Quarterly Report (10-q)

Date : 05/20/2015 @ 6:48PM
Source : Edgar (US Regulatory)
Stock : Wally World Media Inc (PK) (WLYW)
Quote : 0.0026  0.0 (0.00%) @ 9:00PM

Quarterly Report (10-q)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-Q

 

(Mark One)

    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2015

 

or

 

    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ________ to_________

 

Commission File Number:    333-185694

 

WALLY WORLD MEDIA, INC.

(Exact name of registrant as specified in its charter)

 

Nevada   45-5370930

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

65 Church St. 2nd Floor

New Brunswick, New Jersey 08901

(Address of principal executive offices) (Zip Code)

 

(732) 246-0439 

(Registrant’s telephone number, including area code)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

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

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated Filer   Accelerated Filer
Non-Accelerated Filer (Do not check if a smaller reporting company) Smaller Reporting Company

 

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

 

There were 38,761,290 shares of the Registrant’s Common Stock outstanding at May 20, 2015.

 

 

 

 
 

 

WALLY WORLD MEDIA, INC.

QUARTERLY REPORT ON FORM 10-Q

For the Period Ended March 31, 2015

 

TABLE OF CONTENTS

 

  Page
PART 1 - FINANCIAL INFORMATION  
     
Item 1. Condensed Consolidated Financial Statements (Unaudited) 1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 2
Item 3. Quantitative and Qualitative Disclosures About Market Risk 8
Item 4. Controls and Procedures 8
   
PART II - OTHER INFORMATION  
     
Item 1. Legal Proceedings 9
Item 1A. Risk Factors 9
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 9
Item 3. Defaults Upon Senior Securities 9
Item 4. Mine Safety Disclosures 9
Item 5. Other Information 9
Item 6. Exhibits 9
   
SIGNATURES 10

 

 
 

 

CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

 

This Quarterly Report on Form 10-Q (this “Report”) contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “predict,” “project,” “forecast,” “potential,” “continue” negatives thereof or similar expressions. Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations about the future and are not guarantees. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievement to be materially different from the results of operations or plans expressed or implied by such forward-looking statements.

 

We cannot predict all of the risks and uncertainties. Accordingly, such information should not be regarded as representations that the results or conditions described in such statements or that our objectives and plans will be achieved and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements. These forward-looking statements are found at various places throughout this Report and include information concerning possible or assumed future results of our operations, including statements about potential acquisition or merger targets; business strategies; future cash flows; financing plans; plans and objectives of management; any other statements regarding future acquisitions, future cash needs, future operations, business plans and future financial results, and any other statements that are not historical facts.

 

These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Report. All subsequent written and oral forward-looking statements concerning other matters addressed in this Report and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Report.

 

Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.

 

CERTAIN TERMS USED IN THIS REPORT

 

When this report uses the words “we,” “us,” “our,” and the “Company,” they refer to Wally World Media, Inc.    “SEC” refers to the Securities and Exchange Commission.

 

 
 

 

PART I – FINANCIAL INFORMATION

 

WALLY WORLD MEDIA, INC.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2015

 

CONTENTS

 

Condensed Consolidated Financial Statements:  
   
Condensed Consolidated Balance Sheets - As of March 31, 2015 (Unaudited) and September 30, 2014 F-1
   
Condensed Consolidated Statements of Operations -  For the Three and Six  Months Ended March 31, 2015 and 2014 (Unaudited) F-2
   
Condensed Consolidated Statements of Changes in Stockholders’ Deficit For the Period from September 30, 2014 to March 31, 2015 (Unaudited) F-3
   
Condensed Consolidated Statements of Cash Flows –  For the Six Months Ended March 31, 2015 and 2014 (Unaudited) F-4
   
Notes to Unaudited Condensed Consolidated Financial Statements F-5

 

1
 

 

WALLY WORLD MEDIA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

    March 31,     September 30,  
    2015     2014  
    (Unaudited)        
ASSETS            
             
CURRENT ASSETS:            
Cash   $ 1,981     $ -  
Prepaid expenses and other current assets     -       15,382  
                 
Total Current Assets     1,981       15,382  
                 
 Long Term Assets                
Security deposit     8,400       8,400  
                 
Total Assets   $ 10,381     $ 23,782  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT                
                 
CURRENT LIABILITIES:                
Bank overdraft   $ -     $ 1,016  
Accounts payable     92,261       62,473  
Accrued interest     8,498       -  
Convertible notes payable, net of debt discount     160,256       -  
Derivative liabilities     4,769,976       -  
Due to former related parties     5,000       5,000  
                 
Total Current Liabilities     5,035,991       68,489  
                 
 Commitments and Contingencies - (Note 5)                
                 
STOCKHOLDERS' DEFICIT:                
                 
Preferred stock ($0.0001 par value; 50,000,000 shares authorized; none issued or outstanding)     -       -  
Common stock ($0.0001 par value; 500,000,000 shares authorized; 38,761,290 and 38,600,000 shares issued and outstanding at March 31, 2015 and September 30, 2014, respectively)     3,876       3,860  
Additional paid-in capital     2,647,669       2,548,224  
Accumulated deficit     (7,677,155 )     (2,596,791 )
                 
Total Stockholders' Deficit     (5,025,610 )     (44,707 )
                 
Total Liabilities and Stockholders' Deficit   $ 10,381     $ 23,782  

 

See accompanying condensed notes to unaudited financial statements.

F-1
 

WALLY WORLD MEDIA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

   For the Three Months   For the Three Months   For the Six Months   For the Six Months 
   Ended   Ended   Ended   Ended 
   March 31, 2015   March 31, 2014   March 31, 2015   March 31, 2014 
   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited) 
                 
NET REVENUES  $-   $-   $-   $- 
                     
OPERATING EXPENSES:                    
Compensation   69,411    405,194    238,585    534,942 
Professional fees   18,656    180,163    46,211    212,960 
General and administrative   30,133    73,499    59,623    134,269 
                     
Total Operating Expenses   118,200    658,856    344,419    882,171 
                     
OTHER INCOME (EXPENSE)                    
Derivative expense   (25,085)   -    (259,478)   - 
Change in fair value of derivative liabilities   1,775,603    -    (4,315,498)   - 
Other income   8,276    -    8,276    - 
Interest Expense   (104,755)   -    (169,258)   - 
Interest Income   2    109    13    129 
                     
Total Other Income (Expense)   1,654,041    109    (4,735,945)   129 
                     
NET INCOME (LOSS)  $1,535,841   $(658,747)  $(5,080,364)  $(882,042)
                     
NET INCOME (LOSS) PER COMMON SHARE:                    
Basic  $0.04   $(0.02)  $(0.13)  $(0.03)
Diluted  $0.01   $(0.02)  $(0.13)  $(0.03)
                     
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:                    
Basic   38,759,498    35,413,390    38,678,873    31,367,845 
Diluted   243,097,182    35,413,390    38,678,873    31,367,845 

 

See accompanying condensed notes to unaudited financial statements.

