10-Q/A 1 sungame_10qa-033111.htm SUNGAME 10-Q/A sungame_10qa-033111.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q
Amendment 2

(Mark One)
 
[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934, as amended
 
For The Quarterly Period Ended March 31, 2011
 
[_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934, as amended
 
For The Transition Period from __________ To _________
 
Commission file number:      333-158946

SUNGAME CORPORATION

(Exact name of registrant as specified in its charter)

Delaware
 
20-8017623
(State or other jurisdiction
 
(IRS Employer Identification No.)
of incorporation or organization)
   

501 Silverside Road, Suite 105,
Wilmington, DE
 
19809
(Address of principal executive offices)
 
(zip code)
 
(310) 666-0051

 (Registrant’s telephone number, including area code)


 (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 þ 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 o 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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o
 
Accelerated filer o
 
Non-accelerated filer o
 
Smaller reporting company þ
 
(Do not check if a smaller reporting company)
     

Indicate by check mark whether the issuer is a shell company (as defined in rule 12b-2 of the Exchange Act) Yes o  No þ
Indicate by check mark if the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes o  No þ

The number of shares of common stock are:
As of 31 March 2011 - 250,014
As of 9 May 2011- 177,550,014 issued, 250,014 outstanding
(issuances from the merger have not been processed through transfer)
 
 
 

 
 
SUNGAME CORPORATION
For The Quarterly Period Ended March 31, 2011

TABLE OF CONTENTS
 
 
PART I - FINANCIAL INFORMATION
3
     
Item 1.
Financial Statements - Sungame Corporation
3
     
 
Financial Statements - Freevi  Corporation
11
     
  Consolidated Financial Statements 26
     
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
34
     
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
44
     
Item 4.
Controls and Procedures
44
   
PART II - OTHER INFORMATION
45
     
Item 1.
Legal Proceedings
45
     
Item 1A.
Risk Factors
45
     
Item 2.
Unregistered Sales of Equity Securities.
45
     
Item 3.
Defaults Upon Senior Securities
45
     
Item 4.
Removed and Reserved.
45
     
Item 5.
Other Information.
45
     
Item 6.
 Exhibits.
45
     
SIGNATURES
46
 
 
Note:   Amendment 1 includes the addition of Freevi Corp. financials, the pro forma combined financial statements and the adjustment to certain warrants outstanding.
 
Amendment 2 corrects the authorized number of shares to 300,000,000 on the pro forma consolidated balance sheet.
 
 
 
2

 
 
Part I.  Financial Information.
 
Item 1.  Financial Statements.
SUNGAME CORPORATION
(A DEVELOPMENT STAGE COMPANY)
Balance Sheets
 
 
   
March 31,
   
December 31,
 
   
2011
   
2010
 
   
Unaudited
       
ASSETS:
           
             
Current Assets:
           
Cash
  $ 26     $ 60  
Accounts Receivable
    21,650       17,600  
                 
Total Current Assets
    21,676       17,660  
                 
Fixed Assets
               
Office Equipment
    2,140       2,140  
Accumulated Depreciation
    (779 )     (672 )
Total Fixed Assets
    1,361       1,468  
                 
Other Assets
               
Investment - Freevi Corp
               
                 
TOTAL ASSETS
  $ 23,037     $ 19,128  
                 
LIABILITIES AND STOCKHOLDERS' (DEFICIENCY):
               
                 
Current Liabilities:
               
Accounts Payable
  $ 112,035     $ 112,035  
Credit Cards Payable
    9,229       8,751  
Loans Payable - Stockholder
    161,872       161,272  
                 
Total Current Liabilities
    283,136       282,058  
                 
Stockholders' Equity (Deficiency):
               
Common stock, par value, $0.001 300,000,000 authorized with: 250,000 issued and outstanding
    250       250  
Paid in Capital
    2,153,035       2,153,035  
Preferred Stock, par value $0.001 5,000,000 authorized with none outstanding
    -       -  
                 
Accumulated deficit
    (2,413,384 )     (2,416,215 )
                 
Total Stockholders' (Deficiency)
    (260,099 )     (262,930 )
                 
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY
  $ 23,037     $ 19,128  
                 
 
The accompanying notes are an integral part of these financial statements
 
 
3

 
 
SUNGAME CORPORATION
(A DEVELOPMENT STAGE COMPANY)
Statements of Operations
 
               
November 13,
 
   
Three months ended
   
2006, (Inception)
 
   
March 31,
   
to March 31,
 
   
2011
   
2010
   
2011
 
   
Unaudited
   
Unaudited
   
Unaudited
 
                   
Revenue:
  $ 31,150     $ 6,265     $ 106,262  
                         
Total Revenue
    31,150       6,265       106,262  
                         
Costs and Expenses:
                       
      Software development
    27,140       17,108       1,440,575  
      Stock based compensation
    -       -       587,300  
      Depreciation
    107       69       779  
      Consulting costs
    -       -       302,500  
      Bad debts
    -       -       4,214  
      Startup costs
    765       19,018       178,156  
                         
Total Expenses
    28,012       36,195       2,513,524  
                         
Net Income (Loss) From Operations
    3,138       (29,930 )     (2,407,262 )
                         
                         
Other Income and (Expenses)
                       
      Interest expense
    (307 )     (5,108 )     (6,122 )
      (307 )     (5,108 )     (6,122 )
                         
Net Income (Loss)
  $ 2,831     $ (35,038 )   $ (2,413,384 )
                         
Per Share Information
                       
Income (Loss) per common share
  $ 0.01     $ (0.14 )        
                         
                         
Weighted average number of shares outstanding
    250,000       250,000          
 
The accompanying notes are an integral part of these financial statements
 
 
 
 
 
4

 
 
SUNGAME CORPORATION
(A DEVELOPMENT STAGE COMPANY)
Statements of Cash Flows
 
 
               
November 13,
 
   
Three months ended
   
2006, (Inception)
 
   
March 31,
       
to March 31,
 
   
2011
   
2010
   
2011
 
   
Unaudited
   
Unaudited
   
Unaudited
 
Cash Flows from Operating Activities
                 
                   
     Net Income (Loss)
  $ 2,831     $ (35,038 )   $ (2,413,384 )
      Adjustments to reconcile net loss to
                       
         net cash used by operating activities:
                       
