APPYEA, INC - Quarter Report: 2015 December (Form 10-Q)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended December 31, 2015

[   ]

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: 333-190999

APPYEA, INC.

(Exact Name of Registrant as Specified in its Charter)

(Address of Principal Executive Offices)  (Zip Code)

Registrant's telephone number including area code:  (817) 887-8142

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 past 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 [X]     No [  ]

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

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

Larger accelerated filer	[   ]	Accelerated filer	[   ]
Non-accelerated filer	[   ]	Smaller reporting company	[X]

 

Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [  ]     No [X]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 108,370,017 shares outstanding as of March 1, 2016.

 

			Page
Part I – FINANCIAL INFORMATION
Item 1.	Financial Statements		3
	Balance Sheets as of December 31, 2015 and June 30, 2015 (unaudited)		3
	Statements of Operations for the three and six months ended December 31, 2015 and 2014 (unaudited)		4
	Statements of Cash Flows for the six months ended December 31, 2015 and 2014 (unaudited)		5
	Notes to Financial Statements (unaudited)		6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		18
Item 3.	Quantitative and Qualitative Disclosure About Market Risk		21
Item 4.	Controls and Procedures		21
Part II - OTHER INFORMATION
Item 1.	Legal Proceedings		22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		22
Item 3.	Defaults Upon Senior Securities		22
Item 4.	Mine Safety Disclosures		22
Item 5.	Other Information		22
Item 6.	Exhibits		22
SIGNATURES			23

 

 

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PART I. FINANCIAL INFORMATION

See accompanying notes to unaudited financial statements.

APPYEA, INC.

STATEMENTS OF OPERATIONS

(Unaudited)

See accompanying notes to unaudited financial statements.

APPYEA, INC.

STATEMENTS OF CASH FLOWS

(Unaudited)

 

See accompanying notes to unaudited financial statements.

AppYea, Inc. ("AppYea", "the Company", "we" or "us") was incorporated in the State of South Dakota on November 26, 2012, to engage in the acquisition, purchase, maintenance and creation of mobile software applications. The Company is in the development stage with no significant revenues and a limited operating history.

The Company's common stock is traded on the OTC Markets (www.otcmarkets.com) under the symbol "APYP".  The first day of trading on the OTC Markets was December 15, 2014.

 

At December 31, 2015, and June 30, 2015, prepaid expenses totaled $146,904 and $1,498,483, respectively; and as of December 31, 2015, consisted of prepaid consulting fees of $136,442 and other prepaid expenses of $10,462.

On March 9, 2015, the Company entered into a consulting agreement with the Cicero Consulting Group, LLC for the term of 12 months, and automatically renew for an additional 12 months unless terminated by the Company.  The Company valued this agreement in accordance with ASC505-50 as an Equity-Based Payment to Non-Employees at the current market price of the common stock.  The Company paid the consultant a commencement fee in the form of 1,723,329 shares of restricted common stock at the current market price, as of March 9, 2015, of $1.02. In October 2015, the Company and Cicero Consulting Group, LLC agreed to terminate the agreement, and Cicero Consulting Group, LLC agreed to return and cancel the shares. As a result, we fully recognized the remaining prepaid expense of $732,415 as consulting fees and reversed common stock of $172.

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On May 6, 2015, the Company entered into a consulting agreement with the Alex Consulting, Inc. for the term of one year or until the terms of this Agreement has been satisfied, whichever comes first.  The Company valued this agreement in accordance with ASC505-50 as an Equity-Based Payment to Non-Employees at the current market price of the common stock.  The Company paid the consultant a commencement fee in the form of 700,000 shares of restricted common stock at the current market price, as of May 6, 2015, of $0.51. As at December 31, 2015, the Company had recognized a prepaid expense of $136,442 to be expensed over the period from January 1, 2016, to May 5, 2016.

On May 18, 2015, the Company entered into a consulting agreement with the SmallCapVoice.com, Inc. for the term of three months commencing on August 18, 2015.  The Company valued this agreement in accordance with ASC505-50 as an Equity-Based Payment to Non-Employees at the current market price of the common stock.  The Company paid a monthly fee of $2,500 and a onetime issuance of 28,000 shares of restricted common stock at the current market price, as of May 18, 2015, of $0.51. As at December 31, 2015, the Company had recognized a prepaid expense balance of $0 from this vendor, as the prepaid amount was fully expensed from July 1, 2015 to August 18, 2015.