 

F-2
 

 

WALLY WORLD MEDIA, INC.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' (DEFICIT) EQUITY

For the Year ended September 30, 2014 and for the Six Months ended March 31, 2015

(Unaudited)

 

                Additional           Total Stockholders'  
    Preferred Stock     Common Stock     Paid-in     Accumulated     (Deficit)  
    Shares     Amount     Shares     Amount     Capital     Deficit     Equity  
                                           
Balance, September 30, 2013     -       -       26,490,000       2,649       912,087       (851,337 )     63,399  
                                                         
Sale of common stock     -       -       8,315,000       831       830,669       -       831,500  
                                                         
Issuance of common stock for services     -       -       2,705,000       271       304,729       -       305,000  
                                                         
Issuance of common stock for prepaid services     -       -       1,090,000       109       223,891               224,000  
                                                         
Stock based compensation in connection with options granted     -       -       -       -       276,848               276,848  
                                                         
Net loss for the year ended September 30, 2014     -       -       -       -       -       (1,745,454 )     (1,745,454 )
                                                         
Balance, September 30, 2014     -       -       38,600,000       3,860       2,548,224       (2,596,791 )     (44,707 )
                                                         
Stock based compensation in connection with options granted     -       -       -       -       89,461       -       89,461  
                                                         
Issuance of common stock for services     -       -       161,290       16       9,984       -       10,000  
                                                         
Net loss for the period ended March 31, 2015     -       -       -       -       -       (5,080,364 )     (5,098,364 )
                                                         
Balance, March 31, 2015     -     $ -       38,761,290     $ 3,876     $ 2,647,669     $ (7,677,155 )   $ (5,025,610 )

 

 

See accompanying condensed notes to unaudited financial statements.

 

F-3
 

 

WALLY WORLD MEDIA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

    For the Six Months     For the Six Months  
    Ended     Ended  
    March 31, 2015     March 31, 2014  
    (Unaudited)     (Unaudited)  
             
CASH FLOWS FROM OPERATING ACTIVITIES:            
Net loss   $ (5,080,364 )   $ (882,042 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Amortization of prepaid expense in connection with the issuance of common stock issued for prepaid services     13,750       9,167  
Amortization of debt discount     160,256       -  
Derivative expense     259,478       -  
Change in fair value of derivative liabilities     4,315,498       -  
Stock-based compensation and fees     99,461       346,168  
Changes in operating assets and liabilities:                
Prepaid expenses and other current asset     1,632       (107,738 )
Accounts payable     29,788       (3,681 )
Accrued interest     8,498       -  
                 
NET CASH USED IN OPERATING ACTIVITIES     (192,003 )     (638,126 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:                
Net proceeds from issuance of notes     195,000       -  
Bank overdraft     (1,016 )     -  
Repayments of related party advances     -       (2,675 )
Proceeds from sale of common stock     -       831,500  
                 
NET CASH PROVIDED BY FINANCING ACTIVITIES     193,984       828,825  
                 
NET INCREASE IN CASH     1,981       190,699  
                 
CASH - beginning of period     -       87,663  
                 
CASH - end of period   $ 1,981     $ 278,362  
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW  INFORMATION:                
Cash paid for:                
Interest   $ -     $ -  
Income taxes   $ -     $ -  
                 
NON-CASH INVESTING AND FINANCING ACTIVITIES:                

Debt discount relating to derivative liabilities

  $ 195,000     $ -  
Issuance of common stock for prepaid services   $ -     $ 59,000  

 

 

See accompanying condensed notes to unaudited financial statements.

 

F-4
 

 

WALLY WORLD MEDIA, INC.

UNAUDITED CONDENSED CONSOLIDATED NOTES TO FINANCIAL STATEMENTS

March 31, 2015

 

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Organization

 

Wally World Media, Inc. (the “Company”) was incorporated in the State of Nevada on May 17, 2012 and established a fiscal year end of September 30.  The Company’s principal business is focused on creating an internet crowd-sourcing, virtual, micro service network that allows users that register on the Company’s website to place job offerings for a service on the Company’s “youpop” platform, a social media website. Services may include a video of a personalized birthday wish, a practical joke, a dare, etc.  Additionally, the Company’s registered website users may post events such as a bachelor party or anniversary on the Company’s “Party Crowd” platform. Users may accept donations from people who are attending the event. 

 

On March 10, 2014, the Company formed a new wholly owned subsidiary Vape Shop Holdings Inc. which was incorporated in the state of Nevada. 

 

Basis of presentation and going concern

 

These unaudited condensed interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (”SEC”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by "GAAP" for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.    The accounting policies and procedures used in the preparation of these financial statements have been derived from the audited financial statements of the Company for the fiscal year ended September 30, 2014, which are contained in the Company’s Current Report on Form 10-K. The balance sheet as of September 30, 2014 was derived from those financial statements.  The results of operations for the six months ended March 31, 2015 are not necessarily indicative of the results to be expected for the full year.

 

As reflected in the accompanying unaudited consolidated financial statements, the Company has a net loss and net cash used in operations of approximately $5.1 million and $192,000, respectively, for the six months ended March 31, 2015.  Additionally the Company has a working capital deficit, stockholder’s deficit, and accumulated deficit of approximately $5.0 million, $5.0 million and $7.7 million, respectively, at March 31, 2015 and no revenues. The ability of the Company to continue as a going concern is dependent on the Company’s ability to further implement its business plan, raise capital, and generate revenues. Currently, management is seeking capital to implement its business plan.   Management believes that the actions presently being taken provide the opportunity for the Company to continue as a going concern. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.  

 

Principles of consolidation

 

The consolidated financial statements include the accounts of the Company and its wholly-owned inactive subsidiary. All intercompany transactions and balances are eliminated at consolidation.

 

Use of estimates

 

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and the related disclosures at the date of the financial statements and during the reporting period. Actual results could materially differ from these estimates. Significant estimates include the valuation of deferred tax assets, and the value of stock-based compensation and fees.

 

F-5
 

 

WALLY WORLD MEDIA, INC.

UNAUDITED CONDENSED CONSOLIDATED NOTES TO FINANCIAL STATEMENTS

March 31, 2015

 

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Reclassifications

 

Certain prior period balances have been reclassified to conform to the current year’s presentation.  These reclassifications had no impact on previously reported results of operations or stockholders’ equity.  The Company reclassified rental expense to general and administrative expense during the prior periods. The Company did not deem any of these reclassifications to be material.

 

Cash and cash equivalents

 

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company places its cash with a high credit quality financial institution. The Company’s account at this institution is insured by the Federal Deposit Insurance Corporation ("FDIC") up to $250,000. At March 31, 2015, the Company has not reached bank balances exceeding the FDIC insurance limit. To reduce its risk associated with the failure of such financial institution, the Company evaluates at least annually the rating of the financial institution in which it holds deposits. 

 

Fair Value Measurements and Fair Value of Financial Instruments

 

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants.    The Company classifies assets and liabilities recorded at fair value under the fair value hierarchy based upon the observability of inputs used in valuation techniques.   Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions.  The fair value measurements are classified under the following hierarchy:

 

Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets and liabilities in active markets;
   
Level 2—Observable inputs, other than quoted market prices, that are either directly or indirectly observable in the marketplace for identical or similar assets and liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets and liabilities; and
   
Level 3—Unobservable inputs that are supported by little or no market activity that is significant to the fair value of assets or liabilities.

