10-Q 1 2015sept30-apyp_10q.htm FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark One)

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

For the quarterly period ended September 30, 2015

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

For the transition period from _____ to _______

Commission File Number: 333-190999

APPYEA, INC.
(Exact Name of Registrant as Specified in its Charter)

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 [  ]

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

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

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

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 64,004,911 shares outstanding as of November 13, 2015.
 

APPYEA, INC.

Index
 
Page
   
     
Item 1.
 3
     
 
3
       
 
4
       
 
5
       
 
6
       
Item 2.
17
       
Item 3.
19
     
Item 4.
19
       
   
       
Item 1.
 
20
       
Item 1A. Risk Factors    20
       
Item 2.
 
20
       
Item 3.
 
20
       
Item 4.
 
20
       
Item 5.
 
20
       
Item 6.
21
       
22
 
 
 
PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements
 
 
APPYEA, INC.
CONDENSED BALANCE SHEETS
(Unaudited)

   
September 30,
   
June 30,
 
   
2015
   
2014
 
ASSETS
       
Current Assets:
       
Cash and cash equivalents
 
$
50,603
   
$
265
 
Accounts receivable
   
204
     
339
 
Prepaid expenses
   
958,883
     
1,498,483
 
Deferred financing cost, net
   
13,111
     
-
 
Total Current Assets
   
1,022,801
     
1,499,087
 
                 
Fixed assets, net
   
60,957
     
76,572
 
                 
     TOTAL ASSETS
 
$
1,083,758
   
$
1,575,659
 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
Current Liabilities:
               
Accounts payable
   
600
     
4,277
 
Derivative liabilities
   
441,162
     
158,775
 
Convertible loans and accrued interest, net of debt discounts
   
57,464
     
56,065
 
Convertible loans and accrued interest, net of debt discounts - related party
   
25,173
     
17,571
 
Total Current Liabilities
   
524,399
     
236,688
 
                 
Total Liabilities
   
524,399
     
236,688
 
                 
Commitments and Contingencies (Note 9)
               
                 
Stockholders' Equity:
               
 Convertible preferred stock, $0.0001 par value, 5,000,000 shares authorized, 5,000,000 shares issued and outstanding at September 30, 2015 and June 30, 2015, respectively
   
500
     
500
 
 Common stock, $0.0001 par value, 750,000,000 shares authorized, 44,952,538 and 37,847,163 shares issued and outstanding at September 30, 2015 and June 30, 2015, respectively
   
4,495
     
3,784
 
Additional paid-in capital
   
2,983,952
     
2,474,909
 
Accumulated deficit
   
(2,429,588
)
   
(1,140,222
)
Total Stockholders' Equity
   
559,359
     
1,338,971
 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
 
$
1,083,758
   
$
1,575,659
 
 
See accompanying notes to condensed unaudited financial statements.
 
 
 
APPYEA, INC.
CONDENSED STATEMENT OF OPERATIONS
(Unaudited)


   
Three Months Ended September 30,
 
   
2015
   
2014
 
         
Revenues
 
$
386
   
$
1,329
 
Gross Profit
   
386
     
1,329
 
                 
Operating Expenses
               
Sales and marketing
   
1,578
     
2,483
 
Legal and professional fees
   
877,654
     
9,343
 
General and administrative
   
4,714
     
4,902
 
Depreciation
   
15,615
     
10,615
 
Total Operating Expenses
   
899,561
     
27,343
 
                 
Loss from operations
   
(899,175
)
   
(26,014
)
                 
Other Income (Expense)
               
Change in fair value of derivative liabilities
   
(335,503
)
   
-
 
Interest expense
   
(54,688
)
   
(641
)
Net Other Expense
   
(390,191
)
   
(641
)
                 
Net Loss
 
$
(1,289,366
)
 
$
(26,655
)
                 
Net Loss Per Share: Basic and Diluted
 
$
(0.03
)
 
$
(0.00
)
                 
Weighted Average Number of Shares Outstanding: Basic and Diluted
   
41,384,608
     
34,512,910
 

 
See accompanying notes to condensed unaudited financial statements.
 

