Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with our financial statements, including the notes thereto, appearing in this report and are hereby referenced. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this report. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. We believe it is important to communicate our expectations. However, our management disclaims any obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.
These forward-looking statements are based on our managements current expectations and beliefs and involve numerous risks and uncertainties that could cause actual results to differ materially from expectations. You should not rely upon these forward-looking statements as predictions of future events because we cannot assure you that the events or circumstances reflected in these statements will be achieved or will occur. You can identify a forward-looking statement by the use of the forward-terminology, including words such as may, will, believes, anticipates, estimates, expects, continues, should, seeks, intends, plans, and/or words of similar import, or the negative of these words and phrases or other variations of these words and phrases or comparable terminology. These forward-looking statements relate to, among other things: our sales, results of operations and anticipated cash flows; capital expenditures; depreciation and amortization expenses; sales, general and administrative expenses; our ability to maintain and develop relationship with our existing and potential future customers; and, our ability to maintain a level of investment that is required to remain competitive. Many factors could cause our actual results to differ materially from those projected in these forward-looking statements, including, but not limited to: variability of our revenues and financial performance; risks associated with technological changes; the acceptance of our products in the marketplace by existing and potential customers; disruption of operations or increases in expenses due to our involvement with litigation or caused by civil or political unrest or other catastrophic events; general economic conditions, government mandates; and, the continued employment of our key personnel and other risks associated with competition.
PC Mobile Media Corp. was formed in the state of Nevada on August 22, 2015. We are a development stage company with a plan of operation that offers mobile billboard display advertising. Our planned initial market will primarily occur in the Las Vegas area. We plan to conduct our business operations out of an administrative office provided by our director.
Plan of Operation
The Companys mission is to get our clients' message to the right audience at the right time. Targeting the right audience at the right time is becoming increasingly difficult for advertisers. Society in general has become more mobile and sophisticated at handling multiple tasks. Consequently, we are tuning out unnecessary or unwanted information including certain print media and radio advertisements.
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Alternative media is everywhere from product advertisements on the floors of grocery stores, to audio monitors on gas station pumps, and pop-up ads on automated teller machines. PC Mobile Media takes the advertisers message to the target audience anytime, anywhere. Our planned 10 X 20 four-color banners will get the attention of your target market by traveling along strategically chosen routs or penetrating and setting up stationary at special events or at specific locations. Whether the client is geographically specific such as local political campaigns or a national product that seeks maximum exposure, PC Mobile Media takes the message to the customer.
Results of Operations for the Three Months Ended March 31, 2017 Compared to the Three Months Ended March 31, 2016
Revenues
. The Companys revenues were $6,000 for the three ended March 31, 2017 as compared to $0 for the three months ended March 31, 2016. On October 1, 2016, the Company entered into a Mobile Billboard Rental Agreement for 12 months of mobile billboard advertising at $2,000 per month.
Selling, General and Administrative Expenses
. Selling, general and administrative expenses for the three months ended March 31, 2017 were $1,305 as compared to $1,325 for the three months ended March 31, 2016. General and administrative expenses incurred related to the audit and transfer agent fees.
Professional Fees
. Professional Fees for the three months ended March 31, 2017 were $1,200 as compared to $5,200 for the three months ended March 31, 2016. General and administrative expenses decreased because the Company did not incur the additional legal and filing fees related to the initial S-1 filing.
Results of Operations for the Six Months Ended March 31, 2017 Compared to the Six Months Ended March 31, 2016
Revenues
. The Companys revenues were $10,000 for the six ended March 31, 2017 as compared to $0 for the six months ended March 31, 2017. On October 1, 2016, the Company entered into a Mobile Billboard Rental Agreement for 12 months of mobile billboard advertising at $2,000 per month.
Selling, General and Administrative Expenses
. Selling, general and administrative expenses for the six months ended March 31, 2017 were $2,530 as compared to $1,943 for the six months ended March 31, 2016. General and administrative expenses increased because the Company incurred expenses related to the increase in audit and transfer agent fees.
