Amortization of deferred financing costs     —         7,312  
 Impairment of intangible asset     821,235       —    
 Gain on settlement of accrued payroll liability     —         (28,468 )
 Changes in operating assets and liabilities:                
 Accounts receivable     354       (300 )
 Prepaid expenses and other assets     4,938       (2,040 )
 Accounts payable     400       23,885  
 Accounts payable, related party     112,500       —    
 Accrued liabilities     108,710       8,629  
 Deferred revenue     —         55,395  
 Net cash used in operating activities     (345,616 )     (175,463 )
                 
 Cash Flows From Investing Activities                
 Cash paid for software development costs and license     (146,170 )     (87,461 )
 Cash paid for software development costs incurred on account in prior year     (45,060 )     —    
 Purchase of technology hardware     —         (1,664 )
 Net cash used in investing activities     (191,230 )     (89,125 )
                 
 Cash Flows From Financing Activities                
 Advances from related party     9,510       —    
 Cash received from subscription receivable     25,000       —    
 Proceeds from sale of stock     226,781       222,774  
 Borrowing on short term notes payable     12,500       61,500  
 Borrowing on convertible debt     242,500       80,077  
 Payment of related party debt, net     —         (2,896 )
 Payment of short-term notes payable     (5,000 )     (6,000 )
 Payment of convertible debt     —         (61,200 )
 Deferred financing costs     —         (5,000 )
 Net cash provided by financing activities     511,291       289,255  
                 
 Net increase (decrease) in cash and cash equivalents     (25,555 )     24,667  
 Cash and cash equivalents, beginning of period     25,810       1,143  
 Cash and cash equivalents, end of period   $ 255     $ 25,810  

 

WRIT Media Group, Inc.
Consolidated Statements of Cash Flows (continued)
         
         
    For The Year Ended March 31,
    2015   2014
                 
 Supplemental disclosure information:                
 Income taxes paid   $ —       $ —    
 Interest paid   $ 6,119     $ 780  
 Non-cash financing activities:                
 Common Shares issued for convertible debt and accrued interest   $ 83,191     $ 145,589  
 Common Shares issued for acquisition of assets from Amiga Games, Inc.     —         400,000  
 Debt discount resulting from recognition of derivative liability   $ —       $ 164,014  
 Reclassification of derivative liabilities to additional paid in capital   $ —       $ (1,528,390 )
 Software development cost incurred on account   $ 142,544     $ 45,060  
 Stock issued for subscription receivable   $ —       $ 25,000  
 Accrued interest enrolled into debt   $ 2,292     $ —    
 Cancellation of shares   $ —       $ (100 )
 Common Shares issued for accrued compensation   $ 8,473     $ —    
 Discount on issuance of convertible note payable   $ 280,955     $ —    
 Conversion from Series B preferred stock to common stock   $ —       $ 1  
                 
The accompanying notes are an integral part of these audited consolidated financial statements.

 

WRIT MEDIA GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 – ORGANIZATION, BUSINESS OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

 

Organization and Business Operations

 

WRIT Media Group, Inc. (“we”, “our”, “WRIT” or the “Company”) (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.

 

Basis of Presentation and Consolidation

 

These consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America.  The consolidated financial statements include the accounts of the Company and its subsidiaries, Front Row Networks, Inc., Amiga Games, Inc. and Retro Infinity Inc. All significant intercompany balances and transactions have been eliminated.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the amount of revenues and expenses during the reporting periods.  Management makes these estimates using the best information available at the time the estimates are made.  However, actual results could differ materially from those estimates.

 

Cash and Cash Equivalents

 

Cash and cash equivalents include cash on hand, demand deposits with banks and liquid investments with an original maturity of three months or less.

 

 

Accounts Receivable

 

Accounts receivable are recorded at the net invoice value and are not interest bearing. We consider receivables past due based on the contractual payment terms. We perform ongoing credit evaluations of our customers, and generally we do not require collateral on our accounts receivable. We estimate the need for allowances for potential credit losses based on historical collection activity and the facts and circumstances relevant to specific customers and we record a provision for uncollectible accounts when collection is uncertain. To date, we have not experienced any credit related losses.

 

Long Lived Assets

 

In accordance with ASC 360 "Property Plant and Equipment," the Company reviews the carrying value of intangibles subject to amortization and long-lived assets for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

 

Recoverability of long-lived assets is measured by comparison of its carrying amount to the undiscounted cash flows that the asset or asset group is expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the property, if any, exceeds its fair market value.

 

Revenue Recognition

 

The Company follows revenue recognition in two industries, technology and film.

 

Revenue is measured at the fair value of the consideration received or receivable net of sales tax, trade discounts and customer returns.

 

Sale of Technology Gaming

 

Revenue from sale of technology gaming applications is recognized when the following conditions are satisfied:

 

Persuasive evidence of an arrangement exists
Delivery has occurred or services have been rendered
The seller’s price to the buyer is fixed or determinable
Collectability is reasonably assured

 

During the year ended March 31, 2015, there was no revenue recognized. A development fee from Roku Inc. was recognized as a cash advance of $55,395 was recorded as deferred revenue as of March 31, 2015 and 2014.

 

Film Sales

 

Based on Revenue Recognition Requirement for Film Sales (ASC 926-605-25), the Company recognizes film license revenues when all of the following conditions are met:

 

- Persuasive evidence of a sale or licensing arrangement with a customer exists

- The film is complete and, in accordance with the terms of the arrangement, has been delivered or is available for immediate and unconditional delivery

- The license period of the arrangement has begun and the customer can begin its exploitation, exhibition, or sale

- The arrangement fee is fixed or determinable

- Collection of the arrangement fee is reasonably assured

 

 

Income Taxes

 

The Company accounts for income taxes in accordance with ASC 740, which requires an asset and liability approach for financial accounting and reporting for income taxes and allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years.  Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.  A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain.

 

Software Development Costs

 

The Company accounts for software development costs in accordance with ASC 985-20, “Costs of Computer Software to be Sold, Leased, or Otherwise Marketed”. Costs incurred prior to the establishment of technological feasibility are expensed as incurred as research and development costs. Costs incurred after establishing technological feasibility and before the product is released for sale to customers are capitalized.

 

Stock-based Compensation

 

Accounting Standards Codification (“ASC”) 718, “Accounting for Stock-Based Compensation" established financial accounting and reporting standards for stock-based compensation plans. It defines a fair value based method of accounting for an employee stock option or similar equity instrument. The Company accounts for compensation cost for stock option plans and for share based payments to non-employees in accordance with ASC 718. Accordingly, employee share-based payment compensation is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the requisite service period. Additionally, share-based awards to non-employees are expensed over the period in which the related services are rendered at their fair value. The Company accounts for share based payments to non-employees in accordance with ASC 505-50 “Accounting for Equity Instruments Issued to Non-Employees for Acquiring, or in Conjunction with Selling, Goods or Services”.

 

Embedded Conversion Feature

 

The Company has issued convertible instruments which contain embedded conversion features. The Company evaluates the embedded conversion feature within its convertible debt instruments under ASC 815-15 and ASC 815-40 to determine if the conversion feature meets the definition of a liability and therefore need to bifurcate the conversion feature and account for it as a separate derivative liability.

 

If the embedded conversion feature does not meet the definition of a liability, the Company evaluated the conversion feature under ASC 815-40 for a beneficial conversion feature at inception. The effective conversion price was then computed based on the allocation of the proceeds to the convertible debt to determine if a beneficial conversion feature exists. The effective conversion price was compared to the market price on the date of the original note and was deemed to be less than the market value of the Company’s stock at the inception of the note. A beneficial conversion feature was recognized and gave rise to a debt discount that is amortized over the stated maturity of the convertible debt instrument or the earliest potential conversion date.

 

If the embedded conversion feature meets the definition of a liability, it is required a bifurcation of the conversion feature from the debt and accounting for the conversion feature as a derivative contract liability with changes in fair value recorded in the Statements of Operations.

 

 

Beneficial Conversion Features

 

The intrinsic value of a beneficial conversion feature inherent to a convertible note payable, which is not bifurcated and accounted for separately from the convertible note payable and may not be settled in cash upon conversion, is treated as a discount to the convertible note payable. This discount is amortized over the period from the date of issuance to the date the note is due using the effective interest method. If the note payable is retired prior to the end of its contractual term, the unamortized discount is expensed in the period of retirement to interest expense. In general, the beneficial conversion feature is measured by comparing the effective conversion price, after considering the relative fair value of detachable instruments included in the financing transaction, if any, to the fair value of the common shares at the commitment date to be received upon conversion.

 

Net Loss per Share

 

In accordance with ASC 260 “Earnings per Share,” basic net loss per common share is computed by dividing net loss for the period by the weighted average number of common shares outstanding during the period. Diluted net income/(loss) per share is computed by dividing the net income/(loss) for the period by the weighted average number of common and common equivalent shares, such as stock options and warrants, outstanding during the period. Such common equivalent shares have not been included in the computation of net loss per share as their effect would be anti-dilutive.

 

Fair Value Measurements

 

As defined in ASC 820 “Fair Value Measurements”, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).

 

The three levels of the fair value hierarchy defined by ASC 820 are as follows:

 

Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date.  Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.

 

Level 2 – Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars.

 

Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

 

The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value as of March 31, 2015 and 2014. As required by ASC 820, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.

 

As of March 31, 2015   Total   Quoted Prices in Active Markets for Identical Instruments Level 1   Significant Other Observable Inputs Level 2   Significant Unobservable Inputs Level 3  
                   
Derivative Liabilities   $ -           $ -  

 

As of March 31, 2014   Total   Quoted Prices in Active Markets for Identical Instruments Level 1   Significant Other Observable Inputs Level 2   Significant Unobservable Inputs Level 3  
                   
Derivative Liabilities   $ -           $ -  

 

Recent Accounting Pronouncements

 

We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.

 

NOTE 2 – GOING CONCERN

 

As reflected in the accompanying consolidated financial statements, the Company has accumulated deficits of $1,783,553 at March 31, 2015 that includes losses of $2,203,576 for the fiscal year ended March 31, 2015 and a working capital deficiency of $620,060. At March 31, 2014 the Company had retained earnings of $420,023 that included a net income of $1,044,284 which included a non-cash gain on derivative liability of $1,715,954 and a working capital deficiency of $181,109. These factors raise substantial doubt about the ability of the Company to continue as a going concern.  The consolidated financial statements have been prepared on a going concern basis and do not include any adjustments that might result from outcome of this uncertainty.

 

Although management is currently attempting to implement its business plan, and is seeking additional sources of equity or debt financing, there is no assurance these activities will be successful.

 

NOTE 3 – NOTES PAYABLE

 

Note payable consists of the following:

 

   

March 31,

2015

 

March 31,

2014

                 
Note payable, net of debt discount of $0 and $0 respectively   $ 7,500     $ 45,500  

 

FOR THE YEAR ENDED MARCH 31, 2015

 

Falmouth Street Holdings, LLC

 

On March 2, 2015, the Company borrowed $7,500 from Falmouth Street Holdings, LLC. The maturity date of this note is August 29, 2015 and this loan bears an interest rate of 12% per annum from the issuance date. The note is still outstanding as of March 31, 2015. As of today the debt is still outstanding and therefore is in default.

 

SCHU Mortgage & Capital, Inc.

On February 18, 2014, the Company borrowed $15,000 from SCHU Mortgage & Capital, Inc. The maturity date of this note is August 18, 2014 and this loan bears an interest rate of 8% per annum from the issuance date. On July 10, 2014, SCHU Mortgage & Capital, Inc. sold and assigned its $15,000 note to Magna Group LLC, along with accrued interest of $465. See discussion on the new Magna note in note 4.

 

 

SFH Capital LLC

On October 22, 2013, the Company borrowed $14,000 from SFH Capital LLC. The maturity date of this note was October 22, 2014 and this loan bears an interest rate of 12% per annum from the issuance date. On June 6, 2014 the Company entered into a debt modification agreement with the debt holder. The modified note was convertible into common stock at a price of $10.00, with an extend maturity date of January 6, 2015, and there were no other changes to the original terms of the promissory note. The principal amount of the modified note was $15,045 on June 6, 2014, with the accrued interest owed on the old debt included in the principal of the new debt.

 

On October 29, 2013, the Company borrowed $4,000 from SFH Capital LLC. The maturity date of this note was October 29, 2014 and this loan bears an interest rate of 8% per annum from the issuance date. On June 6, 2014 the Company entered into a debt modification agreement with the debt holder. The modified note was convertible into common stock at a price of $10.00, bears an extend maturity date of January 6, 2015, and there were no other changes to the original terms of the promissory note. The principal amount of the modified note was $4,193 on June 6, 2014, with the accrued interest owed on the old debt included in the principal of the new debt.

 

On December 11, 2013, the Company borrowed $12,500 from SFH Capital LLC. The maturity date of this note was December 11, 2014 and this loan bears an interest rate of 8% per annum from the issuance date. On June 6, 2014 the Company entered into a debt modification agreement with the debt holder. The modified note was convertible into common stock at a price of $10.00, bears an extend maturity date of January 6, 2015, and there were no other changes to the original terms of the promissory note. The principal amount of the modified note was $12,985 on June 6, 2014, with the accrued interest owed on the old debt included in the principal of the new debt.

 

See accounting treatment for the new SFH Capital LLC notes in note 4

 

Mr. J. Shaw

 

On April 1, 2014, the Company borrowed $5,000 from J. Shaw. The maturity date of this note is May 1, 2014, and this loan bears an interest rate of 0% per annum from the issuance date. On April 23, 2014, the principal balance of the note was paid in its entirety and the note has been surrendered to the Company.

 

FOR THE YEAR ENDED MARCH 31, 2014

 

Mrs. Nancy Louise Jones

 

On November 26, 2010, the Company borrowed $60,562 from Mrs. Nancy Louise Jones, wife of Mr. John Diaz, the former CEO and former major shareholder, who resigned as an Officer and Director of WRIT in November, 2012. The maturity date of this loan is September 1, 2012 and was extended to September 8, 2013. The Company evaluated the application of ASC 470-50 and ASC 470-60 and concluded that the extension of maturity constituted a debt modification, rather than a debt extinguishment or a troubled debt restructuring. As this loan bears no interest, in accordance with ASC 835-30 Imputation of Interest, the Company uses 8%, the prevailing rate for similar debt, to recognize the imputed interest expense of $5,449 on this debt for the year ended March 31, 2013. The imputed interest expense is accounted as a capital transaction and recorded as an increase of Additional Paid-In Capital. On May 2, 2013, Nancy Louise Jones assigned her $60,562 note to Magna Group LLC (see Note 4). The maturity date of this amended note is January 2, 2014. This loan bears an interest rate of 12% per annum. The note is convertible into common stock at a price of 55% multiplied by the lowest volume weighted average price for the Common Stock during the five trading day period ending on the latest complete trading day prior to the conversion date. Additionally, in no event shall the conversion price be less than $0.008. The Company evaluated the application of ASC 470-50 and ASC 470-60 and concluded the addition of a conversion feature constituted a debt extinguishment rather than a troubled debt restructuring. See more discussion about the new debt in Note 4.

 

 

On June 12, 2013, the Company borrowed $12,000 from Mrs. Nancy Louise Jones. Out of the $12,000 debt proceeds $2,000 was paid to Mrs. Nancy Louise Jones for legal and administrative fees. The maturity date of this note is August 31, 2013, which was amended by the parties to April 1, 2014. This loan bears an interest rate of 12% per annum. The Company evaluated the application of ASC 470-50 and ASC 470-60 and concluded the extension of maturity date does not constitute a troubled debt restructuring or debt extinguishment. On March 17, 2014, Nancy Louise Jones assigned her $12,000 note to Magna Group LLC, along with accrued interest of $1,077 (see Note 4). The maturity date of this amended note is March 17, 2015. This loan bears an interest rate of 12% per annum. The note is convertible into common stock at a price of 55% multiplied by the lowest volume weighted average price for the Common Stock during the five trading day period ending on the latest complete trading day prior to the conversion date. Additionally, in no event shall the conversion price be less than $0.008. The Company evaluated the application of ASC 470-50 and ASC 470-60 and concluded the addition of a conversion feature constituted a debt extinguishment rather than a troubled debt restructuring. See more discussion about the new debt in Note 4.