        Depreciation
    107       69       779  
        (Increase) in accounts receivable
    (4,050 )     (4,714 )     (21,650 )
        Increase in accrued expenses
    -       -       190,000  
        Increase in credit card payable
    478       3,520       9,230  
        Increase/(decrease) in accounts payable
    -       (4,000 )     878,037  
        Compensatory stock issuances
    -       -       837,300  
Net Cash Used by Operating Activities
    (634 )     (40,163 )     (519,688 )
                         
Cash Flows from Investing Activities
                       
                         
     (Increase) in Fixed Assets
    -       -       (767 )
                         
Net Cash Used for Investing Activities
    -       -       (767 )
                         
Cash Flows from Financing Activities
                       
                         
      Issuance of Common Stock and Warrants
    -       -       251,500  
      Paid in capital
    -       -       107,109  
      Increase in Loans Payable
    600       44,602       161,872  
                         
Net Cash Provided by Financing Activities
    600       44,602       520,481  
                         
Net Increase in Cash & Cash Equivalents
    (34 )     4,439       26  
                         
Beginning Cash & Cash Equivalents
    60       2,011       -  
                         
Ending Cash & Cash Equivalents
  $ 26     $ 6,450     $ 26  
                         
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
                       
                         
     Cash paid for interest expense
  $ 307     $ -       6,122  
     Cash paid for income taxes
  $ -     $ -     $ -  
                         
NON-CASH TRANSACTIONS
                       
     Stock issued for services
  $ -     $ -       837,300  
     Paid in capital - debt relief
    -       -       182,376  
     Stock issued for debt relief
    -       -       863,369  
 
The accompanying notes are an integral part of these financial statements
 
 
5

 
 
 
Sungame Corporation
Statements of Stockholder's Equity (Deficit)
 
 
         
Common
               
Preferred
             
   
Common
   
Dollars at
   
Paid in
   
Preferred
   
Dollars
   
Retained
   
Stockholders'
 
   
Shares (1)
   
$0.001 Par
   
Capital
   
Shares
   
$0.001 Par
   
Earnings
   
Deficiency
 
Balances 11/14/06
    -     $ -     $ -       -     $ -     $ -     $ -  
Shares to parent for services
    38       1       1,499                               1,500  
Net loss for year
                                            (1,500 )     (1,500 )
Balances at December 31, 2006
    38       1       1,499       -       -       (1,500 )     -  
                                                         
Net loss for year
                                            (890,443 )     (890,443 )
Balances at December 31, 2007
    38       1       1,499       -       -       (891,943 )     (890,443 )
                                                         
Shares issued to parent for debt relief
    103,088       103       774,897                               775,000  
Shares issued for services
    96,874       97       587,203                               587,300  
Shares issued for cash
    12,500       12       119,988                               120,000  
Warrants issued for cash
                    5,000                               5,000  
Additional paid-in capital from parent
              107,109                               107,109  
Net loss for year
                                            (980,353 )     (980,353 )
Balances at December 31, 2008
    212,500       213       1,595,696               -       (1,872,296 )     (276,387 )
                                                         
Shares issued for cash
    12,500       12       124,988                               125,000  
Shares issued for services
    25,000       25       249,975                               250,000  
Net loss for year
                                            (430,182 )     (430,182 )
Balances at December 31, 2009
    250,000       250       1,970,659       -       -       (2,302,478 )     (331,569 )
                                                         
Forgiveness of debt
                    182,376                               182,376  
Net loss for year
                                            (113,737 )     (113,737 )
Balances at December 31, 2010
    250,000       250       2,153,035       -       -       (2,416,215 )     (262,930 )
                                                         
Net income for period
                                            2,831       2,831  
                                                         
Balances at March 31, 2011 -
   Unaudited
    250,000     $ 250     $ 2,153,035     $ -     $ -     $ (2,413,384 )   $ (260,099 )
                                                         
                                                         
(1) As retroactively restated for a 40 for 1 reverse stock split on January 10, 2011
                         
 
The accompanying notes are an integral part of these financial statements
 
 
 
6

 

SUNGAME CORPORATION
NOTES TO FINANCIAL STATEMENTS

 
1.
Business and Summary of Significant Accounting Policies

Business

The accompanying financial statements include the accounts of SunGame Corporation (“the Company”), a Delaware corporation.  The Company is an early development stage company that intends to become a leader in providing virtual worlds and online games. The Company believes that it can exploit the market that is at the confluence of social games and social virtual world, and that this market is very significant. The Company will provide various types of Games in an online Virtual World where the users, regardless of location can play games, chat, buy  virtual goods and where our customers are corporations and game aggregators.

The main activity will be to provide a social games and social virtual worlds that attracts players who interact in a seamless environment. The main goal will be to introduce competitive and unique products in an already established market place. The Company will be a premier marketer of money related activities that will have distinct comparative advantages compared to both direct and indirect competitors.

The Company was incorporated in Delaware on November 14, 2006. The Company’s fiscal year end is December 31st.

Summary of Significant Accounting Policies

Development Stage Company

The Company is a development stage company as defined by Accounting Standards Codified No.915. The Company is devoting substantially all of its present efforts to establish a new business. All losses accumulated since inception have been considered as part of the Company’s development stage activities.

Risks and Uncertainties

The Company operates in an emerging industry that is subject to market acceptance and technological change. The Company’s operations are subject to significant risks and uncertainties, including financial, operational, technological and other risks associated with operating an emerging business, including the potential risk of business failure.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts and timing of revenue and expenses, the reported amounts and classification of assets and liabilities, and disclosure of contingent assets and liabilities. These estimates and assumptions are based on management’s future expectations for the Company’s operations. The Company’s actual results could vary materially from management’s estimates and assumptions.
 
Property and Equipment

Property and equipment, when acquired, will be stated at cost. Depreciation will be computed using the straight-line method to allocate the cost of depreciable assets over the estimated useful lives of the assets.

Software Costs

The costs for internal use software, whether developed or obtained, are assessed to determine whether they should be capitalized or expensed in accordance with American Institute of Certified Public Accountants’ Statement (“SOP”) 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use”. Capitalized software costs are reflected as property and equipment on the balance sheet and are to be depreciated when the Company begins recording revenue the deemed date that the software is placed in service. As of the date of these financial statements the development of the software necessary to achieve the business purposes of the Company is in an undeterminable state causing the Company to deem the asset to be impaired. This conclusion requires that the costs incurred to date be treated as expenses as opposed to the capitalizing of the software.