Professional Fees
. Professional Fees for the six months ended March 31, 2017 were $5,050 as compared to $10,300 for the six months ended March 31, 2016. General and administrative expenses decreased because the Company did not incur the additional legal and filing fees related to the initial S-1 filing.
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Liquidity and Capital Resources
We measure our liquidity in a number of ways, including the following:
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As of
March 31, 2017
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As of
September 30, 2016
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Cash and Cash Equivalents
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$
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4,070
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$
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4,050
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Working Capital (Deficit)
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(12,975)
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(15,395)
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Liabilities
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21,045
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19,445
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The Company has not yet established an ongoing source of revenue sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations. These factors raise substantial doubt about the Companys ability to continue as a going concern.
In order to continue as a going concern, the Company will need, among other things, additional capital resources.
Impact of Inflation
We believe that the rate of inflation has had negligible effect on our operations. We believe we can absorb most, if not all, increased non-controlled operating costs by increasing sales prices, whenever deemed necessary and by operating our Company in the most efficient manner possible.
Net Cash Used in Operating Activities
We experienced cash flow provided from operating activities for the six months ended March 31, 2017 in the amount of $20. We experienced negative cash flow from operating activities for the six months ended March 31, 2016 in the amount of $10,993.
Net Cash Used in Investing Activities
The cash used in investing activities during the six months ended March 31, 2017 and March 31, 2016 was $0 and $0, respectively.
Net Cash Provided by Financing Activities
Cash provided by financing activities during the six months ended March 31, 2017 and March 31, 2016 was $0 and $6,518, respectively.
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Availability of Additional Funds
The Company has financed its expenses and costs thus far through an equity investment by one of its shareholders. PC Mobile Media Corp. received a Notice of Effectiveness on its filing Form S-1 from the Securities and Exchange Commission on March 25, 2016 to offer on a best-efforts basis 4,000,000 shares of its common stock at a fixed price of $0.01 per share.
PC Mobile Media Corp. closed its offering on June 10, 2016 and raised $40,000 by placing 4,000,000 through its offering.
Management has been successful in raising $40,000 in funds from its offering and which is budgeted to sustain operations for a twelve-month period. If we begin to generate profits, we will increase our marketing and sales activity accordingly. The Company currently has $4,070 in cash to meet its current obligations, requiring additional capital for operating cash flow. As of our quarter ending March 31, 2017, our auditor has expressed substantial doubt for continuation as a going concern.
At March 31, 2017, the Company is in contract with 2 Drink LLC to provide mobile billboard advertising services at $2,000 per month. The Company as a whole may continue to operate at a loss for an indeterminate period thereafter, depending upon the performance of its business. In the process of carrying out its business plan, the Company will continue to identify new financial partners and investors. However, it may determine that it cannot raise sufficient capital in the future to support its business on acceptable terms, or at all. Accordingly, there can be no assurance that any additional funds will be available on terms acceptable to the Company or at all. The company is authorized to issue 75,000,000 shares of common stock.
We have no known demands or commitments and are not aware of any events or uncertainties as of March 31, 2017 that will result in or that are reasonably likely to materially increase or decrease our current liquidity.
Critical Accounting Policies and Estimates
Our financial statements and accompanying notes have been prepared in accordance with United States Generally Accepted Accounting Principles (GAAP) applied on a consistent basis. The preparation of financial statements in conformity with United States GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates. Our significant estimates and assumptions include amortization, the fair value of our stock, and the valuation allowance relating to the Companys deferred tax assets.
We qualify as an emerging growth company, as defined in the Jumpstart Our Business Startups Act, which became law in April, 2012. Under the JOBS Act, emerging growth companies, can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.
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Material Commitments
There were no material commitments during the six months ended March 31, 2017.
Purchase of Furniture and Equipment
We purchased no equipment during the six months ended March 31, 2017.
Recent Accounting Pronouncements
From time to time, new accounting pronouncements are issued that we adopt as of the specified effective date. We believe that the impact of recently issued standards that are not yet effective may have an impact on our results of operations and financial position.