 
 
APPYEA, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)


   
Three Months Ended September 30,
 
   
2015
   
2014
 
CASH FLOWS FROM OPERATING ACTIVITIES
       
Net loss
 
$
(1,289,366
)
 
$
(26,655
)
Adjustments to reconcile net loss to net cash used in operating activities:
               
Depreciation expense
   
15,615
     
10,615
 
Common stock issued for services
   
327,000
     
-
 
Amortization of stock issued for prepaid services     536,376       -  
Amortization of deferred financing cost
   
1,649
     
-
 
Amortization of debt discounts
   
50,102
     
-
 
Change in fair value of derivative liabilities
   
335,503
     
-
 
Changes in operating assets and liabilities:
               
Accounts receivable
   
135
     
(22
)
Prepaid expenses
   
3,224
     
-
 
Accounts payable
   
(3,677
)
   
554
 
Accrued interest
   
2,937
     
641
 
Net Cash Used in Operating Activities
   
(20,502
)
   
(14,867
)
                 
CASH FLOWS FROM FINANCING ACTIVITIES
               
Issuance of common stock for cash
   
-
     
17,250
 
Proceeds from convertible notes payable, net of original issue discounts
   
81,750
     
-
 
Payment of deferred financing costs
   
(10,910
)
   
-
 
Repayment of convertible notes payable
   
-
     
(2,000
)
Net cash provided by Financing Activities
   
70,840
     
15,250
 
                 
Net cash increase for period
   
50,338
     
383
 
Cash at beginning of period
   
265
     
4,404
 
Cash at end of period
 
$
50,603
   
$
4,787
 
                 
SUPPLEMENTAL CASH FLOW INFORMATION:
               
Cash paid for income taxes
 
$
-
   
$
-
 
Cash paid for interest
   
-
     
-
 
                 
NON CASH INVESTING AND FINANCING ACTIVITIES
               
Issuance of common stock for deferred financing costs
 
$
3,850
   
$
-
 
Issuance of common stock for conversion of debt and accrued interest
   
43,607
     
-
 
Resolution of derivative liabilities upon conversion of debt
   
134,866
         
Derivative liability recognized as debt discount
   
81,750
     
-
 

 
See accompanying notes to condensed unaudited financial statements.
 
 

APPYEA, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS FOR THE THREE MONTH PERIODS ENDED SEPTEMBER 30, 2015 AND 2014
(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 September 30, 2015 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 condensed financial statements should be read in conjunction with the audited financial statements and accompanying notes for the fiscal year ended June 30, 2015, included in its Annual Report on Form 10-K filed on October 28, 2015.
 
3. GOING CONCERN AND LIQUIDITY
 
At September 30, 2015, the Company had cash of $50,603 and current liabilities of $524,399 and 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. PREPAID EXPENSES

At September 30, 2015 and June 30, 2015, prepaid expenses totaled $958,883 and $1,498,483, respectively; and as of September 30, 2015 consisted of prepaid consulting fees of $958,107 and other prepaid expenses of $776.

Consulting fees consisted of the following:

Consulting fee

On March 9, 2015, the Company entered into a consulting agreement with the Cicero Consulting Group, LLC for the term of 12 months, and automatically renew for an additional 12 months unless terminated by the Company.  The Company valued this agreement in accordance with ASC505-50 as an Equity-Based Payment to Non-Employees at the current market price of the common stock.  The Company paid the consultant a commencement fee in the form of 1,723,329 shares of restricted common stock at the current market price, as of March 9, 2015, of $1.02. As at September 30, 2015, the Company had recognized a prepaid expense of $732,415 to be expensed over the period from July 1, 2015 to March 8, 2016. In October 2015, the Company and Cicero Consulting Group, LLC agreed to terminate the agreement, and Cicero Consulting Group, LLC agreed to return and cancel the shares. 
 
On May 6, 2015, the Company entered into a consulting agreement with the Alex Consulting, Inc. for the term of one year or until the terms of this Agreement has been satisfied, whichever comes first.  The Company valued this agreement in accordance with ASC505-50 as an Equity-Based Payment to Non-Employees at the current market price of the common stock.  The Company paid the consultant a commencement fee in the form of 700,000 shares of restricted common stock at the current market price, as of May 6, 2015, of $0.51. As at September 30, 2015, the Company had recognized a prepaid expense of $225,692 to be expensed over the period from July 1, 2015 to May 5, 2016.