 

Asher Enterprises Notes Payable

 

On November 2, 2012, the Company borrowed $16,000 from Asher Enterprises. The maturity date of this note is August 5, 2013. 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, Asher Enterprises 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 25% multiplied by the lowest trading price for the Common Stock during the 120 trading day period ending on the latest complete trading day prior to the conversion date. As of March 31, 2013, the note is not convertible yet. On May 1, 2013, the $16,000 note became convertible. See more discussion in Note 4.

 

Along with the note payable, the Company issued warrants to purchase 247 shares of common stock. The warrants expire 5 years after issuance and have an exercise price of $6.50. The exercise price can adjust downward if the Company issues common stock at a price per share lower than the current exercise price. As of March 31, 2013, the warrants were treated as a derivative liability.

 

The Company analyzed the warrants for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the warrants should be classified as a liability due to their not being indexed to the Company’s common stock. The warrants were measured at fair value at the date of inception and at the end of each reporting period or termination of the instrument with the change in fair value recorded to earnings. The fair value of the warrants resulted in a full debt discount of $16,000. The unamortized discount is $7,362 as of March 31, 2013. See discussion related to the derivative liabilities in Note 5 and warrants in Note 7.

 

On January 30, 2013, the Company borrowed $32,500 from Asher Enterprises. The maturity date of this note is November 1, 2013. 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, Asher Enterprises 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 50% multiplied by the lowest two trading price for the Common Stock during the 20 trading day period ending on the latest complete trading day prior to the conversion date. As of March 31, 2013, the note is not convertible yet. On July 29, 2013, the $32,500 note became convertible. See more discussion in Note 4.

 

 

NOTE 4 – CONVERTIBLE DEBT

 

Convertible debt outstanding, net of debt discount of $0, on March 31, 2013   $ 22,277  
         
Add: issuance of convertible debts, net of discount of $67,000     13,077  
Assignment from Nancy Louise Jones, net of discount of $60,562     12,000  
Reclassification from accrued interest to convertible debt, net of discount of $3,952     675  
Reclassification from  nonconvertible debt to convertible debt, net of debt discount of $39,862     8,638  
Less: principal converted into common stock     (140,136 )
Principal repayment     (61,200 )
Add: amortization of debt discount     171,376  
Convertible debts outstanding, net of debt discount of $0 on March 31, 2014   $ 26,707  
Add: issuance of convertible debt     242,500  
Add: reclassification from non-convertible debts to convertible debts     45,500  
Add: reclassification from accrued interest to convertible debts     2,292  
Less: debt discount originated from beneficial conversion feature     (280,955 )
Less: principal converted into common stock     (82,074 )
Add: amortization of debt discount     177,119  
Convertible debt outstanding, net of debt discount of $103,836 on March 31, 2015   $ 131,089  

 

During the year ended March 31, 2015, $82,074 of convertible debts with accrued interest of $1,118 was converted into 35,172 shares of common stock.

 

During the year ended March 31, 2014, $145,589 of convertible debts and accrued interests was converted into 13,873 shares of common stock.

 

FOR THE YEAR ENDED MARCH 31, 2015

 

Magna Group LLC/Hanover Holdings

 

On March 17, 2014, Nancy Louise Jones assigned her $12,000 note to Magna Group LLC, along with accrued interest of $1,077. The maturity date of this amended note is March 17, 2015. This loan bears an interest rate of 12% per annum. The note is convertible into common stock at a price of 55% multiplied by the lowest volume weighted average price for the Common Stock during the five trading day period ending on the latest complete trading day prior to the conversion date. Additionally, in no event shall the conversion price be less than $0.008. An amount equal to $2,577 of the principal balance of the note was converted into 244 common shares on March 21, 2014. On April, 4 2014 and April 21, 2014, Magna Group LLC converted $10,500 of the convertible note dated March 17, 2014 into 1,215 common shares. This note has been converted in its entirety and has been surrendered to the Company.

 

On March 17, 2014, a convertible note was issued with Magna Group, LLC in the amount of $13,077. The notes bears interest of 12% per annum, and is due on March 17, 2015 and is convertible into common shares at a price of 55% multiplied by the lowest volume weighted average price for the Common Stock during the five trading day period ending on the latest complete trading day prior to the conversion date. Additionally, in no event shall the conversion price be less than $0.008. An amount equal to $3,500 of the principal balance of the note was converted into 1,383 common shares on September 15, 2014. On October 10, 2014 and October 22, 2014, Magna Group converted $6,500 of the convertible note into 3,921 common shares. On November 26, 2014, Magna Group converted $3,077 principal amount and $872.33 interest amount of the convertible note into 2,849 common shares. This note has been converted in its entirety and has been surrendered to the Company.

 

 

On July 10, 2014, SCHU Mortgage & Capital, Inc. sold and assigned its $15,000 note to Magna Group LLC, along with accrued interest of $465 (see Note 3). On that same date, the Company amended the related debt agreement with the note holder. The maturity date of this amended note is July 10, 2015. This loan bears an interest rate of 12% per annum. The note is convertible into common stock at a price of 55% multiplied by the lowest volume weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. On August 18, 2014 $5,465 of the principal balance was converted into 994 common shares. On August 26, 2014, $5,000 of the principal balance was converted into 975 common shares. On September 2, 2014, $5,000 of the principal balance plus interest of $155 was converted into 1,442 common shares. This note has been converted in its entirety and has been surrendered to the Company.

 

The Company evaluated the application of ASC 470-50 and ASC 470-60 and concluded the assignment constituted a debt extinguishment, with the old debt written off and the new debt initially recorded at fair value with a new effective interest rate.

 

On July 10, 2014, the Company borrowed a convertible promissory note of $22,000 from Hanover Holdings I, LLC. The maturity date of this note is July 10, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. An amount equal to $2,500 of the principal balance of the note was converted into 4,545 common shares on February 4, 2015, leaving a principal balance of $19,500 as of March 31, 2015. As of today the debt is still outstanding and therefore is in default.

 

On September 10, 2014, the Company borrowed a convertible promissory note of $33,000 from Magna Equities II, LLC. The maturity date of this note is September 10, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2015, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.

 

On October 28, 2014, the Company borrowed a convertible promissory note of $25,000 from Magna Equities II, LLC. The maturity date of this note is October 28, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2015, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.

 

On December 17, 2014, the Company borrowed a convertible promissory note of $14,000 from Magna Equities II, LLC. The maturity date of this note is December 17, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2015, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.

 

The Company evaluated the embedded conversion feature within the above Magna convertible notes payable under ASC 815-15 and ASC 81 -40 and determined embedded conversion feature does not meet the definition of a liability. Then the Company evaluated the conversion feature for a beneficial conversion feature at inception. The Company accounted for the intrinsic value of a Beneficial Conversion Feature inherent to the convertible notes payable and a total debt discount of $126,010 was recorded on the Magna notes. During the year ended March 31, 2015, debt discount of $84,395 was amortized, and the unamortized debt discount is $41,615 as of March 31, 2015.

 

 

KBM Worldwide Inc.

 

On June 3, 2014, the Company borrowed $53,000 from KBM Worldwide Inc. The maturity date of this note is March 5, 2015. This loan bears an interest rate of 8% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. After 180 days following the date of the note, KBM Worldwide Inc. has the right to convert all or a portion of the remaining outstanding principal amount of this note into shares of the Company’s Common Stock. The conversion price will be 55% multiplied by the lowest three trading prices for the Common Stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2015, KBM Worldwide Inc. converted debt principal of $5,735 into 8,193 common shares, bringing the note balance to $47,265. As of today the debt is still outstanding and therefore is in default.

 

On July 29, 2014, the Company borrowed a convertible promissory note of $32,500 from KBM Worldwide, Inc. The maturity date of this note is May 1, 2015. This loan bears an interest rate of 8% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. After 180 days following the date of the note, KBM Worldwide Inc. has the right to convert all or a portion of the remaining outstanding principal amount of this note into shares of the Company’s Common Stock. The conversion price is 55% multiplied by the average of the lowest 3 trading day prices for the Common Stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date. On July 30, 2014, an amendment to the note defined a floor to the conversion price to be $.008 per share. As of March 31, 2015, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.

 

On September 15, 2014, the Company borrowed a convertible promissory note of $63,000 from KBM Worldwide, Inc. The maturity date of this note is June 17, 2015. This loan bears an interest rate of 8% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. After 180 days following the date of the note, KBM Worldwide Inc. has the right to convert all or a portion of the remaining outstanding principal amount of this note into shares of the Company’s Common Stock. The conversion price is 55% multiplied by the average of the lowest 3 trading day prices for the Common Stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2015, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.

 

The Company evaluated the embedded conversion feature within the above KBM convertible notes payable under ASC 815-15 and ASC 81 -40 and determined embedded conversion feature does not meet the definition of a liability. Then the Company evaluated the conversion feature for a beneficial conversion feature at inception. The Company accounted for the intrinsic value of a Beneficial Conversion Feature inherent to the convertible notes payable and a total debt discount of $148,500 was recorded on the KBM notes. During the year ended March 31, 2015, debt discount of $86,279 was amortized, and the unamortized debt discount is $62,221 as of March 31, 2015.

 

SFH Capital LLC

 

On October 22, 2013, the Company borrowed $14,000 from SFH Capital LLC. The maturity date of this note was October 22, 2014 and this loan bears an interest rate of 12% per annum from the issuance date. On June 6, 2014 the Company entered into a debt modification agreement with the debt holder. The modified note was convertible into common stock at a price of $10.00, with an extend maturity date of January 6, 2015, and there were no other changes to the original terms of the promissory note. The principal amount of the modified note was $15,045 and on June 6, 2014, it was converted into 1,504 common shares. The note was paid off in full and the note has been surrendered to the Company at March 31, 2015.

 

On October 29, 2013, the Company borrowed $4,000 from SFH Capital LLC. The maturity date of this note was October 29, 2014 and this loan bears an interest rate of 8% per annum from the issuance date. On June 6, 2014 the Company entered into a debt modification agreement with the debt holder. The modified note was convertible into common stock at a price of $10.00, bears an extend maturity date of January 6, 2015, and there were no other changes to the original terms of the promissory note. The principal amount of the modified note was $4,193 and on June 9, 2014, it was converted into 419 common shares. The note was paid off in full and the note has been surrendered to the Company at March 31, 2015.

 

 

On December 11, 2013, the Company borrowed $12,500 from SFH Capital LLC. The maturity date of this note was December 11, 2014 and this loan bears an interest rate of 8% per annum from the issuance date. On June 6, 2014 the Company entered into a debt modification agreement with the debt holder. The modified note was convertible into common stock at a price of $10.00, bears an extend maturity date of January 6, 2015, and there were no other changes to the original terms of the promissory note. The principal amount of the modified note was $12,985 and on June 10, 2014, SFH Capital LLC converted $10,000 of the convertible note into 1,000 common shares. On September 15, 2014, SFH Capital LLC converted $2,985 of principal balance plus $91 of interest of the convertible note into 305 common shares. The note was paid off in full and the note has been surrendered to the Company at March 31, 2015.

 

The Company evaluated the application of ASC 470-50 and ASC 470-60 and concluded the addition of a conversion feature constituted a debt extinguishment rather than a troubled debt restructuring, with the old debt written off and the new debt initially recorded at fair value with a new effective interest rate. The Company evaluated the embedded conversion feature within the three modified SFH convertible notes payable under ASC 815-15 and ASC 815-40 and determined embedded conversion feature does not meet the definition of a liability. Then the Company evaluated the conversion feature for a beneficial conversion feature at inception. The Company accounted for the intrinsic value of a Beneficial Conversion Feature inherent to the convertible notes payable and a debt discount of $3,009, $839, and $2,597 were recorded on each SFH note respectively. During the year ended March 31, 2015, debt discount of $3,009, $839, and $2,597 were fully amortized on the first, second and third SFH notes, respectively, since they were fully converted. The unamortized debt discount is $0 as of March 31, 2015

 

Other Convertible Notes

 

Convertible debts were issued September 2009, bearing interest at a rate of 8% per annum, due in one year, and are convertible at $2.00 per share, and the total balance outstanding as of March 31, 2014 was $3,130. The note is in default. During the year ended March 31, 2015, debt principal of $2,470 and interest of $104 reclassified into note principal were converted into 6,427 common shares. As of March 31, 2015, other convertible notes have a principal balance of $660.

  

FOR THE YEAR ENDED MARCH 31, 2014

 

Asher Enterprises, Inc.

 

On November 2, 2012, the Company borrowed $16,000 from Asher Enterprises.  The maturity date of this note is August 5, 2013. This loan bears an interest rate of 8% per annum from the issuance date before default.  Interest on overdue principal after default accrues at an annual rate of 22%.  After 180 days following the date of the note, Asher Enterprises 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 25% multiplied by the lowest trading price for the Common Stock during the one hundred twenty trading day period ending on the latest complete trading day prior to the conversion date. Along with the note payable, the Company issued warrants to purchase 247 shares of common stock. The warrants expire 5 years after issuance and have an exercise price of $6.50.  The exercise price can adjust downward if the Company issues common stock at a price per share lower than the current exercise price. On May 1, 2013, the $16,000 note became convertible. This note has been converted in its entirety along with accrued interest of $640 into 680 common shares, and has been surrendered to the Company. Debt discount of $7,362 was fully amortized as of March 31, 2014. The warrants have been exercised in their entirety and no warrant shares remain un-exercised.

 

On January 30, 2013, the Company borrowed $32,500 from Asher Enterprises.  The maturity date of this note is November 1, 2013. This loan bears an interest rate of 8% per annum from the issuance date before default.  Interest on overdue principal after default accrues at an annual rate of 22%.  After 180 days following the date of the note, Asher Enterprises 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 50% multiplied by the average of the lowest two trading prices for the Common Stock during the twenty trading day period ending on the latest complete trading day prior to the conversion date. On July 29, 2013, the $32,500 note became convertible. This note has been converted in its entirety along with accrued interest of $1,300 into 1,690 common shares and has been surrendered to the Company. Debt discount of $32,500 was fully amortized as of March 31, 2014.

 

 

On April 10, 2013, the Company borrowed $28,000 from Asher Enterprises.  The maturity date of this note is January 15, 2014.  This loan bears an interest rate of 8% per annum from the issuance date before default.  Interest on overdue principal after default accrues at an annual rate of 22%.  After 180 days following the date of the note, Asher Enterprises 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 50% multiplied by the average of the lowest two trading prices for the Common Stock during the twenty trading day period ending on the latest complete trading day prior to the conversion date. On October 7, 2013, the $28,000 note became convertible. An amount equal to $5,800 of the principal balance of the note was converted into 580 common shares on October 21, 2014. On February 3, 2014, the principal balance of the note plus interest was paid in its entirety and the note has been surrendered to the Company. Debt discount of $28,000 was fully amortized as of March 31, 2014.

 

On May 13, 2013, the Company borrowed $27,500 from Asher Enterprises. The maturity date of this note is February 17, 2014. This loan bears an interest rate of 8% per annum from the issuance date before default.  Interest on overdue principal after default accrues at an annual rate of 22%.  After 180 days following the date of the note, Asher Enterprises 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 50% multiplied by the average of the lowest two trading prices for the Common Stock during the forty trading day period ending on the latest complete trading day prior to the conversion date. On November 9, 2013, the $27,500 note became convertible. On February 18, 2014, the principal balance of the note plus interest was paid in its entirety and the note has been surrendered to the Company. Debt discount of $27,500 was fully amortized as of March 31, 2014.

 

The Company analyzed the conversion option of all the Asher notes for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the embedded conversion feature should be classified as a liability due to their being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. The embedded conversion feature was measured at fair value at the date of inception and at the end of each reporting period or termination of the instrument with the change in fair value recorded to earnings.

 

The Company analyzed the warrants for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the warrants should be classified as a liability due to their not being indexed to the Company’s common stock. The warrants were measured at fair value at the date of inception and at the end of each reporting period or termination of the instrument with the change in fair value recorded to earnings. See discussion related to the derivative liabilities in Note 5, and warrants in Note 7.