 
7

 

Start-up Costs

Start-up costs that would commonly be capitalized as Other Assets to be amortized over a period of five years have also been deemed to be impaired for the same reasons stated in the paragraph on “Software Costs”. Based on these circumstances, management has elected to expense these start-up costs as well.

“Long-lived assets” are reviewed for impairment of value whenever events or changes in circumstances indicate that the carrying value of the assets might not be recoverable or at least at the end of each reporting period. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying value of an asset is not recoverable. For Long-lived assets to be held and used, management measures fair value based on quoted market prices or based on discounted estimates of future cash flows.

Concentration of Credit Risk

The Company’s financial instruments that are exposed to concentrations and credit risk primarily consist of amounts due to related parties. The Company presently uses one vendor for all of its software development.

Income Taxes

Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to be applied to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided for significant deferred tax assets when it is more likely than not that such asset will not be recovered.
 
At March 31, 2011 and 2010 the Company had net operating loss carry forwards of approximately $1,521,000 and $1,445,000 which begin to expire in 2026. The deferred tax asset of approximately $593,200 and $563,600 in 2011 and 2010 created by the net operating losses have been offset by a 100% valuation allowance. The change in the valuation allowance in 2011 and 2010 was $29,600 and $44,300.

2.           Going Concern Uncertainty and Managements’ Plans

In the Company’s audited financial statements for the fiscal year ended December 31, 2010, the Report of the Independent Registered Public Accounting Firm includes an explanatory paragraph that describes substantial doubt about the Company’s ability to continue as a going concern.  The Company’s interim financial statements for the year ended December 31, 2010 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.  The Company reported a net loss of $113,737 for the year ended December 31, 2010, and an accumulated deficit of $2,416,215 as of December 31, 2010. As of March 31, 2011 the accumulated deficit is $2,413,384. At December 31, 2010, the Company’s total current liabilities exceed total current assets by $103,126. At March 31, 2011 this amount was $99,589.

The future success of the Company is likely dependent on its ability to attain additional capital, or to find an acquisition to add value to its present shareholders and ultimately, upon its ability to attain future profitable operations.  There can be no assurance that the Company will be successful in obtaining such financing, or that it will attain positive cash flow from operations.  Management believes that actions presently being taken to revise the Company’s operating and financial requirements provide the opportunity for the Company to continue as a going concern.

3.           Property and Equipment

The Company has incurred software costs in the development of its virtual world in the amount of $1,413,435 as of December 31, 2010. By March 31 this total had increased to $1,440,575. Per the discussion under “Software Costs” this amount has been expensed at this time.
 
4.           Contracts Payable

During the year ended December 31, 2008, the Company entered into a Corporate Finance Advisory Services Agreement with Friedland Global Capital Markets, LLC (Friedland) the Agreement provides that the Company would pay a total of $190,000 for services as set forth in the Agreement.  In July 2008, Friedland agreed to suspend payment of the fees until the completion of financing.  These funds are non-interest paying and due on demand. During the year ended December 31, 2009 the Company made payments in the amount of $25,000 against this obligation. In the second quarter of 2010 the Company completed negotiations for the mutual release of all obligations under this contract with no further liability. The cancellation of the contract was treated as an additional contribution to Paid-in-Capital.

5.           Advance Payable, Related Party

At December 31, 2009, the Company’s had working capital advances due to the Company’s majority shareholder, Adversor, Inc. (“Adversor”) of $117,470. These funds are non interest bearing and are due on demand. Also included in the Company’s $51,582 in accounts payable at end 2009 were $26,600 owed to Adversor. In 2009 the Company recorded consulting fees to Adversor of $26,600. At December 31, 2010 the Company had working capital advances due to Adversor of $161,272, also non-interest bearing and due on demand. At March 31, 2011 Adversor advances had increased to $162,372. Included in the Company’s $112,035 in the Company’s accounts payable at end 2010 were $106,013 owed to Adversor. In 2010 the Company recorded consulting fees to Adversor of $45,000.

 
8

 

6.           Stockholders’ Deficiency

Common Stock
 
In October 2008, the Company entered into a Security Purchase Agreement (Security Purchase Agreement) with a third party, the Company received cash of $125,000 in exchange for 500,000 shares of restricted common stock and a warrant exercisable for 500,000 shares of the Company’s restricted common stock.  The warrant has an exercise price of $0.80 per share and a term of three years.  The shares were sold at a price of $0.25 per share with $0.24 per share allocated to the common stock and $0.01 per share allocated to the warrant.  However, Sungame reversed its stock in Q1 2011, effective 11 January 2011, (See 8K dated 11 January 2011) and the resultant warrants are now priced at $32.00 per warrant with 12,500 warrants remaining outstanding, adjusted for the reverse split of 40:1. The exercise dates remain the same.

In October 2008, the Company entered into a Services Agreements with two parties.  The Services Agreements provides for the Company to receive services totaling up to $625,000 in connection with the development of its website and gaming software to be paid for by the issuance of up to 2,500,000 shares of the Company’s common stock.  During the year ended December 31, 2008, the Company issued 1,600,000 of these shares in exchange for services performed at that time totaling $400,000.  The shares were issued at a price of $0.25 per share.

In October 2008, the Company issued 4,123,500 shares of its restricted common stock to its majority shareholder, Adversor, in exchange for their efforts in the settlement of $775,000 of outstanding accounts payable owed to an unrelated third party vendor.  The shares were issued at a price of $0.188 per share.
 
In September 2008, the Company issued 1,373,000 shares of its restricted common stock to a director, Mr. Goss, of the Company as payment for services totaling $1,373,000.  The shares were issued at a price of $0.10 per share.

In June 2008, the Company issued 902,000 shares of its restricted common stock to Friedland, in exchange for services totaling $50,000 provided under the Finance Advisory Services Agreement.  The shares were issued at a price of $0.055 per share.

