APPYEA, INC - Quarter Report: 2016 December (Form 10-Q)

appyea_10q.htm

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, 2016

o	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)

South Dakota		46-1496846
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

777 Main Street, Suite 600, Fort Worth, Texas 76102

(Address of Principal Executive Offices) (Zip Code)

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

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 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 o

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 o

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	o	Accelerated filer	o
Non-accelerated filer	o	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 o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 469,667,527 shares outstanding as of February 9, 2017.

APPYEA, INC.

Index

		Page
Part I – FINANCIAL INFORMATION

Item 1.	Financial Statements	3

	Balance Sheets as of December 31, 2016 and June 30, 2016 (unaudited)	3

	Statements of Operations for the three and six months ended December 31, 2016 and 2015 (unaudited)	4

	Statements of Cash Flows for the three and six months ended December 31, 2016 and 2015 (unaudited)	5

	Notes to Financial Statements (unaudited)	6

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	11

Item 3.	Quantitative and Qualitative Disclosure About Market Risk	14

Item 4.	Controls and Procedures	14

Part II - OTHER INFORMATION

Item 1.	Legal Proceedings	15

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	15

Item 3.	Defaults Upon Senior Securities	15

Item 4.	Mine Safety Disclosures	15

Item 5.	Other Information	15

Item 6.	Exhibits	16

SIGNATURES		17

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

APPYEA, INC.

BALANCE SHEETS

(Unaudited)

	December 31,			June 30,
	2016			2016

ASSETS
Current Assets:
Cash and cash equivalents	$	12,597		$	14,637
Prepaid expenses		38,500			4,167
Total Current Assets		51,097			18,804

Fixed assets, net of accumulated depreciation of $197,210 and $175,226		60,660			82,644

TOTAL ASSETS	$	111,757		$	101,448

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts payable		5,047			4,643
Accrued salary		80,000			32,000
Convertible loans and accrued interest, net of unamortized discounts of $17,381 and $0, respectively		109,943			454
Due to related party		1,108			-
Derivative liability		14,012			1,452
Total Current Liabilities		210,110			38,549

Total Liabilities		210,110			38,549

Stockholders' Equity (Deficit):
Convertible preferred stock, $0.0001 par value, 5,000,000 shares authorized, 5,000,000 shares issued and outstanding at December 31, 2016 and June 30, 2016, respectively		500			500
Common stock, $0.0001 par value, 750,000,000 shares authorized, 469,667,527 and 464,667,527 shares issued and outstanding at December 31, 2016 and June 30, 2016, respectively		46,966			46,466
Additional paid-in capital		4,112,973			4,098,473
Accumulated deficit		(4,258,792	)		(4,082,540	)
Total Stockholders' Equity (Deficit)		(98,353	)		62,899
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	111,757		$	101,448

See accompanying notes to unaudited financial statements.

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APPYEA, INC.

STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended December 31,						Six Months Ended December 31,
	2016			2015			2016			2015

Revenues	$	139		$	1,472		$	541		$	1,858

Operating Expenses
Sales and marketing		-			4,808			-			6,386
Legal and professional fees		83,506			848,739			86,503			1,726,393
General and administrative		33,304			2,949			61,257			7,663
Depreciation		10,891			22,115			21,984			37,730
Total Operating Expenses		127,701			878,611			169,744			1,778,172

Loss from operations		(127,562	)		(877,139	)		(169,203	)		(1,776,314	)

Other Income (Expense)
Change in fair value of derivative liabilities		1,118			3,013			(1,060	)		(332,490	)
Interest expense		(5,989	)		(64,396	)		(5,989	)		(119,084	)
Net Other Income (Expense)		(4,871	)		(61,383	)		(7,049	)		(451,574	)

Net Loss	$	(132,433	)	$	(938,522	)	$	(176,252	)	$	(2,227,888	)

Net Loss Per Common Share: Basic and Diluted	$	(0.00	)	$	(0.01	)	$	(0.00	)	$	(0.04	)

Weighted Average Number of Common Shares Outstanding: Basic and Diluted		467,874,049			69,742,109			466,270,788			55,427,024

See accompanying notes to unaudited financial statements.