5. FIXED ASSETS

As at December 31, 2015, and June 30, 2015, the balance of fixed assets represented a vehicle and mobile application software as follows:

 

Depreciation expense for six months ended December 31, 2015, and 2014, was $37,730 and $24,562, respectively.

At December 31, 2015, and June 30, 2015, convertible loans consisted of the following:

 

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During six months ended December 31, 2015, and 2014, the Company recognized interest expense of $7,349 and $2,152 and amortization of discounts of $97,309 and $10,283, respectively.

April 2013 Note

On April 2, 2013, the Company issued a $15,000 convertible promissory note payable. The unsecured convertible promissory note payable is due upon demand and carried an interest rate of 12% per annum. The note payable is convertible at the option of the holder, at 50% of the lowest traded price for the 20 days preceding conversion as posted on the OTC Markets or on such US National Exchange upon which the Company may be listed. On July 24, 2014, the Company repaid $1,000 in respect of this convertible note payable leaving an outstanding principle balance of $14,000 in respect of the promissory note.

Effective April 2, 2013, the Company recorded no beneficial conversion expense on the conversion feature as the specific conversion price was currently not determinable.  However, effective December 15, 2014 the Company's shares of common stock became publicly quoted and accordingly we evaluated the terms of the conversion features of the convertible debenture in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity's Own Stock and determined it is indexed to the Company's common stock and that the conversion features meet the definition of a liability and therefore bifurcated the conversion feature and accounted for it as a separate derivative liability.

The Company valued the conversion feature at the first day the shares were publicly quoted (December 15, 2014) at $21,736 using the Black Scholes valuation model. $17,020 included accrued interest of $3,020 of the value assigned to the derivative liability was recognized as a debt discount on the convertible debenture. The debt discount was recorded as a reduction (contra-liability) to the convertible debenture and is being amortized over the life of the convertible debenture.  The balance of $4,716 of the value assigned to the derivative liability was expensed on the first day the shares became publicly traded.

On September 21, 2015, the convertible note of $7,500 and accrued interest of $2,206 were converted into 1,493,257 common shares and the Company amortized $1,875 of the debt discount and reclassed the fair value of the derivative liability on the date of conversion of $27,145 to additional paid-in capital.

On January 9, 2014, the Company issued a $10,000 convertible promissory note payable. The unsecured convertible promissory note payable has a 12-month term and carries an interest rate of 8% per annum. The note payable is convertible at the option of the holder, at 50% of the lowest traded price for the 60 days preceding conversion as posted on the OTC Markets or on such US National Exchange upon which the Company may be listed.

As of December 31, 2015, the outstanding principal balance of the note, accrued interest and unamortized debt discount were $0. Debt discount of $4,477 was amortized for the six months ended December 31, 2015.

On October 15, 2014, as part of its acquisition of a social networking mobile application and a vehicle, the Company agreed to pay $60,000 on a deferred basis in a convertible promissory note payable for a term of 12 months and carried an interest rate of 7% per annum. The unsecured note payable is convertible at the option of the holder at a 45% discount to the lowest closing bid price for the Company's common stock during the 20 trading days immediately preceding the conversion date.

Effective October 15, 2014, the Company recorded no beneficial conversion expense on the conversion feature as the specific conversion price is currently not determinable.  However, effective December 15, 2014 the Company's shares of common stock became publicly quoted and accordingly we evaluated the terms of the conversion features of the convertible debenture in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity's Own Stock and determined it is indexed to the Company's common stock and that the conversion features meet the definition of a liability and therefore bifurcated the conversion feature and accounted for it as a separate derivative liability.

The Company valued the conversion feature at the first day the shares were publicly quoted (December 15, 2014) at $62,415 using the Black Scholes valuation model. $60,702 included accrued interest of $702 of the value assigned to the derivative liability was recognized as a debt discount on the convertible debenture.  The debt discount was recorded as a reduction (contra-liability) to the convertible debenture and is being amortized over the life of the convertible debenture.  The balance of $1,713 of the value assigned to the derivative liability was expensed on the first day the shares became publicly traded.