 

The estimated fair value of certain financial instruments, including cash and cash equivalents and accounts payable are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.

 

Prepaid expenses

 

Prepaid expenses of $0 and $15,382 at March 31, 2015 and September 30, 2014, respectively, consisted primarily of costs paid for future services which will occur within a year. Prepaid expenses include prepayments in cash and equity instruments for consulting, public relations and business advisory services, advertising and accounting fees which are being amortized over the terms of their respective agreements.

 

Software development costs

 

The Company develops software and applications which are being provided to customers for free in order to deliver revenue producing products. Costs incurred to develop internal-use software, including website development costs, during the preliminary project stage are expensed as incurred.   Internal-use software development costs are capitalized during the application development stage, which is after:   (i) the preliminary project stage is completed; and (ii) management authorizes and commits to funding the project and it is probable the project will be completed and used to perform the function intended.   Capitalization ceases at the point the software project is substantially complete and ready for its intended use, and after all substantial testing is completed.   Upgrades and enhancements are capitalized if it is probable that those expenditures will result in additional functionality.   Amortization is provided for on a straight-line basis over the expected useful life of three years of the internal-use software development costs and related upgrades and enhancements.   When existing software is replaced with new software, the unamortized costs of the old software are expensed when the new software is ready for its intended use. The Company has been expensing all of its software development cost during the development stage.

 

F-6
 

 

WALLY WORLD MEDIA, INC.

UNAUDITED CONDENSED CONSOLIDATED NOTES TO FINANCIAL STATEMENTS

March 31, 2015

 

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Software developments cost consisted of compensation of software programmers in the amount of approximately $25,000 and $188,000 during the six months ended March 31, 2015 and 2014, respectively. During the 2015 and 2014 periods, the Company did not capitalize any software development costs.

 

Impairment of long-lived assets

 

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. The Company did not record any impairment loss during the six months ended March 31, 2015 and 2014.

  

Revenue recognition

 

The Company will recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the purchase price is fixed or determinable and collectability is reasonably assured. For all revenue sources discussed below, in accordance with ASC 605-45 “Principal Agent Considerations”, the Company recognizes revenue net of amounts paid to third parties. The Company’s specific revenue recognition policies are as follows:

 

Users that register on the Company’s website may place job offerings for a service on the Company’s “Youpop” platform, a social media website (the “Job Offeror”). The Job Offeror will offer cash payments for a specific service to be completed. For example, the Job Offeror may require another user to provide a video of a specific content (i.e. personalized birthday wish, practical joke, dares, etc.). Other users that are looking to fulfill job postings (the “Job Offeree”) apply for the job. Once the Job Offeree applies, the Job Offeror can view the applicants profile, past jobs, user rating and ask direct questions. Once the Job Offeror engages a Job Offeree, the Company will charge the Job Offeror’s credit card for the service fee including its transaction fee of up to 30% of the transaction amount and the Company will hold the money until the work is completed by the job offeree and uploaded to Youpop for review and acceptance. At such time, the Company will record deferred revenue for the amount of the transaction fee and a customer deposit for the amount received from the Job Offeror. Upon acceptance of the completed task by the Job Offeror, the money is moved to the Job Offeree’s account and the Company will recognize transaction fee revenue. Job Offerees may request the funds be sent to them or they may leave it on account. Upon completion of the job, the Company recognizes revenue which consists of a transaction fee of up to 30% of the transaction amount with 50% paid by the Job Offeror and 50% by the Job Offeree.

 

Income taxes

 

The Company is governed by the Income Tax Law of the United States. The Company utilizes ASC Topic 740, "Accounting for Income Taxes," which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

 

Under ASC Topic 740, the evaluation of a tax position is a two-step process. The first step is to determine whether it is more likely than not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements.

 

F-7
 

 

WALLY WORLD MEDIA, INC.

UNAUDITED CONDENSED CONSOLIDATED NOTES TO FINANCIAL STATEMENTS

March 31, 2015

 

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

A tax position is measured at the largest amount of benefit that is greater than 50% likelihood of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the threshold is no longer met. ASC Topic 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosures, and transition.

 

Stock-based compensation

 

The Company accounts for stock-based instruments granted to employees in accordance with ASC Topic 718. ASC Topic 718 requires companies to estimate and recognize the grant-date fair value of stock based awards issued to employees and directors.    The Company recognizes compensation on a straight-line basis over the requisite service period for each award.    There were 3,000,000 options outstanding as of March 31, 2015. The Company accounts for non-employee stock-based awards in accordance with the measurement and recognition criteria under ASC Topic 505-50.

 

Advertising

 

Advertising is expensed as incurred and is included in general and administrative expenses in the accompanying condensed statements of operations. For the six months ended March 31, 2015 and 2014, advertising expense was approximately $170 and $42,300, respectively.

 

Research and development

 

Research and development costs are expensed as incurred. The Company did not incur any research and development cost for the six months ended March 31, 2015 and 2014.

 

Net income (loss) per share of common stock

 

Basic net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of common shares during the period. Diluted net income (loss) per share is computed using the weighted average number of common shares and potentially dilutive securities outstanding during the period. Shares potentially issuable were as follows:

 

   March 31,
2015
   March 31,
2014
 
Stock Options   3,000,000    4,650,000 
Warrants   255,999,360    - 
Convertible notes   41,000,000    - 
    299,999,360    4,650,000 

 

Derivative Instruments

 

The Company enters into financing arrangements that consist of freestanding derivative instruments or are hybrid instruments that contain embedded derivative features. The Company accounts for these arrangements in accordance with Accounting Standards Codification topic 815, Accounting for Derivative Instruments and Hedging Activities (“ASC 815”) as well as related interpretations of this standard. In accordance with this standard, derivative instruments are recognized as either assets or liabilities in the balance sheet and are measured at fair values with gains or losses recognized in earnings. Embedded derivatives that are not clearly and closely related to the host contract are bifurcated and are recognized at fair value with changes in fair value recognized as either a gain or loss in earnings. The Company determines the fair value of derivative instruments and hybrid instruments based on available market data using appropriate valuation models, considering all of the rights and obligations of each instrument.

 

F-8
 

 

WALLY WORLD MEDIA, INC.

UNAUDITED CONDENSED CONSOLIDATED NOTES TO FINANCIAL STATEMENTS

March 31, 2015

 

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

The Company estimates fair values of derivative financial instruments using the Black-Scholes model, adjusted for the effect of dilution, because it embodies all of the requisite assumptions (including trading volatility, estimated terms, dilution and risk free rates) necessary to fair value these instruments. Estimating fair values of derivative financial instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques (such as Black-Scholes model) are highly volatile and sensitive to changes in the trading market price of our common stock. Since derivative financial instruments are initially and subsequently carried at fair values, our income (expense) going forward will reflect the volatility in these estimates and assumption changes. Under the terms of the new accounting standard, increases in the trading price of the Company’s common stock and increases in fair value during a given financial quarter result in the application of non-cash derivative expense. Conversely, decreases in the trading price of the Company’s common stock and decreases in trading fair value during a given financial quarter result in the application of non-cash derivative income. The Company has equity instruments including convertible promissory notes (see Note 3) that are accounted for as derivative liabilities that are evaluated on a daily basis for potential reclassification as liabilities pursuant to ASC 815. 

