10-Q 1 appyea_10q.htm FORM 10-Q appyea_10q.htm

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

(Mark One)

 

x

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

 

For the quarterly period ended September 30, 2016

 

o

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

 

For the transition period from __________ to __________

 

Commission File Number: 333-190999

 

APPYEA, INC.

(Exact Name of Registrant as Specified in its Charter)

 

South Dakota

 

46-1496846

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

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

(Address of Principal Executive Offices) (Zip Code)

 

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

 

N/A

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

 

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

 

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

 

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

 

Larger accelerated filer

o

Accelerated filer

o

Non-accelerated filer

o

Smaller reporting company

x

 

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

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 464,667,527 shares outstanding as of November 8, 2016.

 

 

 
 
 

 

APPYEA, INC.

 

Index

 

Page

Part I – FINANCIAL INFORMATION

 

Item 1.

Financial Statements

3

 

Balance Sheets as of September 30, 2016 and June 30, 2016 (unaudited)

3

 

Statements of Operations for the three months ended September 30, 2016 and 2015 (unaudited)

4

 

Statements of Cash Flows for the three months ended September 30, 2016 and 2015 (unaudited)

5

 

Notes to Financial Statements (unaudited)

6

 

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

10

 

Item 3.

Quantitative and Qualitative Disclosure About Market Risk

12

 

Item 4.

Controls and Procedures

13

 

Part II - OTHER INFORMATION

 

Item 1.

Legal Proceedings

14

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

14

 

Item 3.

Defaults Upon Senior Securities

14

 

Item 4.

Mine Safety Disclosures

14

 

Item 5.

Other Information

14

 

Item 6.

Exhibits

15

 

SIGNATURES

16

 
 
2
 

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

APPYEA, INC.

BALANCE SHEETS

(Unaudited)

 

 

 

September 30,

 

 

June 30,

 

 

 

2016

 

 

2016

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$5,340

 

 

$14,637

 

Prepaid expenses

 

 

4,667

 

 

 

4,167

 

Total Current Assets

 

 

10,007

 

 

 

18,804

 

 

 

 

 

 

 

 

 

 

Fixed assets, net of accumulated depreciation of $186,319 and $175,226

 

 

71,551

 

 

 

82,644

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$81,558

 

 

$101,448

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

 

2,394

 

 

 

4,643

 

Accrued salary

 

 

56,000

 

 

 

32,000

 

Convertible loans and accrued interest

 

 

454

 

 

 

454

 

Derivative liabilities

 

 

3,630

 

 

 

1,452

 

Total Current Liabilities

 

 

62,478

 

 

 

38,549

 

 

 

 

 

 

 

 

 

 

Total Liabilities

 

 

62,478

 

 

 

38,549

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies (Note 7)

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Stockholders' Equity:

 

 

 

 

 

 

 

 

Convertible preferred stock, $0.0001 par value, 5,000,000 shares authorized, 5,000,000 shares issued and outstanding at September 30, 2016 and June 30, 2016, respectively

 

 

500

 

 

 

500

 

Common stock, $0.0001 par value, 750,000,000 shares authorized, 464,667,527 shares issued and outstanding at September 30, 2016 and June 30, 2016, respectively

 

 

46,466

 

 

 

46,466

 

Additional paid-in capital

 

 

4,098,473

 

 

 

4,098,473

 

Accumulated deficit

 

 

(4,126,359)

 

 

(4,082,540)

Total Stockholders' Equity

 

 

19,080

 

 

 

62,899

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$81,558

 

 

$101,448

 

 

See accompanying notes to unaudited financial statements.

 
 
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APPYEA, INC.

STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three months ended September 30,

 

 

 

2016

 

 

2015

 

 

 

 

 

 

 

 

Revenues

 

$402

 

 

$386

 

Gross Profit

 

 

402

 

 

 

386

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

Sales and marketing

 

 

-

 

 

 

1,578

 

Legal and professional fees

 

 

2,997

 

 

 

877,654

 

General and administrative

 

 

27,953

 

 

 

4,714

 

Depreciation

 

 

11,093

 

 

 

15,615

 

Total Operating Expenses

 

 

42,043

 

 

 

899,561

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(41,641)

 

 

(899,175)

 

 

 

 

 

 

 

 

 

Other Income (Expense)

 

 

 

 

 

 

 

 

Change in fair value of derivative liabilities

 

 

(2,178)

 

 

(335,503)

Interest expense

 

 

-

 

 

 

(54,688)

Net Other Income (Expense)

 

 

(2,178)

 

 

(390,191)

 

 

 

 

 

 

 

 

 

Net Loss

 

$(43,819)

 

$(1,289,366)

 

 

 

 

 

 

 

 

 

Net Loss Per Common Share: Basic and Diluted

 

$(0.00)

 

$(0.03)

 

 

 

 

 

 

 

 

 

Weighted Average Number of Common Shares Outstanding: Basic and Diluted

 

 

464,667,527

 

 

 

41,384,608

 

 

See accompanying notes to unaudited financial statements.