In March of 2009, pursuant to the Securities Purchase Agreement the Company received further cash of $125,000 in exchange for 500,000 shares of restricted common stock and a warrant exercisable for 500,000 shares of the Company’s restricted common stock. The warrant has an exercise price of $0.80 per share and a term of three years. The shares were sold at a price of $0.25 per share with $0.24 per share allocated to the common stock an $0.01 per share allocated to the warrant. The Company also issued 100,000 shares of its restricted common stock in exchange for consulting services valued at $25,000.  However, Sungame reversed its stock in Q1 2011, effective 11 January 2011, (See 8K dated 11 January 2011) and the resultant warrants are now priced at $32.00 per warrant with 12,500 warrants remaining outstanding, adjusted for the reverse split of 40:1.  The exercise dates remain the same.

In October of 2009, the Company issued 900,000 shares of its restricted common stock in exchange for consulting services valued at $225,000.
 
For clarification purposes, Adversor has been characterized as a holding company by nature. As fair and accurate depiction, Adversor owned a majority share of Sungame, and thus could be interpreted as a parent subsidiary relationship, particularly under accounting rules. However, Adversor was never intended to exert control over Sungame, and was intended to relinquish the stock, which it did, and therefore Sungame takes the founded position it was never a subsidiary, regardless of the classification for accounting purposes; although we do understand the source of confusion. We trust this adequately explains our position.

Warrants

At January 11, 2011, the following warrants to purchase common stock were outstanding:

Number of common
shares covered by warrants
Exercise Price
Expiration Date
     
12,500
$32.00
October 2011
12,500
$32.00
March 2012
25,000
   
 
 
Other Capital Transactions

During the year ended December 31, 2010 the Company negotiated a settlement on a contract in the amount of $165,000 and was forgiven accounts payable in the amount of $17,376. The Company has treated such amounts as capital contributions and as such has increased Additional Paid in Capital by $182,376.

 
9

 


8.            8K Information filed

On November 3, 2010, the Company filed form 8K with the Securities and Exchange Commission (SEC) reporting the Company’s signing of a binding letter of intent with Freevi, Inc., a Nevada corporation and having their headquarters in Canada, to merge the two entities. Freevi, Inc. is a private corporation that is entering into the social networking business space, with acumen in multimedia.

This merger is proposed to be a “stock only” transaction. The Company will cause a reverse split in its outstanding shares of 1 new share for each 40 shares now outstanding. After this reverse split the shares will be exchanged on a 1 for 1 basis as this is considered to be the approximate fair value for each entity.

On January 10, 2011, The Company filed a form 8K with the SEC reporting the reverse split of the outstanding shares. In addition, the Company increased the authorized shares from 100,000,000 to 300,000,000.

Subsequent events

On April 15, 2011 The Company filed form 8K with the SEC reporting that the acquisition with Freevi has been completed. The Company issued 177,000,000 post reverse split shares to facilitate the transaction.

 
10

 

RONALD R. CHADWICK, P.C.
Certified Public Accountant
2851 South Parker Road, Suite 720
Aurora, Colorado  80014
Telephone (303)306-1967
Fax (303)306-1944




REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


Board of Directors
Freevi Corporation
Las Vegas, Nevada

I have audited the accompanying balance sheet of Freevi Corporation (a development stage company) as of December 31, 2010, and the related statements of operations, stockholders' deficiency and cash flows for the period from October 21, 2010 (inception) through December 31, 2010. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audit.

I conducted my audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  I believe that my audit provides a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Freevi Corporation as of December 31, 2010, and the results of its operations and its cash flows for the period from October 21, 2010 (inception) through December 31, 2010 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements the Company has suffered a loss from operations and has a working capital deficit that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Aurora, Colorado
Ronald R. Chadwick, P.C.
April 8, 2011
RONALD R. CHADWICK, P.C.
 
 
 
 
11

 
 
Freevi Corporation
(a development stage company)
Balance Sheet

             
   
March 31, 2011
   
December 31, 2010
 
ASSETS:
           
             
Current Assets:
           
Cash and cash equivalents
  $ 3,584     $ 10,650  
Other receivable
    8,844       0  
Prepaid Expenses
    2,725       225  
                 
TOTAL ASSETS
  $ 15,153     $ 10,875  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
               
                 
Current Liabilities:
               
Accounts Payable
  $ 45,121     $ 26,520  
Accrued Liabilities
    1,872       2,083  
Due to Chandran Holding Media Inc
    234,424       95,925  
                 
Total Current Liabilities
    281,417       124,528  
                 
Stockholders' Deficiency:
               
                 
Common Stock, par value, $.001, 350,000,000 authorized with: 177,000,000 issued and outstanding
    177,000       177,000  
Deficit Accumulated During the Development Stage
    (443,264 )     (290,653 )
                 
Total Stockholders' Deficiency
    (266,264 )     (113,653 )
                 
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY
  $ 15,153     $ 10,875  
 
 
 
 
12

 
 
Freevi Corporation
(a development stage company)
Statement of Operations
 
   
For the three
   
For the period from
 
   
months
ended
   
October 21, 2010 (inception)
 
   
March 31, 2011
   
to March 31, 2011
 
             
Revenue:
  $ 2,269     $ 2,269  
                 
Costs and Expenses:
               
Software development
    33,443       233,770  
Compensation
    95,395       115,310  
Consulting and professional fees
    8,571       89,202  
Other general and administrative expenses
    17,471       17,987  
Total Costs and Expenses
    154,880       456,269  
                 
Net Loss
  $ (152,611 )   $ (443,264 )
                 
Per Share Information
               
Loss per common share
  $ (0.01 )   $ (0.01 )
                 
Weighted average number  of shares outstanding
    177,000,000       177,000,000  
 
 
13

 
 
Freevi Corporation
(a development stage company)
Statement of Cash Flows
 
         
For the period from
 
   
For the
three months
   
October 21, 2010 (inception)
 
   
ended March 31, 2011
   
to March 31, 2011
 
             
Net loss
  $ (152,611 )   $ (443,264 )
Adjustments to reconcile net loss to net cash used by operating activities
               
Common stock issued for licensing agreement
    - 0 -       165,000  
Common stock issued for services
    - 0 -       12,000  
Increase in prepaid expenses
    (2,500 )     (3,225 )
Increase of other receivables
    (8,844 )     (9,344 )
Increase/decrease in accounts payable
    18,601       44,871  
Increase/decrease in accrued liabilities
    (211 )     1,872  
Net cash used by operating activities
    (85,275 )     (244,591 )
                 