On May 18, 2015, the Company entered into a consulting agreement with the SmallCapVoice.com, Inc. for the term of three months commencing on August 18, 2015.  The Company valued this agreement in accordance with ASC505-50 as an Equity-Based Payment to Non-Employees at the current market price of the common stock.  The Company paid a monthly fee of $2,500 and a onetime issuance of 28,000 shares of restricted common stock at the current market price, as of May 18, 2015, of $0.51. As at September 30, 2015, the Company had recognized a prepaid expense balance of $0 from this vendor, as the prepaid amount was fully expensed from July 1, 2015 to August 18, 2015.

5. FIXED ASSETS

As at September 30, 2015 and June 30, 2015, the balance of fixed assets represented a vehicle and mobile application software as follows:
 
   
September 30, 2015
   
June 30, 2015
 
Mobile applications
 
$
179,870
   
$
179,870
 
Automobile
   
8,305
     
8,305
 
Fixed assets, gross
   
188,175
     
188,175
 
Accumulated depreciation
   
(127,218
)
   
(111,603
)
Fixed assets, net
 
$
60,957
   
$
76,572
 

Depreciation expense for three months ended September 30, 2015 and 2014 was $15,615 and $10,615, respectively.
 
6. CONVERTIBLE LOANS

At September 30, 2015 and June 30, 2015, convertible loans consisted of the following:
 
   
September 30, 2015
   
June 30, 2015
 
April 2013 Note
 
$
6,500
   
$
14,000
 
January 2014 Note
   
-
     
10,000
 
October 2014 Note
   
22,850
     
30,000
 
February 2015 Note
   
-
     
15,000
 
March 2015 Note
   
10,000
     
10,000
 
April 2015 Note
   
10,000
     
10,000
 
August 2015 Note
   
25,000
     
-
 
September 2015 Note - 1
   
27,000
     
-
 
September 2015 Note - 2
   
35,750
     
-
 
Total notes payable
   
137,100
     
89,000
 
                 
Accrued interest 
   
8,479
     
10,762
 
                 
Less: Unamortized debt discounts
   
(88,115
)
   
(43,697
)
                 
Total convertible loans
   
57,464
     
56,065
 
                 
Less: current portion of convertible loans
   
(57,464
)
   
(56,065
)
                 
Long-term convertible loans
 
$
-
   
$
-
 
 
 
During three months ended September 30, 2015 and 2014, the Company recognized interest expense of $2,105 and $641 and amortization of discounts of $43,332 and $0, respectively.

April 2013 Note

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

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

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

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

As of September 30, 2015, the outstanding principal balance of the note was $6,500, the note had accrued interest of $2,112 and an unamortized debt discount of $1,587. Debt discount of $5,505 was amortized for three months ended September 30, 2015.
 
January 2014 Note 

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

Effective January 9, 2014, the Company recorded no beneficial conversion expense on the conversion feature as the specific conversion price was currently not determinable.  However, effective December 15, 2014 the Company's shares of common stock became publicly quoted and accordingly we evaluated the terms of the conversion features of the convertible debenture in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity's Own Stock and determined it is indexed to the Company's common stock and that the conversion features meet the definition of a liability and therefore bifurcated the conversion feature and accounted for it as a separate derivative liability.
 
The Company valued the conversion feature at the first day the shares were publicly quoted (December 15, 2014) at $13,722 using the Black Scholes valuation model. $10,745 included accrued interest of $745 of the value assigned to the derivative liability was recognized as a debt discount on the convertible debenture.  The debt discount was recorded as a reduction (contra-liability) to the convertible debenture and is being amortized over the life of the convertible debenture.  The balance of $2,977 of the value assigned to the derivative liability was expensed on the first day the shares became publicly traded.

On August 6, 2015, the convertible note of $10,000 and accrued interest of $1,530 was converted into 768,720 common shares and the Company amortized the remaining debt discount of $3,403 and reclassed the fair value of the derivative liability on the date of conversion of $42,670 to additional paid-in capital.

As of September 30, 2015, the outstanding principal balance of the note, accrued interest and unamortized debt discount were $0. Debt discount of $4,477 was amortized for the three months ended September 30, 2015.

October 2014 Note

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

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

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

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

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

As of September 30, 2015, the outstanding principal balance of the note was $22,850, the note had accrued interest of $3,424 and an unamortized debt discount of $0. Debt discount of $9,211 was amortized for three months ended September 30, 2015.