 

Magna Group LLC

 

On May 2, 2013 Magna Group LLC purchased the note payable of $60,562 from Mrs. Nancy Louise Jones and entered into an amended debt agreement with the Company. See Note 3. The maturity date of this amended note is January 2, 2014. This loan bears an interest rate of 12% per annum. The note is convertible into common stock at a price of 55% multiplied by the lowest volume weighted average price for the Common Stock during the five trading day period ending on the latest complete trading day prior to the conversion date. Additionally, in no event shall the conversion price be less than $0.008. Magna converted debt principal of $60,562 and interest of $579 into 1,519 common shares, and the debt balance was brought to zero. Debt discount of $60,562 was fully amortized as of March 31, 2014.

 

On May 9, 2013, Magna issued another convertible note of $11,500 to the Company. The note bears interest of 12% per annum, is due on January 9, 2014 and is convertible into common shares at a price of 55% multiplied by the lowest volume weighted average price for the Common Stock during the five trading day period ending on the latest complete trading day prior to the conversion date. Additionally, in no event shall the conversion price be less than $0.008. On January 9, 2014, the principal balance of the note plus interest was paid in its entirety and the note has been surrendered to the Company. Debt discount of $11,500 was fully amortized as of March 31, 2014.

 

 

On March 17, 2014, Nancy Louise Jones assigned her $12,000 note to Magna Group LLC, along with accrued interest of $1,077. The maturity date of this amended note is March 17, 2015. This loan bears an interest rate of 12% per annum. The note is convertible into common stock at a price of 55% multiplied by the lowest volume weighted average price for the Common Stock during the five trading day period ending on the latest complete trading day prior to the conversion date. Additionally, in no event shall the conversion price be less than $0.008. An amount equal to $2,577 of the principal balance of the note was converted into 245 common shares on March 21, 2014, leaving a principal balance of $10,500.

 

On March 17, 2014, a convertible note was issued with Magna Group, LLC in the amount of $13,077. The notes bears interest of 12% per annum, and is due on March 17, 2015 and is convertible into common shares at a price of 55% multiplied by the lowest volume weighted average price for the Common Stock during the five trading day period ending on the latest complete trading day prior to the conversion date. Additionally, in no event shall the conversion price be less than $0.008.

 

As the Asher debt became convertible on May 1, 2013, July 29, 2013, October 7, 2013, and November 9, 2013, the conversion option of Magna $60,562 note and Magna $11,500 note became tainted, that is, under ASC 815-15 “Derivatives and Hedging”, it should be recorded as derivative liability.

 

Other Convertible Notes

 

Convertible debts were issued September 2009, bearing interest at a rate of 8% per annum, due in one year, and are convertible at $2.00 per share, and the total balance outstanding as of March 31, 2013 was $22,277, including related party convertible note of $1,550.

 

On September 12, 2013, one of the debt holders assigned $9,170 note to Fierce Entertainment LLC. The maturity date of this amended note is September 12, 2014. This loan bears an interest rate of 8% per annum. The note is convertible into common stock at $20.00 per share. The Company evaluated the application of ASC 470-50 and ASC 470-60 and concluded the amended term dose not constituted a debt extinguishment or troubled debt restructuring. On October 11, 2013 Fierce Entertainment LLC converted debt principal of $9,170 into 459 common shares, bringing the note balance to $0.

 

On November 5, 2013, one of the debt holders assigned $402 along with accrued interest of $3,550 to another debt holder. The term stays the same as the original note, with maturity date on September 2010, interest rate of 8%, and conversion price of $2.00 per share. The note is in default. The Company evaluated the application of ASC 470-50 and ASC 470-60 and concluded the amended term dose not constituted a debt extinguishment or troubled debt restructuring. On January 22, 2014, debt principal of $1,482 along with accrued interest of $84.25 was converted into 783 common shares. In February 2014, the Company entered into an amended debt agreement with the debt holder and the conversion rate was modified to $20.00, and there were no other changes to the original terms of the promissory note. Debt discount of $3,952 was fully amortized as of March 31, 2014.

 

Beside the conversions described above, during the year ended March 31, 2014, debt principal of $12,045, including the related party convertible note of $1,550, and interest of $2,850 have been converted into 7,918 common shares. As of March 31, 2014, the convertible notes have a total outstanding balance of $3,130.

 

As the Asher debt became convertible on May 1, 2013, July 29, 2013, October 7, 2013, and November 9, 2013 the conversion option all other convertible notes became tainted, that is, under ASC 815-15 “Derivatives and Hedging”, it should be recorded as derivative liability.

 

NOTE 5 – DERIVATIVE LIABILITIES

 

FOR THE YEAR ENDED MARCH 31, 2015

 

The Company had no derivative liabilities for the year ended March 31, 2015.

 

 

FOR THE YEAR ENDED MARCH 31, 2014

 

Asher Enterprise, Inc. Convertible Notes

 

As discussed in Note 4, the Company determined that the instruments embedded in the Asher convertible note should be classified as liabilities and recorded at fair value due to their being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. The fair value of the instruments was determined by using Black-Scholes option-pricing model, assuming maximum value.

 

As discussed in Note 4, Asher note of $16,000 and $32,500 became convertible on May 1, 2013 and July 29, 2013, respectively. The conversion feature for Asher note of $16,000 and $32,500 should be classified as derivative liabilities and recorded at fair value. The fair value of the conversion feature for Asher note of $16,000 was determined to be $147,692 on May 1, 2013 and was recognized as additional paid in capital. The fair value of the conversion feature for Asher note of $32,500 was determined to be $74,286 on July 29, 2013 of which $32,500 was recorded as debt discount and $41,786 was recorded as derivative loss. As a result of full conversion on May 29, 2013 and September 9, 2013, under ASC 815-15 “Derivative and Hedging”, the instrument should be measured at fair value at the date of the termination with the change in fair value recorded earnings. Total fair value of the conversion feature on conversion dates was $239,307 and this value was reclassified out of liabilities to equity.

 

As discussed in Note 4, Asher note of $28,000 became convertible on October 7, 2013. The conversion feature for Asher note of $28,000 should be classified as derivative liabilities and recorded at fair value. The fair value of the conversion feature for Asher note of $28,000 was determined to be $84,000 on October 7, 2013, of which $28,000 was recorded as debt discount and $56,000 was recorded as derivative loss. On October 21, 2013, $5,800 out of the $28,000 was converted, and as a result, under ASC 815-15 “Derivative and Hedging”, the instrument should be measured at fair value at the date of the conversion with the change in fair value recorded in earnings. Prorated fair value of the conversion feature on conversion dates was $11,600 and this value was reclassified out of liabilities to equity. On February 3, 2014, the remaining principal balance of $22,200 plus interest was paid in its entirety. Total fair value of the conversion feature on debt repayment date was $44,400 and this value was recorded in earnings.

 

As discussed in Note 4, Asher note of $27,500 became convertible on November 9, 2013. The conversion feature for Asher note of $27,500 should be classified as derivative liabilities and recorded at fair value. The fair value of the conversion feature for Asher note of $27,500 was determined to be $110,000, on November 9, 2013, of which $27,500 was recorded as debt discount and $82,500 was recorded as derivative loss. On February 18, 2014, the principal balance of the note plus interest was paid in its entirety. Total fair value of the conversion feature on debt repayment date was $82,500 and this value was recorded in earnings.

 

Magna Group LLC Convertible Notes

 

As discussed in Note 4, the conversion feature of Magna $60,562 note and Magna $11,500 note were tainted by Asher note on May 2, 2013, May 9, 2013, July 29, 2013, and October 7, 2013, and should be classified as derivative liabilities and recorded at fair value. On May 2, 2013, and May 9, 2013, the fair value of the conversion feature of the two Magna notes was determined to be $164,056, out of which $72,062 was recorded as debt discount and $91,994 was recorded as derivative loss. On July 29, 2013 the fair value of the conversion feature of the two Magna notes was determined to be $50,575 and was recognized as additional paid in capital. As a result of conversion of $10,000, $8,000 and $9,362 debt principal on May 10, 2013, July 30, 2013 and August 19, 2013, respectively and the termination of derivative treatment on May 29, 2013 and September 9, 2013, under ASC 815-15 “Derivative and Hedging”, the instrument should be measured at fair value at the date of the termination with the change in fair value recorded earnings. Total fair value of the conversion feature on conversion and termination dates was $233,395 and this value was reclassified out of liabilities to equity. On October 7, 2013, the Magna $60,562 note has been fully converted, and the fair value of the Magna $11,500 note conversion feature was determined to be $86,250 and was recognized as additional paid in capital. On January 9, 2014, the principal balance of the note plus interest was paid in its entirety. Total fair value of the conversion feature on debt repayment date was $20,909 and this value was recorded in earnings.

 

 

Other Third Party and Related Party Convertible Notes

 

As discussed in Note 4, the conversion feature of other third party convertible notes was tainted by Asher note on May 1, 2013, July 29, 2013 and October 7, 2013. In addition, the conversion feature of related party convertible debt of $1,550 was also tainted for the same reason. The conversion features should be classified as derivative liabilities and recorded at fair value. On May 1, 2013 July 29, 2013 and October 7, 2013, the fair value of the conversion feature of these debts was determined to be $2,505,840, $805,280 and $467,400, respectively and was recorded as additional paid in capital. As discussed in Note 4, on November 5, 2013, one of the debt holders assigned $402 along with accrued interest of $3,550 to another debt holder. The fair value of the conversion feature of the new note was determined to be $39,520, on November 5, 2013, out of which $3,952 was recorded as debt discount, and $35,568 was recorded as derivative loss.

 

As a result of conversion of $18,902 debt principal during the period that the convertible notes got tainted and the termination of derivative treatment on May 29, 2013, September 9, 2013, and February 18, 2014, under ASC 815-15 “Derivative and Hedging”, the instrument should be measured at fair value at the date of the termination with the change in fair value recorded earnings. Total fair value of the conversion feature on conversion and termination dates was $2,025,730 and this value was reclassified out of liabilities to equity.

 

Warrants

 

There were no warrants issued during the year ended March 31, 2015.

 

As discussed in Note 4, 49,231 warrants issued with the Asher debt should be classified as derivative liability and recorded at fair value at the termination date. Asher settled all the warrants on June 5, 2013. The fair value of the warrants on June 5, 2013 was determined to be $24,615 using Black-Scholes Option Pricing Model, assuming maximum value, and was reclassified out of liabilities to equity.

 

The following table summarizes the derivative liabilities included in the consolidated balance sheet:

 

Balance at March 31, 2013   $ 23,550  
Record derivative liability as debt discount     164,014  
Change in fair value of derivative liability     (1,715,954 )
Reclassification of additional paid in capital to derivative liability     1,528,390  
Balance at March 31, 2014   $ -  
Change in derivative liability     -  
Balance at March 31, 2015   $ -  

  

NOTE 6 – PREFERRED STOCK

 

Each share of Series A preferred stock is convertible at any time into the number of common shares equal to four times the sum of all outstanding common and Series B and Series C preferred shares at the time of conversion divided by the number of Series A preferred shares. Series A shareholders may receive dividends as declared by the Board.  The Company has 10,000 Series A preferred shares outstanding at March 31, 2015 and 2014.

 

On March 3, 2013 a Stock Purchase Agreement was consummated between John Diaz; the largest and controlling shareholder of WRIT Media Group, Inc., and its former President and Chairman, and EAM Delaware LLC, a Delaware limited liability company controlled by Eric Mitchell, the current President and Chairman of WRIT Media Group, Inc.

 

The transaction was for the sale of 10,000 shares of Preferred Class, Series A Stock in WRIT currently held by EAM Delaware LLC, which represents a controlling block of stock in consideration for $10,000.

 

 

Each share of Series B preferred stock is convertible into the number of common shares equal to the designated $2 initial price of the Series B preferred stock divided by one hundred times the par value of the common stock subject to adjustments as may be determined by the Board of Directors from time to time. Series B shareholders may receive dividends as declared by the Board. The Company has no Series B shares outstanding at March 31, 2015 and 2014.

 

Each share of Series C preferred stock is convertible at any time into 500 common shares.  Series C holders may receive dividends as declared by the Board. The Company has no Series C shares outstanding at March 31, 2015 and 2014.

 

The Company evaluated the application of ASC 815-15 and ASC 815-40 for the embedded conversion feature of preferred stock listed above and concluded the embedded conversion option should be classified as equity.

 

NOTE 7 – EQUITY

 

On January 22, 2014, shareholders approved of a 1 for 1,000 reverse split of the Company’s issued and outstanding common shares. The Company accounted for the reverse stock split retrospectively and is presented accordingly in the Company’s financial statements as of March 31, 2014, and 2013.

 

On June 25, 2015, shareholders approved of a 1 for 200 reverse split of the Company’s issued and outstanding common shares. The Company accounted for the reverse stock split retrospectively and is presented accordingly in the Company’s financial statements as of March 31, 2015, and 2014.

 

For the Year Ended March 31, 2015:

 

Shares issued for convertible notes:

 

During the year ended March 31, 2015, $82,074 of convertible debts with accrued interest of $1,118 was converted into 35,172 shares of common stock. See Note 4.

 

Common Shares issued for cash

 

During the year ended March 31, 2015, the Company issued 17,647 common shares for cash totaling $226,781.

 

Common Shares issued for services

 

During the year ended March 31, 2015, the Company issued 14,007 shares to Eric Mitchell, the Company CEO and CFO, as compensation at their fair value of $51,861.

 

During the year ended March 31, 2015, the Company issued 80,294 shares to third party consultants as compensation at their fair value of $580,291.

 

Common Shares issued for accrued compensation

 

During the year ended March 31, 2015, the Company issued 847 shares to Eric Mitchell, the Company CEO and CFO, to settle accrued compensation of $8,473. The fair value of the shares was determined to be $8,473, resulting in no loss on settlement.

 

Subscription receivable

 

During the year ended March 31, 2015, the Company received $25,000 for subscription receivable whereas the shares were issue during the year ended March 31, 2014.

 

 

Warrants Issued

 

Under a subscription agreement dated March 18, 2014, the Company issued 3,125 restricted common shares to Irwin Zalcberg for cash totaling $50,000. Along with the subscription agreement, the Company issued warrants to purchase 3,125 shares of common stock. The warrants expire 2 years after issuance and have an exercise price of $24.00. The warrants do not entitle the holder to any voting rights or other rights as a shareholder of the Company. The warrants remain un-exercised.

 

Under a subscription agreement dated April 21, 2014, the Company issued 16,667 restricted common shares to Irwin Zalcberg for cash totaling $200,000. Along with the subscription agreement, the Company issued warrants to purchase 20,833 shares of common stock. The warrants expire 2 years after issuance and have an exercise price of $50.00. The warrants do not entitle the holder to any voting rights or other rights as a shareholder of the Company. The warrants remain un-exercised.

 

The following table summarizes the Company’s warrant activity for the year ended March 31, 2015:

 

    Number of Units   Weighted-Average Exercise Price  

Weighted-Average Remaining Contractual Term

(in years)

  Intrinsic Value
  Outstanding at March 31, 2014       3,125     $ 24.00       0.97     $ —    
  Issuance       20,833       50.00       1.06       —    
  Exercises       —         —         —         —    
  Forfeitures       —         —         —         —    
  Outstanding at March 31,  2015       23,958     $ 46.00       1.05     $ —    

 

 

For the Year Ended March 31, 2014:

 

Shares issued for convertible notes:

 

During the year ended March 31, 2014, convertible debts of $140,136 along with accrued interest of $5,453 were converted into 13,873 common shares. See Note 4. 

 

Shares issued for services:

 

During the year ended March 31, 2014, the Company issued 8,159 shares to employees and third party consultants as compensation at their fair value of $258,418.

 

Shares issued for cash

 

During the year ended March 31, 2014, the Company issued 13,429 shares for cash totaling $247,774, out of which $25,000 was received in April 2014.

 

Cancellation of Common shares

 

On October 22, 2013 the Company cancelled 50 common shares. The common shares were cancelled due to partial cancellation of a stock purchase agreement between convertible note holder and other party.

 

 

Warrants Issued

 

Along with the Asher note payable, the Company issued warrants to purchase 247 shares of common stock to Asher Enterprise Inc. The warrants expire 5 years after issuance and have an exercise price of $6.50.  The exercise price can adjust downward if the Company issues common stock at a price per share lower than the current exercise price.