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APPYEA, INC.

STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended December 31,
	2016			2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(176,252	)	$	(2,227,888	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense		21,984			37,730
Common stock issued for services		15,000			327,000
Convertible note issued for services		25,000			-
Amortization of stock issued for prepaid services		-			1,358,041
Amortization of deferred financing cost		-			6,344
Amortization of debt discounts		4,119			104,080
Change in fair value of derivative liabilities		1,060			332,490
Changes in operating assets and liabilities:
Accounts receivable		-			339
Prepaid expenses		(34,333	)		(6,462	)
Accounts payable		404			(3,244	)
Due to related party		-			2,688
Accrued salary		48,000			-
Accrued interest		1,870			8,660
Net Cash Used in Operating Activities		(93,148	)		(60,222	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of mobile application software		-			(20,000	)
Net cash used in Investing Activities		-			(20,000	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from convertible notes payable, net of original issue discounts		90,000			106,750
Payment of deferred financing costs		-			(12,910	)
Proceeds from related party		11,417			-
Repayment of loan to related party		(10,309	)		-
Net cash provided by Financing Activities		91,108			93,840

Net cash increase (decrease) for period		(2,040	)		13,618
Cash at beginning of period		14,637			265
Cash at end of period	$	12,597		$	13,883

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for income taxes	$	-		$	-
Cash paid for interest	$	-		$	-

NON CASH INVESTING AND FINANCING ACTIVITIES
Purchase of mobile application software in exchange for a convertible loan	$	-		$	58,000
Issuance of common stock for deferred financing costs	$	-		$	3,850
Issuance of common stock for conversion of debt and accrued interest	$	-		$	118,339
Resolution of derivative liability upon conversion of debt	$	-		$	334,907
Derivative liability recognized as debt discount	$	11,500		$	164,750
Cancelation of issuance of common stock for services	$	-		$	172

See accompanying notes to unaudited financial statements.

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APPYEA, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2016

(Unaudited)

1. NATURE OF OPERATIONS

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.

2. BASIS OF PRESENTATION

The Company's fiscal year end is June 30. The accompanying unaudited interim condensed financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and the rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial reporting and are presented in US dollars. Accordingly, these unaudited interim condensed financial statements do not include all information and footnote disclosures required for an annual set of financial statements prepared under United States generally accepted accounting principles. In the opinion of our management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the financial position, results of operations and cash flows as of December 31, 2016, and for the interim periods presented herein have been reflected in these unaudited interim condensed financial statements and the notes thereto. Interim results included herein are not necessarily indicative of the results to be expected for the fiscal year as a whole. These unaudited interim financial statements should be read in conjunction with the audited financial statements and accompanying notes for the fiscal year ended June 30, 2016, included in its Annual Report on Form 10-K filed on September 30, 2016. Certain prior period amounts have been reclassified to conform to current period presentation.

3. GOING CONCERN AND LIQUIDITY

At December 31, 2016, the Company had cash of $12,597 and current liabilities of $210,110 and a working capital deficit of $159,013. The Company has generated net losses since inception. The Company anticipates future losses in its business. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

The Company's ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. There is no assurance that this series of events will be satisfactorily completed.

4. FIXED ASSETS

As at December 31, 2016, and June 30, 2016, the balance of fixed assets represented mobile application software as follows:

	December 31, 2016			June 30, 2016
Mobile applications	$	257,870		$	257,870
Accumulated depreciation		(197,210	)		(175,226	)
Fixed assets, net	$	60,660		$	82,644

Depreciation expense for six months ended December 31, 2016, and 2015, was $21,984 and $37,730, respectively.