February 2015 Note

On February 9, 2015, the Company issued a $15,000 convertible promissory note payable. The unsecured convertible promissory note payable is due upon demand and carried an interest rate of 12% per annum. The note payable is convertible at the option of the holder, at 50% of the lowest traded price for the 60 days preceding conversion as posted on the OTC Markets or on such US National Exchange upon which the Company may be listed.

Effective February 9, 2015, the Company evaluated the terms of the conversion features of the convertible debenture in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity's Own Stock and determined it is indexed to the Company's common stock and that the conversion features meet the definition of a liability and therefore bifurcated the conversion feature and accounted for it as a separate derivative liability.
 
The Company valued the conversion feature at the issue date (February 9, 2015) at $21,817 using the Black Scholes valuation model. $15,000 of the value assigned to the derivative liability was recognized as a debt discount on the convertible debenture.  The debt discount was recorded as a reduction (contra-liability) to the convertible debenture and is being amortized over the life of the convertible debenture.  The balance of $6,817 of the value assigned to the derivative liability was expensed on the issue date of the convertible note payable.

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

As of September 30, 2015, the outstanding principal balance of the note, accrued interest and unamortized debt discount were $0. Debt discount of $8,750 was amortized for the three months ended September 30, 2015.

March 2015 Note

On March 13, 2015, the Company issued a $10,000 convertible promissory note payable. The unsecured convertible promissory note payable is due upon demand and carries an interest rate of 12% per annum. The note payable is convertible at the option of the holder, at 50% of the lowest traded price for the 60 days preceding conversion as posted on the OTC Markets or on such US National Exchange upon which the Company may be listed.

Effective March 13, 2015, the Company evaluated the terms of the conversion features of the convertible debenture in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity's Own Stock and determined it is indexed to the Company's common stock and that the conversion features meet the definition of a liability and therefore bifurcated the conversion feature and accounted for it as a separate derivative liability.

The Company valued the conversion feature at the issue date (March 13, 2015) at $14,552 using the Black Scholes valuation model. $10,000 of the value assigned to the derivative liability was recognized as a debt discount on the convertible debenture.  The debt discount was recorded as a reduction (contra-liability) to the convertible debenture and is being amortized over the life of the convertible debenture.  The balance of $4,552 of the value assigned to the derivative liability was expensed on the issue date of the convertible note.
 
As of September 30, 2015, the outstanding principal balance of the note was $10,000, the note had accrued interest of $661 and an unamortized debt discount of $4,167. Debt discount of $2,500 was amortized for three months ended September 30, 2015.

April 2015 Note

On April 9, 2015, the Company issued a $10,000 convertible promissory note payable. The unsecured convertible promissory note payable is due upon demand and carries an interest rate of 12% per annum. The note payable is convertible at the option of the holder, at 50% of the lowest traded price for the 30 days preceding conversion as posted on the OTC Markets or on such US National Exchange upon which the Company may be listed.

Effective April 9, 2015, the Company evaluated the terms of the conversion features of the convertible debenture in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity's Own Stock and determined it is indexed to the Company's common stock and that the conversion features meet the definition of a liability and therefore bifurcated the conversion feature and accounted for it as a separate derivative liability.

The Company valued the conversion feature at the issue date (April 9, 2015) at $16,215 using the Black Scholes valuation model. $10,000 of the value assigned to the derivative liability was recognized as a debt discount on the convertible debenture.  The debt discount was recorded as a reduction (contra-liability) to the convertible debenture and is being amortized over the life of the convertible debenture.  The balance of $6,215 of the value assigned to the derivative liability was expensed on the issue date of the convertible note.
 
As of September 30, 2015, the outstanding principal balance of the note was $10,000, the note had accrued interest of $572 and an unamortized debt discount of $5,000. Debt discount of $2,500 was amortized for three months ended September 30, 2015.

August 2015 Note

On August 13, 2015, the Company issued a $25,000 convertible promissory note payable. The unsecured convertible promissory note payable is due upon demand and carries an interest rate of 8% per annum. The note payable is convertible at the option of the holder, at the lower of i) the closing sale price of the common stock on the principal market on the trading day and ii) 50% of the lowest sale price for the 30 consecutive trading.