Net cash used for investing activities
    - 0 -       - 0 -  
                 
Cash flows from financing activities
               
Borrowings from Chandran Holding Media Inc
    138,499       249,808  
Net cash provided by financing activities
    138,499       249,808  
                 
Net increase/decrease in cash and cash equivalents
    (7,066 )     6,986  
Beginning cash and cash equivalents
    10,650       - 0 -  
Ending cash and cash equivalents
  $ 3,504     $ 6,986  
                 
    $ 3,584.00          
Noncash investing & financing activities
               
None
               
                 
Cash paid for interest & income taxes:
               
None
               
 
 
 
14

 
Freevi Corporation
(a development stage company)
Statement of Stockholders' Deficiency
 
 
 
                       
                         
   
Common
   
Common
Stock Dollars
   
Deficit
Accumulated
During the
   
Stockholders'
 
   
Shares
   
at $.001 Par
   
Development Stage
   
Deficiency
 
                         
Balances at October 21, 2010 (Inception)
    -0-     $ -0-     $ -0-     $ -0-  
                                 
Shares to founders for services
    12,000,000       12,000.00               12,000.00  
                                 
Shares issued for Licensing arrangement
    165,000,000       165,000.00               165,000.00  
                                 
Net loss for the period from October 21 2010 (inception) to December 31 2010
                    (290,653 )     (290,653 )
                                 
Balances at December 31, 2010
    177,000,000     $ 177,000     $ (290,653 )   $ (113,653 )
                                 
Net loss for the three months ended March 31 2011
                    (152,611 )     (152,611 )
                                 
Balances at March 31,2011
    177,000,000     $ 177,000     $ (443,264 )   $ (266,264 )
 
 
15

 
 
Freevi Corporation
(a development stage company)
Notes to the Financial Statements
 
 
1.
Business and Summary of Significant Accounting Policies
 
Business
 
The accompanying financial statements include the accounts of Freevi Corporation (“the Company”) a Nevada corporation. The Company is an early development stage company that is a rich media platform revolving around its core product the “Freevi Flightdeck” tm, a graphical user interface that allows users to consume video and audio content, network with other Freevi users, engage in e-commerce transactions, and access games and other applications. Freevi’s proprietary technologies have been licensed from Chandran Holding Media Inc.
 
The Company was incorporated in Nevada on October 21, 2010. The Company’s fiscal year end is December 31.
 
Summary of Significant Accounting Policies
 
Development Stage Company
 
The Company is a development stage company as defined by ASC 915. The Company is devoting substantially all of its present efforts to establish new business. All losses accumulated since inception have been considered as part of the Company’s development stage activities.
 
Risk and Uncertainties
 
Our business is rapidly evolving and intensely competitive, and is subject to changing technology, shifting user needs and frequent introductions of new products and services. We have many competitors in different industries, including traditional search engines, vertical search engines, e-commerce sites, social networking sites, traditional media companies, and providers of online products and services. Our current and potential competitors range from large and established companies to emerging start ups. Established companies have longer operating histories and more established relationships with customers and end users, and they can use their experience and resources against us in a variety of competitive ways, including by making acquisitions, investing aggressively in research and development, and competing aggressively for advertisers and websites. Emerging start ups may be able to innovate and provide products and services faster than we can. If our competitors are more successful than we are in developing competing products or in attracting and retaining users, advertisers, and content providers, our revenues and growth rates could decline.
 
We will generate our revenues almost entirely from advertising, and the reduction in spending by or loss of advertisers could seriously harm our business. Our advertisers will be able to terminate their contracts with us at any time. Advertisers will not continue to do business with us if their investment in advertising with us does not generate sales leads, and ultimately customers, or if we do not deliver their
 
advertisements in an appropriate and effective manner. In addition, expenditures by advertisers tend to be cyclical, reflecting overall economic conditions and budgeting and buying patterns. If we are unable to remain competitive and provide value to our advertisers, they may stop placing ads with us, which would negatively harm our revenues and business.
 
Use of Estimates
 
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America required management to make certain estimates and assumptions that affect the reported amounts and timing of revenue and expenses, the reported amounts and classification of assets and liabilities, and disclosure of contingent assets and liabilities. These estimates and assumptions are based on management’s future expectations for the Company’s operations. The Company’s actual results could vary materially from management’s estimates and assumptions.
 
 
16

 
 
Property and Equipment

Property and equipment, when acquired, will be stated at cost. Depreciation will be computed using the straight line method to allocate the cost of depreciable assets over the estimated useful lives of the assets.

Software Costs

The costs for internal use software, whether developed or obtained, are assessed to determine whether they should be capitalized of expensed in accordance with American Institute of Certified Public Accountants’ Statement (“SOP”) 98-1 “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use”. Capitalized software costs are reflected as property and equipment on the balance sheet and are to be depreciated when the Company begins recording revenue the deemed date that the software is placed in service. As of the date of these financial statements the development of the software necessary to achieve the business purposes of the Company is in an undeterminable state causing the Company to deem the asset to be impaired. This conclusion required that the costs incurred to date be treated as expenses as opposed to the capitalizing of the software.

Start-up Costs

Start-up costs that would commonly be capitalized as Other Assets to be amortized over a period of five years have also been deemed to be impaired for the same reasons stated in the paragraph on “Software Costs”. Based on these circumstances, management has elected to expense these start-up costs as well.

“Long-lived assets” are reviewed for impairment of value whenever events or changes in circumstances indicate that the carrying value of the assets might not be recoverable at the end of each reporting period. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying value of an asset is not recoverable. For Long-lived assets to be held and used, management measures fair value based on quoted market prices or based on discounted estimates of future cash flows.

Concentration of Credit Risk

The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of an amount due to Chandran Holding Media Inc, a related party (see Note 4)

Income Taxes

Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carry amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measure using enacted tax rates expected to be applied to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided for significant tax assets when it is more likely than not that such asset will not be recovered.