 
 
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APPYEA, INC.

STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Three months ended September 30,

 

 

 

2016

 

 

2015

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net loss

 

$(43,819)

 

$(1,289,366)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation expense

 

 

11,093

 

 

 

15,615

 

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

 

 

2,178

 

 

 

335,503

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

-

 

 

 

135

 

Prepaid expenses

 

 

(500)

 

 

3,224

 

Accounts payable

 

 

(2,249)

 

 

(3,677)

Accrued salary

 

 

24,000

 

 

 

-

 

Accrued interest

 

 

-

 

 

 

2,937

 

Net Cash Used in Operating Activities

 

 

(9,297)

 

 

(20,502)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Proceeds from convertible notes payable, net of original issue discounts

 

 

-

 

 

 

81,750

 

Payment of deferred financing costs

 

 

-

 

 

 

(10,910)

Net cash provided by Financing Activities

 

 

-

 

 

 

70,840

 

 

 

 

 

 

 

 

 

 

Net cash increase (decrease) for period

 

 

(9,297)

 

 

50,338

 

Cash at beginning of period

 

 

14,637

 

 

 

265

 

Cash at end of period

 

$5,340

 

 

$50,603

 

 

 

 

 

 

 

 

 

 

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 unaudited financial statements.

 
 
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APPYEA, INC.

NOTES TO FINANCIAL STATEMENTS FOR THE THREE MONTH PERIODS ENDED SEPTEMBER30, 2016 AND 2015

(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, 2016, and for the interim periods presented herein have been reflected in these unaudited interim condensed financial statements and the notes thereto. Interim results included herein are not necessarily indicative of the results to be expected for the fiscal year as a whole. These unaudited interim condensed financial statements should be read in conjunction with the audited financial statements and accompanying notes for the fiscal year ended June 30, 2016, included in its Annual Report on Form 10-K filed on September 30, 2016. Certain prior period amounts have been reclassified to conform to current period presentation.

 

3. GOING CONCERN AND LIQUIDITY

 

At September 30, 2016, the Company had cash of $5,340 and current liabilities of $62,478 and a working capital deficit of $52,471. The Company has generated net losses since inception. The Company anticipates future losses in its business. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

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

 

4. FIXED ASSETS

 

As at September 30, 2016, and June 30, 2016, the balance of fixed assets represented a vehicle and mobile application software as follows:

 

 

 

September 30,
2016

 

 

June 30,
2016

 

Mobile applications

 

$257,870

 

 

$257,870

 

Accumulated depreciation

 

 

(186,319)

 

 

(175,226)

Fixed assets, net

 

$71,551

 

 

$82,644

 

 

Depreciation expense for three months ended September 30, 2016, and 2015, was $11,093 and $15,615, respectively.

 
 
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5. CONVERTIBLE LOANS

 

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, 2016, the outstanding principal balance of the note was $0 and the note had accrued interest of $454.

 

6. DERIVATIVE LIABILITIES

 

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

 

Fair Value Assumptions Used in Accounting for Derivative Liabilities.

 

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

 

The Company determined our derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes pricing model to calculate the fair value as of September 30, 2016. The Black-Scholes model requires six basic data inputs: the exercise or strike price, time to expiration, the risk free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each convertible note is estimated using the Black-Scholes valuation model.

 
 
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At September 30, 2016, the estimated fair values of the liabilities measured on a recurring basis are as follows:

 

Fair Value Measurements at September 30, 2016

 

 

 

 

Quoted Prices in

 

 

Significant Other

 

 

Significant

 

 

 

September 30,

 

 

Active Markets

 

 

Observable Inputs

 

 

Unobservable Inputs

 

 

 

2016

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 2015 Note

 

$3,630

 

 

$-

 

 

$-

 

 

$3,630

 

 

 

$3,630

 

 

$-

 

 

$-

 

 

$3,630

 

 

The following table summarizes the changes in the derivative liabilities during the three months ended September 30, 2016: 

 

Fair Value Measurements Using Significant Observable Inputs (Level 3)

 

 

 

 

 

Balance - June 30, 2016

 

$1,452

 

Loss on change in fair value of the derivative

 

 

2,178

 

Balance - September 30, 2016

 

$3,630

 

 

The aggregate loss on derivatives during the three months ended September 30, 2016 was $2,178.

 

7. COMMITMENTS AND CONTINGENCIES

 

Leases and Long term Contracts

 

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

 

Legal

 

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

 

Rent

 

As of January 30, 2013, the Company leases office space at $200 per month with three-month terms, which shall be automatically extended for successive three-month periods unless there is the notice to cancel. The lease can be cancelled at any time by either party with 30 days’ notice prior to expiration of an applicable term. For the three months ended September 30, 2016 and 2015, the Company incurred $607 and $609, respectively.