Effective August 13, 2015, the Company evaluated the terms of the conversion features of the convertible debenture in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity's Own Stock and determined it is indexed to the Company's common stock and that the conversion features meet the definition of a liability and therefore bifurcated the conversion feature and accounted for it as a separate derivative liability.

The Company paid cash fees to this lender of $3,500 recognized as an original issue discount to the note. The Company valued the conversion feature at the issue date (August 13, 2015) at $60,723 using the Black Scholes valuation model. $21,500 of the value assigned to the derivative liability was recognized as a debt discount on the convertible debenture.  The debt discount was recorded as a reduction (contra-liability) to the convertible debenture and is being amortized over the life of the convertible debenture.  The balance of $39,223 of the value assigned to the derivative liability was expensed on the issue date of the convertible note.
 
As of September 30, 2015, the outstanding principal balance of the note was $25,000, the note had accrued interest of $263 and an unamortized debt discount of $20,833. Debt discount of $4,167 was amortized for three months ended September 30, 2015.

September 2015 Note - 1

On September 9, 2015, the Company issued a $27,000 convertible promissory note payable and incurred $2,000 financing costs to a third party which were recognized as deferred financing costs. The unsecured convertible promissory note payable is due upon demand and carries an interest rate of 8% per annum. The note payable is convertible at the option of the holder, at 55% of the lowest trading price for the 20 prior trading days as reported on the OTC Markets, or any exchange upon which the common stock may be traded in the future.

Effective September 9, 2015, the Company evaluated the terms of the conversion features of the convertible debenture in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity's Own Stock and determined it is indexed to the Company's common stock and that the conversion features meet the definition of a liability and therefore bifurcated the conversion feature and accounted for it as a separate derivative liability.

The Company valued the conversion feature at the issue date (September 9, 2015) at $41,070 using the Black Scholes valuation model. $27,000 of the value assigned to the derivative liability was recognized as a debt discount on the convertible debenture.  The debt discount was recorded as a reduction (contra-liability) to the convertible debenture and is being amortized over the life of the convertible debenture.  The balance of $14,070 of the value assigned to the derivative liability was expensed on the issue date of the convertible note.
 
As of September 30, 2015, the outstanding principal balance of the note was $27,000, the note had accrued interest of $124 and an unamortized debt discount of $24,750. Debt discount of $2,250 and deferred financing cost assets of $167 were amortized for three months ended September 30, 2015.
September 2015 Note - 2

On September 9, 2015, the Company issued a $35,750 convertible promissory note payable and incurred $2,750 financing costs to a third party which were recognized as deferred financing costs. The unsecured convertible promissory note payable is due upon demand and carries an interest rate of 10% per annum. The note payable is convertible at the option of the holder, at the lesser of i) 50% multiplied by the lowest trading price during the previous 25 trading day period ending on the latest complete trading day prior the date of this Note and ii) the 50% multiplied by the lowest trading price for the common stock during the 25 trading day period ending on the latest complete trading day prior to the conversion date as reported on the OTC Markets, or applicable trading market.

Effective September 9, 2015, the Company evaluated the terms of the conversion features of the convertible debenture in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity's Own Stock and determined it is indexed to the Company's common stock and that the conversion features meet the definition of a liability and therefore bifurcated the conversion feature and accounted for it as a separate derivative liability.

The Company paid cash fees to this lender of $2,500 recognized as an original issue discount to the note. The Company valued the conversion feature at the issue date (September 9, 2015) at $53,140 using the Black Scholes valuation model. $33,250 of the value assigned to the derivative liability was recognized as a debt discount on the convertible debenture.  The debt discount was recorded as a reduction (contra-liability) to the convertible debenture and is being amortized over the life of the convertible debenture.  The balance of $19,890 of the value assigned to the derivative liability was expensed on the issue date of the convertible note.
 
As of September 30, 2015, the outstanding principal balance of the note was $35,750, the note had accrued interest of $167 and an unamortized debt discount of $31,778. Debt discount of $3,972 and deferred financing cost assets of $306 were amortized for three months ended September 30, 2015.