 

On June 5, 2013, Asher Enterprises exercised 132 warrants for common stock. Instead of paying cash to the Company, Asher Enterprises forfeited the remaining 115 warrants as consideration given to exercise the warrants.

 

Under a subscription agreement dated March 18, 2014, the Company issued 3,125 restricted common shares to Irwin Zalcberg for cash totaling $50,000. Along with the subscription agreement, the Company issued warrants to purchase 3,125 shares of common stock. The warrants expire 2 years after issuance and have an exercise price of $24.00. The warrants do not entitle the holder to any voting rights or other rights as a shareholder of the Company. The warrants remain un-exercised.

 

The following table summarizes the Company’s warrant activity for the year ended March 31, 2014:

 

    Number of Units   Weighted-Average Exercise Price  

Weighted-Average Remaining Contractual Term

(in years)

  Intrinsic Value
  Outstanding at March 31, 2013       247     $ 6.50       4.59     $ 52,554  
  Issuance       3,125       24.00       —         —    
  Exercises       (132 )     6.50       —         —    
  Forfeitures       (115 )     6.50       —         —    
  Outstanding at March 31,  2014       3,125     $ 24.00       1.97     $ —    

 

NOTE 8 – ASSETS ACQUISITION AND INTANGIBLE ASSETS

 

On August 19, 2013, the Company issued 2,500 common shares to acquire software from Amiga Games, Inc. Amiga Games, Inc. licenses classic video game libraries and intends to resurrect classic game titles by giving them new life on today's gaming platforms such as smart phones, PCs, modern game consoles, and tablets. The 2,500 shares were valued using the $160.00 per share closing price on the acquisition date for total purchase price consideration of $400,000.

 

In addition, during the year ended March 31, 2015 and March 31, 2014, the Company incurred another $263,439 and $132,521 respectively, on software development cost to upgrade the acquired software, and $25,275 for licenses. As of March 31, 2015 total cash paid for software of $191,230 included $45,060 for prior year software costs and $146,170 for current year software costs. As of March 31, 2015, $142,544 of software development costs were incurred on account and recorded in accounts payable.

 

The following table summarizes the composition of intangible assets as of March 31, 2015.

 

Total purchase price of intangible assets as of March 31, 2014   $ 400,000  
Software development capitalized costs as of March 31, 2014     132,521  
Software development capitalized costs as of March 31, 2015     263,439  
Licenses     25,275  
Total Intangible Assets   $ 821,235  

  

During the year ended March 31, 2015, the Company incurred an impairment of Intangible Assets of $821,235 due to the uncertainty on when the assets can generate revenue.

 

The following table summarizes the composition of intangible assets as of March 31, 2015.

 

Total of intangible assets   $ 821,235  
Software Asset impairment as of March 31, 2015     (821,235 )
Total Intangible Assets   $ —    

 

NOTE 9 – CONCENTRATION

 

For the fiscal year ended March 31, 2014, 100% of the Company’s revenue is generated from gaming applications development with one customer, Microsoft Corporation.

 

NOTE 10 - RELATED PARTY BALANCES AND TRANSACTIONS

 

During the year ended March 31, 2015, the Company incurred $270,097 compensation expense for Eric Mitchell, the Company CEO and CFO. Out of the $270,097 compensation expense, $135,600 was paid in cash; $51,861 was paid by issuance of common stock while the remaining $82,636 was still not paid. During the year ended March 31, 2015, the Company also issued 847 shares to Eric Mitchell, the Company to settle accrued compensation of $8,473 from prior year. As of March 31, 2015 and 2014, the accrued compensation owed to Eric Mitchell, is $82,636, and $8,473 (presented as part of accrual liability balance on the accompanying consolidated balance sheets), respectively.

 

During the year ended March 31, 2015, $9,510 was advanced by Eric Mitchell and the advance is due on demand with 0% interest.

 

During the year ended March 31, 2015, the Company engaged DEVCAP Partners LLC for marketing and branding services and incurred a total expense of $611,250. Out of $611,250, $498,750 was paid by issuance of 65,625 shares of common stock and the remaining $112,500 was still not paid as of March 31, 2015. Due to the stock issuance for services provided, DEVCAP Partners LLC became majority shareholder, owning more than 10% the Company’s issued and outstanding common shares. As of March 31, 2015 and 2014, the accounts payable balance owed to DEVCAP Partners LLC is $112,500 and $-0-, respectively.

 

NOTE 11 - INCOME TAXES

 

Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has a net loss of $2,203,576 as of March 31, 2015 and net income of $1,044,284 as of March 31, 2014. The following table shows the net deferred tax benefit:

 

   

March 31, 2015

 

March 31, 2014

Deferred Tax Benefit   $ 348,049     $ 147,000  
Allowance     (348,049 )     (147,000 )
Net Deferred Tax Benefit   $ —       $ —    

 

The tax asset benefits for the net operating losses carried forward for future years are $994,000 and $421,000 respectively, for the years ending March 31, 2015 and March 31, 2014.

 

Pursuant to ASC 740, the Company is required to compute tax asset benefits for net operating losses carried forward. Potential benefit of net operating losses has not been recognized in these financial statements because the Company cannot be assured it is more likely-than-not it will utilize the net operating losses carried forward in future years which will start to expire in the year of 2031.

 

 

NOTE 12 – SUBSEQUENT EVENTS

 

During May 2015, the Company issued 37,500 common shares for cash totaling $5,000.

 

During April 2015, principal of $5,750 from the Magna Equities II, LLC convertible note originated from July 10, 2014 was converted into 25,879 common shares. The principal balance of the note is $13,750.

 

During April, May and June 2015, the Company issued 915,269 common shares to employees and third party consultants as compensation for services totaling $349,870.

 

On June 9, 2015, the Company borrowed $3,300 on a note payable with 10% interest rate and maturity date of June 22, 2016.

 

On June 15, 2015, EAM Delaware LLC converted 2,500 Preferred Series A stock into 1,133,030 common shares.

 

On June 17, 2015, the Company authorized a 1 for 200 reverse split of the Company’s issued and outstanding shares of Common Stock.

 

On July 2, 2015 the Company issued a Subscription receivable for cash totaling $5,000 in exchange for shares totaling 26,316.

 

On July 22, 2015, the Company converted software development cost incurred on account of $67,024 into an 18% Note Payable

 

On August 4, 2015, the Company converted accounts payable of $112,500 into a 12% Note Payable

 

On August 24, 2015, the Company converted software development cost incurred on account of $75,520 into an 18% Note Payable.

 

 

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

 

None.

 

ITEM 9A.  CONTROLS AND PROCEDURES.

 

(A)  Evaluation of Disclosure Controls and Procedures

 

As of the end of the period covered by this Annual 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 March 31, 2015. The Company has taken the steps described below to remediate such material weaknesses.

 

(B)  Internal Control over Financial Reporting

 

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed 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 ("GAAP"). The Company’s internal controls over financial reporting include policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; (2) provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’ assets that could have a material effect on our financial statements. Under the supervision and with the participation of our management, including our CEO, we evaluated the effectiveness of our internal control over financial reporting as of March 31, 2015. In its evaluation, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on our assessment and the criteria described above, management has concluded that, as of March 31, 2015, our internal control over financial reporting was not effective. 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 March 31, 2015.

 

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. This Annual Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this Annual Report. 

 

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.

 

The Company is not an "accelerated filer" for the fiscal year ended March 31, 2015 because it is qualified as a "small business issuer". Hence, under current law, the internal controls certification and attestation requirements of Section 404 of the Sarbanes-Oxley act will not apply to the Company. This Annual report on Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management's report in this Annual Report on Form 10-K.

 

ITEM 9B.  OTHER INFORMATION.

 

Other than the Form 8-Ks filed during the fourth quarter, we have no other information that we would have been required to disclose in a report on Form 8-K during a fourth quarter of the year covered by this Form 10K.

 

PART III

 

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE.

 

The members of our Board of Directors serve until the next annual meeting of the stockholders, or until their successors have been elected. The officers serve at the pleasure of the Board of Directors. Information as to the directors and executive officers of the Company is as follows:

 

Name    Age   Position(s)
         
Eric Mitchell    48   Director, CEO and President, Treasurer and CFO
         
Rebecca Bieker    58   Secretary

  

 

Eric Mitchell, Director, Chief Executive Officer, President, Treasurer & Chief Financial Officer.  

 

Eric Mitchell has over 20 years of financial, business development, and strategic planning experience in the motion picture industry.  Mr. Mitchell started his career in 1990 as an executive with Sony Pictures Entertainment’s Tri-Star Pictures division. At Sony, Mr. Mitchell was responsible for overseeing strategic planning, financial planning, and business development within the motion picture group. His acquisition, business affairs, and financial talents helped Sony gain domestic and certain foreign film rights to blockbuster hits CLIFFHANGER, SNIPER, THREESOME, and WEEKEND AT BERNIES 2. Eric negotiated and secured theatrical & video rights to SWAN PRINCESS for Columbia TriStar Home Video, and this title became the highest grossing family title for CTHV and spawned three sequels. Mr. Mitchell also assisted Tri-Star’s Vice Chairman in acquiring multi-picture distribution rights with Carolco Pictures, which generated $250 million in profit, the most ever in Tri-Star history, generating such hits as LA STORY, UNIVERSAL SOLDIER, THE DOORS, TOTAL RECALL, BASIC INSTINCT, and TERMINATOR 2.

 

As an advisor to the Chairman, Mr. Mitchell helped newly-formed Crusader Entertainment raise over $300 million for overhead and motion picture financing from investor Philip Anschutz and Anschutz Entertainment Group (“AEG”). Crusader was owned by producers Howard and Karen Baldwin and AEG, and over a four year period produced eight motion pictures, including such memorable films as Oscar and Golden Globe award-winning RAY and action blockbuster SAHARA.

 

Ascendant Pictures and its partner, Germany-based VIP Mediafonds, employed Mitchell as an advisor where he participated in and structured the investment of over US$500 million in development and production capital into 21 feature films. Theatrical motion pictures financed and produced by Ascendant and the production fund included LORD OR WAR, LUCKY NUMBER SLEVIN, ASK THE DUST, EDISON, and THE JACKET.

 

In 2006 Mr. Mitchell was named the COO of Baldwin Entertainment Group Ltd., a motion picture production and sports management company founded by Howard Baldwin. Baldwin is a motion picture producer and founded the Hartford Whalers ice hockey franchise and also owned part of the Pittsburgh Penguins NHL franchise, which won the Stanley Cup in 1992. Mr. Mitchell was responsible for all aspects of operations and business development, including the development and sourcing of motion picture productions and sports-related projects, including the purchase of AHL hockey teams.

 

In 2009, Mr. Mitchell advised newly-formed Bl!nk Media Ireland Limited, an interactive video gaming Company formed by former executives of Electronic Arts and Marvel Entertainment. Eric provided advice regarding the potential structuring of a complex multi-party financing, including state job credits and production incentives.

 

Eric has produced several motion pictures including IN THIS CORNER, 100 KILOS, THE ANNIHILATION OF FISH, and DEATH SENTENCE starring Kevin Bacon, and has served as Executive Producer for Royal Street Entertainment LLC on its Lifetime and Hallmark TV movies CITIZEN JANE and SECRETS IN THE WALLS. Mr. Mitchell has also taught a film finance class for Paul Heller’s “Producing the Independent Film” at the UCLA Extension Center. Eric is a graduate of Carnegie Mellon University and received his Masters in Management from the Massachusetts Institute of Technology’s Sloan School of Management.

 

Rebecca Bieker, Secretary.

 

Ms. Bieker has over 32 years of administrative experience with regards to business management in real estate, investor development and accounting. Rebecca received her education from Moraine Park Technical Institute in Wisconsin, in Real Estate, Accounting and Computers, with further education from real estate and business schools in Las Vegas, Nevada.

 

Our officers and directors may be deemed promoters of the Company as those terms are defined by the Securities Act of 1933, as amended. All directors hold office until the next annual stockholders' meeting or until their death, resignation, retirement, removal, disqualification, or until their successors have been elected and qualified. Our officers serve at the will of the Board of Directors.

 

There are no agreements or understandings for any officer or director of the Company to resign at the request of another person and none of the officers or directors is acting on behalf of or will act at the direction of any other person.

 

 

We have checked the box provided on the cover page of this Form to indicate that there is no disclosure in this form of reporting person delinquencies in response to Item 405 of Regulation S-K.

 

Audit Committee.

 

Our board of directors has not established an audit committee. In addition, we do not have any other compensation or executive or similar committees. We will not, in all likelihood, establish an audit committee until such time as the Company generates a positive cash flow of which there can be no assurance. We recognize that an audit committee, when established, will play a critical role in our financial reporting system by overseeing and monitoring management's and the independent auditors' participation in the financial reporting process. At such time as we establish an audit committee, its additional disclosures with our auditors and management may promote investor confidence in the integrity of the financial reporting process.

 

Until such time as an audit committee has been established, the full board of directors will undertake those tasks normally associated with an audit committee to include, but not by way of limitation, the (i) review and discussion of the audited financial statements with management, and (ii) discussions with the independent auditors the matters required to be discussed by the Statement On Auditing Standards No. 61 and No. 90, as may be modified or supplemented.

 

Code of Ethics.

 

We have adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer and persons performing similar functions. The code of ethics will be posted on the investor relations section of the Company's website. At such time as we have posted the code of ethics on our website, we intend to satisfy the disclosure requirements under Item 10 of Form 8-K regarding an amendment to, or waiver from, a provision of the code of ethics by posting such information on the website.

 

ITEM 11.  EXECUTIVE COMPENSATION

 

SUMMARY COMPENSATION TABLE

 

Name and Principal

Position

  Year   Salary   Bonus  

Stock

Awards

 

Option

Awards

 

Nonequity Incentive

Plan Compensation

  Nonqualified Deferred Compensation Earnings  

All Other

Compensation

  Total
Eric Mitchell     FY2015     $ 135,600     $ —       $ 60,334     $ —       $ —       $   $ —       $ 195,934
President     FY2014       80,503       —         133,341       —         —             —         213,844
      FY2013       62,880       —         58,560       —         —             —         121,440
Rebecca Bieker     FY2015       —        —         —         —         —             —        
Secretary     FY2014       —        —         6,000       —         —             —         6,000
      FY2013       1,000       —         15,000       —         —             —         16,000

  

DIRECTOR COMPENSATION

 

Name  

Fees

Earned or

Paid in

Cash

($)

   

Stock

Awards

($)

   

Option

Awards

($)

   

Non-Equity

Incentive

Plan

Compensation

($)

   

Nonqualified

Deferred

Compensation Earnings

($)

   

All

Other

Compensation

($)

   

Total

($)

 
Eric Mitchell     -       -       -       -       -                  

 

 

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

 

(a)  Security Ownership of Certain Beneficial Owners.

 

(b)  Security Ownership of Management.

 

The following table sets forth the security and beneficial ownership for each class of equity securities of the Company owned beneficially and of record by all directors and officers of the Company, and any holder of more than 5% of each class of stock.

 

Title of Class   Name and Address of Beneficial Owner   Amount and Nature of Beneficial Owner   Percent of Class
Common Stock   Irwin Zalcberg   5,833,333 shares     15 %
Common Stock   DEVCAP Partners LLC   13,125,000 shares     33.8 %
Common Stock   Eric Mitchell   4,038,313 shares     10.4 %
Common Stock   Rebecca Bieker   75,000 shares     0.1 %
Preferred Stock,
Series A
  Eric Mitchell   10,000 shares     100 %

 

 

(c)  Ownership and Change in Control.

 

Each of the security ownership by the beneficial owners and by management is also the owner of record for the like number of shares.

 

There are currently no arrangements that would result in a change in our control.

 

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 

There were no related party transactions during the fiscal year. 

 

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES.

 

Audit and Non-Audit Fees

 

Fiscal Year Ended  

March 31,

2015

 

March 31,

2014

 Audit Fees   $ 57,485     $ 54,400  
 Audit Related Fees   $ —       $ —    
 Tax Fees   $ —         —    
 All Other Fees   $ —         —    

 

Pre-Approval of Services by the Independent Auditor

 

The Board of Directors has established policies and procedures for the approval and pre-approval of audit services and permitted non-audit services. The Board has the responsibility to engage and terminate the Company's independent registered public accountants, to pre-approve their performance of audit services and permitted non-audit services and to review with the Company's independent registered public accountants their fees and plans for all auditing services. All services provided by and fees paid to MaloneBailey LLP were pre-approved by the Board of Directors.