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5. CONVERTIBLE LOANS

At December 31, 2016 and June 30, 2016, convertible loans consisted of the following:

	December 31, 2016			June 30, 2016
March 2015 Note	$	-		$	-
November 2016 Note		125,000			-
Total convertible notes payable		125,000			-

Accrued interest		2,324			454
Less: Unamortized debt discount		(17,381	)		-
Total convertible notes		109,943			454

Less: current portion of convertible notes		109,943			454
Long-term convertible notes	$	-		$	-

During the six months ended December 31, 2016 and 2015, the Company recognized interest expense of $1,870 and $7,349 and amortization of discount of $4,119 and $104,080, respectively.

November 2016 Note

On November 15, 2016, the Company entered into four separate agreements with Greentree Financial Group, Inc., consisting of a Financial Advisory Agreement, a Loan Agreement, a Convertible Promissory Note, and a Warrant.

The Loan Agreement allows for the Company to borrow up to $250,000 from Greentree, which will be evidenced by various promissory notes, which will automatically mature 12 months from the date of applicable Note, will accrue interest at a rate of 12% per annum, and will include an original issuance discount of 10%. In addition, the promissory notes will be convertible at a price equal to 55% of the lowest trading price during the 10 trading days immediately prior to a conversion date. Note may not be converted prior to 6 months from its issuance. There is a 10% prepayment penalty associated with each of the promissory notes. Each promissory note conversion shall result in $1,500 being added to the principal of each promissory note converted. An initial promissory note of $100,000 and the note of $25,000 for a financial advisory service were issued on November 15, 2016.

The warrant issued to Greentree allows for the purchase of up to 5,000,000 shares of the Company’s common stock for a three year period, expiring on November 15, 2019, with an exercise price of $0.03 per share. The warrants also contain a cashless exercise feature, based on a cashless exercise formula.

The Company determined that the exercise feature of the warrants met the definition of a liability in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity's Own Stock. The Company will bifurcate the embedded conversion option in the note once the note becomes convertible and account for it as a derivative liability. The fair value of the warrants was recorded as a debt discount being amortized to interest expense over the term of the note.

The Company valued the warrants using the Black Scholes valuation model. The fair value of the derivative liability for the warrants during six months ended December 31, 2016 amounted to $11,500. The derivative liability was recognized as a debt discount to the notes.

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Warrants

A summary of activity during the period ended December 31, 2016 follows:

	Warrant Outstanding
			Weighted Average
	Shares		Exercise Price

Outstanding, June 30, 2016		-	$	-
Granted		5,000,000		0.03
Exercised		-		-
Forfeited/canceled		-		-
Outstanding, December 31, 2016		5,000,000	$	0.03

The following table summarizes information relating to outstanding and exercisable warrants as of December 31, 2016:

Warrants Outstanding

Warrants Exercisable

Number of

Weighted Average

Remaining
Contractual life

Weighted

Average

Number of

Weighted

Average

Shares

(in years)

Exercise Price

Shares

Exercise Price

5,000,000

2.87

0.03

5,000,000

0.03

6. DERIVATIVE LIABILITIES

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, 2016. 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.

At December 31, 2016, the estimated fair values of the liabilities measured on a recurring basis are as follows:

	Six Months Ended			Year Ended
	December 31, 2016			June 30, 2016
Expected term	2.87 - 3.00 years			0.00 - 1.00 years
Expected average volatility	553%-567		%	25%-1,390		%
Expected dividend yield		-			-
Risk-free interest rate	1.28%-1.47		%	0.00%-0.57		%

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At December 31, 2016, the estimated fair values of the liabilities measured on a recurring basis are as follows:

Fair Value Measurements at December 31, 2016
			Quoted Prices in		Significant Other		Significant
	December 31,		Active Markets		Observable Inputs		Unobservable Inputs
	2016		(Level 1)		(Level 2)		(Level 3)
March 2015 Note	$	1,512	$	-	$	-	$	1,512
Warrants -Issued in fiscal year 2017		12,500		-		-		12,500
Total liabilities	$	14,012	$	-	$	-	$	14,012

The following table summarizes the changes in the derivative liabilities during the six months ended December 31, 2016:

Balance - June 30, 2016	$	1,452
Addition of new derivatives recognized as debt discounts		11,500
Loss on change in fair value of the derivative		1,060
Balance - December 31, 2016	$	14,012

The aggregate loss on derivatives during the six months ended December 31, 2016 was $1,060.