On June 16, 2015, $30,000 of the convertible note was converted into 652,174 common shares of the Company.

On September 22, 2015, $7,150 of the convertible note was converted into 1,000,000 common shares and the Company amortized $715 of the debt discount and reclassed the derivative liability on the date of conversion of $25,850 to additional paid-in capital.

During October, 2015, $22,850 of the convertible note and accrued interest of $3,543 were converted into 15,480,000 common shares and the Company reclassed the fair value of the derivative liability on the date of conversion of $33,649 to additional paid-in capital.

As of December 31, 2015, the outstanding principal balance of the note, accrued interest and unamortized debt discount were $0. Debt discount of $9,211 was amortized for six months ended December 31, 2015.

February 2015 Note

On August 18, 2015, the convertible note of $15,000 and accrued interest of $651 was converted into 1,043,398 common shares and the Company $6,750 of the debt discount and reclassed the derivative liability on the date of conversion of $39,201 to additional paid-in capital.

As of December 31, 2015, the outstanding principal balance of the note, accrued interest and unamortized debt discount were $0. Debt discount of $8,750 was amortized for the six months ended December 31, 2015.

March 2015 Note

As of December 31, 2015, the outstanding principal balance of the note was $4,500 the note had accrued interest of $697 and an unamortized debt discount of $750. Debt discount of $5,917 was amortized for six months ended December 31, 2015.

April 2015 Note

August 2015 Note

September 2015 Note - 1

October 2015 Note

On October 14, 2015, the Company issued a $58,000 convertible promissory note payable and paid $20,000 cash to purchase mobile applications. The unsecured convertible promissory note payable is due upon demand and carries an interest rate of 15% per annum. The note payable is convertible at a 45% of the lowest closing bid price for the Company’s common stock during the 20 trading days immediately preceding a conversion date.

Effective October 14, 2015, the Company evaluated the terms of the conversion features of the convertible debenture in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity's Own Stock and determined it is indexed to the Company's common stock and that the conversion features meet the definition of a liability and therefore bifurcated the conversion feature and accounted for it as a separate derivative liability.

The Company valued the conversion feature at the issue date (October 14, 2015) at $463,519 using the Black Scholes valuation model. $58,000 of the value assigned to the derivative liability was recognized as a debt discount on the convertible debenture.  The debt discount was recorded as a reduction (contra-liability) to the convertible debenture and is being amortized over the life of the convertible debenture.  The balance of $405,519 of the value assigned to the derivative liability was expensed on the issue date of the convertible note.

November 2015 Note

These aggregate fees of $16,760 were recognized as deferred financing costs which are being amortized to interest expense over the life of the notes. Aggregate amortization recognized during the six months ended December 31, 2015, was $6,343, and the unamortized balance of deferred financing costs was $10,417 as of December 31, 2015.

At December 31, 2015, and 2014, convertible loan – related party consisted of the following:

On October 14, 2014, the Company issued a $22,000 convertible promissory note payable. The unsecured convertible promissory note payable is due upon demand and carried an interest rate of 15% per annum. The note payable is convertible at the option of the holder, at 50% of the lowest traded price for the 60 days preceding conversion as posted on the OTC Markets or on such US National Exchange upon which the Company may be listed.

Effective October 14, 2014, the Company recorded no beneficial conversion expense on the conversion feature as the specific conversion price was currently not determinable.  However, effective December 15, 2014 the Company's shares of common stock became publicly quoted and accordingly we evaluated the terms of the conversion features of the convertible debenture in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity's Own Stock and determined it is indexed to the Company's common stock and that the conversion features meet the definition of a liability and therefore bifurcated the conversion feature and accounted for it as a separate derivative liability.

The Company valued the conversion feature at the first day the shares were publicly quoted (December 15, 2014) at $26,782 using the Black Scholes valuation model. $22,570 included accrued interest of $570 of the value assigned to the derivative liability was recognized as a debt discount on the convertible debenture.  The debt discount was recorded as a reduction (contra-liability) to the convertible debenture and is being amortized over the life of the convertible debenture.  The balance of $4,212 of the value assigned to the derivative liability was expensed on the first day the shares became publicly traded.