 

 

ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

 

We are a reporting company pursuant to the requirements of the 1934 Act and we file quarterly, annual and other reports with the Securities and Exchange Commission. The reports and other information filed by us will be available for inspection and copying at the public reference facilities of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549.

 

Copies of such material may be obtained by mail from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. In addition, the Commission maintains a World Wide Web site on the Internet at http://www.sec.gov that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission. 

 

The following documents are filed as part of this report, except for those documents designated by an asterisk (*), which have been previously filed with the Securities and Exchange Commission and, pursuant to Rule 17 C.F.R. 230.411, are incorporated by reference to the document referenced in brackets following the descriptions of such exhibits.

 

* 3.1   Certificate of Incorporation {Exhibit 3.1 to our Registration Statement on Form S-1/A (File No. 333-147959)}
       
* 3.2   Bylaws {Exhibit 3.2 to our Registration Statement on Form S-1/A (File No. 333-147959)}
       
  4.1   Certificate of Designation of Series A Cumulative Convertible Preferred Stock
       
  4.2   Certificate of Designation of Series B Cumulative Convertible Preferred Stock
       
  4.3   Certificate of Designation of Series C Cumulative Convertible Preferred Stock
       
* 4.4   Common Stock Certificate Form
       
* 4.5   Restated Share Exchange Agreement of February 25, 2011{Exhibit 2.1 to our Form 8-K/A (File No. 333-147959)}
       
  10.1   Subscription Agreements from Irwin Zalcberg
       
  10.2   Loan Agreement with Nancy Louise Jones
       
* 14.1   Code of Ethics {Exhibit 14 to our Form 10-K FYE March 31, 2008 (File No. 333-147959)}
       
* 21.1   Subsidiaries of our Company {Exhibit 21.1 to our Registration Statement on Form SB-2/A (File No. 333-147959)}
       
  23.1   Consent of Malone Bailey LLP, Independent Auditor
       
  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
       
  PRE ** XBRL Taxonomy Extension Presentation Linkbase Document

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 

  SIGNATURES

 

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Company has duly caused this Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  WRIT Media Group, Inc.  
       
Date: December 14, 2015  By: /s/ Eric Mitchell  
    Eric Mitchell  
    President and Director  
       
  By: /s/ Eric Mitchell  
    Eric Mitchell  
    Chief Financial Officer and Chief Accounting Officer/Controller  

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Date: December 14, 2015  By: /s/ Eric Mitchell  
    Eric Mitchell  
    President and Sole Director  

 



EXHIBIT 31.1

 

WRIT MEDIA GROUP, INC.

a Delaware corporation

8200 Wilshire Boulevard,

Suite 200

Beverly Hills, CA 90211

310.461.3737

 

Rule 15d­14(a) Certifications

 

I, Eric Mitchell, certify that:

1. I have reviewed this 10­K 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 13a­15(e) and 15d­15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a­15(f) and 15d­15(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: December 14, 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-K 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: December 14, 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-K of WRIT Media Group, Inc. (the “Company”) for the annual period ended March 31, 2015, 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: December 14, 2015

By: /s/ Eric Mitchell

Eric Mitchell,

President, Principal Executive Officer

 

Date: December 14, 2015

By: /s/ Eric Mitchell

Eric Mitchell,

Treasurer, Principal Financial Officer

 

This certification accompanying the Form 10-K 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-K), irrespective of any general incorporation language contained in such filing.



v3.3.1.900
Document and Entity Information - USD ($)
12 Months Ended
Mar. 31, 2015
Dec. 11, 2015
Entity Registrant Name Writ Media Group, Inc.  
Entity Central Index Key 0001413547  
Document Type 10-K  
Document Period End Date Mar. 31, 2015  
Amendment Flag false  
Current Fiscal Year End Date --03-31  
Is Entity a Well-known Seasoned Issuer? No  
Is Entity a Voluntary Filer? No  
Is Entity's Reporting Status Current? No  
Entity Filer Category Smaller Reporting Company  
Entity Public Float $ 457,864  
Document Fiscal Period Focus FY  
Document Fiscal Year Focus 2014  
Common Stock    
Entity Common Stock, Shares Outstanding   2,309,056
Preferred Stock    
Entity Common Stock, Shares Outstanding   7,500


v3.3.1.900
Balance Sheets - USD ($)
Mar. 31, 2015
Mar. 31, 2014
Current Assets    
Cash and cash equivalents $ 255 $ 25,810
Accounts receivable $ 470 824
Prepaid expense and other assets 3,750
Deferred financing costs 1,188
Subscription receivable 25,000
Total current assets $ 725 56,572
Long Term Assets    
Property, plant and equipment, net $ 1,112 1,664
Intangible assets - software 532,521
Total Assets $ 1,837 590,757
Current Liabilities    
Accounts payable 198,349 $ 100,465
Accounts payable, related party 112,500
Accrued liability 106,442 $ 9,614
Convertible debts, net of unamortized discount of $103,836 and $0, respectively 131,089 26,707
Notes payable 7,500 $ 45,500
Due to related parties 9,510
Deferred Revenue 55,395 $ 55,395
Total current liabilities 620,785 237,681
Total Liabilities 620,785 $ 237,681
Shareholders' Equity (Deficit)    
Common stock, $0.00001 par, 20,000,000,000 shares authorized, 194,378 and 46,411 shares issued and outstanding, respectively 2
Additional paid in capital 1,164,603 $ (66,947)
Retained Earnings (Deficit) (1,783,553) 420,023
Total shareholders' equity (deficit) (618,948) 353,076
Total Liabilities and Shareholders' Equity (Deficit) $ 1,837 $ 590,757
Preferred Stock - Series A    
Shareholders' Equity (Deficit)    
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
Preferred Stock - Series B    
Shareholders' Equity (Deficit)    
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
Preferred Stock - Series C    
Shareholders' Equity (Deficit)    
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


v3.3.1.900
Balance Sheets (Parenthetical) - USD ($)
Mar. 31, 2015
Mar. 31, 2014
Current Liabilities    
Unamortized discount on Convertible debts $ 103,836 $ 0
Shareholders' Equity    
Common stock, Par value $ .00001 $ 0.00001
Common stock, shares authorized 20,000,000,000 20,000,000,000
Common stock, shares issued 194,378 46,411
Common stock, shares outstanding 194,378 46,411
Preferred Stock - Series A    
Shareholders' Equity    
Preferred stock, Par value $ .00001 $ 0.00001
Preferred stock, authorized 130,000,000 130,000,000
Preferred stock, issued 10,000 10,000
Preferred stock, outstanding 10,000 10,000
Preferred Stock - Series B    
Shareholders' Equity    
Preferred stock, Par value $ 0.00001 $ 0.00001
Preferred stock, authorized 70,000,000 70,000,000
Preferred stock, issued 0 0
Preferred stock, outstanding 0 0
Preferred Stock - Series C    
Shareholders' Equity    
Preferred stock, Par value $ .00001 $ 0.00001
Preferred stock, authorized 20,000,000 20,000,000
Preferred stock, issued 0 0
Preferred stock, outstanding 0 0


v3.3.1.900
Statements of Operations - USD ($)
12 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Revenues    
Third party $ 11,000
Total revenue $ 11,000
Operating Costs and Expenses    
Intangible asset impairment expense $ 821,235
General and administrative 1,174,146 $ 498,250
Total operating expenses 1,995,381 498,250
Loss from operations $ (1,995,381) (487,250)
Other income (expense)    
Other income 3,000
Gain (Loss) from derivative liability 1,715,954
Interest expense $ (208,195) (187,420)
Net income (loss) $ (2,203,576) $ 1,044,284
Net income (loss) per share:    
Basic $ (16.99) $ 48.12
Diluted $ (16.99) $ 4.96
Weighted average common shares outstanding:    
Basic 129,708 21,700
Diluted 129,708 210,736


v3.3.1.900
Shareholders Equity - USD ($)
Common Stock
Preferred Stock - Series A
Preferred Stock - Series B
Additional Paid-In Capital
Retained Earnings (Deficit)
Total
Beginning Balance, Shares at Mar. 31, 2013 7,870 10,000 10,000      
Beginning Balance, Value at Mar. 31, 2013 $ 409,762 $ (624,261) $ (214,499)
Shares issued for convertible notes, Shares 13,873         13,873
Shares issued for convertible notes, Value     145,589   $ 145,589
Shares issued for acquisition, Shares 2,500         2,500
Shares issued for acquisition, Value     400,000   $ 400,000
Shares issued for services, Shares 8,158          
Shares issued for services, Value     258,418   $ 258,418
Shares issued for cash, Shares 13,428         13,429
Shares issued for cash, Value     247,774   $ 247,774
Reclassification of derivative to additional paid in capital       $ (1,528,390)   $ (1,528,390)
Cashless exercise of warrants, Shares 132          
Cashless exercise of warrants, Value      
Cancellation of shares, Shares (50)         (50)
Cancellation of shares, Value     $ (100)   $ (100)
Conversion of preferred stock to common stock, Shares 500          
Conversion of preferred stock to common stock, Value   $ (10,000)  
Net loss         1,044,284 $ 1,044,284
Ending Balance, Shares at Mar. 31, 2014 46,411 10,000      
Ending Balance, Value at Mar. 31, 2014 $ (66,947) 420,023 $ 353,076
Shares issued for convertible notes, Shares 35,172         35,172
Shares issued for convertible notes, Value $ 1     83,190   $ 83,191
Shares issued for acquisition, Value          
Shares issued for services, Shares 95,148         94,301
Shares issued for services, Value $ 1     640,624   $ 640,625
Shares issued for cash, Shares 17,647         17,647
Shares issued for cash, Value     226,781   $ 226,781
Cancellation of shares, Value          
Discount on issuance of convertible note payable       280,955   $ 280,955
Net loss         (2,203,576) (2,203,576)
Ending Balance, Shares at Mar. 31, 2015 194,378 10,000      
Ending Balance, Value at Mar. 31, 2015 $ 2 $ 1,164,603 $ (1,783,553) $ (618,948)


v3.3.1.900
Statements of Cash Flows (Unaudited) - USD ($)
12 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Cash Flows From Operating Activities    
Net Income (loss) $ (2,203,576) $ 1,044,284
Adjustments to reconcile net income (loss) to net cash used in operating activities:    
Gain on derivative liability $ (1,715,954)
Depreciation $ 552
Shares issued for services 640,625 $ 258,418
Amortization of debt discount $ 177,119 173,376
Amortization of deferred financing costs $ 7,312
Impairment of intangible asset $ 821,235
Gain on settlement of accrued payroll liability $ (28,468)
Changes in operating assets and liabilities:    
Accounts receivable $ 354 (300)
Prepaid expenses and other assets 4,938 (2,040)
Accounts payable 400 $ 23,885
Accounts payable, related party 112,500
Accrued liabilities $ 108,710 $ 8,629
Deferred revenue 55,395
Net cash used in operating activities $ (345,616) (175,463)
Cash Flows From Investing Activities    
Cash paid for software development costs and license (146,170) $ (87,461)
Cash paid for software development costs incurred on account in prior year $ (45,060)
Purchase of technology hardware $ (1,664)
Net cash used in investing activities $ (191,230) $ (89,125)
Cash Flows From Financing Activities    
Advances from related party 9,510
Cash received from subscription receivable 25,000
Proceeds from sale of stock 226,781 $ 222,774
Borrowing on short term notes payable 12,500 61,500
Borrowing on convertible debt $ 242,500 80,077
Payment of related party debt, net (2,896)
Payment of short-term notes payable $ (5,000) (6,000)
Payment of convertible debt (61,200)
Deferred financing costs (5,000)
Net cash provided by financing activities $ 511,291 289,255
Net increase (decrease) in cash and cash equivalents (25,555) 24,667
Cash and cash equivalents, beginning of period 25,810 1,143
Cash and cash equivalents, end of period $ 255 $ 25,810
Supplemental disclosure information:    
Income taxes paid
Interest paid $ 6,119 $ 780
Non-cash financing activities:    
Common Shares issued for convertible debt and accrued interest $ 83,191 145,589
Common Shares issued for acquisition of assets from Amiga Games, Inc. 400,000
Debt discount resulting from recognition of derivative liability 164,014
Reclassification of derivative liabilities to additional paid in capital (1,528,390)
Software development cost incurred on account $ 142,544 45,060
Stock issued for subscription receivable $ 25,000
Accrued interest enrolled into debt $ 2,292
Cancellation of shares, Value $ (100)
Common Shares issued for accrued compensation $ 8,473
Discount on issuance of convertible note payable $ 280,955
Conversion from Series B preferred stock to common stock $ 1


v3.3.1.900
1. ORGANIZATION, BUSINESS OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
12 Months Ended
Mar. 31, 2015
Accounting Policies [Abstract]  
1. ORGANIZATION, BUSINESS OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

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.

 

Basis of Presentation and Consolidation

 

These consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America.  The consolidated financial statements include the accounts of the Company and its subsidiaries, Front Row Networks, Inc., Amiga Games, Inc. and Retro Infinity Inc. All significant intercompany balances and transactions have been eliminated.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the amount of revenues and expenses during the reporting periods.  Management makes these estimates using the best information available at the time the estimates are made.  However, actual results could differ materially from those estimates.

 

Cash and Cash Equivalents

 

Cash and cash equivalents include cash on hand, demand deposits with banks and liquid investments with an original maturity of three months or less.

 

Accounts Receivable

 

Accounts receivable are recorded at the net invoice value and are not interest bearing. We consider receivables past due based on the contractual payment terms. We perform ongoing credit evaluations of our customers, and generally we do not require collateral on our accounts receivable. We estimate the need for allowances for potential credit losses based on historical collection activity and the facts and circumstances relevant to specific customers and we record a provision for uncollectible accounts when collection is uncertain. To date, we have not experienced any credit related losses.

 

Long Lived Assets

 

In accordance with ASC 360 "Property Plant and Equipment," the Company reviews the carrying value of intangibles subject to amortization and long-lived assets for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

 

Recoverability of long-lived assets is measured by comparison of its carrying amount to the undiscounted cash flows that the asset or asset group is expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the property, if any, exceeds its fair market value.

 

Revenue Recognition

 

The Company follows revenue recognition in two industries, technology and film.

 

Revenue is measured at the fair value of the consideration received or receivable net of sales tax, trade discounts and customer returns.

 

Sale of Technology Gaming

 

Revenue from sale of technology gaming applications is recognized when the following conditions are satisfied:

 

Persuasive evidence of an arrangement exists
Delivery has occurred or services have been rendered
The seller’s price to the buyer is fixed or determinable
Collectability is reasonably assured

 

During the year ended March 31, 2015, there was no revenue recognized. A development fee from Roku Inc. was recognized as a cash advance of $55,395 was recorded as deferred revenue as of March 31, 2015 and 2014.

 

Film Sales

 

Based on Revenue Recognition Requirement for Film Sales (ASC 926-605-25), the Company recognizes film license revenues when all of the following conditions are met:

 

- Persuasive evidence of a sale or licensing arrangement with a customer exists

- The film is complete and, in accordance with the terms of the arrangement, has been delivered or is available for immediate and unconditional delivery

- The license period of the arrangement has begun and the customer can begin its exploitation, exhibition, or sale

- The arrangement fee is fixed or determinable

- Collection of the arrangement fee is reasonably assured

 

Income Taxes

 

The Company accounts for income taxes in accordance with ASC 740, which requires an asset and liability approach for financial accounting and reporting for income taxes and allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years.  Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.  A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain.

 

Software Development Costs

 

The Company accounts for software development costs in accordance with ASC 985-20, “Costs of Computer Software to be Sold, Leased, or Otherwise Marketed”. Costs incurred prior to the establishment of technological feasibility are expensed as incurred as research and development costs. Costs incurred after establishing technological feasibility and before the product is released for sale to customers are capitalized.