Deferred Financing Costs

In connection with the convertible notes issued in September 2015, the Company paid cash commissions of $4,750. In addition, the Company paid cash fees of $6,160 and issued an aggregate of 100,000 common shares valued at $3,850 as commissions for all of the convertible loans issued during the three months ended September 30, 2015.  These aggregate fees of $14,760 were recognized as deferred financing costs which are being amortized to interest expense over the life of the notes. Aggregate amortization recognized during the three months ended September 30, 2015 was $1,649 and the unamortized balance of deferred financing costs was $13,111 as of September 30, 2015.

7. CONVERTIBLE LOANS – RELATED PARTY

At September 30, 2015 and 2014, convertible loan – related party consisted of the following:

   
September 30, 2015
   
June 30, 2015
 
   
   
 
October 2014 Note – Related party
 
$
22,000
   
$
22,000
 
                 
Accrued interest 
   
3,173
     
2,342
 
                 
Less: Unamortized debt discounts
   
-
     
(6,771
)
                 
Total
   
25,173
     
17,571
 
                 
Less: current portion of convertible loan
   
(25,173
)
   
(17,571
)
                 
Long-term convertible notes payable
 
$
-
   
$
-
 

During three months ended September 30, 2015 and 2014, the Company recognized interest expense of $832 and $641 and amortization of discount of $6,771 and $0, respectively. The related party loan is owed to the father of the sole officer and Director of the Company.
 
October 2014 Note – Related party

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

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

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

As of September 30, 2015, the outstanding principal balance of the note was $22,000, the note had accrued interest of $3,173 and an unamortized debt discount of $0. Debt discount of $6,771 was amortized for three months ended September 30, 2015.

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

   
Three Months Ended
 
Year Ended
   
September 30, 2015
 
June 30, 2015
Expected term
 
 0.04 - 1.00 years
 
 0.29 - 1.00 years
Expected average volatility
 
 25%-242%
 
 108%-218%
Expected dividend yield
 
 -
 
 -
Risk-free interest rate
 
 0.00%-0.40%
 
 0.01%-0.25%
 
 
At September 30, 2015, the estimated fair values of the liabilities measured on a recurring basis are as follows:

Fair Value Measurements at September 30, 2015
 
       
Quoted Prices in
   
Significant Other
   
Significant
 
    September 30,    
Active Markets
   
Observable Inputs
   
Unobservable Inputs
 
 
 
2015
   
(Level 1)
   
(Level 2)
   
(Level 3)
 
April 2013 Note
 
$
23,621
   
$
-
   
$
-
   
$
23,621
 
October 2014 Note
   
63,145
     
-
     
-
     
63,145
 
March 2015 Note
   
30,617
     
-
     
-
     
30,617
 
April 2015 Note
   
30,914
     
-
     
-
     
30,914
 
August 2015 Note
   
61,575
     
-
     
-
     
61,575
 
September 2015 Note - 1
   
80,828
     
-
     
-
     
80,828
 
September 2015 Note - 2
   
81,422
     
-
     
-
     
81,422
 
October 2014 Note - related party
   
69,040
     
-
     
-
     
69,040
 
   
$
441,162
   
$
-
   
$
-
   
$
441,162
 

The following table summarizes the changes in the derivative liabilities during the three months ended September 30, 2015:

Fair Value Measurements Using Significant Observable Inputs (Level 3)
 
     
 Balance - June 30, 2015
 
$
158,775
 
 Addition of new derivatives recognized as debt discounts
   
81,750
 
Addition of new derivatives recognized as loss on derivatives
   
73,183
 
 Settled upon conversion of debt
   
(134,866
)
 Loss on change in fair value of the derivative
   
262,320
 
 Balance - September 30, 2015
 
$
441,162
 
 
The aggregate loss on derivatives during the three months ended September 30, 2015 was $335,503.

9. 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 three months ended September 30 2015 and 2014, the Company incurred $609 and $619, respectively.

Consulting Agreements

On March 9, 2015, the Company entered into a consulting agreement with the Cicero Consulting Group, LLC for the term of 12 months, and automatically renew for an additional 12 months unless terminated by the Company.  The Company valued this agreement in accordance with ASC505-50 as an Equity-Based Payment to Non-Employees at the current market price of the common stock.  The Company paid the consultant a commencement fee in the form of 1,723,329 shares of restricted common stock at the current market price, as of March 9, 2015, of $1.02. As at September 30, 2015, the Company had recognized a prepaid expense of $732,415 to be expensed through March 8, 2016. In October of 2015, the Company and Cicero Consulting Group, LLC agreed to terminate the agreement, and Cicero Consulting Group, LLC agreed to return and cancel the shares. 