During the period ended December 31, 2015, convertible note of $22,000 and accrued interest of $3,661 were purchased by third parties and converted into 20,561,051 common shares and the Company reclassed the fair value of the derivative liability on the date of conversion of $99,655 to additional paid-in capital.

As of December 31, 2015, the outstanding principal balance of the note, accrued interest and unamortized debt discount were $0. Debt discount of $6,771 was amortized for six months ended December 31, 2015.

The Company analyzed the conversion option for derivative accounting consideration under ASC 815, Derivatives and Hedging, and hedging, and determined that the instrument should be classified as a liability since the conversion option becomes effective at issuance resulting in there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.

Fair Value Assumptions Used in Accounting for Derivative Liabilities.

ASC 815 requires we assess the fair market value of derivative liability at the end of each reporting period and recognize any change in the fair market value as other income or expense item.

The Company determined our derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes pricing model to calculate the fair value as of December 31, 2015. The Black-Scholes model requires six basic data inputs: the exercise or strike price, time to expiration, the risk free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each convertible note is estimated using the Black-Scholes valuation model. The following weighted-average assumptions were used in the December 31, 2015, and June 30, 2015:

 

 At December 31, 2015, the estimated fair values of the liabilities measured on a recurring basis are as follows:

As of January 30, 2013, the Company leases office space at $200 per month with three-month terms, which shall be automatically extended for successive three-month periods unless there is the notice to cancel. The lease can be cancelled at any time by either party with 30 days’ notice prior to expiration of an applicable term.  For the six months ended December 31 2015 and 2014, the Company incurred $1,223 and $1,237, respectively.

Consulting Agreements

On March 9, 2015, the Company entered into a consulting agreement with the Cicero Consulting Group, LLC for the term of 12 months, and automatically renew for an additional 12 months unless terminated by the Company.  The Company valued this agreement in accordance with ASC505-50 as an Equity-Based Payment to Non-Employees at the current market price of the common stock.  The Company paid the consultant a commencement fee in the form of 1,723,329 shares of restricted common stock at the current market price, as of March 9, 2015, of $1.02. In October of 2015, the Company and Cicero Consulting Group, LLC agreed to terminate the agreement, and Cicero Consulting Group, LLC agreed to return and cancel the shares. 

On May 6, 2015, the Company entered into a consulting agreement with the Alex Consulting, Inc. for the term of one year or until the terms of this Agreement has been satisfied, whichever comes first.  The Company valued this agreement in accordance with ASC505-50 as an Equity-Based Payment to Non-Employees at the current market price of the common stock.  The Company paid the consultant a commencement fee in the form of 700,000 shares of restricted common stock at the current market price, as of May 6, 2015, of $0.51. As at December 31, 2015, the Company had recognized a prepaid expense of $136,442 to be expensed through May 5, 2016.

On May 18, 2015, the Company entered into a consulting agreement with the SmallCapVoice.com, Inc. for the term of three months commencing on August 18, 2015.  The Company valued this agreement in accordance with ASC505-50 as an Equity-Based Payment to Non-Employees at the current market price of the common stock.  The Company paid a monthly fee of $2,500 and a onetime issuance of 28,000 shares of restricted common stock at the current market price, as of May 18, 2015, of $0.51. The fair value of the shares of $9,177 was expensed over the period from July 1, 2015, to August 18, 2015.

On July 1, 2015, the Company entered into a consulting agreement with the Castle Rock Resources, LLC, for the term of six months and automatically renew for an additional 6 months unless terminated by the Company.  The Company valued this agreement in accordance with ASC505-50 as an Equity-Based Payment to Non-Employees at the current market price of the common stock.  The Company paid the consultant a commencement fee in the form of 2,400,000 shares of restricted common stock at the current market price, as of July 1, 2015, of $0.12 or $288,000. The cost associated with this issuance was expensed in full during the six months ended December 31, 2015

On July 13, 2015, the Company entered into a consulting agreement with Gilles Trahan, for the term of six months.  The Company valued this agreement in accordance with ASC505-50 as an Equity-Based Payment to Non-Employees at the current market price of the common stock.  The Company paid the consultant a commencement fee in the form of 300,000 shares of restricted common stock at the current market price, as of July 13, 2015, of $0.13 or $39,000. The cost associated with this issuance was expensed in full during the six months ended December 31, 2015.