 

Stock-based Compensation

 

Accounting Standards Codification (“ASC”) 718, “Accounting for Stock-Based Compensation" established financial accounting and reporting standards for stock-based compensation plans. It defines a fair value based method of accounting for an employee stock option or similar equity instrument. The Company accounts for compensation cost for stock option plans and for share based payments to non-employees in accordance with ASC 718. Accordingly, employee share-based payment compensation is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the requisite service period. Additionally, share-based awards to non-employees are expensed over the period in which the related services are rendered at their fair value. The Company accounts for share based payments to non-employees in accordance with ASC 505-50 “Accounting for Equity Instruments Issued to Non-Employees for Acquiring, or in Conjunction with Selling, Goods or Services”.

 

Embedded Conversion Feature

 

The Company has issued convertible instruments which contain embedded conversion features. The Company evaluates the embedded conversion feature within its convertible debt instruments under ASC 815-15 and ASC 815-40 to determine if the conversion feature meets the definition of a liability and therefore need to bifurcate the conversion feature and account for it as a separate derivative liability.

 

If the embedded conversion feature does not meet the definition of a liability, the Company evaluated the conversion feature under ASC 815-40 for a beneficial conversion feature at inception. The effective conversion price was then computed based on the allocation of the proceeds to the convertible debt to determine if a beneficial conversion feature exists. The effective conversion price was compared to the market price on the date of the original note and was deemed to be less than the market value of the Company’s stock at the inception of the note. A beneficial conversion feature was recognized and gave rise to a debt discount that is amortized over the stated maturity of the convertible debt instrument or the earliest potential conversion date.

 

If the embedded conversion feature meets the definition of a liability, it is required a bifurcation of the conversion feature from the debt and accounting for the conversion feature as a derivative contract liability with changes in fair value recorded in the Statements of Operations.

 

Beneficial Conversion Features

 

The intrinsic value of a beneficial conversion feature inherent to a convertible note payable, which is not bifurcated and accounted for separately from the convertible note payable and may not be settled in cash upon conversion, is treated as a discount to the convertible note payable. This discount is amortized over the period from the date of issuance to the date the note is due using the effective interest method. If the note payable is retired prior to the end of its contractual term, the unamortized discount is expensed in the period of retirement to interest expense. In general, the beneficial conversion feature is measured by comparing the effective conversion price, after considering the relative fair value of detachable instruments included in the financing transaction, if any, to the fair value of the common shares at the commitment date to be received upon conversion.

 

Net Loss per Share

 

In accordance with ASC 260 “Earnings per Share,” basic net loss per common share is computed by dividing net loss for the period by the weighted average number of common shares outstanding during the period. Diluted net income/(loss) per share is computed by dividing the net income/(loss) for the period by the weighted average number of common and common equivalent shares, such as stock options and warrants, outstanding during the period. Such common equivalent shares have not been included in the computation of net loss per share as their effect would be anti-dilutive.

 

Fair Value Measurements

 

As defined in ASC 820 “Fair Value Measurements”, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).

 

The three levels of the fair value hierarchy defined by ASC 820 are as follows:

 

Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date.  Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.

 

Level 2 – Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars.

 

Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

 

The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value as of March 31, 2015 and 2014. As required by ASC 820, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.

 

As of March 31, 2015   Total   Quoted Prices in Active Markets for Identical Instruments Level 1   Significant Other Observable Inputs Level 2   Significant Unobservable Inputs Level 3  
                   
Derivative Liabilities   $ -           $ -  

 

As of March 31, 2014   Total   Quoted Prices in Active Markets for Identical Instruments Level 1   Significant Other Observable Inputs Level 2   Significant Unobservable Inputs Level 3  
                   
Derivative Liabilities   $ -           $ -  

 

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.

 



v3.3.1.900
2. GOING CONCERN
12 Months Ended
Mar. 31, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
2. GOING CONCERN

NOTE 2 – GOING CONCERN

 

As reflected in the accompanying consolidated financial statements, the Company has accumulated deficits of $1,783,553 at March 31, 2015 that includes losses of $2,203,576 for the fiscal year ended March 31, 2015 and a working capital deficiency of $620,060. At March 31, 2014 the Company had retained earnings of $420,023 that included a net income of $1,044,284 which included a non-cash gain on derivative liability of $1,715,954 and a working capital deficiency of $181,109. 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.



v3.3.1.900
3. NOTES PAYABLE
12 Months Ended
Mar. 31, 2015
Payables and Accruals [Abstract]  
3. NOTES PAYABLE

NOTE 3 – NOTES PAYABLE

 

Note payable consists of the following:

 

   

March 31,

2015

 

March 31,

2014

                 
Note payable, net of debt discount of $0 and $0 respectively   $ 7,500     $ 45,500  

 

FOR THE YEAR ENDED MARCH 31, 2015

 

Falmouth Street Holdings, LLC

 

On March 2, 2015, the Company borrowed $7,500 from Falmouth Street Holdings, LLC. The maturity date of this note is August 29, 2015 and this loan bears an interest rate of 12% per annum from the issuance date. The note is still outstanding as of March 31, 2015. As of today the debt is still outstanding and therefore is in default.

 

SCHU Mortgage & Capital, Inc.

On February 18, 2014, the Company borrowed $15,000 from SCHU Mortgage & Capital, Inc. The maturity date of this note is August 18, 2014 and this loan bears an interest rate of 8% per annum from the issuance date. On July 10, 2014, SCHU Mortgage & Capital, Inc. sold and assigned its $15,000 note to Magna Group LLC, along with accrued interest of $465. See discussion on the new Magna note in note 4.

 

SFH Capital LLC

On October 22, 2013, the Company borrowed $14,000 from SFH Capital LLC. The maturity date of this note was October 22, 2014 and this loan bears an interest rate of 12% per annum from the issuance date. On June 6, 2014 the Company entered into a debt modification agreement with the debt holder. The modified note was convertible into common stock at a price of $10.00, with an extend maturity date of January 6, 2015, and there were no other changes to the original terms of the promissory note. The principal amount of the modified note was $15,045 on June 6, 2014, with the accrued interest owed on the old debt included in the principal of the new debt.

 

On October 29, 2013, the Company borrowed $4,000 from SFH Capital LLC. The maturity date of this note was October 29, 2014 and this loan bears an interest rate of 8% per annum from the issuance date. On June 6, 2014 the Company entered into a debt modification agreement with the debt holder. The modified note was convertible into common stock at a price of $10.00, bears an extend maturity date of January 6, 2015, and there were no other changes to the original terms of the promissory note. The principal amount of the modified note was $4,193 on June 6, 2014, with the accrued interest owed on the old debt included in the principal of the new debt.

 

On December 11, 2013, the Company borrowed $12,500 from SFH Capital LLC. The maturity date of this note was December 11, 2014 and this loan bears an interest rate of 8% per annum from the issuance date. On June 6, 2014 the Company entered into a debt modification agreement with the debt holder. The modified note was convertible into common stock at a price of $10.00, bears an extend maturity date of January 6, 2015, and there were no other changes to the original terms of the promissory note. The principal amount of the modified note was $12,985 on June 6, 2014, with the accrued interest owed on the old debt included in the principal of the new debt.

 

See accounting treatment for the new SFH Capital LLC notes in note 4

 

Mr. J. Shaw

 

On April 1, 2014, the Company borrowed $5,000 from J. Shaw. The maturity date of this note is May 1, 2014, and this loan bears an interest rate of 0% per annum from the issuance date. On April 23, 2014, the principal balance of the note was paid in its entirety and the note has been surrendered to the Company.

 

FOR THE YEAR ENDED MARCH 31, 2014

 

Mrs. Nancy Louise Jones

 

On November 26, 2010, the Company borrowed $60,562 from Mrs. Nancy Louise Jones, wife of Mr. John Diaz, the former CEO and former major shareholder, who resigned as an Officer and Director of WRIT in November, 2012. The maturity date of this loan is September 1, 2012 and was extended to September 8, 2013. The Company evaluated the application of ASC 470-50 and ASC 470-60 and concluded that the extension of maturity constituted a debt modification, rather than a debt extinguishment or a troubled debt restructuring. As this loan bears no interest, in accordance with ASC 835-30 Imputation of Interest, the Company uses 8%, the prevailing rate for similar debt, to recognize the imputed interest expense of $5,449 on this debt for the year ended March 31, 2013. The imputed interest expense is accounted as a capital transaction and recorded as an increase of Additional Paid-In Capital. On May 2, 2013, Nancy Louise Jones assigned her $60,562 note to Magna Group LLC (see Note 4). The maturity date of this amended note is January 2, 2014. This loan bears an interest rate of 12% per annum. The note is convertible into common stock at a price of 55% multiplied by the lowest volume weighted average price for the Common Stock during the five trading day period ending on the latest complete trading day prior to the conversion date. Additionally, in no event shall the conversion price be less than $0.008. The Company evaluated the application of ASC 470-50 and ASC 470-60 and concluded the addition of a conversion feature constituted a debt extinguishment rather than a troubled debt restructuring. See more discussion about the new debt in Note 4.

 

On June 12, 2013, the Company borrowed $12,000 from Mrs. Nancy Louise Jones. Out of the $12,000 debt proceeds $2,000 was paid to Mrs. Nancy Louise Jones for legal and administrative fees. The maturity date of this note is August 31, 2013, which was amended by the parties to April 1, 2014. This loan bears an interest rate of 12% per annum. The Company evaluated the application of ASC 470-50 and ASC 470-60 and concluded the extension of maturity date does not constitute a troubled debt restructuring or debt extinguishment. On March 17, 2014, Nancy Louise Jones assigned her $12,000 note to Magna Group LLC, along with accrued interest of $1,077 (see Note 4). The maturity date of this amended note is March 17, 2015. This loan bears an interest rate of 12% per annum. The note is convertible into common stock at a price of 55% multiplied by the lowest volume weighted average price for the Common Stock during the five trading day period ending on the latest complete trading day prior to the conversion date. Additionally, in no event shall the conversion price be less than $0.008. The Company evaluated the application of ASC 470-50 and ASC 470-60 and concluded the addition of a conversion feature constituted a debt extinguishment rather than a troubled debt restructuring. See more discussion about the new debt in Note 4.

 

Asher Enterprises Notes Payable

 

On November 2, 2012, the Company borrowed $16,000 from Asher Enterprises. The maturity date of this note is August 5, 2013. 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, Asher Enterprises 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 25% multiplied by the lowest trading price for the Common Stock during the 120 trading day period ending on the latest complete trading day prior to the conversion date. As of March 31, 2013, the note is not convertible yet. On May 1, 2013, the $16,000 note became convertible. See more discussion in Note 4.

 

Along with the note payable, the Company issued warrants to purchase 247 shares of common stock. The warrants expire 5 years after issuance and have an exercise price of $6.50. The exercise price can adjust downward if the Company issues common stock at a price per share lower than the current exercise price. As of March 31, 2013, the warrants were treated as a derivative liability.

 

The Company analyzed the warrants for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the warrants should be classified as a liability due to their not being indexed to the Company’s common stock. The warrants were measured at fair value at the date of inception and at the end of each reporting period or termination of the instrument with the change in fair value recorded to earnings. The fair value of the warrants resulted in a full debt discount of $16,000. The unamortized discount is $7,362 as of March 31, 2013. See discussion related to the derivative liabilities in Note 5 and warrants in Note 7.

 

On January 30, 2013, the Company borrowed $32,500 from Asher Enterprises. The maturity date of this note is November 1, 2013. 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, Asher Enterprises 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 50% multiplied by the lowest two trading price for the Common Stock during the 20 trading day period ending on the latest complete trading day prior to the conversion date. As of March 31, 2013, the note is not convertible yet. On July 29, 2013, the $32,500 note became convertible. See more discussion in Note 4.



v3.3.1.900
4. CONVERTIBLE DEBT
12 Months Ended
Mar. 31, 2015
Debt Disclosure [Abstract]  
4. CONVERTIBLE DEBT

NOTE 4 – CONVERTIBLE DEBT

 

Convertible debt outstanding, net of debt discount of $0, on March 31, 2013   $ 22,277  
         
Add: issuance of convertible debts, net of discount of $67,000     13,077  
Assignment from Nancy Louise Jones, net of discount of $60,562     12,000  
Reclassification from accrued interest to convertible debt, net of discount of $3,952     675  
Reclassification from  nonconvertible debt to convertible debt, net of debt discount of $39,862     8,638  
Less: principal converted into common stock     (140,136 )
Principal repayment     (61,200 )
Add: amortization of debt discount     171,376  
Convertible debts outstanding, net of debt discount of $0 on March 31, 2014   $ 26,707  
Add: issuance of convertible debt     242,500  
Add: reclassification from non-convertible debts to convertible debts     45,500  
Add: reclassification from accrued interest to convertible debts     2,292  
Less: debt discount originated from beneficial conversion feature     (280,955 )
Less: principal converted into common stock     (82,074 )
Add: amortization of debt discount     177,119  
Convertible debt outstanding, net of debt discount of $103,836 on March 31, 2015   $ 131,089  

 

During the year ended March 31, 2015, $82,074 of convertible debts with accrued interest of $1,118 was converted into 35,172 shares of common stock.

 

During the year ended March 31, 2014, $145,589 of convertible debts and accrued interests was converted into 13,873 shares of common stock.

 

FOR THE YEAR ENDED MARCH 31, 2015

 

Magna Group LLC/Hanover Holdings

 

On March 17, 2014, Nancy Louise Jones assigned her $12,000 note to Magna Group LLC, along with accrued interest of $1,077. The maturity date of this amended note is March 17, 2015. This loan bears an interest rate of 12% per annum. The note is convertible into common stock at a price of 55% multiplied by the lowest volume weighted average price for the Common Stock during the five trading day period ending on the latest complete trading day prior to the conversion date. Additionally, in no event shall the conversion price be less than $0.008. An amount equal to $2,577 of the principal balance of the note was converted into 244 common shares on March 21, 2014. On April, 4 2014 and April 21, 2014, Magna Group LLC converted $10,500 of the convertible note dated March 17, 2014 into 1,215 common shares. This note has been converted in its entirety and has been surrendered to the Company.

 

On March 17, 2014, a convertible note was issued with Magna Group, LLC in the amount of $13,077. The notes bears interest of 12% per annum, and is due on March 17, 2015 and is convertible into common shares at a price of 55% multiplied by the lowest volume weighted average price for the Common Stock during the five trading day period ending on the latest complete trading day prior to the conversion date. Additionally, in no event shall the conversion price be less than $0.008. An amount equal to $3,500 of the principal balance of the note was converted into 1,383 common shares on September 15, 2014. On October 10, 2014 and October 22, 2014, Magna Group converted $6,500 of the convertible note into 3,921 common shares. On November 26, 2014, Magna Group converted $3,077 principal amount and $872.33 interest amount of the convertible note into 2,849 common shares. This note has been converted in its entirety and has been surrendered to the Company.

 

On July 10, 2014, SCHU Mortgage & Capital, Inc. sold and assigned its $15,000 note to Magna Group LLC, along with accrued interest of $465 (see Note 3). On that same date, the Company amended the related debt agreement with the note holder. The maturity date of this amended note is July 10, 2015. This loan bears an interest rate of 12% per annum. The note is convertible into common stock at a price of 55% multiplied by the lowest volume weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. On August 18, 2014 $5,465 of the principal balance was converted into 994 common shares. On August 26, 2014, $5,000 of the principal balance was converted into 975 common shares. On September 2, 2014, $5,000 of the principal balance plus interest of $155 was converted into 1,442 common shares. This note has been converted in its entirety and has been surrendered to the Company.

 

The Company evaluated the application of ASC 470-50 and ASC 470-60 and concluded the assignment constituted a debt extinguishment, with the old debt written off and the new debt initially recorded at fair value with a new effective interest rate.

 

On July 10, 2014, the Company borrowed a convertible promissory note of $22,000 from Hanover Holdings I, LLC. The maturity date of this note is July 10, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. An amount equal to $2,500 of the principal balance of the note was converted into 4,545 common shares on February 4, 2015, leaving a principal balance of $19,500 as of March 31, 2015. As of today the debt is still outstanding and therefore is in default.

 

On September 10, 2014, the Company borrowed a convertible promissory note of $33,000 from Magna Equities II, LLC. The maturity date of this note is September 10, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2015, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.

 

On October 28, 2014, the Company borrowed a convertible promissory note of $25,000 from Magna Equities II, LLC. The maturity date of this note is October 28, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2015, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.

 

On December 17, 2014, the Company borrowed a convertible promissory note of $14,000 from Magna Equities II, LLC. The maturity date of this note is December 17, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2015, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.