ASU Update 2014-09 Revenue from Contracts with Customers (Topic 606) issued May 28, 2014 by FASB and IASB converged guidance on recognizing revenue in contracts with customers on an effective date after December 31, 2017 will be evaluated as to impact and implemented accordingly.
In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties About an Entitys Ability to Continue as a Going Concern. The amendments require management to perform interim and annual assessments of an entitys ability to continue as a going concern and provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. The standard applies to all entities and is effective for annual and interim reporting periods ending after December 15, 2016, with early adoption permitted. The Company has evaluated the impact that this new guidance will have and has included the appropriate disclosures in Note 2 to these financial statements.
In February 2016, the FASB issued ASU No. 2016-02, Leases, to improve financial reporting about leasing transactions. This ASU will require organizations that lease assets ("lessees") to recognize a lease liability and a right-of-use asset on its balance sheet for all leases with terms of more than twelve months. A lease liability is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis and a right-of-use asset represents the lessee's right to use, or control use of, a specified asset for the lease term. The amendments in this ASU simplify the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. This ASU leaves the accounting for the organizations that own the assets leased to the lessee ("lessor") largely unchanged except for targeted improvements to align it with the lessee accounting model and Topic 606, Revenue from Contracts with Customers.
The amendments in ASU 2016-02 are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. The Company is evaluating the potential impact of ASU 2016-02 on its Financial Statements.
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Off Balance Sheet Arrangements
As of March 31, 2017, we had no off balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Disclosure under this section is not required for a smaller reporting company.
Item 4. Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that the information required to be disclosed in the reports that we file under the Securities Exchange Act of 1934 (the "Exchange Act") is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer (being the same person), to allow timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives, and in reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the Companys principal executive and financial officer and effected by the Companys board of directors, management and other personnel, 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 and includes those policies and procedures that:
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Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;
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Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and
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Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Companys assets that could have a material effect on the financial statements.
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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. 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.
The Companys management assessed the effectiveness of the Companys internal control over financial reporting as of March 31, 2017. In making this assessment, the Companys management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. The COSO framework is based upon five integrated components of control: control environment, risk assessment, control activities, information and communications and ongoing monitoring.
Based on an evaluation under the supervision and with the participation of the Companys management, the Companys principal executive officer and principal financial officer has concluded that the Companys disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act were not effective as of March 31, 2017 (the Evaluation Date), to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms and (ii) accumulated and communicated to the Companys management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Each of the following is deemed a material weakness in our internal control over financial reporting:
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We do not have an audit committee. While we are not currently obligated to have an audit committee, including a member who is an
audit committee financial expert,
as defined in Item 407 of Regulation S-K, under applicable regulations or listing standards; however, it is management
s view that such a committee is an important internal control over financial reporting, the lack of which may result in ineffective oversight in the establishment and monitoring of internal controls and procedures.
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We did not maintain proper segregation of duties for the preparation of our financial statements. We currently have only one officer overseeing all transactions. This has resulted in several deficiencies, including the lack of control over preparation of financial statements and proper application of accounting policies.
Management believes that the material weaknesses set forth in the two items above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.
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Management's Remediation Initiatives
In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we plan to initiate the following series of measures once we have the financial resources to do so:
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We will create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to us. And, we plan to appoint one or more outside directors to an audit committee resulting in a fully functioning audit committee, which will undertake the oversight in the establishment and monitoring of required internal controls and procedures, such as reviewing and approving estimates and assumptions made by management when funds are available to us.
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Management believes that the appointment of outside directors to a fully functioning audit committee, would remedy the lack of a functioning audit committee.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal controls over financial reporting that occurred during the period covered by this report, which were identified in connection with managements evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
This Quarterly Report does not include an attestation report of the Companys registered independent public accounting firm regarding internal control over financial reporting. Managements report was not subject to attestation by the Companys independent registered public accounting firm pursuant to rules of the SEC that permit the Company to provide only managements report in this Quarterly Report.
/s/ Paul Conforte
Paul Conforte
CEO, President and Treasurer
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