The Company is authorized to issue 750,000,000 shares of common stock at a par value of $0.0001.

In July 2015, the Company issued 2,400,000 shares of common stock valued at $288,000 to Alex Castle Rock Resources, LLC and 300,000 shares of common stock valued at $39,000 to Gilles Trahan in exchange for consulting services. The fair value of these shares was expensed during the three months ended December 31, 2015. In addition, the Company issued 100,000 shares of common stock valued at $3,850 to Almorli Advisors for loan commissions which were recognized as deferred financing costs.

As at December 31, 2015, and June 30, 2015, 94,815,962 and 37,847,163 shares of the Company's common stock were issued and outstanding, respectively.

The President of the Company provides management and office premises to the Company for no compensation.

During the six months ended December 31, 2015, the former president paid accounts payable of $2,688 on behalf of the Company. As of December 31, 2015 and June 30, 2015, the balance due to a related party was $2,688 and $0, respectively.

 

On February 4, 2016, the Company’s sole director, Chief Executive Officer and Chief Financial Officer, Jackie Williams, passed away.  Effective February 16, 2016, pursuant to the Company’s Bylaws, shareholders holding a majority of the common share votes, voted by written consent to appoint Keri Williams and Devin Beavers to serve as directors of the Company.  In addition, on February 16, 2016, the newly appointed board of directors appointed Devin Beavers to serve as interim Chief Executive Officer and interim Chief Financial Officer.  There are currently no agreements in place for compensation to be paid to either Keri Williams or Devin Beavers. 

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Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operation

The following discussion and analysis was prepared to supplement information contained in the accompanying financial statements and is intended to provide certain details regarding the Company’s financial condition as of December 31, 2015, and the results of operations for the three and six months ended December 31, 2015.  It should be read in conjunction with the unaudited financial statements and notes thereto contained in this report as well as the audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal years ended June 30, 2015 and June 30, 2014.

AppYea, Inc. (“AppYea,” “we,” “our,” “us,” or the “Company”) was incorporated in the State of South Dakota on November 26, 2012. We are engaged in the acquisition, purchase, maintenance and creation of mobile software applications (or “apps”). The Company’s current business plans include the marketing of its mobile applications, as well the expansion of its mobile application portfolio through the acquisition of third party developed mobile applications and/or mobile applications development companies. The Company has derived revenue by way of the sale of its developed and acquired mobile applications as well as through advertisement integration. The Company currently uses advertising integration in the free versions of our mobile applications that are downloaded by consumers. The Company plans to continue using advertisement integration in the free versions of its mobile apps. However, at the time of the initial download, or at any time after the initial download of our application, the consumer can choose to pay for the full, “ad-free,” version of the application, at which time the advertisements are removed. We currently have 13 fully developed gaming applications, as well as a group of 14 applications that provide wait times at various amusement parks, and 23 additional source code applications that operate in the following categories: Business, Education, Entertainment, Finance, Lifestyle, Medical, Music, Navigation, News, Travel, Utilities and Wellness.  We also have acquired an automobile application and a social media application.

The Company is currently focused on the sale of its fully developed applications to mobile phone users, and finalizing the development of its source code applications.

The Company is currently actively seeking acquisitions of developed mobile applications and/or mobile applications development companies, however, we currently do not have any proposals or arrangements to enter into any acquisition or other business combinations.

For the Three Months Ended December 31, 2015 and December 31, 2014

We generated revenue of $1,472 and $750 for the three months ended December 31, 2015 and 2014, respectively. For the three months ended December 31, 2015, we had a larger mobile apps offering than in the corresponding period during the prior year. During our limited history, we have generated nominal revenue and have very little operating history upon which to evaluate our business.

Operating expenses, which consisted of sales and marketing costs, legal and professional fees, general and administrative expenses, and depreciation expense, were $878,611 and $55,365, for the three months ended December 31, 2015 and 2014, respectively. Operating expense increases during the three months ended December 31, 2015 were primarily the result of increased professional fees as well as the costs associated with managing and maintain our public financial reporting requirements.