 

The Company evaluated the embedded conversion feature within the above Magna convertible notes payable under ASC 815-15 and ASC 81 -40 and determined embedded conversion feature does not meet the definition of a liability. Then the Company evaluated the conversion feature for a beneficial conversion feature at inception. The Company accounted for the intrinsic value of a Beneficial Conversion Feature inherent to the convertible notes payable and a total debt discount of $126,010 was recorded on the Magna notes. During the year ended March 31, 2015, debt discount of $84,395 was amortized, and the unamortized debt discount is $41,615 as of March 31, 2015.

 

KBM Worldwide Inc.

 

On June 3, 2014, the Company borrowed $53,000 from KBM Worldwide Inc. The maturity date of this note is March 5, 2015. This loan bears an interest rate of 8% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. After 180 days following the date of the note, KBM Worldwide Inc. has the right to convert all or a portion of the remaining outstanding principal amount of this note into shares of the Company’s Common Stock. The conversion price will be 55% multiplied by the lowest three trading prices for the Common Stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2015, KBM Worldwide Inc. converted debt principal of $5,735 into 8,193 common shares, bringing the note balance to $47,265. As of today the debt is still outstanding and therefore is in default.

 

On July 29, 2014, the Company borrowed a convertible promissory note of $32,500 from KBM Worldwide, Inc. The maturity date of this note is May 1, 2015. This loan bears an interest rate of 8% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. After 180 days following the date of the note, KBM Worldwide Inc. has the right to convert all or a portion of the remaining outstanding principal amount of this note into shares of the Company’s Common Stock. The conversion price is 55% multiplied by the average of the lowest 3 trading day prices for the Common Stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date. On July 30, 2014, an amendment to the note defined a floor to the conversion price to be $.008 per share. As of March 31, 2015, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.

 

On September 15, 2014, the Company borrowed a convertible promissory note of $63,000 from KBM Worldwide, Inc. The maturity date of this note is June 17, 2015. This loan bears an interest rate of 8% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. After 180 days following the date of the note, KBM Worldwide Inc. has the right to convert all or a portion of the remaining outstanding principal amount of this note into shares of the Company’s Common Stock. The conversion price is 55% multiplied by the average of the lowest 3 trading day prices for the Common Stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2015, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.

 

The Company evaluated the embedded conversion feature within the above KBM convertible notes payable under ASC 815-15 and ASC 81 -40 and determined embedded conversion feature does not meet the definition of a liability. Then the Company evaluated the conversion feature for a beneficial conversion feature at inception. The Company accounted for the intrinsic value of a Beneficial Conversion Feature inherent to the convertible notes payable and a total debt discount of $148,500 was recorded on the KBM notes. During the year ended March 31, 2015, debt discount of $86,279 was amortized, and the unamortized debt discount is $62,221 as of March 31, 2015.

 

SFH Capital LLC

 

On October 22, 2013, the Company borrowed $14,000 from SFH Capital LLC. The maturity date of this note was October 22, 2014 and this loan bears an interest rate of 12% per annum from the issuance date. On June 6, 2014 the Company entered into a debt modification agreement with the debt holder. The modified note was convertible into common stock at a price of $10.00, with an extend maturity date of January 6, 2015, and there were no other changes to the original terms of the promissory note. The principal amount of the modified note was $15,045 and on June 6, 2014, it was converted into 1,504 common shares. The note was paid off in full and the note has been surrendered to the Company at March 31, 2015.

 

On October 29, 2013, the Company borrowed $4,000 from SFH Capital LLC. The maturity date of this note was October 29, 2014 and this loan bears an interest rate of 8% per annum from the issuance date. On June 6, 2014 the Company entered into a debt modification agreement with the debt holder. The modified note was convertible into common stock at a price of $10.00, bears an extend maturity date of January 6, 2015, and there were no other changes to the original terms of the promissory note. The principal amount of the modified note was $4,193 and on June 9, 2014, it was converted into 419 common shares. The note was paid off in full and the note has been surrendered to the Company at March 31, 2015.

 

On December 11, 2013, the Company borrowed $12,500 from SFH Capital LLC. The maturity date of this note was December 11, 2014 and this loan bears an interest rate of 8% per annum from the issuance date. On June 6, 2014 the Company entered into a debt modification agreement with the debt holder. The modified note was convertible into common stock at a price of $10.00, bears an extend maturity date of January 6, 2015, and there were no other changes to the original terms of the promissory note. The principal amount of the modified note was $12,985 and on June 10, 2014, SFH Capital LLC converted $10,000 of the convertible note into 1,000 common shares. On September 15, 2014, SFH Capital LLC converted $2,985 of principal balance plus $91 of interest of the convertible note into 305 common shares. The note was paid off in full and the note has been surrendered to the Company at March 31, 2015.

 

The Company evaluated the application of ASC 470-50 and ASC 470-60 and concluded the addition of a conversion feature constituted a debt extinguishment rather than a troubled debt restructuring, with the old debt written off and the new debt initially recorded at fair value with a new effective interest rate. The Company evaluated the embedded conversion feature within the three modified SFH convertible notes payable under ASC 815-15 and ASC 815-40 and determined embedded conversion feature does not meet the definition of a liability. Then the Company evaluated the conversion feature for a beneficial conversion feature at inception. The Company accounted for the intrinsic value of a Beneficial Conversion Feature inherent to the convertible notes payable and a debt discount of $3,009, $839, and $2,597 were recorded on each SFH note respectively. During the year ended March 31, 2015, debt discount of $3,009, $839, and $2,597 were fully amortized on the first, second and third SFH notes, respectively, since they were fully converted. The unamortized debt discount is $0 as of March 31, 2015

 

Other Convertible Notes

 

Convertible debts were issued September 2009, bearing interest at a rate of 8% per annum, due in one year, and are convertible at $2.00 per share, and the total balance outstanding as of March 31, 2014 was $3,130. The note is in default. During the year ended March 31, 2015, debt principal of $2,470 and interest of $104 reclassified into note principal were converted into 6,427 common shares. As of March 31, 2015, other convertible notes have a principal balance of $660.

  

FOR THE YEAR ENDED MARCH 31, 2014

 

Asher Enterprises, Inc.

 

On November 2, 2012, the Company borrowed $16,000 from Asher Enterprises.  The maturity date of this note is August 5, 2013. This loan bears an interest rate of 8% per annum from the issuance date before default.  Interest on overdue principal after default accrues at an annual rate of 22%.  After 180 days following the date of the note, Asher Enterprises 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 25% multiplied by the lowest trading price for the Common Stock during the one hundred twenty trading day period ending on the latest complete trading day prior to the conversion date. Along with the note payable, the Company issued warrants to purchase 247 shares of common stock. The warrants expire 5 years after issuance and have an exercise price of $6.50.  The exercise price can adjust downward if the Company issues common stock at a price per share lower than the current exercise price. On May 1, 2013, the $16,000 note became convertible. This note has been converted in its entirety along with accrued interest of $640 into 680 common shares, and has been surrendered to the Company. Debt discount of $7,362 was fully amortized as of March 31, 2014. The warrants have been exercised in their entirety and no warrant shares remain un-exercised.

 

On January 30, 2013, the Company borrowed $32,500 from Asher Enterprises.  The maturity date of this note is November 1, 2013. This loan bears an interest rate of 8% per annum from the issuance date before default.  Interest on overdue principal after default accrues at an annual rate of 22%.  After 180 days following the date of the note, Asher Enterprises 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 50% multiplied by the average of the lowest two trading prices for the Common Stock during the twenty trading day period ending on the latest complete trading day prior to the conversion date. On July 29, 2013, the $32,500 note became convertible. This note has been converted in its entirety along with accrued interest of $1,300 into 1,690 common shares and has been surrendered to the Company. Debt discount of $32,500 was fully amortized as of March 31, 2014.

 

On April 10, 2013, the Company borrowed $28,000 from Asher Enterprises.  The maturity date of this note is January 15, 2014.  This loan bears an interest rate of 8% per annum from the issuance date before default.  Interest on overdue principal after default accrues at an annual rate of 22%.  After 180 days following the date of the note, Asher Enterprises 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 50% multiplied by the average of the lowest two trading prices for the Common Stock during the twenty trading day period ending on the latest complete trading day prior to the conversion date. On October 7, 2013, the $28,000 note became convertible. An amount equal to $5,800 of the principal balance of the note was converted into 580 common shares on October 21, 2014. On February 3, 2014, the principal balance of the note plus interest was paid in its entirety and the note has been surrendered to the Company. Debt discount of $28,000 was fully amortized as of March 31, 2014.

 

On May 13, 2013, the Company borrowed $27,500 from Asher Enterprises. The maturity date of this note is February 17, 2014. This loan bears an interest rate of 8% per annum from the issuance date before default.  Interest on overdue principal after default accrues at an annual rate of 22%.  After 180 days following the date of the note, Asher Enterprises 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 50% multiplied by the average of the lowest two trading prices for the Common Stock during the forty trading day period ending on the latest complete trading day prior to the conversion date. On November 9, 2013, the $27,500 note became convertible. On February 18, 2014, the principal balance of the note plus interest was paid in its entirety and the note has been surrendered to the Company. Debt discount of $27,500 was fully amortized as of March 31, 2014.

 

The Company analyzed the conversion option of all the Asher notes for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the embedded conversion feature should be classified as a liability due to their being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. The embedded conversion feature was measured at fair value at the date of inception and at the end of each reporting period or termination of the instrument with the change in fair value recorded to earnings.

 

The Company analyzed the warrants for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the warrants should be classified as a liability due to their not being indexed to the Company’s common stock. The warrants were measured at fair value at the date of inception and at the end of each reporting period or termination of the instrument with the change in fair value recorded to earnings. See discussion related to the derivative liabilities in Note 5, and warrants in Note 7.

 

Magna Group LLC

 

On May 2, 2013 Magna Group LLC purchased the note payable of $60,562 from Mrs. Nancy Louise Jones and entered into an amended debt agreement with the Company. See Note 3. The maturity date of this amended note is January 2, 2014. This loan bears an interest rate of 12% per annum. The note is convertible into common stock at a price of 55% multiplied by the lowest volume weighted average price for the Common Stock during the five trading day period ending on the latest complete trading day prior to the conversion date. Additionally, in no event shall the conversion price be less than $0.008. Magna converted debt principal of $60,562 and interest of $579 into 1,519 common shares, and the debt balance was brought to zero. Debt discount of $60,562 was fully amortized as of March 31, 2014.

 

On May 9, 2013, Magna issued another convertible note of $11,500 to the Company. The note bears interest of 12% per annum, is due on January 9, 2014 and is convertible into common shares at a price of 55% multiplied by the lowest volume weighted average price for the Common Stock during the five trading day period ending on the latest complete trading day prior to the conversion date. Additionally, in no event shall the conversion price be less than $0.008. On January 9, 2014, the principal balance of the note plus interest was paid in its entirety and the note has been surrendered to the Company. Debt discount of $11,500 was fully amortized as of March 31, 2014.

 

On March 17, 2014, Nancy Louise Jones assigned her $12,000 note to Magna Group LLC, along with accrued interest of $1,077. The maturity date of this amended note is March 17, 2015. This loan bears an interest rate of 12% per annum. The note is convertible into common stock at a price of 55% multiplied by the lowest volume weighted average price for the Common Stock during the five trading day period ending on the latest complete trading day prior to the conversion date. Additionally, in no event shall the conversion price be less than $0.008. An amount equal to $2,577 of the principal balance of the note was converted into 245 common shares on March 21, 2014, leaving a principal balance of $10,500.

 

On March 17, 2014, a convertible note was issued with Magna Group, LLC in the amount of $13,077. The notes bears interest of 12% per annum, and is due on March 17, 2015 and is convertible into common shares at a price of 55% multiplied by the lowest volume weighted average price for the Common Stock during the five trading day period ending on the latest complete trading day prior to the conversion date. Additionally, in no event shall the conversion price be less than $0.008.

 

As the Asher debt became convertible on May 1, 2013, July 29, 2013, October 7, 2013, and November 9, 2013, the conversion option of Magna $60,562 note and Magna $11,500 note became tainted, that is, under ASC 815-15 “Derivatives and Hedging”, it should be recorded as derivative liability.

 

Other Convertible Notes

 

Convertible debts were issued September 2009, bearing interest at a rate of 8% per annum, due in one year, and are convertible at $2.00 per share, and the total balance outstanding as of March 31, 2013 was $22,277, including related party convertible note of $1,550.

 

On September 12, 2013, one of the debt holders assigned $9,170 note to Fierce Entertainment LLC. The maturity date of this amended note is September 12, 2014. This loan bears an interest rate of 8% per annum. The note is convertible into common stock at $20.00 per share. The Company evaluated the application of ASC 470-50 and ASC 470-60 and concluded the amended term dose not constituted a debt extinguishment or troubled debt restructuring. On October 11, 2013 Fierce Entertainment LLC converted debt principal of $9,170 into 459 common shares, bringing the note balance to $0.

 

On November 5, 2013, one of the debt holders assigned $402 along with accrued interest of $3,550 to another debt holder. The term stays the same as the original note, with maturity date on September 2010, interest rate of 8%, and conversion price of $2.00 per share. The note is in default. The Company evaluated the application of ASC 470-50 and ASC 470-60 and concluded the amended term dose not constituted a debt extinguishment or troubled debt restructuring. On January 22, 2014, debt principal of $1,482 along with accrued interest of $84.25 was converted into 783 common shares. In February 2014, the Company entered into an amended debt agreement with the debt holder and the conversion rate was modified to $20.00, and there were no other changes to the original terms of the promissory note. Debt discount of $3,952 was fully amortized as of March 31, 2014.

 

Beside the conversions described above, during the year ended March 31, 2014, debt principal of $12,045, including the related party convertible note of $1,550, and interest of $2,850 have been converted into 7,918 common shares. As of March 31, 2014, the convertible notes have a total outstanding balance of $3,130.

 

As the Asher debt became convertible on May 1, 2013, July 29, 2013, October 7, 2013, and November 9, 2013 the conversion option all other convertible notes became tainted, that is, under ASC 815-15 “Derivatives and Hedging”, it should be recorded as derivative liability.



v3.3.1.900
5. DERIVATIVE LIABILITIES
12 Months Ended
Mar. 31, 2015
Notes to Financial Statements  
5. DERIVATIVE LIABILITIES

NOTE 5 – DERIVATIVE LIABILITIES

 

FOR THE YEAR ENDED MARCH 31, 2015

 

The Company had no derivative liabilities for the year ended March 31, 2015.

 

FOR THE YEAR ENDED MARCH 31, 2014

 

Asher Enterprise, Inc. Convertible Notes

 

As discussed in Note 4, the Company determined that the instruments embedded in the Asher convertible note should be classified as liabilities and recorded at fair value due to their being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. The fair value of the instruments was determined by using Black-Scholes option-pricing model, assuming maximum value.

 

As discussed in Note 4, Asher note of $16,000 and $32,500 became convertible on May 1, 2013 and July 29, 2013, respectively. The conversion feature for Asher note of $16,000 and $32,500 should be classified as derivative liabilities and recorded at fair value. The fair value of the conversion feature for Asher note of $16,000 was determined to be $147,692 on May 1, 2013 and was recognized as additional paid in capital. The fair value of the conversion feature for Asher note of $32,500 was determined to be $74,286 on July 29, 2013 of which $32,500 was recorded as debt discount and $41,786 was recorded as derivative loss. As a result of full conversion on May 29, 2013 and September 9, 2013, under ASC 815-15 “Derivative and Hedging”, the instrument should be measured at fair value at the date of the termination with the change in fair value recorded earnings. Total fair value of the conversion feature on conversion dates was $239,307 and this value was reclassified out of liabilities to equity.

 

As discussed in Note 4, Asher note of $28,000 became convertible on October 7, 2013. The conversion feature for Asher note of $28,000 should be classified as derivative liabilities and recorded at fair value. The fair value of the conversion feature for Asher note of $28,000 was determined to be $84,000 on October 7, 2013, of which $28,000 was recorded as debt discount and $56,000 was recorded as derivative loss. On October 21, 2013, $5,800 out of the $28,000 was converted, and as a result, under ASC 815-15 “Derivative and Hedging”, the instrument should be measured at fair value at the date of the conversion with the change in fair value recorded in earnings. Prorated fair value of the conversion feature on conversion dates was $11,600 and this value was reclassified out of liabilities to equity. On February 3, 2014, the remaining principal balance of $22,200 plus interest was paid in its entirety. Total fair value of the conversion feature on debt repayment date was $44,400 and this value was recorded in earnings.