 
 
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8. SHAREHOLDERS' EQUITY

 

Convertible Preferred Stock

 

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

 

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

 

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

 

Common Stock

 

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

 

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

 

9. RELATED PARTY TRANSACTIONS

 

In March 2016, the Company appointed current CEO and approved a base compensation package of $8,000 per month for CEO. As of September 30, 2016 and June 30, 2016, the Company recorded accrued salary of $56,000 and $32,000.

 

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

 

Introduction

 

The following discussion and analysis was prepared to supplement information contained in the accompanying financial statements and is intended to provide certain details regarding the Company’s financial condition as of September 30, 2016, and the results of operations for the three months ended September 30, 2016. It should be read in conjunction with the unaudited financial statements and notes thereto contained in this report as well as the audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal years ended June 30, 2016.

 

Overview

 

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

 

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

 

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

 

Results of Operations

 

For the Three Months Ended September 30, 2016 and 2015

 

We generated revenue of $402 and $386 for the three months ended September 30, 2016 and 2015, respectively. For the three months ended September 30, 2016, we had a larger mobile apps offering than in the corresponding period during the prior year. During our limited history, we have generated nominal revenue and have very little operating history upon which to evaluate our business.

 

Operating expenses, which consisted of sales and marketing costs, legal and professional fees, general and administrative expenses and depreciation expense, were $42,043 and $899,561, for the three months ended September 30, 2016 and 2015, respectively. Operating expense decreases during the three months ended September 30, 2016 were primarily the result of decreased professional fees.

 

Other expenses totaled $2,178 for the three months ended September 30, 2016 compared to $390,191 for the three months ended September 30, 2015. The decrease in other expenses was primarily the result of a decrease in change in fair value of derivative liabilities and interest expense during the period ended September 30, 2016.

 
 
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As a result of the foregoing, we incurred losses of $43,819 and $1,289,366 during the three months ended September 30, 2016 and 2015, respectively.

 

Liquidity and Capital Resources

 

As of September 30, 2016, we had cash or cash equivalents of $5,340.

 

Net cash used in operating activities was $9,297 for the three months ended September 30, 2016 and net cash used in operating activities was $20,502 for the three months ended September 30, 2015. During the three months ended September 30, 2016 we incurred a net loss of $43,819, which was primarily the cause of the increase in our net cash used in operating activities. At September 30, 2016, our operating activities and available capital resources were not sufficient to fund our operations going forward. We believe that we are going to need to obtain additional funding for our activities during the next twelve months to: 1) further fund the development of our source code applications, 2) to fund any potential acquisitions of developed mobile applications and/or mobile applications development companies, and 3) to fund any operating deficits.

 

Net cash used in investing activities was $0 for the three months ended September 30, 2016 and 2015. 

 

Net cash provided by financing activities for the three months ended September 30, 2016 was $0, compared to net cash provided by financing activities of $70,840 for the three months ended September 30, 2015. 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, 2016, our total assets were $81,558 and our total liabilities were $62,478. Included in our assets of as of September 30, 2016 was $5,340 of cash, $4,667 in prepaid expenses, and net fixed assets of $71,551. As of June 30, 2016, our total assets were $101,448 and our total liabilities were $38,549.

 

Plan of Operation and Funding

 

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

 

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

 

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

 

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

 

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

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

 

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

 

Item 3. Quantitative and Qualitative Disclosure About Market Risk

 

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

 
 
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Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

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

 

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

 

·

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

 

·

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

 

·

Documentation of all proper accounting procedures is not yet complete.

 

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

 

·

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

 

Changes in Internal Control over Financial Reporting

 

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

 
 
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PART II. OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

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

 

Item 1A. Risk Factors.

 

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

 

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

 

None.

 

Item 3. Default Upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures.

 

Not applicable to our Company.

 

Item 5. Other Information.

 

None.

 
 
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Item 6. Exhibits

 

31

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

 

32

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

 

101.INS*

XBRL Instance Document

 

101.SCH*

XBRL Taxonomy Schema

 

101.CAL*

XBRL Taxonomy Calculation Linkbase

 

101.DEF*

 XBRL Taxonomy Definition Linkbase

 

101.LAB*

XBRL Taxonomy Label Linkbase

 

101.PRE*

 XBRL Taxonomy Presentation Linkbase

_______________

*

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

 

 
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SIGNATURES

 

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

 
 APPYEA, INC.
    
Date: November 14, 2016 By:/s/ Douglas O. McKinnon

 

 

Douglas O. McKinnon, Chief Financial Officer,
Principal Accounting Officer, Chief Executive Officer
 

 

 

16