 

Recent accounting pronouncements

 

In June 2014, the FASB issued ASU 2014-10, “Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements”. ASU 2014-10 eliminates the distinction of a development stage entity and certain related disclosure requirements, including the elimination of inception-to-date information on the statements of operations, cash flows and stockholders’ equity. The amendments in ASU 2014-10 will be effective prospectively for annual reporting periods beginning after December 15, 2014, and interim periods within those annual periods, however early adoption is permitted. The Company evaluated and adopted ASU 2014-10 for the interim reporting period ended March 31, 2015.

 

In August 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update 2014-15, “Presentation of Financial Statements - Going Concern (Subtopic 205-40); Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. This update requires management of the Company to evaluate whether there is substantial doubt about the Company’s ability to continue as a going concern. This update is effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. Early adoption is permitted. The Company does not expect this standard to have an impact on the Company’s consolidated financial statements upon adoption. 

Accounting standards which were not effective until after March 31, 2015 are not expected to have a material impact on the Company’s financial position or results of operations.

 

NOTE 2 – RELATED PARTY TRANSACTIONS

 

The following related parties from time to time, provided advances to the Company for working capital purposes. These advances were short-term in nature and non-interest bearing.

 

Name  Balance at
March 31, 2015
   Balance at
September 30, 2014
   Relationship
Robb Knie  $5,000   $5,000   *
              
   $5,000   $5,000    

 

Was a related party in 2013 but not a related party as of March 31, 2015

 

NOTE 3 – CONVERTIBLE NOTES PAYABLE

 

   March 31, 2015 
10% Convertible promissory notes  $205,000 
Less: Debt discount   (44,744)
 Total  $160,256 

 

F-9
 

 

WALLY WORLD MEDIA, INC.

UNAUDITED CONDENSED CONSOLIDATED NOTES TO FINANCIAL STATEMENTS

March 31, 2015

 

NOTE 3 – CONVERTIBLE NOTES PAYABLE (continued)

 

October 2014 Closing

 

On October 23, 2014, the Company closed a financing transaction by entering into a Securities Purchase Agreement dated October 23, 2014 (the “Securities Purchase Agreement”) with certain funds and investors signatory to such Securities Purchase Agreement (the “Purchasers”) for an aggregate subscription amount of $160,000 (the “Purchase Price”). Pursuant to the Securities Purchase Agreement, the Company issued the following to the Purchasers: (i) 10% Convertible Promissory Notes with an aggregate principal amount of $160,000 (the “Notes”), (ii) Class A Warrants to purchase an aggregate of 4,266,656 shares of the Company’s common stock, par value $0.01 per share, for an exercise price of $0.05 per share for a period of five (5) years from the effective date of the registration statement (the “Class A Warrants”), and (iii) Class B Warrants to purchase an aggregate of 4,266,656 shares of the Company’s common stock, par value $0.01 per share, for an exercise price of $0.25 per share for a period of five (5) years from the effective date of the registration statement (the “Class B Warrants”, and together with the Class A Warrants, the “Warrants”). The Company paid legal fees associated with the issuance of the Notes of $10,000 which was recognized as debt discount to be amortized over the terms of the Note.

 

The terms of the Notes and the Warrants are as follows:

 

10% Convertible Promissory Notes

 

The total principal amount of the Notes are $160,000. The Notes accrue interest at a rate equal to 10% per annum and have a maturity date of April 23, 2015. The Notes are convertible any time after the issuance date of the Notes. The Purchasers have the right to convert the Notes into shares of the Company’s common stock at a conversion price equal to the lesser of (i) $0.0375, and (ii) 75% of the lowest closing bid price for the 20 consecutive trading days preceding a Conversion Date, subject to standard adjustments and price protection on the conversion price as discussed below. The Notes can be redeemed under certain conditions and the Company can force the conversion of the Notes in the event certain equity conditions are met. As long as any portions of this Note remains outstanding, unless the holders of at least 51% in principal amount of the then outstanding Notes shall have otherwise given prior written consent, the Company shall not, and shall not permit any of the Subsidiaries to, directly or indirectly enter into certain transactions as defined in section 7 of the promissory note agreement. One of those transactions is that the Company may not borrow or guarantee funds or assume any indebtedness in excess of $100,000 in the aggregate other than incurring trade payables in the ordinary course of business.

 

In the event of default, the Purchasers have the right to require the Company to repay in cash all or a portion of the Notes at a price equal to 115% of the aggregate principal amount of the Notes plus all accrued but unpaid interest.

  

Warrants

 

The Warrants are exercisable in whole or in part, at an initial exercise price per share of $0.05 for the Class A Warrants and $0.25 for the Class B Warrants, subject to adjustment. The exercise price and number of shares of the Company’s common stock issuable under the Warrants (the “Warrant Shares”) are subject to adjustments for stock dividends, splits, combinations, subsequent rights offerings, pro rata distributions and any issuance of securities below the exercise price of the Warrants. Any adjustment to the exercise price shall similarly cause the number of warrant shares to be adjusted so that the total quantity of the Warrants may increase. The warrants also contain a cashless exercise provision. In connection with the issuance of a convertible note in December 2014, the exercise price of the warrants were reduced to $0.005 and the Notes conversion prices have been adjusted to the a conversion price equal to the lesser of (i) $0.005, and (ii) 75% of the lowest closing bid price for the 20 consecutive trading days preceding a Conversion Date, subject to standard adjustments. Additionally, the number of warrants increased from a total of 8,533,312 warrants to 255,999,360 warrants as a result of the adjustment to the exercise price.

 

F-10
 

 

WALLY WORLD MEDIA, INC.

UNAUDITED CONDENSED CONSOLIDATED NOTES TO FINANCIAL STATEMENTS

March 31, 2015

 

NOTE 3 – CONVERTIBLE NOTES PAYABLE (continued)

 

December 2014 and February 2015 Closing

 

Between December 30, 2014 and February 6, 2015, the Company issued convertible notes in the aggregate principal amount of $45,000. The notes accrue interest at a rate equal to 10% per annum and a maturity date of June 29, 2015. The notes are convertible any time after the issuance date of the note. The holder has the right to convert the notes into shares of the Company’s common stock at a conversion price equal to the lesser of (i) $0.005, and (ii) 75% of the lowest closing bid price for the 20 consecutive trading days preceding a Conversion Date, subject to standard adjustments. The notes can be redeemed under certain conditions and the Company can force the conversion of the note in the event certain equity conditions are met.