On May 6, 2015, the Company entered into a consulting agreement with the Alex Consulting, Inc. for the term of one year or until the terms of this Agreement has been satisfied, whichever comes first.  The Company valued this agreement in accordance with ASC505-50 as an Equity-Based Payment to Non-Employees at the current market price of the common stock.  The Company paid the consultant a commencement fee in the form of 700,000 shares of restricted common stock at the current market price, as of May 6, 2015, of $0.51. As at September 30, 2015, the Company had recognized a prepaid expense of $225,692 to be expensed through May 5, 2016.

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

On July 1, 2015, the Company entered into a consulting agreement with the Castle Rock Resources, LLC, for the term of six months and automatically renew for an additional 6 months unless terminated by the Company.  The Company valued this agreement in accordance with ASC505-50 as an Equity-Based Payment to Non-Employees at the current market price of the common stock.  The Company paid the consultant a commencement fee in the form of 2,400,000 shares of restricted common stock at the current market price, as of July 1, 2015, of $0.12 or $288,000. The cost associated with this issuance was expensed in full during the three months ended September 30, 2015

On July 13, 2015, the Company entered into a consulting agreement with Gilles Trahan, for the term of six months.  The Company valued this agreement in accordance with ASC505-50 as an Equity-Based Payment to Non-Employees at the current market price of the common stock.  The Company paid the consultant a commencement fee in the form of 300,000 shares of restricted common stock at the current market price, as of July 13, 2015, of $0.13 or $39,000. The cost associated with this issuance was expensed in full during the three months ended September 30, 2015

On July 15, 2015, the Company entered into a consulting agreement with the Almorli Advisors.  The Company valued this agreement in accordance with ASC505-50 as an Equity-Based Payment to Non-Employees at the current market price of the common stock.  The Company paid the consultant a cash fee of 8% of total capital provided to the Company and restricted shares of the Company equal to 5% of the total capital provided to the Company at the current market price, resulting in a deferred financing cost of $10,010. The fee is to be expensed over the period from August 2015 to September 2016. During the three month period ended September 30, 2015, we recognized interest expense of $1,177.
 
10. 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.
 
A convertible preferred share is convertible into 100 shares of common stock and has the voting rights of 1,000 share of common stock.
 
As at September 30, 2015 and June 30, 2015, 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.

In July 2015, the Company issued 2,400,000 shares of common stock valued at $288,000 to Alex Castle Rock Resources, LLC and 300,000 shares of common stock valued at $39,000 to Gilles Trahan in exchange for consulting services. The fair value of these shares was expensed during the three months ended September 30, 2015. In addition, the Company issued 100,000 shares of common stock valued at $3,850 to Almorli Advisors for loan commissions which were recognized as deferred financing costs.

During the three months ended September 30, 2015, an aggregate of 4,305,375 common shares were issued for the conversion of debt and accrued interest of $44,037.

As at September 30, 2015 and June 30, 2015, 44,952,538 and 37,847,163 shares of the Company's common stock were issued and outstanding, respectively.

11. RELATED PARTY TRANSACTIONS

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

As of September 30, 2015 and June 30, 2015, the Company had an outstanding convertible note payable of $22,000 to the father of the sole officer and Director of the Company (see Note 7).
 
12. SUBSEQUENT EVENTS
 
Subsequent to September 30, 2015, the Company issued and cancelled the following common stock:
 
· Issued 15,960,000 shares of common stock for conversion of convertible loans with principal and accrued interest balances of $26,393.
· Cancelled 1,723,329 shares of common stock, previously issued to the Cicero Consulting Group, LLC in March 2015. 
 
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 September 30, 2014, and the results of operations for the three months ended September 30, 2015.  It should be read in conjunction with the unaudited financial statements and notes thereto contained in this report as well as the audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal years ended June 30, 2015 and June 30, 2014.

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.  Additionally, we own a social mobile application that allows users to share news, videos and other information to various social media outlets.

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

We generated revenue of $386 and $1,329 for the three months ended September 30, 2015 and 2014, respectively. For the three months ended September 30, 2015, we had a smaller mobile apps offering than in the corresponding period during the prior year. During our limited history, we have generated nominal revenue and have very little operating history upon which to evaluate our business.