   
March 31, 2011
 
       
Deferred tax assets at December 31, 2010
  $ 155,764  
Valuation allowance
    (155,764 )
Net deferred tax assets
    -0-  

 
 
 
17

 
 
 
2.
Going Concern Uncertainty and Management’s Plans
 
In the Company’s audited financial statements for the period from October 21, 2010 (inception) to December 31, 2010, the Report of the Independent Registered Public Accounting Firm includes an explanatory paragraph that describes substantial doubt about the Company’s ability to continue as a going concern.  The Company’s financial statements for the three months ended March 31, 2011 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company reported a net loss of $152,611 for the three months ended March 31, 2011, and an accumulated deficit of $443,264 as at March 31, 2011. At March 31, 2011, the Company’s total current liabilities exceed total current assets by $266,264.

The future success of the Company is likely dependent on its ability to attain additional capital, or to find an acquisition to add value to its present shareholders and ultimately, upon its ability to attain future profitable operations. There can be no assurance that the Company will be successful in obtaining such financing, or that it will attain positive cash flow from operations. Management believes that actions presently being take to revise the Company’s operating and financial requirements provide the opportunity for the Company to continue as a going concern.
 
3.
Property and Equipment
 
The Company has incurred software costs in the development of its products in the amount of $33,443 for the three months ended March 31, 2011 per the discussion under “Software Costs” in Note 1 this amount has been expensed at this time.

4.
Advance Payable, Related Party
 
During the period from October 21, 2010 (inception) to March 31, 2011, the Company’s majority shareholder, Chandran Holding Media Inc (Chandran) advanced funds to the Company for operations. The Company and Chandran also share certain members of executive management and certain employees.  At March 31, 2011, Chandran is owed $234,424. These funds are non-interest bearing and due on demand.

5.
Stockholders’ Deficiency
 
On October 21, 2010, the Company issued 12,000,000 of common stock to its founders for services rendered. On November 2, 2010, the Company entered into a license agreement with its related party, Chandran Holding Media Inc. for proprietary technologies. The Company issued 165,000,000 shares of common stock to Chandran for this licensing arrangement. Both of these equity transactions were valued at $.001 par value.

6.
Planned Merger
 
On November 3, 2010 the Company was named in a Form 8-K filed with the Securities and Exchange Commission (SEC) reporting the Company’s signing of a binding letter of intent with Sungame Corporation, a Delaware corporation  and an early stage development corporation to merge the two entities. Sungame Corporation hopes to become a leader in providing seamless skill gaming in a virtual world. The merger is proposed to be a “stock only” transaction with the shares being exchanged on a 1 for 1 basis as this is considered to be the approximate fair value of each entity (Sungame Corporation will cause a reverse split in its outstanding shares of 1 new share for each 40 shares now outstanding prior to the merger being completed.)

 
 
18

 
 
Freevi Corporation
(a development stage company)
Balance Sheet
 
   
December 31, 2010
 
ASSETS:
     
   
 
 
Current Assets:
     
Cash and cash equivalents
  $ 10,650  
Prepaid Expenses
    225  
         
TOTAL ASSETS
  $ 10,875  
         
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
       
         
Current Liabilities:
       
Accounts Payable
  $ 26,520  
Accrued Liabilities
    2,083  
Due to Chandran Holding Media Inc
    95,925  
         
Total Current Liabilities
    124,528  
         
Stockholders' Deficiency:
       
         
Common Stock, par value, $.001, 350,000,000 authorized with: 177,000,000 issued and outstanding
    177,000  
Deficit Accumulated During the Development Stage
    (290,653 )
         
Total Stockholders' Deficiency
    (113,653 )
         
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY
  $ 10,875  
 
 
 
19

 
 
Freevi Corporation
(a development stage company)
Statement of Operations
 
       
Revenue:
    - 0 -  
         
Costs and Expenses:
       
Software development
    199,000  
Compensation
    13,841  
Consulting and professional fees
    77,381  
Other general and administrative expenses
    431  
Total Costs and Expenses
    290,653  
         
Net Loss
  $ (290,653 )
         
Per Share Information
       
Loss per common share
  $ (0.01 )
         
Weighted average number  of shares outstanding
    151,436,620  
 
 
 
20

 
 
Freevi Corporation
(a development stage company)
Statement of Cash Flows
 
Net loss
  $ (290,653 )
Adjustments to reconcile net loss to net cash used by operating activities
       
Common stock issued for licensing agreement
    165,000  
Common stock issued for services
    12,000  
Increase in prepaid expenses
    (225 )
Increase in accounts payable
    26,520  
Increase in accrued liabilities
    2,083  
Net cash used by operating activities
    (85,275 )
         
Net cash used for investing activities
    - 0 -  
         
Cash flows from financing activities
       
Borrowings from Chandran Holding Media Inc
    95,925  
Net cash provided by financing activities
    95,925  
         
Net increase in cash and cash equivalents
    10,650  
Beginning cash and cash equivalents
    - 0 -  
Ending cash and cash equivalents
  $ 10,650  
         
         
Noncash investing & financing activities
       
None
       
         
Cash paid for interest & income taxes:
       
None
       
 
 
 
21

 
 
Freevi Corporation
(a development stage company)
Statement of Stockholders' Deficiency
 
 
                       
                         
   
Common
   
Common
Stock Dollars
   
Deficit
Accumulated
During the
   
Stockholders'
 
   
Shares
   
at $.001 Par
   
 Development Stage
   
Deficiency
 
                         
Balances at October 21, 2010 (Inception)
    -0-     $ -0-     $ -0-     $ -0-  
                                 
Shares to founders for services
    12,000,000     $ 12,000             $ 12,000  
                                 
Shares issued for Licensing arrangement
    165,000,000     $ 165,000             $ 165,000  
                                 
Net loss for the period from October 21 2010 (inception) to December 31 2010
                  $ (290,653 )   $ (290,653 )
                                 
Balances at December 31, 2010
    177,000,000     $ 177,000     $ (290,653 )   $ (113,653 )
 
 
 
 
22

 
 
Freevi Corporation
(a development stage company)
Notes to Financial Statements
 
 
1.
Business and Summary of Significant Accounting Policies

Business

The accompanying financial statements include the accounts of Freevi Corporation (“the Company”) a Nevada corporation. The Company is an early development stage company that is a rich media platform revolving around its core product the “Freevi Flightdeck” tm, a graphical user interface that allows users to consume video and audio content, network with other Freevi users, engage in e-commerce transactions, and access games and other applications. Freevi’s proprietary technologies have been licensed from Chandran Holding Media Inc.
 
The Company was incorporated in Nevada on October 21, 2010. The Company’s fiscal year end is December 31.