 

Derivative Liabilities

 

Since the Company determined that the terms of the Notes and Warrants in the October 2014 closing include a down-round provision under which the conversion price and exercise price could be affected by future equity offerings undertaken by the Company under the provisions of FASB ASC Topic No. 815-40, “Derivatives and Hedging - Contracts in an Entity’s Own Stock”, the embedded conversion options and the warrants were accounted for as derivative liabilities at the date of issuance and adjusted to fair value through earnings at each reporting date. Additionally, the Company determined that the terms of the notes in the December 2014 and February 2015 closing includes a variable conversion price based on the closing bid prices of the Company’s common stock which also cause the embedded conversion options to be accounted for as derivative liabilities. In accordance with ASC 815, the Company has bifurcated the conversion feature of the convertible notes, along with the free-standing warrant derivative instruments and recorded derivative liabilities on their issuance date. The Company uses the Black-Scholes option pricing model to value the derivative liabilities. Included in the model to value the derivative liabilities of the above notes and warrants are the following assumptions: stock price at valuation date of approximately $0.02, exercise/conversion price ranging from $0.005 to $0.05, dividend yield of zero, years to maturity of 0.23 – 5.00, a risk free rate of 0.03% - 1.65%, and expected volatility of 158% - 193%. The notes were all discounted in full based on the valuations and the Company recognized an additional derivative expense of $259,478 upon initial recording of the derivative liabilities. The total debt discount of $205,000 consisted of legal fees related to the notes of $10,000, a portion of the valuation of the derivatives of $45,000 and the valuation of the warrants of $150,000 to be amortized over the terms of the note. These derivative liabilities are then revalued on each reporting date. The loss resulting from the increase in fair value of these convertible instruments was $4,315,498 for the six months ended March 31, 2015. At March 31, 2015, the Company had recorded warrant derivative liability of $4,264,440 and note derivative liability of $505,536.

 

For the six months ended March 31, 2015 and 2014 the Company recognized $160,256 and $0, respectively of amortization of debt discount.  As of March 31, 2015, the discount had a carrying value of $44,744.

 

NOTE 4 – STOCKHOLDERS’ DEFICIT

 

Preferred stock

 

The Company authorized 50,000,000 preferred shares.  Preferred shares may be designated by the Company’s board of directors.   There were no shares designated as of March 31, 2015.

 

Common stock

 

During 2nd quarter of fiscal 2015, the Company issued 161,290 shares of its common stock to a company owned by its Chief Financial Officer as payment for accounting services rendered pursuant to an engagement letter. The Company valued these common shares at the fair value of approximately $0.06 per common share based on the quoted trading price on the date of grant. In connection with issuance of these common shares, the Company recorded stock-based compensation of $10,000 for the six months ended March 31, 2015.

 

F-11
 

 

WALLY WORLD MEDIA, INC.

UNAUDITED CONDENSED CONSOLIDATED NOTES TO FINANCIAL STATEMENTS

March 31, 2015

 

NOTE 4 – STOCKHOLDERS’ DEFICIT (continued)

 

Stock options

 

During the six months ended March 31, 2015, the Company recorded stock based compensation expense related to vested options granted in fiscal 2014 in the amount of $89,461. As of March 31, 2015, there were no unrecognized compensation costs related to non-vested share-based compensation arrangements.

 

Stock option activities for the period ended March 31, 2015 are summarized as follows:

 

    Number of Options   Weighted Average Exercise Price   Weighted Average Remaining Contractual Life (Years)   Aggregate Intrinsic Value 
Balance at September 30, 2014   3,850,000   $0.83    2.29    - 
Granted   -    -    -      
Forfeited   (850,000)   0.25    2.60      
Balance at March 31, 2015   3,000,000   $1.00    1.79   $- 
Options exercisable at March 31, 2015   3,000,000   $1.00    -   $- 

 

There was no intrinsic value as of March 31, 2015 in connection with these stock options. 

 

Stock Warrants

 

On October 23, 2014, the Company closed a financing transaction by entering into a Securities Purchase Agreement dated October 23, 2014 with certain funds and investors signatory to such Securities Purchase Agreement for an aggregate subscription amount of $160,000. Pursuant to the Securities Purchase Agreement, the Company issued the following to the Purchasers: (i) 10% Convertible Promissory Notes with an aggregate principal amount of $160,000 (the “Notes”), (ii) Class A Warrants to purchase an aggregate of 4,266,656 shares of the Company’s common stock, par value $0.01 per share, for an exercise price of $0.05 per share for a period of five (5) years from the effective date of the registration statement (the “Class A Warrants”), and (iii) Class B Warrants to purchase an aggregate of 4,266,656 shares of the Company’s common stock, par value $0.01 per share, for an exercise price of $0.25 per share for a period of five (5) years from the effective date of the registration statement (the “Class B Warrants”, and together with the Class A Warrants, the “Warrants”).

 

The Warrants are exercisable in whole or in part, at an initial exercise price per share of $0.05 for the Class A Warrants and $0.25 for the Class B Warrants, subject to adjustment. The exercise price and number of shares of the Company’s common stock issuable under the Warrants (the “Warrant Shares”) are subject to adjustments for stock dividends, splits, combinations, subsequent rights offerings, pro rata distributions and any issuance of securities below the exercise price of the Warrants. Any adjustment to the exercise price shall similarly cause the number of warrant shares to be adjusted so that the total value of the Warrants may increase. The warrants also contain a cashless exercise provision. In connection with the issuance of a convertible note in December 2014, the exercise price of the Warrants have been adjusted to a conversion price equal to the lesser of (i) $0.005, and (ii) 75% of the lowest closing bid price for the 20 consecutive trading days preceding a Conversion Date, subject to standard adjustments. Additionally, the number of warrants increased from a total of 8,533,312 warrants to 255,999,360 warrants as a result of the adjustment to the exercise price.

 

F-12
 

 

WALLY WORLD MEDIA, INC.

UNAUDITED CONDENSED CONSOLIDATED NOTES TO FINANCIAL STATEMENTS

March 31, 2015

 

NOTE 5 – COMMITMENTS AND CONTINGENCIES

 

On April 1, 2013, the Company executed a lease agreement for approximately 1,400 square feet of office space located in Brunswick, New Jersey, which shall serve as the Company’s permanent offices. The initial term of the lease shall be for 36 months, with one option to renew for an additional 36 months.    The base monthly rental for the premises is $2,100 plus common area maintenance charges.    In addition, the lease required a security deposit and one month of prepaid rent in the amount of $8,400 and $2,100, respectively.

 

In January 2015, the Company orally agreed to sublease this office space to a third party. The third party shall pay the monthly rental plus common area maintenance charges starting February 2015. The rent income of approximately $8,300 from the sublease rental arrangement has been recorded in other income.

 

Future minimum rental payments required under this operating lease are as follows:

  

   Total   1 year   1-3 years   3-5 years   5+ years 
Operating lease  $25,200   $25,200   $-   $-   $- 
Total  $25,200   $25,200   $-   $-   $- 

  

Rent expense was $9,591 and $18,206 for the six months ended March 31, 2015 and 2014, respectively.

