UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 June 30, 2014
 
or
 
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:    333-185694

WALLY WORLD MEDIA, INC.
(Exact name of registrant as specified in its charter)
 
Nevada
 
45-5370930
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
65 Church St. 2nd Floor
New Brunswick, New Jersey 08901
(Address of principal executive offices) (Zip Code)
 
(732) 246-0439
(Registrant’s telephone number, including area code)

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 preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)  has been subject to such filing requirements for the past 90  days. Yes 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 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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large Accelerated Filer                     o
 
Accelerated Filer                           o
Non-Accelerated Filer                       o
(Do not check if a smaller reporting company)
Smaller Reporting Company        x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ¨  No  x
 
There were 38,600,000 shares of the Registrant’s Common Stock outstanding at August 11, 2014 .
 
 
 
 
 
WALLY WORLD MEDIA, INC.
QUARTERLY REPORT ON FORM 10-Q
For the Period Ended June 30, 2014

TABLE OF CONTENTS
 
 
Page
PART 1 - FINANCIAL INFORMATION
 
     
Item 1.
Condensed Consolidated Financial Statements (Unaudited)
F-1
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
2
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
8
Item 4.
Controls and Procedures
8
   
PART II - OTHER INFORMATION
 
     
Item 1.
Legal Proceedings
8
Item 1A.
Risk Factors
8
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
8
Item 3.
Defaults Upon Senior Securities
8
Item 4.
Mine Safety Disclosures
8
Item 5.
Other Information
9
Item 6.
Exhibits
9
   
SIGNATURES
10
 
 
 
 
 
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

This Quarterly Report on Form 10-Q (this “Report”) contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “predict,” “project,” “forecast,” “potential,” “continue” negatives thereof or similar expressions. Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations about the future and are not guarantees. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievement to be materially different from the results of operations or plans expressed or implied by such forward-looking statements.

We cannot predict all of the risks and uncertainties. Accordingly, such information should not be regarded as representations that the results or conditions described in such statements or that our objectives and plans will be achieved and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements. These forward-looking statements are found at various places throughout this Report and include information concerning possible or assumed future results of our operations, including statements about potential acquisition or merger targets; business strategies; future cash flows; financing plans; plans and objectives of management; any other statements regarding future acquisitions, future cash needs, future operations, business plans and future financial results, and any other statements that are not historical facts.

These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Report. All subsequent written and oral forward-looking statements concerning other matters addressed in this Report and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Report.

Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.

CERTAIN TERMS USED IN THIS REPORT

When this report uses the words “we,” “us,” “our,” and the “Company,” they refer to Wally World Media, Inc.  “SEC” refers to the Securities and Exchange Commission.

 
 
 
 
PART I – FINANCIAL INFORMATION
 
WALLY WORLD MEDIA, INC.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2014
 
CONTENTS
 
Condensed Consolidated Financial Statements:
 
   
Condensed Consolidated Balance Sheets - As of June 30, 2014 (Unaudited) and September 30, 2013
F-2
   
Condensed Consolidated Statements of Operations - For the Three and Nine Months Ended June 30, 2014 and 2013 (Unaudited)
F-3
   
Condensed Consolidated Statements of Changes in Stockholders’ Equity For the Nine Months Ended June 30, 2014 (Unaudited)
F-4
   
Condensed Consolidated Statements of Cash Flows – For the Nine Months Ended June 30, 2014 and 2013 (Unaudited)
F-5
   
Notes to Unaudited Condensed Consolidated Financial Statements
F-6
 
 
F-1
 
 
WALLY WORLD MEDIA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
             
   
June 30,
   
September 30,
 
   
2014
   
2013
 
   
(Unaudited)
       
ASSETS
           
             
CURRENT ASSETS:
           
    Cash
  $ 103,259     $ 87,663  
    Prepaid expenses and other current assets
    181,250       5,200  
        Total Current Assets
    284,509       92,863  
                 
     Long Term Assets:
               
        Security deposit
    8,400       8,400  
        Total Assets
  $ 292,909     $ 101,263  
                 
LIABILITIES AND STOCKHOLDERS'  EQUITY
               
                 
CURRENT LIABILITIES:
               