Other expenses totaled $61,383 for the three months ended December 31, 2015 compared to $23,738 for the three months ended December, 2014.

As a result of the foregoing, we incurred losses of $938,522 and $78,353 during the three months ended December 31, 2015 and 2014, respectively.

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For the Six Months Ended December 31, 2015 and December 31, 2014

We generated revenue of $1,858 and $2,079 for the six months ended December 31, 2015 and 2014, respectively. For the six months ended December 31, 2015, we had a smaller mobile apps offering than in the corresponding period during the prior year. During our limited history, we have generated nominal revenue and have very little operating history upon which to evaluate our business.

Operating expenses, which consisted of sales and marketing costs, legal and professional fees, general and administrative expenses, and depreciation expense, were $1,778,172 and $82,708, for the six months ended December 31, 2015 and 2014, respectively. Operating expense increases during the six months ended December 31, 2015 were primarily the result of increased professional fees as well as the costs associated with managing and maintain our public financial reporting requirements.

Other expenses totaled $451,574 for the six months ended December 31, 2015 compared to $24,379 for the six months ended December, 2014.

As a result of the foregoing, we incurred losses of $2,227,888 and $105,008 during the six months ended December 31, 2015 and 2014, respectively.

Our activities have been entirely directed at the development of our internal apps, the acquisition of third party apps, and the sourcing of capital to fund these activities.

As of December 31, 2015, we had cash or cash equivalents of $13,883.

Net cash used in operating activities was $60,222 for the six months ended December 31, 2015 and net cash used in operating activities was $40,191 for the six months ended December 31, 2014. During the six month ended December 31, 2015 we incurred a net loss of $2,227,888, which was primarily the cause of the increase in our net cash used in operating activities. At December 31, 2015 our operating activities and available capital resources were not sufficient to fund our operations going forward. We believe that we are going to need to obtain additional funding for our activities during the next twelve months to: 1) further fund the development of our source code applications, 2) to fund any potential acquisitions of developed mobile applications and/or mobile applications development companies, and 3) to fund any operating deficits.

Net cash used in investing activities was $20,000 for the six months ended December 31, 2015 and $0 for the six months ended December 31, 2014.  During the six months ending December 31, 2015 we spent $20,000 on acquiring mobile applications while we made no such expenditures during the six months ended December 31, 2014. The Company is currently seeking acquisition targets and subject to our executing any purchase agreements, we may have significant cash outlays for investing activities. Should we close on any acquisitions, we will most likely need to sell additional securities and/or borrow additional funds in order to fund such acquisitions and to meet our business objectives during the next twelve months.

Net cash provided by financing activities for the six months ended December 31, 2015 was $93,840, compared to net cash provided by financing activities of $37,250 for the six months ended December 31, 2014.  During the six months ended December 31, 2015, we received $106,750 by way of loan under a convertible note payable.

As of December 31, 2015, our total assets were $288,046 and our total liabilities were $392,866. Included in our assets of as of December 31, 2015 was $13,883 of cash, $146,904 in prepaid expenses, $10,417 of deferred financing costs and net fixed assets of $116,842.  As of June 30, 2015 our total assets were $1,575,659 and our total liabilities were $236,688.

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During the next twelve months, we anticipate that our principal sources of liquidity will consist of any, or all, of the following: 1) proceeds from sales of our common stock, 2) revenue generated from our operations, and 3) additional debt borrowings. While we are presently generating revenue and we anticipate our revenue will continue to increase, we are currently operating at a loss.

On a long-term basis, our ability to ultimately achieve and maintain profitability and positive cash flow is dependent upon our ability to successfully continue to develop our products and our ability to generate revenues.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties and are based on the beliefs and assumptions of management and information currently available to management. The use of words such as “believes”, “expects”, “anticipates”, “intends”, “plans”, “estimates”, “should”, “likely” or similar expressions, indicates a forward-looking statement.

The identification in this report of factors that may affect our future performance and the accuracy of forward-looking statements is meant to be illustrative and by no means exhaustive. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty.