 

NOTE 6 – SUBSEQUENT EVENTS

 

Between April 30, 2015 and May 18, 2015, the Company issued the following to the Purchasers: (i) 10% Convertible Promissory Notes with an aggregate principal amount of $20,000, (ii) Class A Warrants to purchase an aggregate of 4,000,000 shares of the Company’s common stock for an exercise price of $0.005 per share for a period of five (5) years from the initial exercise date which is 6 months after the date of the respective notes, and (iii) Class B Warrants to purchase an aggregate of 4,000,000 shares of the Company’s common stock for an exercise price of $0.005 per share for a period of five (5) years from the initial exercise date which is 6 months after the date of the respective notes. The notes are convertible any time after the issuance date of the notes. The holders have the right to convert the notes into shares of the Company’s common stock at a conversion price equal to the lesser of (i) $0.005, and (ii) 75% of the lowest closing bid price for the 20 consecutive trading days preceding a Conversion Date, subject to standard adjustments. The notes can be redeemed under certain conditions and the Company can force the conversion of the note in the event certain equity conditions are met.

 

The exercise price and number of shares of the Company’s common stock issuable under the warrants are subject to adjustments for stock dividends, splits, combinations, subsequent rights offerings, pro rata distributions and any issuance of securities below the exercise price of the warrants. Any adjustment to the exercise price shall similarly cause the number of warrant shares to be adjusted so that the total quantity of the warrants may increase. The warrants also contain a cashless exercise provision.

 

In accordance with ASC 815, the Company has bifurcated the conversion feature of the convertible notes, along with the free-standing warrant derivative instruments and recorded derivative liabilities on their issuance date. The Company uses the Black-Scholes option pricing model to value the derivative liabilities. The notes were all discounted in full based on the valuations and the Company recognized an additional derivative expense of approximately $62,000 upon recording of the derivative liabilities. The total debt discount of $20,000 were from the valuation of the warrants of $20,000 to be amortized over the terms of the notes. These derivative liabilities will then be revalued on each reporting date.

 

F-13
 

 

Item 2.        Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

The following discussion and analysis should be read in conjunction with our financial statements and the related notes. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties, such as its plans, objectives, expectations and intentions. Its actual results and the timing of certain events could differ materially from those anticipated in these forward-looking statements.

 

Overview

 

Wally World Media, Inc. was incorporated in the State of Nevada on May 17, 2012.  We are a start-up business and are still working on our software and platform. We have developed a social media website that we refer to as “YouPop.” Our “YouPop” platform launched for public use in April 2013. On March 19, 2014, we launched reShoot™, a free mobile video camera app for Apple’s iPhone and iPad. reShoot features patent-pending “on the fly” video editing technology to rewind and re-shoot unwanted portions of video. Portions of our YouPop technology have been incorporated into the reShoot app. The reShoot app includes proprietary functionality which allows users to pause recordings (even when the app is closed), live preview of videos, record new footage into existing videos, and insert clips from the camera roll. reShoot provides a mobile video recording and editing studio within a user-friendly app.

 

The YouPop Platform

 

In April 2013, we launched our YouPop Platform. The following is how the YouPop platform operated. Users are permitted to register on our website and place job offerings for a service. For example, a user will be able to post a job offer to provide a video of a specific content (i.e. personalized birthday wish, practical joke, dares, etc.).  Other users will be able to view that offer and fulfill that offer by contacting the person and agreeing to provide that service. If the offer is accepted, the person who posted the job will provide us with their credit card information and we will hold the information until the service provider successfully completes the work.  It is intended that upon acceptance of the completed task, we will charge the credit card the amount that was to be paid plus a service fee and credit the service provider’s account with the agreed upon amount.  We will generate revenue by charging both the person looking for services to be provided and the service provider with a transaction fee or service charge of up to 15% from each party.

 

Our payment processing is being set up and structured as a conditional payment system. We expect to get a customer’s authorization to charge his or her credit card at some future time when the services are complete. This method of payment pre-authorizes the charge but we do not actually charge the credit card until the services are completed. In the event that services are completed and we attempt to charge the credit card but it is rejected or the financial institution does not accept the charge, if possible, the services will be blocked and will not be delivered. We will not guarantee payment and this is a risk that the service provider takes. If the payment is not made at the end of the services, then the service provider does not get paid and the person requesting the service will not get access to the material he or she requested.

 

In order to resolve any disputes that may arise between two contracting parties as to whether service was successfully completed, we will be implementing dispute resolution policies and procedures. These policies will include a process for the service provider to submit a request for review by an independent panel consisting of officers of the Company that will review, arbitrate and mediate any dispute. We recognize and understand that there may be disputes and disagreements between parties and we will do our best to resolve them. But, in the event there is no resolution, each party bears the risk of non-performance or non-payment.

  

We expect that YouPop will be attractive for both businesses and individuals. We expect that people will use our service to complete specific micro-services, such as:

 

Providing Testimonials for businesses or services

 

Advertising to increase user generated ads

  

Converting an excel document into other formats

 

2
 

 

Producing viral videos

 

Searching for talented people to provide radio and TV show content

 

We do recognize that it is possible that some users may try to use our platform for unlawful transactions. We plan to implement the following steps to try to prevent, or limit, unlawful transactions or acts, from occurring on or through the platform. We will have a procedure for manual review of each posting and a reporting mechanism for users of the site to notify us of any inappropriate content that may appear. While we will do our best to prevent these unlawful postings, we do recognize that they may occur and it is possible that we could potentially incur substantial liability if these unlawful postings do occur.

  

ReShoot Technology

 

The Company has developed an app for the iPhone and iPad based on its reShoot technology.  reShoot, a video camera app for Apple iPhones and iPads running iOS 8.   Featuring its patent- pending “on the Fly” video editing technology, reShoot makes it easy to correct videos while recording. It provides the capability to rewind and reshoot over unwanted footage.  Utilizing the iPhone’s camera, reShoot provides the capability to record, rewind, pause, annotate and reshoot videos of any length, and post them to social networks and video sharing platforms such as Facebook, Twitter, Vimeo, YouPop and Dropbox.  reShoot’s  videoArc feature, users can add new footage to existing video recordings stored in their VideoArc or camera roll. Instead of capturing dozens of clips, VideoArc provides a single video stream or montage that can be edited and extended.

  

With the Insert reShoot features users can record new video into video they have already taken.  It also allows users to insert new footage into a previously recorded VideoArc clip or clip from their camera roll.

 

The Company has changed its focus to concentrate its efforts on the reShoot technology which is developing new features such as video sound effects, thought bubbles, video emoticons and adding sound to traditional photographs.

 

Plan of Operations

 

We have commenced limited operations and our reShoot App has been available in the iTunes Store since March 18, 2014.

 

Our principal business intends to focus on creating a large user base for our reShoot technology that includes adding new features, new ways to monetize the mobile app through In-App purchases of special features, creating specific genre based videos entertainment and licensing the technology.   We plan to use the YouPop platform we have developed to connect the reShoot app and allow its users to share long form videos without exchanging the files using our cloud.

 

We have a limited operating history for investors to evaluate the potential of our business development. As such, we have not built our customer base or our brand name. In addition, our sources of cash are not adequate for the next 12 months of operations. If we are unable to raise additional cash, we will have to reduce our expansion plans.

 

Limited Operating History

 

We have generated limited financial history and have not previously demonstrated that we will be able to expand our business. Our business is subject to risks inherent in growing an enterprise, including limited capital resources and possible rejection of our business model and/or sales methods.