7. COMMITMENTS AND CONTINGENCIES

Leases and Long term Contracts

The Company has not entered into any long term leases, contracts or commitments.

Legal

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

Rent

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, 2016 and 2015, the Company incurred $1,215 and $1,223, respectively.

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8. SHAREHOLDERS' EQUITY

Convertible Preferred Stock

The Company is authorized to issue 5,000,000 shares of convertible preferred stock at a par value of $0.0001.

Each convertible preferred share is convertible into 1,500 shares of common stock and has the voting rights of 1,000 shares of common stock.

As at December 31, 2016, and June 30, 2016, 5,000,000 shares of the Company's convertible preferred stock were issued and outstanding.

Common Stock

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

During the period ended December 31, 2016, the Company issued 5,000,000 shares of common stock with a fair value of $15,000 for consulting services.

As at December 31, 2016, and June 30, 2016, 469,667,527 and 464,667,527 shares of the Company's common stock were issued and outstanding, respectively.

9. RELATED PARTY TRANSACTIONS

In March 2016, the Company appointed current CEO and approved a base compensation package of $8,000 per month for CEO. As of December 31, 2016 and June 30, 2016, the Company recorded accrued salary of $80,000 and $32,000, respectively.

During the period ended December 31, 2016, the Company borrowed a total amount of $11,417 from Evergreen Venture Partners LLC (“EVP”), which the CEO is the majority owner, and repaid $10,309. This loan is a non-interest bearing and due on demand. As of December 31, 2016 and June 30, 2016, the Company owed EVP, a related party $1,108 and $0, respectively.

10. SUBSEQUENT EVENTS

Subsequent to December 31, 2016, the Company drew down another $75,000 under the November 15, 2016 Loan Agreement (see Note 5).

10

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

Introduction

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, 2016, and the results of operations for the three and six months ended December 31, 2016. 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 year ended June 30, 2016.

Overview

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 Loan Agreement allows for the Company to borrow up to $250,000 from Greentree, which will be evidenced by various promissory notes, which will accrue interest at a rate of 12% per annum, and will include an original issuance discount of 10%. In addition, the promissory notes will be convertible at a price equal to 55% of the lowest trading price during the 10 trading days immediately prior to a conversion date. Greentree shall not be able to convert the promissory notes in an amount that would result in the beneficial ownership of greater than 4.9% of the outstanding shares of the Company, with the exception that the limitation may be waived by Greentree with 61 days prior notice. There is a 10% prepayment penalty associated with each of the promissory notes. Each promissory note conversion shall result in $1,500 being added to the principal of each promissory note converted. An initial promissory note of $100,000 was entered into on November 15, 2016.

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.

Results of Operations

For the Three Months Ended December 31, 2016 and 2015

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We generated revenue of $139 and $1,472 for the three months ended December 31, 2016 and 2015, respectively. 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 $127,701 and $878,611, for the three months ended December 31, 2016 and 2015, respectively. Operating expense decreased during the three months ended December 31, 2016 were primarily the result of decreased professional fees.

Other expenses totaled $4,871 for the three months ended December 31, 2016 compared to $61,383 for the three months ended December 31, 2015. The decrease in other expenses was primarily the result of a decrease in interest expense during the period ended December 31, 2016.

As a result of the foregoing, we incurred losses of $132,433 and $938,522 during the three months ended December 31, 2016 and 2015, respectively.

For the Six Months Ended December 31, 2016 and 2015

We generated revenue of $541 and $1,858 for the six months ended December 31, 2016 and 2015, respectively. 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 $169,744 and $1,778,172, for the six months ended December 31, 2016 and 2015, respectively. Operating expense decreases during the six months ended December 31, 2016 were primarily the result of decreased professional fees.

Other expenses totaled $7,049 for the six months ended December 31, 2016 compared to $451,574 for the six months ended December 31, 2015. The decrease in other expenses was primarily the result of a decrease in change in fair value of derivative liabilities and interest expense during the period ended December 31, 2016.