Summary of Significant Accounting Policies

Development Stage Company

The Company is a development stage company as defined by ASC 915. The Company is devoting substantially all of its present efforts to establish new business. All losses accumulated since inception have been considered as part of the Company’s development stage activities.

Risk and Uncertainties

Our business is rapidly evolving and intensely competitive, and is subject to changing technology, shifting user needs and frequent introductions of new products and services. We have many competitors in different industries, including traditional search engines, vertical search engines, e-commerce sites, social networking sites, traditional media companies, and providers of online products and services. Our current and potential competitors range from large and established companies to emerging start ups. Established companies have longer operating histories and more established relationships with customers and end users, and they can use their experience and resources against us in a variety of competitive ways, including by making acquisitions, investing aggressively in research and development, and competing aggressively for advertisers and websites. Emerging start ups may be able to innovate and provide products and services faster than we can. If our competitors are more successful than we are in developing completing products or in attracting and retaining users, advertisers, and content providers, our revenues and growth rates could decline.

We will generate our revenues almost entirely from advertising, and the reduction in spending by or loss of advertisers could seriously harm our business. Our advertisers will be able to terminate their contracts with us at any time. Advertisers will not continue to do business with us if their investment in advertising with us does not generate sales leads, and ultimately customers, or if we do not deliver their advertisements in an appropriate and effective manner. In addition, expenditures by advertisers tend to be cyclical, reflecting overall economic conditions and budgeting and buying patterns. If we are unable to remain competitive and provide value to our advertisers, they may stop placing ads with us, which would negatively harm our revenues and business.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America required management to make certain estimates and assumptions that affect the reported amounts and timing of revenue and expenses, the reported amounts and classification of assets and liabilities, and disclosure of contingent assets and liabilities. These estimates and assumptions are based on management’s future expectations for the Company’s operations. The Company’s actual results could vary materially from management’s estimates and assumptions.
 
 
 
23

 
 
Property and Equipment

Property and equipment, when acquired, will be stated at cost. Depreciation will be computed using the straight line method to allocate the cost of depreciable assets over the estimated useful lives of the assets.

Software Costs

The costs for internal use software, whether developed or obtained, are assessed to determine whether they should be capitalized of expensed in accordance with American Institute of Certified Public Accountants’ Statement (“SOP”) 98-1 “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use”. Capitalized software costs are reflected as property and equipment on the balance sheet and are to be depreciated when the Company begins recording revenue the deemed date that the software is placed in service. As of the date of these financial statements the development of the software necessary to achieve the business purposes of the Company is in an undeterminable state causing the Company to deem the asset to be impaired. This conclusion required that the costs incurred to date be treated as expenses as opposed to the capitalizing of the software.

Start-up Costs

Start-up costs that would commonly be capitalized as Other Assets to be amortized over a period of five years have also been deemed to be impaired for the same reasons stated in the paragraph on “Software Costs”. Based on these circumstances, management has elected to expense these start-up costs as well.

“Long-lived assets” are reviewed for impairment of value whenever events or changes in circumstances indicate that the carrying value of the assets might not be recoverable at the end of each reporting period. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying value of an asset is not recoverable. For Long-lived assets to be held and used, management measures fair value based on quoted market prices or based on discounted estimates of future cash flows.

Concentration of Credit Risk

The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of an amount due to Chandran Holding Media Inc, a related party (see Note 4)

Income Taxes
 
Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carry amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measure using enacted tax rates expected to be applied to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided for significant tax assets when it is more likely than not that such asset will not be recovered.

Deferred tax assets at December 31, 2010
  $ 101,729  
Valuation allowance
    (101,729 )
Net deferred tax assets
    -0-  

 
24

 
 
2.
Going Concern Uncertainty and Management’s Plans

In the Company’s audited financial statements for the period from October 21, 2010 (inception) to December 31, 2010, the Report of the Independent Registered Public Accounting Firm includes an explanatory paragraph that describes substantial doubt about the Company’s ability to continue as a going concern.  The Company’s financial statements for this period since inception have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company reported a net loss of $290,653 for the period of October 21, 2010 (inception) to December 31, 2010, and an accumulated deficit of $290,653 as of December 31, 2010. At December 31, 2010, the Company’s total current liabilities exceed total current assets by $113,653.

The future success of the Company is likely dependent on its ability to attain additional capital, or to find an acquisition to add value to its present shareholders and ultimately, upon its ability to attain future profitable operations. There can be no assurance that the Company will be successful in obtaining such financing, or that it will attain positive cash flow from operations. Management believes that actions presently being take to revise the Company’s operating and financial requirements provide the opportunity for the Company to continue as a going concern.
 
3.
Property and Equipment

The Company has incurred software costs in the development of its products in the amount of $199,000 as of December 31, 2010. Per the discussion under “Software Costs”  in Note 1 this amount has been expensed at this time.

4.
Advance Payable, Related Party

During the period from October 21, 2010 (inception) to December 31, 2010, the Company’s majority shareholder, Chandran Holding Media Inc (Chandran) advanced funds to the Company for operations. The Company and Chandran also share certain members of executive management and certain employees.  At December 31, 2010, Chandran is owed $95,925. These funds are non-interest bearing and due on demand.

5.
Stockholders’ Deficiency

On October 21, 2010, the Company issued 12,000,000 of common stock to its founders for services rendered. On November 2, 2010, the Company entered into a license agreement with its related party, Chandran Holding Media Inc. for proprietary technologies. The Company issued 165,000,000 shares of common stock to Chandran for this licensing arrangement. Both of these equity transactions were valued at $.001 par value.

6.
Planned Merger

On November 3, 2010 the Company was named in a Form 8-K filed with the Securities and Exchange Commission (SEC) reporting the Company’s signing of a binding letter of intent with Sungame Corporation, a Delaware corporation  and an early stage development corporation to merge the two entities. Sungame Corporation hopes to become a leader in providing seamless skill gaming in a virtual world. The merger is proposed to be a “stock only” transaction with the shares being exchanged on a 1 for 1 basis as this is considered to be the approximate fair value of each entity (Sungame Corporation will cause a reverse split in its outstanding shares of 1 new share for each 40 shares now outstanding prior to the merger being completed.)
 