Factors that could cause our actual results to differ materially from those expressed or implied by forward-looking statements include, but are not limited to:

·

Trends affecting the Company’s financial condition, results of operations or future prospects;

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The Company’s business and growth strategies;

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The Company’s financing plans and forecasts;

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The factors that we expect to contribute to our success and the Company’s ability to be successful in the future;

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The Company’s business model and strategy for realizing positive results as sales increase;

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Competition, including the Company’s ability to respond to such competition and its expectations regarding continued competition in the market in which the Company competes;

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Expenses;

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The Company’s expectations with respect to continued disruptions in the global cap ital markets and reduced levels of consumer spending and the impact of these trends on its financial results;

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The Company’s ability to meet its projected operating expenditures and the costs associated with development of new projects;

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The Company’s ability to pay dividends or to pay any specific rate of dividends, if declared;

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The impact of new accounting pronouncements on its financial statements;

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That the Company’s cash flows from operating activities will be sufficient to meet its projected operating expenditures for the next twelve months;

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The Company’s market risk exposure and efforts to minimize risk;

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Development opportunities and its ability to successfully take advantage of such opportunities;

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Regulations, including anticipated taxes, tax credits or tax refunds expected;

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The outcome of various tax audits and assessments, including appeals thereof, timing of resolution of such audits, the Company’s estimates as to the amount of taxes that will ultimately be owed and the impact of these audits on the Company’s financial statements;

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The Company’s overall outlook including all statements under Management’s Discussion and Analysis or Plan of Operation;

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That estimates and assumptions made in the preparation of financial statements in conformity with US GAAP may differ from actual results; and

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Expectations, plans, beliefs, hopes or intentions regarding the future.

Item 3.  Quantitative and Qualitative Disclosure About Market Risk

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

Item 4.  Controls and Procedures

The Company’s management conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and Rule 15d-15(e) under the 1934 Act) pursuant to Rule 13a-15 under the 1934 Act.  The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports it files or submits under the 1934 Act is recorded, processed, summarized and reported on a timely basis and that such information is communicated to management and the Company’s board of directors to allow timely decisions regarding required disclosure.

·

Since inception our chief executive officer also functions as our chief financial officer.  As a result, our officers may not be able to identify errors and irregularities in the financial statements and reports.

·

We were unable to maintain full segregation of duties within our financial operations due to our reliance on limited personnel in the finance function.  While this control deficiency did not result in any material adjustments to our financial statements, it could have resulted in a material misstatement that might have been prevented or detected by a segregation of duties.

·

Documentation of all proper accounting procedures is not yet complete.

To the extent reasonably possible given our limited resources, as financial resources become available we intend to take measures to cure the aforementioned weaknesses, including, but not limited to, the following:

·

Increasing the capacity of our qualified financial personnel to ensure that accounting policies and procedures are consistent across the organization and that we have adequate control over financial statement disclosures.

There were no changes in our internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II. OTHER INFORMATION

To the best of the Company’s knowledge and belief, no legal proceedings are currently pending or threatened.

We are not required to provide this information as we are a Smaller Reporting Company.

On October 14, 2015, the Company issued a $58,000 convertible promissory note payable and paid $20,000 cash to purchase mobile applications. The unsecured convertible promissory note payable is due upon demand and carries an interest rate of 15% per annum. The note payable is convertible at a 45% of the lowest closing bid price for the Company’s common stock during the 20 trading days immediately preceding a conversion date.

On November 25, 2015, the Company issued a $25,000 convertible promissory note payable and incurred $2,000 financing costs to a third party which were recognized as deferred financing costs. The unsecured convertible promissory note payable is due upon demand and carries an interest rate of 10% per annum. The note payable is convertible at 50% of the lowest daily trading price, determined on the then current trading market for the Company's common stock, for 15 trading days prior to conversion at the option of the Holder, in whole at any time and from time to time.

None.

Not applicable to our Company.

None.

31	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Devin Beavers.
32	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Devin Beavers.

 

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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.

APPYEA, INC.

Date:  March 2, 2016	By:  /s/ Devin Beavers
	Devin Beavers
	Interim Chief Financial Officer, Interim Principal Accounting Officer, Interim Chief Executive Officer and Director