 

3
 

 

Critical Accounting Policies and Estimates 

 

While our significant accounting policies are more fully described in Note 1 to our financial statements for the six months ended March 31, 2015, we believe that the following accounting policies are the most critical tool to aid you in fully understanding and evaluating this management discussion and analysis.

 

Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We continually evaluate our estimates, including those related to recovery of long-lived assets, income taxes, and the valuation of equity transactions. We base our estimates on historical experience and on various other assumptions that we believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Any future changes to these estimates and assumptions could cause a material change to our reported amounts of revenues, expenses, assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of the financial statements.

 

Software development costs

 

Costs incurred to develop internal-use software, including website development costs, during the preliminary project stage are expensed as incurred. Internal-use software development costs are capitalized during the application development stage, which is after: (i) the preliminary project stage is completed; and (ii) management authorizes and commits to funding the project and it is probable the project will be completed and used to perform the function intended. Capitalization ceases at the point the software project is substantially complete and ready for its intended use, and after all substantial testing is completed. Upgrades and enhancements are capitalized if it is probable that those expenditures will result in additional functionality. Amortization is provided for on a straight-line basis over the expected useful life of three years of the internal-use software development costs and related upgrades and enhancements. When existing software is replaced with new software, the unamortized costs of the old software are expensed when the new software is ready for its intended use.

 

Impairment of long-lived assets

 

In accordance with ASC Topic 360, we review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. We recognize an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. For the six months ended March 31, 2015 and 2014, we did not incur impairment expense.

 

Revenue recognition

 

The Company will recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the purchase price is fixed or determinable and collectability is reasonably assured. For all revenue sources discussed below, in accordance ASC 605-45 “Principal Agent Considerations”, the Company recognizes revenue net of amounts retained by third party entities pursuant to revenue sharing agreements. The Company’s specific revenue recognition policies are as follows:

 

Users that register on the Company’s website may place job offerings for a service on the Company’s “Youpop” platform, a social media website (the “Job Offeror”). The Job Offeror will offer cash payments for a specific service to be completed. For example, the Job Offeror may require another user to provide a video of a specific content (i.e. personalized birthday wish, practical joke, dares, etc.). Other users that are looking to fulfill job postings (the “Job Offeree”) apply for the job. Once the Job Offeree applies, the Job Offeror can view the applicants profile, past jobs, user rating and ask direct questions. Once the Job Offeror engages a Job Offeree, the Company will charge the Job Offeror’s credit card for the service fee including its transaction fee of up to 30% of the transaction amount and the Company will hold the money until the work is completed by the job offeree and uploaded to Youpop for review and acceptance. At such time, the Company will record deferred revenue for the amount of the transaction fee and a customer deposit for the amount received from the Job Offeror. Upon acceptance of the completed task by the Job Offeror, the money is moved to the Job Offeree’s account and the Company will recognize transaction fee revenue. Job Offerees may request the funds be sent to them or they may leave it on account. Upon completion of the job, the Company recognizes revenue which consists of a transaction fee of up to 30% of the transaction amount with 50% paid by the Job Offeror and 50% by the Job Offeree.

 

4
 

 

Stock-based compensation

 

We account for stock-based instruments issued to employees in accordance with ASC Topic 718. ASC Topic 718 requires companies to recognize in the statement of operations the grant-date fair value of stock options and other equity based compensation issued to employees. We account for non-employee share-based awards in accordance with ASC Topic 505-50.

 

Recent Accounting Pronouncements

 

We have reviewed accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation’s reported financial position or operations in the near term.  The applicability of any standard is subject to the formal review of our consolidated financial management and certain standards are under consideration.  Those standards have been addressed in the notes to the consolidated financial statement and in this, our Interim Report, filed on Form 10-Q for the interim reporting period ended March 31, 2015.

  

Results of Operations

 

The following table presents a summary of operating information for the three and six months ended March 31, 2015 and 2014:

 

    For the Three Months Ended     For the Six Months Ended  
    March 31,
2015
    March 31,
2014
    March 31,
2015
    March 31,
 2014
 
    (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  
Net Revenues   $ -     $ -     $ -     $ -  
Total Operating Expenses     118,200       658,856       344,419       882,171  
Total Other Income (Expense)     1,654,041       109       (4,735,945 )     129  

Net Income (Loss)

  $ 1,535,841     $ (658,747 )   $ (5,080,364 )   $ (882,042 )

 

For the six months ended March 31, 2015 and 2014 we generated no revenue.

 

5
 

 

Operating Expenses

 

Expenses for the three months ended March 31, 2015 and 2014 totaled $118,200 and $658,856, respectively. Expenses for the six months ended March 31, 2015 and 2014 totaled $344,419 and $882,171, respectively, and consisted of the following:

 

    For the Three Months Ended     For the Six Months Ended  
    March 31, 2015     March 31, 2014     March 31, 2015     March 31, 2014  
    (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  
Compensation   $ 69,411     $ 405,194     $ 238,585     $ 534,942  
Professional fees     18,656       180,163       46,211       212,960  
General and administrative     30,133       73,499       59,623       134,269  

 

During the three and six months ended March 31, 2015, compensation decreased primarily due to decreased stock based compensation to our officer and employees in connection with options granted in fiscal 2014. We expect compensation to decrease due to lack of working capital.
   
We expect professional fees to decrease due to cost cutting measures as a result of lack of working capital. 
   
For the three and six months ended March 31, 2015 and 2014, general and administrative expenses decreased primarily attributable to a decrease in operations. We expect general and administrative expenses to decrease due to lack of working capital.

 

Other expense increased by approximately $4.7 million during the six months ended March 31, 2015 as compared to the six months ended March 31, 2014. The increase is the result of the recognition of derivative expense, change in fair value of derivative liabilities, and interest expense which includes amortization of debt discount in connection with the issuance of convertible notes.

 

Other income increased by approximately $1.7 million during the three months ended March 31, 2015 as compared to the three months ended March 31, 2014. The increase is primarily attributable to the change in fair value of derivative liabilities, and interest expense which includes amortization of debt discount in connection with the issuance of convertible notes.

 

Net Income (Loss)

 

As a result of the factors described above, we incurred a net loss for six months ended March 31, 2015 and 2014 of approximately $5.1 million and $882,000, respectively.  We incurred a net income (loss) for the three months ended March 31, 2015 and 2014 of approximately $1.5 million and $(659,000).

   

Liquidity and Capital Resources

 

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. We have been funding our operations through the sale of our common stock.

 

Our primary uses of cash have been for salaries and fees paid to third parties for the development of our products. All funds received have been expended in the furtherance of growing the business and establishing brand portfolios. The following trends are reasonably likely to result in a material decrease in our liquidity over the near to long term:

 

An increase in working capital requirements to finance additional product development, 
   
Addition of administrative and sales personnel as the business grows, 
   
Increases in advertising, public relations and sales promotions for existing and new brands as the company expands within existing markets or enters new markets, 

 

6
 

 

The cost of being a public company, and 
   
Capital expenditures to add additional technology.

 

We are not aware of any known trends or any known demands, commitments or events that will result in our liquidity increasing or decreasing in any material way. We are not aware of any matters that would have an impact on future operations.