    Accounts payable
  $ 39,855     $ 30,189  
    Due to related parties
    5,000       7,675  
        Total Current Liabilities
    44,855       37,864  
                 
     Commitments and Contingencies - (Note 4)
               
                 
STOCKHOLDERS' (DEFICIT) EQUITY:
               
    Preferred stock ($0.0001 par value; 50,000,000 shares authorized;
               
       none issued or outstanding
    -       -  
    Common stock ($0.0001 par value; 500,000,000 shares authorized;
               
      38,600,000 and 26,490,000 shares issued and outstanding
               
       at June 30, 2014 and September 30, 2013, respectively)
    3,860       2,649  
    Additional paid-in capital
    2,458,308       912,087  
    Accumulated deficit
    (2,214,114 )     (851,337 )
                 
        Total Stockholders' Equity
    248,054       63,399  
                 
        Total Liabilities and Stockholders' Equity
  $ 292,909     $ 101,263  
 
See accompanying condensed notes to unaudited consolidated financial statements
 
 
F-2
 
 
 
WALLY WORLD MEDIA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                         
   
For the Three Months
   
For the Three Months
   
For the Nine Months
   
For the Nine Months
 
   
Ended
   
Ended
   
Ended
   
Ended
 
   
June 30, 2014
   
June 30, 2013
   
June 30, 2014
   
June 30, 2013
 
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
 
                         
NET REVENUES
  $ -     $ -     $ -     $ -  
                                 
OPERATING EXPENSES:
                               
     Compensation
    237,656       128,109       772,598       364,160  
     Professional fees
   
                      189,227
      50,125      
                     402,187
      97,493  
     Rent expense
    6,453       770       24,659       12,158  
     Impairment expense
    -       -       -       35,000  
     General and administrative
   
                        47,399
      21,421      
                     163,462
      33,979  
        Total Operating Expenses
    480,735       200,425       1,362,906       542,790  
                                 
OTHER INCOME (EXPENSE)
                               
  Interest Income
    -       45       129       414  
                                 
  Total Other Income (Expense)
    -       45       129       414  
                                 
NET LOSS
  $ (480,735 )   $ (200,380 )   $ (1,362,777 )   $ (542,376 )
                                 
NET LOSS PER COMMON SHARE:
                               
    Basic and diluted
  $ (0.01 )   $ (0.01 )   $ (0.04 )   $ (0.02 )
                                 
WEIGHTED AVERAGE NUMBER
                               
OF COMMON SHARES OUTSTANDING:
                               
    Basic and diluted
    38,500,000       23,584,505       33,753,970       22,965,421  
 
See accompanying condensed notes to unaudited consolidated financial statements.
 
 
F-3
 
 
WALLY WORLD MEDIA, INC.
 
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
 
for the nine months ended June 30, 2014
 
(Unaudited)
 
 
   
 
   
 
         
Additional
         
Total
 
   
Preferred Stock
    Common Stock    
Paid-in
   
Accumulated
   
Stockholders'
 
   
Shares
   
Amount
   
Shares
   
Amount
   
Capital
   
Deficit
   
Equity
 
                                           
                                                         
Balance, September 30, 2013
    -     $ -       26,490,000     $ 2,649     $ 912,087     $ (851,337 )   $ 63,399  
                                                         
Sale of common stock
    -       -       8,315,000       831       830,669       -       831,500  
                                                         
Issuance of common stock for services
    -       -       2,705,000       271       304,729       -       305,000  
                                                         
Issuance of common stock for prepaid services
    -       -       1,090,000       109       223,891               224,000  
                                                         
Stock based compensation in connection with options granted
    -       -       -       -       186,932               186,932  
                                                         
Net loss for the nine months ended June 30, 2014
    -       -       -       -       -       (1,362,777 )     (1,362,777 )
                                                         
Balance, June 30, 2014
    -     $ -       38,600,000     $ 3,860     $ 2,458,308     $ (2,214,114 )   $ 248,054  
 
See accompanying condensed notes to unaudited consolidated financial statements.
 