 

As discussed in Note 4, Asher note of $27,500 became convertible on November 9, 2013. The conversion feature for Asher note of $27,500 should be classified as derivative liabilities and recorded at fair value. The fair value of the conversion feature for Asher note of $27,500 was determined to be $110,000, on November 9, 2013, of which $27,500 was recorded as debt discount and $82,500 was recorded as derivative loss. On February 18, 2014, the principal balance of the note plus interest was paid in its entirety. Total fair value of the conversion feature on debt repayment date was $82,500 and this value was recorded in earnings.

 

Magna Group LLC Convertible Notes

 

As discussed in Note 4, the conversion feature of Magna $60,562 note and Magna $11,500 note were tainted by Asher note on May 2, 2013, May 9, 2013, July 29, 2013, and October 7, 2013, and should be classified as derivative liabilities and recorded at fair value. On May 2, 2013, and May 9, 2013, the fair value of the conversion feature of the two Magna notes was determined to be $164,056, out of which $72,062 was recorded as debt discount and $91,994 was recorded as derivative loss. On July 29, 2013 the fair value of the conversion feature of the two Magna notes was determined to be $50,575 and was recognized as additional paid in capital. As a result of conversion of $10,000, $8,000 and $9,362 debt principal on May 10, 2013, July 30, 2013 and August 19, 2013, respectively and the termination of derivative treatment on May 29, 2013 and September 9, 2013, under ASC 815-15 “Derivative and Hedging”, the instrument should be measured at fair value at the date of the termination with the change in fair value recorded earnings. Total fair value of the conversion feature on conversion and termination dates was $233,395 and this value was reclassified out of liabilities to equity. On October 7, 2013, the Magna $60,562 note has been fully converted, and the fair value of the Magna $11,500 note conversion feature was determined to be $86,250 and was recognized as additional paid in capital. On January 9, 2014, the principal balance of the note plus interest was paid in its entirety. Total fair value of the conversion feature on debt repayment date was $20,909 and this value was recorded in earnings.

 

Other Third Party and Related Party Convertible Notes

 

As discussed in Note 4, the conversion feature of other third party convertible notes was tainted by Asher note on May 1, 2013, July 29, 2013 and October 7, 2013. In addition, the conversion feature of related party convertible debt of $1,550 was also tainted for the same reason. The conversion features should be classified as derivative liabilities and recorded at fair value. On May 1, 2013 July 29, 2013 and October 7, 2013, the fair value of the conversion feature of these debts was determined to be $2,505,840, $805,280 and $467,400, respectively and was recorded as additional paid in capital. As discussed in Note 4, on November 5, 2013, one of the debt holders assigned $402 along with accrued interest of $3,550 to another debt holder. The fair value of the conversion feature of the new note was determined to be $39,520, on November 5, 2013, out of which $3,952 was recorded as debt discount, and $35,568 was recorded as derivative loss.

 

As a result of conversion of $18,902 debt principal during the period that the convertible notes got tainted and the termination of derivative treatment on May 29, 2013, September 9, 2013, and February 18, 2014, under ASC 815-15 “Derivative and Hedging”, the instrument should be measured at fair value at the date of the termination with the change in fair value recorded earnings. Total fair value of the conversion feature on conversion and termination dates was $2,025,730 and this value was reclassified out of liabilities to equity.

 

Warrants

 

There were no warrants issued during the year ended March 31, 2015.

 

As discussed in Note 4, 49,231 warrants issued with the Asher debt should be classified as derivative liability and recorded at fair value at the termination date. Asher settled all the warrants on June 5, 2013. The fair value of the warrants on June 5, 2013 was determined to be $24,615 using Black-Scholes Option Pricing Model, assuming maximum value, and was reclassified out of liabilities to equity.

 

The following table summarizes the derivative liabilities included in the consolidated balance sheet:

 

Balance at March 31, 2013   $ 23,550  
Record derivative liability as debt discount     164,014  
Change in fair value of derivative liability     (1,715,954 )
Reclassification of additional paid in capital to derivative liability     1,528,390  
Balance at March 31, 2014   $ -  
Change in derivative liability     -  
Balance at March 31, 2015   $ -  

  



v3.3.1.900
6. PREFERRED STOCK
12 Months Ended
Mar. 31, 2015
Equity [Abstract]  
6. PREFERRED STOCK

NOTE 6 – PREFERRED STOCK

 

Each share of Series A preferred stock is convertible at any time into the number of common shares equal to four times the sum of all outstanding common and Series B and Series C preferred shares at the time of conversion divided by the number of Series A preferred shares. Series A shareholders may receive dividends as declared by the Board.  The Company has 10,000 Series A preferred shares outstanding at March 31, 2015 and 2014.

 

On March 3, 2013 a Stock Purchase Agreement was consummated between John Diaz; the largest and controlling shareholder of WRIT Media Group, Inc., and its former President and Chairman, and EAM Delaware LLC, a Delaware limited liability company controlled by Eric Mitchell, the current President and Chairman of WRIT Media Group, Inc.

 

The transaction was for the sale of 10,000 shares of Preferred Class, Series A Stock in WRIT currently held by EAM Delaware LLC, which represents a controlling block of stock in consideration for $10,000.

 

Each share of Series B preferred stock is convertible into the number of common shares equal to the designated $2 initial price of the Series B preferred stock divided by one hundred times the par value of the common stock subject to adjustments as may be determined by the Board of Directors from time to time. Series B shareholders may receive dividends as declared by the Board. The Company has no Series B shares outstanding at March 31, 2015 and 2014.

 

Each share of Series C preferred stock is convertible at any time into 500 common shares.  Series C holders may receive dividends as declared by the Board. The Company has no Series C shares outstanding at March 31, 2015 and 2014.

 

The Company evaluated the application of ASC 815-15 and ASC 815-40 for the embedded conversion feature of preferred stock listed above and concluded the embedded conversion option should be classified as equity.



v3.3.1.900
7. EQUITY
12 Months Ended
Mar. 31, 2015
Equity [Abstract]  
7. EQUITY

NOTE 7 – EQUITY

 

On January 22, 2014, shareholders approved of a 1 for 1,000 reverse split of the Company’s issued and outstanding common shares. The Company accounted for the reverse stock split retrospectively and is presented accordingly in the Company’s financial statements as of March 31, 2014, and 2013.

 

On June 25, 2015, shareholders approved of a 1 for 200 reverse split of the Company’s issued and outstanding common shares. The Company accounted for the reverse stock split retrospectively and is presented accordingly in the Company’s financial statements as of March 31, 2015, and 2014.

 

For the Year Ended March 31, 2015:

 

Shares issued for convertible notes:

 

During the year ended March 31, 2015, $82,074 of convertible debts with accrued interest of $1,118 was converted into 35,172 shares of common stock. See Note 4.

 

Common Shares issued for cash

 

During the year ended March 31, 2015, the Company issued 17,647 common shares for cash totaling $226,781.

 

Common Shares issued for services

 

During the year ended March 31, 2015, the Company issued 14,007 shares to Eric Mitchell, the Company CEO and CFO, as compensation at their fair value of $51,861.

 

During the year ended March 31, 2015, the Company issued 80,294 shares to third party consultants as compensation at their fair value of $580,291.

 

Common Shares issued for accrued compensation

 

During the year ended March 31, 2015, the Company issued 847 shares to Eric Mitchell, the Company CEO and CFO, to settle accrued compensation of $8,473. The fair value of the shares was determined to be $8,473, resulting in no loss on settlement.

 

Subscription receivable

 

During the year ended March 31, 2015, the Company received $25,000 for subscription receivable whereas the shares were issue during the year ended March 31, 2014.

 

Warrants Issued

 

Under a subscription agreement dated March 18, 2014, the Company issued 3,125 restricted common shares to Irwin Zalcberg for cash totaling $50,000. Along with the subscription agreement, the Company issued warrants to purchase 3,125 shares of common stock. The warrants expire 2 years after issuance and have an exercise price of $24.00. The warrants do not entitle the holder to any voting rights or other rights as a shareholder of the Company. The warrants remain un-exercised.

 

Under a subscription agreement dated April 21, 2014, the Company issued 16,667 restricted common shares to Irwin Zalcberg for cash totaling $200,000. Along with the subscription agreement, the Company issued warrants to purchase 20,833 shares of common stock. The warrants expire 2 years after issuance and have an exercise price of $50.00. The warrants do not entitle the holder to any voting rights or other rights as a shareholder of the Company. The warrants remain un-exercised.

 

The following table summarizes the Company’s warrant activity for the year ended March 31, 2015:

 

    Number of Units   Weighted-Average Exercise Price  

Weighted-Average Remaining Contractual Term

(in years)

  Intrinsic Value
  Outstanding at March 31, 2014       3,125     $ 24.00       0.97     $ —    
  Issuance       20,833       50.00       1.06       —    
  Exercises       —         —         —         —    
  Forfeitures       —         —         —         —    
  Outstanding at March 31,  2015       23,958     $ 46.00       1.05     $ —    

 

 

For the Year Ended March 31, 2014:

 

Shares issued for convertible notes:

 

During the year ended March 31, 2014, convertible debts of $140,136 along with accrued interest of $5,453 were converted into 13,873 common shares. See Note 4. 

 

Shares issued for services:

 

During the year ended March 31, 2014, the Company issued 8,159 shares to employees and third party consultants as compensation at their fair value of $258,418.

 

Shares issued for cash

 

During the year ended March 31, 2014, the Company issued 13,429 shares for cash totaling $247,774, out of which $25,000 was received in April 2014.

 

Cancellation of Common shares

 

On October 22, 2013 the Company cancelled 50 common shares. The common shares were cancelled due to partial cancellation of a stock purchase agreement between convertible note holder and other party.

 

Warrants Issued

 

Along with the Asher note payable, the Company issued warrants to purchase 247 shares of common stock to Asher Enterprise Inc. The warrants expire 5 years after issuance and have an exercise price of $6.50.  The exercise price can adjust downward if the Company issues common stock at a price per share lower than the current exercise price.

 

On June 5, 2013, Asher Enterprises exercised 132 warrants for common stock. Instead of paying cash to the Company, Asher Enterprises forfeited the remaining 115 warrants as consideration given to exercise the warrants.

 

Under a subscription agreement dated March 18, 2014, the Company issued 3,125 restricted common shares to Irwin Zalcberg for cash totaling $50,000. Along with the subscription agreement, the Company issued warrants to purchase 3,125 shares of common stock. The warrants expire 2 years after issuance and have an exercise price of $24.00. The warrants do not entitle the holder to any voting rights or other rights as a shareholder of the Company. The warrants remain un-exercised.

 

The following table summarizes the Company’s warrant activity for the year ended March 31, 2014:

 

    Number of Units   Weighted-Average Exercise Price  

Weighted-Average Remaining Contractual Term

(in years)

  Intrinsic Value
  Outstanding at March 31, 2013       247     $ 6.50       4.59     $ 52,554  
  Issuance       3,125       24.00       —         —    
  Exercises       (132 )     6.50       —         —    
  Forfeitures       (115 )     6.50       —         —    
  Outstanding at March 31,  2014       3,125     $ 24.00       1.97     $ —    

 



v3.3.1.900
8. ASSETS ACQUISITION AND INTANGIBLE ASSETS
12 Months Ended
Mar. 31, 2015
Insurance [Abstract]  
8. ASSETS ACQUISITION AND INTANGIBLE ASSETS

NOTE 8 – ASSETS ACQUISITION AND INTANGIBLE ASSETS

 

On August 19, 2013, the Company issued 2,500 common shares to acquire software from Amiga Games, Inc. Amiga Games, Inc. licenses classic video game libraries and intends to resurrect classic game titles by giving them new life on today's gaming platforms such as smart phones, PCs, modern game consoles, and tablets. The 2,500 shares were valued using the $160.00 per share closing price on the acquisition date for total purchase price consideration of $400,000.

 

In addition, during the year ended March 31, 2015 and March 31, 2014, the Company incurred another $263,439 and $132,521 respectively, on software development cost to upgrade the acquired software, and $25,275 for licenses. As of March 31, 2015 total cash paid for software of $191,230 included $45,060 for prior year software costs and $146,170 for current year software costs. As of March 31, 2015, $142,544 of software development costs were incurred on account and recorded in accounts payable.

 

The following table summarizes the composition of intangible assets as of March 31, 2015.

 

Total purchase price of intangible assets as of March 31, 2014   $ 400,000  
Software development capitalized costs as of March 31, 2014     132,521  
Software development capitalized costs as of March 31, 2015     263,439  
Licenses     25,275  
Total Intangible Assets   $ 821,235  

  

During the year ended March 31, 2015, the Company incurred an impairment of Intangible Assets of $821,235 due to the uncertainty on when the assets can generate revenue.

 

The following table summarizes the composition of intangible assets as of March 31, 2015.

 

Total of intangible assets   $ 821,235  
Software Asset impairment as of March 31, 2015     (821,235 )
Total Intangible Assets   $ —    

 



v3.3.1.900
9. CONCENTRATION
12 Months Ended
Mar. 31, 2015
Risks and Uncertainties [Abstract]  
9. CONCENTRATION

NOTE 9 – CONCENTRATION

 

For the fiscal year ended March 31, 2014, 100% of the Company’s revenue is generated from gaming applications development with one customer, Microsoft Corporation.



v3.3.1.900
10. RELATED PARTY BALANCES AND TRANSACTIONS
12 Months Ended
Mar. 31, 2015
Related Party Transactions [Abstract]  
10. RELATED PARTY BALANCES AND TRANSACTIONS

NOTE 10 - RELATED PARTY BALANCES AND TRANSACTIONS

 

During the year ended March 31, 2015, the Company incurred $270,097 compensation expense for Eric Mitchell, the Company CEO and CFO. Out of the $270,097 compensation expense, $135,600 was paid in cash; $51,861 was paid by issuance of common stock while the remaining $82,636 was still not paid. During the year ended March 31, 2015, the Company also issued 847 shares to Eric Mitchell, the Company to settle accrued compensation of $8,473 from prior year. As of March 31, 2015 and 2014, the accrued compensation owed to Eric Mitchell, is $82,636, and $8,473 (presented as part of accrual liability balance on the accompanying consolidated balance sheets), respectively.

 

During the year ended March 31, 2015, $9,510 was advanced by Eric Mitchell and the advance is due on demand with 0% interest.

 

During the year ended March 31, 2015, the Company engaged DEVCAP Partners LLC for marketing and branding services and incurred a total expense of $611,250. Out of $611,250, $498,750 was paid by issuance of 65,625 shares of common stock and the remaining $112,500 was still not paid as of March 31, 2015. Due to the stock issuance for services provided, DEVCAP Partners LLC became majority shareholder, owning more than 10% the Company’s issued and outstanding common shares. As of March 31, 2015 and 2014, the accounts payable balance owed to DEVCAP Partners LLC is $112,500 and $-0-, respectively.



v3.3.1.900
11. INCOME TAXES
12 Months Ended
Mar. 31, 2015
Income Tax Disclosure [Abstract]  
11. INCOME TAXES

NOTE 11 - INCOME TAXES

 

Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has a net loss of $2,203,576 as of March 31, 2015 and net income of $1,044,284 as of March 31, 2014. The following table shows the net deferred tax benefit:

 

   

March 31, 2015

 

March 31, 2014

Deferred Tax Benefit   $ 348,049     $ 147,000  
Allowance     (348,049 )     (147,000 )
Net Deferred Tax Benefit   $ —       $ —    

 

The tax asset benefits for the net operating losses carried forward for future years are $994,000 and $421,000 respectively, for the years ending March 31, 2015 and March 31, 2014.

 

Pursuant to ASC 740, the Company is required to compute tax asset benefits for net operating losses carried forward. Potential benefit of net operating losses has not been recognized in these financial statements because the Company cannot be assured it is more likely-than-not it will utilize the net operating losses carried forward in future years which will start to expire in the year of 2031.