As a result of the foregoing, we incurred losses of $176,252 and $2,227,888 during the six months ended December 31, 2016 and 2015, respectively.

Liquidity and Capital Resources

As of December 31, 2016, we had cash or cash equivalents of $12,597.

Net cash used in operating activities was $93,148 for the six months ended December 31, 2016 and net cash used in operating activities was $60,222 for the six months ended December 31, 2015. During the six months ended December 31, 2016 we incurred a net loss of $176,252, which was primarily the cause of the increase in our net cash used in operating activities. At December 31, 2016, 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 $0 for the six months ended December 31, 2016 compared to net cash used in investing activities of $20,000 for the six months ended December 31, 2015.

Net cash provided by financing activities for the six months ended December 31, 2016 was $91,108, compared to net cash provided by financing activities of $93,840 for the six months ended December 31, 2015. During the six months ended December 31, 2016, we received $90,000 by way of loan under a convertible note payable and $11,417 loan from a related party and repaid $10,309 to a related party. During the six months ended December 31, 2015, we received $106,750 by way of loan under a convertible note payable.

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As of December 31, 2016, our total assets were $111,757 and our total liabilities were $210,110. Included in our assets of as of December 31, 2016 was $12,597 of cash, $38,500 in prepaid expenses, and net fixed assets of $60,660. As of June 30, 2016, our total assets were $101,448 and our total liabilities were $38,549.

Plan of Operation and Funding

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;
	·	The Company’s business and growth strategies;
	·	The Company’s financing plans and forecasts;
	·	The factors that we expect to contribute to our success and the Company’s ability to be successful in the future;
	·	The Company’s business model and strategy for realizing positive results as sales increase;
	·	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;
	·	Expenses;
	·	The Company’s expectations with respect to continued disruptions in the global capital markets and reduced levels of consumer spending and the impact of these trends on its financial results;
	·	The Company’s ability to meet its projected operating expenditures and the costs associated with development of new projects;
	·	The Company’s ability to pay dividends or to pay any specific rate of dividends, if declared;
	·	The impact of new accounting pronouncements on its financial statements;
	·	That the Company’s cash flows from operating activities will be sufficient to meet its projected operating expenditures for the next twelve months;
	·	The Company’s market risk exposure and efforts to minimize risk;
	·	Development opportunities and its ability to successfully take advantage of such opportunities;
	·	Regulations, including anticipated taxes, tax credits or tax refunds expected;
	·	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;
	·	The Company’s overall outlook including all statements under Management’s Discussion and Analysis or Plan of Operation;
	·	That estimates and assumptions made in the preparation of financial statements in conformity with US GAAP may differ from actual results; and
	·	Expectations, plans, beliefs, hopes or intentions regarding the future.

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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.

Evaluation of Disclosure 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.

Based on this evaluation, it has been concluded that the design and operation of our disclosure controls and procedures are not effective since the following material weaknesses exist:

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.

Changes in Internal Control over Financial Reporting

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.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

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

Item 1A. Risk Factors.

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

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

During the period ended December 31, 2016, the Company issued 5,000,000 shares of common stock to Caro Partners LLC with a fair value of $15,000 for consulting services.

Item 3. Default Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable to our Company.

Item 5. Other Information.

None.

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Item 6. Exhibits

31		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Douglas O. McKinnon.

32		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Douglas O. McKinnon.

101.INS*		XBRL Instance Document

101.SCH*		XBRL Taxonomy Schema

101.CAL*		XBRL Taxonomy Calculation Linkbase

101.DEF*		XBRL Taxonomy Definition Linkbase

101.LAB*		XBRL Taxonomy Label Linkbase

101.PRE*		XBRL Taxonomy Presentation Linkbase

______________

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

16

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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: February 14, 2017	By:	/s/ Douglas O. McKinnon
		Douglas O. McKinnon, Chief Financial Officer, Principal Accounting Officer, Chief Executive Officer