Operating expenses, which consisted of sales and marketing costs, legal and professional fees, general and administrative expenses, and depreciation expense, were $899,561 and $27,343, for the three months ended September 30, 2015 and 2014, respectively. Operating expense increases during the three months ended September 30, 2015 were primarily the result of a substantial increase in fees related to professional services.

As a result of the foregoing, we incurred losses of $1,289,366 and $26,655 during the three months ended September 30, 2015 and 2014, respectively.

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

As of September 30, 2015, we had cash or cash equivalents of $50,603.

Net cash used in operating activities was $20,502 for the three months ended September 30, 2015 and $14,867 for the three months ended September 30, 2014. The increase in the cash used in operating activities in the three months ended September 30, 2015 as opposed to the three months ended September 30, 2014 was due to the increase in our operating losses we incurred between the two periods. At September 30, 2015 our operating activities and available capital resources were not sufficient to fund our operations going forward. We believe that we are going to need to obtain additional funding for our activities during the next twelve months to: 1) further fund the development of our source code applications, 2) to fund any potential acquisitions of developed mobile applications and/or mobile applications development companies, and 3) to fund any operating deficits.

Net cash used in investing activities was $0 for the three months ended September 30, 2015 and September 30, 2014.  The Company is currently seeking mobile application acquisition targets and subject to our executing any purchase agreements, we may have significant cash outlays for investing activities. Should we close on any acquisitions, we will most likely need to sell additional securities and/or borrow additional funds in order to fund such acquisitions and to meet our business objectives during the next twelve months.

Net cash provided by financing activities for the three months ended September 30, 2015 was $70,840, compared to net cash used in financing activities of $15,250 for the three months ended September 30, 2014.During the three months ended September 30, 2015 we received $81,750 in proceeds from the sale of convertible notes to third parties.

As of September 30, 2015, our total assets were $1,083,758 and our total liabilities were $524,399. Included in our assets of as of September 30, 2015 was $50,603 of cash, $204 of accounts receivable, prepaid expenses of $958,883 and deferred financing costs of $13,111.  As of June 30, 2015 our total assets were $1,575,659 and our total liabilities were $236,688.

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 cap ital 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.
 
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.
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.

On August 13, 2015, the Company issued a $25,000 convertible promissory note payable. The unsecured convertible promissory note payable is due upon demand and carries an interest rate of 8% per annum. The note payable is convertible at the option of the holder, at the lower of i) the closing sale price of the common stock on the principal market on the trading day and ii) 50% of the lowest sale price for the 30 consecutive trading.

On September 9, 2015, the Company issued a $27,000 convertible promissory note payable. The unsecured convertible promissory note payable is due upon demand and carries an interest rate of 8% per annum. The note payable is convertible at the option of the holder, at 55% of the lowest trading price for the 20 prior trading days as reported on the OTC Markets, or any exchange upon which the common stock may be traded in the future.

On September 9, 2015, the Company issued a $35,750 convertible promissory note payable. The unsecured convertible promissory note payable is due upon demand and carries an interest rate of 10% per annum. The note payable is convertible at the option of the holder, at the lesser of i) 50% multiplied by the lowest trading price during the previous 25 trading day period ending on the latest complete trading day prior the date of this Note and ii) the 50% multiplied by the lowest trading price for the common stock during the 25 trading day period ending on the latest complete trading day prior to the conversion date as reported on the OTC Markets, or applicable trading market.

In July 2015, the Company issued 2,400,000 shares of common stock valued at $288,000 to Castle Rock Resources, LLC and 300,000 shares of common stock valued at $39,000 to Gilles Trahan in exchange for consulting services. The fair value of these shares was expensed during the three months ended September 30, 2015. In addition, the Company issued 100,000 shares of common stock valued at $3,850 to Almorli Advisors for loan commissions which were recognized as deferred financing costs.

Item 3.  Default Upon Senior Securities.

None.

Item 4.   Mine Safety Disclosures.

Not applicable to our Company.

Item 5.    Other Information.

None.

Item 6.   Exhibits

31
   
32
   
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.
 
 
 
 
 
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:  November 16, 2015
 
By:  /s/ Jackie Williams
 
   
Jackie Williams, President, Principal Financial Officer, Principal Accounting Officer, and Director
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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