 
 
25

 
 
Sungame Corporation
(A Development Stage Company)
 
 
Pro Forma Consolidated Financial Statements
December 31, 2010
 
 
 
 
26

 
 
 
SUNGAME CORPORATION AND FREEVI CORPORATION
 
Pro Forma Consolidated Balance Sheet
December 31, 2010

 

   
Sungame
   
Freevi
   
Adjustments
       
   
Corporation
   
Corporation
   
(See Notes)
   
Consolidated
 
Assets:
                       
Cash
  $ 60     $ 10,650           $ 10,710  
Accounts receivable and other
    17,600                     17,600  
Prepaid expenses
            225             225  
Total current assets
    17,660       10,875             28,535  
                               
Fixed Assets
                             
Office equipment
    2,140                     2,140  
Accumulated depreciation
    (672 )                   (672 )
      1,468                     1,468  
Total assets
  $ 19,128     $ 10,875           $ 30,003  
                               
Liabilities and Stockholders’ Deficiency
                             
Current liabilities:
                             
Accounts payable
  $ 112,035     $ 26,520           $ 138,555  
Accrued liabilities
            2,083             2.083  
Due to Chandran Holding Media, Inc.
            95,925             95,925  
Credit cards payable
    8,751                     8,751  
Loans payable - Stockholder
    161,272                     161,272  
      282,058       124,528             406,586  
                               
Common stock, par value .001,  300,000,000 shares authorized with 177,250,000 issued and outstanding
    250               177,000 (1)     177,250  
Paid-in-capital
    2,153,035               (290,653 )     1,862,382  
Accumulated deficit
    (2,416,215 )                     (2,416,215 )
Total Stockholders’ Deficiency
    (262,930 )             (113,653 )     (376,583 )
                                 
Total Liabilities and Stockholders’
                               
 Deficiency
  $ 19,128     $ 124,528     $ (113,653 )   $ 30,003  

 
27

 
 
SUNGAME CORPORATION AND FREEVI CORPORATION
Pro Forma Consolidated Statement of Operations

 

   
Sungame
Corporation
   
Freevi
Corporation
   
Consolidated
 
   
For the year ended
December 31, 2010
   
For the period from
October 21, 2010
(Inception) to
December 31, 2010
       
                   
Revenue:
  $ 50,112       -0-     $ 50,112  
                         
Total Revenue
    50,112       -0-       50,112  
                         
Costs and Expenses:
                       
Software development
    57,151       199,000       256,151  
Compensation
    -0-       13,841       13,841  
Depreciation
    420       -0-       420  
Consulting and professional fees
    45,000       77,381       122,381  
Other general and administrative expenses
    4,214       431       4,645  
Startup costs
    51,249       -0-       51,249  
                         
Total Expenses
    158,034       290,653       448,687  
                         
Net Loss from Operations
    (107,922 )     (290,653 )     (398,575 )
                         
Other Income and (Expense)
    (5,815 )     -0-       (5815 )
                         
Net Loss
  $ (113,787 )   $ (290,653 )   $ (404,390 )
                         
                         
Per Share Information:
                       
                         
Net Loss per share
  $ (0.01 )   $ (0.01 )   $ (0.01 )
                         
Weighted average number of shares outstanding
    250,000       151,436,620       151,686,620  

 
28

 
 
Sungame Corporation
(A Development Stage Company)
Note to Pro Forma Consolidated Financial Statements
December 31, 2010



Basis of Presentation

The following pro forma consolidated balance sheet as of December 31, 2010 and the pro forma consolidated statements of operation for the year ended December  31, 2010 between Sungame Corporation and Freevi Corporation are presented to show what effects the merger of Freevi Corporation into Sungame Corporation might have had on historical financial information had the transaction taken place on January 1, 2010.  The pro forma consolidated financial statements are derived from the historical financials of Sungame Corporation and Freevi Corporation and assume that for balance sheet purposes the transaction took place on December 31, 2010, and for statement of operations purposes on January 1, 2010 with resulting effects through December 31, 2010.  The pro forma consolidated financial statements should be read in conjunction with the historical financial information.  The pro forma consolidated financial statements are not necessarily indicative of the result that would have been attained had the transaction actually taken place earlier.

Pro Forma Adjustments

Pro forma adjustments from the pro forma consolidated financial statements are referenced below:

(1)
Adjustment to account for the exchange of 177,000,000 shares of Sungame Corporation @ .001 per share for 177,000,000 shares of Freevi Corporation.  Freevi Corporation had a stockholders’ deficiency of $113,653 at December 31, 2010.  The management of Freevi Corporation believes their technology should be valued at $2 million.  However, since they are a development state enterprise and still in a research and development mode, this amount has not been capitalized as an asset under purchase price accounting.  Instead the net liabilities of Freevi Corporation have been recorded in purchase price accounting for this business combination as an offset against paid-in-capital.

 
 
29

 
 
Sungame Corporation
(A Development Stage Company)
 
 
Pro Forma Consolidated Financial Statements
March 31, 2011
 
 
 
 
 
 
30

 
 
SUNGAME CORPORATION AND FREEVI CORPORATION
Pro Forma Consolidated Balance Sheet
March 31, 2011

 

   
Sungame
   
Freevi
   
Adjustments
       
   
Corporation
   
Corporation
   
(See Notes)
   
Consolidated
 
Assets:
                       
Cash
  $ 26     $ 3,584           $ 3,610  
Accounts receivable and other
    21,650       8,844             30,484  
Prepaid expenses
            2,725             2,725  
Total current assets
    21,676       15,153             36,829  
                               
Fixed Assets
                             
Office equipment
    2,140                     2,140  
Accumulated depreciation
    (779 )                   (779 )
      1,361                     1,361  
Total assets
  $ 23,037     $ 15,153           $ 38,190  
                               
Liabilities and Stockholders’ Deficiency
                             
Current liabilities:
                             
Accounts payable
  $ 112,035     $ 45,121           $ 157,156  
Accrued liabilities
            1,872             1,872  
Due to Chandran Holding Media, Inc.
            234,424             234,424  
Credit cards payable
    9,229                     9,229  
Loans payable - Stockholder
    161,872                     161,872  
      283,136       281,417             564,553  
                               
Common stock, par value, .001,  300,000,000 shares authorized with 177,250,000 issued and outstanding
    250               177,000 (1)     177,250  
Paid-in-capital
    2,153,035