 

Our net revenues are not sufficient to fund our operating expenses.  At March 31, 2015 we had a cash balance of $1,981. During the six months ended March 31, 2015, we raised approximately $195,000, net of $10,000 debt issue costs, from the issuance of convertible notes to fund our operating expenses, pay our obligations, and grow our company. We currently have no material commitments for capital expenditures. We may be required to raise additional funds, particularly if we are unable to generate positive cash flow as a result of our operations.   We estimate that based on current plans and assumptions, that our available cash will not be sufficient to satisfy our cash requirements under our present operating expectations, without further financing, for up to 12 months. We presently have no other alternative source of working capital. We may not have sufficient working capital to fund the expansion of our operations and to provide working capital necessary for our ongoing operations and obligations. We will need to raise significant additional capital to fund our operating expenses, pay our obligations, and grow our company. We do not anticipate we will be profitable in fiscal 2015.  Therefore our future operations will be dependent on our ability to secure additional financing.  Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the trading price of our common stock and a downturn in the U.S. equity and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. The inability to obtain additional capital will restrict our ability to grow and may reduce our ability to continue to conduct business operations. If we are unable to obtain additional financing, we will likely be required to curtail our marketing and development plans and possibly cease our operations.  

 

We anticipate that depending on market conditions and our plan of operations, we may incur operating losses in the foreseeable future. Therefore, our auditors have raised substantial doubt about our ability to continue as a going concern.

 

Our liquidity may be negatively impacted by the significant costs associated with our public company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly.

  

Our business plan within 12 months is outlined below:

 

If we continue to develop the reShoot technology and YouPop website and we receive a positive reaction from the market, we will attempt to raise additional money through a private placement, public offering or long-term loans to continue development and marketing our web sites and mobile app to attract larger numbers of users. We will also continually refine our web sites and optimize our marketing efforts from the market feedback we receive during the initial marketing phase and from our user’s feedback. We do not at this time have an estimate of time or cost for this stage.

 

If we are unable to maintain our web site or reShoot app, or successfully launch our marketing efforts because we don't have enough money, we will cease our development and/or marketing operations until we raise money. Attempting to raise capital after failing in any phase of our development plan could be difficult. As such, if we cannot secure additional proceeds we will have to cease operations and investors would lose their entire investment.  At the present time, we have not made any arrangements to raise additional cash. However, we intend to raise additional capital through private placements.  If we need additional cash but are unable to raise it, we will either suspend marketing operations until we do raise the cash, or cease operations entirely. Other than as described in this paragraph, we have no other financing plans.

 

7
 

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements.

 

Contractual Obligations

 

We have certain potential commitments that include future estimated payments. Changes in our business needs, cancellation provisions, changing interest rates, and other factors may result in actual payments differing from the estimates. We cannot provide certainty regarding the timing and amounts of payments. We have presented below a summary of the most significant assumptions used in our determination of amounts presented in the tables, in order to assist in the review of this information within the context of our financial position, results of operations, and cash flows.

 

The following tables summarize our contractual obligations as of March 31, 2015, and the effect these obligations are expected to have on our liquidity and cash flows in future periods:

 

Contractual obligations:  Total   1 year   1-3 years   3-5 years   5+ years 
Operating leases  $25,200   $25,200   $-   $-   $- 
Total  $25,200   $25,200   $-   $-   $- 

 

Item 3.        Quantitative and Qualitative Disclosures About Market Risk.

 

Not applicable for a smaller reporting company.

 

Item 4.        Controls and Procedures.

 

We carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its   principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based upon our evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective as of March 31, 2015, in ensuring that material information that we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms.

 

Changes in Internal Control over Financial Reporting

 

No changes were made to our internal control over financial reporting during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

8
 

 

PART II – OTHER INFORMATION

 

Item 1.        Legal Proceedings.

 

From time to time, the Company may become involved in litigation relating to claims arising out of its operations in the normal course of business. We are not involved in any pending legal proceeding or litigation and, to the best of our knowledge, no governmental authority is contemplating any proceeding to which we are a party or to which any of our properties is subject, which would reasonably be likely to have a material adverse effect on the Company.

 

Item 1A.     Risk Factors

 

Smaller reporting companies are not required to provide the information required by this item.

 

Item 2.        Unregistered Sales of Equity Securities and Use of Proceeds.

 

During 2nd quarter of fiscal 2015, we issued 161,290 shares of our common stock to a company owned by our Chief Financial Officer as payment for accounting services rendered pursuant to an engagement letter. We valued these common shares at the fair value of approximately $0.06 per common share based on the quoted trading price on the date of grant. 

 

The Shares were issued in reliance on exemptions from registration under Section 4(2) of the Securities Act of 1933, as amended (the “ Act ”). These transactions qualified for exemption from registration because among other things, the transactions did not involve a public offering, each investor was an accredited investor and/or qualified institutional buyer, each investor had access to information about the Company and their investment, each investor took the securities for investment and not resale, and the Company took appropriate measures to restrict the transfer of the securities.

 

Item 3.        Defaults Upon Senior Securities.

 

None.

 

Item 4.        Mine Safety Disclosure.

 

Not applicable.

 

Item 5.        Other Information.

 

On May 18, 2015, Adam Wasserman resigned as the Chief Financial Officer of Wally World Media, Inc. effective as of May 20, 2015. His resignation was not the result of any disagreement with the Company on any matter relating to its operations policies or practices.

 

Item 6.        Exhibits.

 

Exhibit

Number

  Description
31.1   Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes - Oxley Act of 2002.
32.1*   Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002
101.INS   XBRL Instance Document
101.SCH   XBRL Taxonomy Extension Schema Document
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document
101.LAB   XBRL Taxonomy Extension Label Linkbase Document
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document

 

* The certification attached as Exhibit 32.1 accompanying this Quarterly Report on Form 10-Q is being furnished and is not deemed filed with the Securities and Exchange Commission.

 

9
 

 

SIGNATURES

 

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

 

  WALLY WORLD MEDIA, INC.
   
Dated: May 20, 2015 By: /s/ Darin Myman
    Darin Myman
   

Chief Executive Officer

(Duly Authorized and Principal Executive Officer)

 

 

10

 



Exhibit 31.1

 

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

 

I, Darin Myman, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Wally World Media, 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 quarterly report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly report;

 

4. The registrant’s other certifying officer 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 controls 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 quarterly 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;
     
  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;

 

5. The registrant’s other certifying officer 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 function):

 

  a) all significant deficiencies and material weaknesses in the design or operation of internal controls 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 controls over financial reporting.

  

Dated: May 20, 2015 By:  /s/ Darin Myman
   

Chief Executive Officer and
Principal Accounting Officer

 



Exhibit 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Wally World Media, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Darin Myman, chief executive officer and chief financial officer of the Company, certify, pursuant to 18 U.S.C. section 1350 of the Sarbanes-Oxley Act of 2002, that:

 

(1)   The Report fully complies with the requirements of section 13(a) or 15(d) 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: May 20, 2015 By:  /s/ Darin Myman
   

Darin Myman

Chief Executive Officer and
Principal Accounting Officer

 

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 

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