 
F-4
 
 
 
WALLY WORLD MEDIA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
             
   
For the Nine Months
   
For the Nine Months
 
   
Ended
   
Ended
 
   
June 30, 2014
   
June 30, 2013
 
   
(Unaudited)
   
(Unaudited)
 
             
CASH FLOWS FROM OPERATING ACTIVITIES:
           
Net loss
  $ (1,362,777 )   $ (542,376 )
Adjustments to reconcile net loss to net cash
               
used in operating activities:
               
Amortization of prepaid expense in connection
               
with the issuance of common stock issued for prepaid services
    90,417       9,850  
Impairment expense
    -       35,000  
Stock-based compensation and fees
    491,932       34,000  
Changes in operating assets and liabilities:
               
Prepaid expenses and other current asset
    (42,467 )     (463 )
Security deposit
    -       (8,400 )
Accounts payable
    9,666       48,323  
Accounts payable - related party
            2,000  
                 
NET CASH USED IN OPERATING ACTIVITIES
    (813,229 )     (422,066 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Purchase of intellectual properties from related party
    -       (35,000 )
                 
NET CASH USED IN INVESTING ACTIVITIES
    -       (35,000 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Proceeds from related party advances
    -       4,813  
Proceeds from subscriptions payable
            33,000  
Repayments of related party advances
    (2,675 )     (12,946 )
Proceeds from sale of common stock
    831,500       400,000  
                 
NET CASH PROVIDED BY FINANCING ACTIVITIES
    828,825       424,867  
                 
NET INCREASE IN CASH
    15,596       (32,199 )
                 
CASH  - beginning of period
    87,663       83,840  
                 
CASH - end of period
  $ 103,259     $ 51,641  
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
         
Cash paid for:
               
Interest
  $ -     $ -  
Income taxes
  $ -     $ -  
                 
NON-CASH INVESTING AND FINANCING ACTIVITIES:
               
Issuance of common stock for prepaid services
  $ 224,000     $ 25,000  
 
See accompanying condensed notes to unaudited consolidated financial statements.
 
 
F-5
 
 
WALLY WORLD MEDIA, INC.
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2014
 
NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Organization
 
Wally World Media, Inc. (the “Company”) was incorporated in the State of Nevada on May 17, 2012 and established a fiscal year end of September 30.  The Company’s principal business is focused on creating an internet crowd-sourcing, virtual, micro service network that allows users that register on the Company’s website to place job offerings for a service on the Company’s “youpop” platform, a social media website. Services may include a video of a personalized birthday wish, a practical joke, a dare, etc.  Additionally, the Company’s registered website users may post events such as a bachelor party or anniversary on the Company’s “Party Crowd” platform. Users may accept donations from people who are attending the event. 
 
On March 10, 2014, the Company formed a new wholly owned subsidiary Vape Shop Holdings Inc. which was incorporated in the state of Nevada. Vape shop was formed to develop technology platforms, explore acquisitions and acquire intellectual property in the vaporizer and accessory industry.
 
Basis of presentation and going concern
 
These unaudited condensed consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (”SEC”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by "GAAP" for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.    The accounting policies and procedures used in the preparation of these financial statements have been derived from the audited financial statements of the Company for the fiscal year ended September 30, 2013, which are contained in the Company’s Current Report on Form 10-K. The balance sheet as of September 30, 2013 was derived from those financial statements.  The results of operations for the nine months ended June 30, 2014 are not necessarily indicative of the results to be expected for the full year.
 
As reflected in the accompanying unaudited condensed consolidated financial statements, the Company has a net loss and net cash used in operations of $1,362,777 and $813,229 respectively for the nine months ended June 30, 2014.  Additionally the Company has accumulated deficit of $2,214,114 at June 30, 2014 and no revenues. These factors raise substantial doubt about the Company’s ability to continue as a going concern.  The ability of the Company to continue as a going concern is dependent on the Company’s ability to further implement its business plan, raise capital and generate revenues.  Currently, management is seeking capital to implement its business plan.  Management believes that the actions presently being taken provide the opportunity for the Company to continue as a going concern. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Principles of consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly owned inactive subsidiary.  All intercompany transactions and balances are eliminated in consolidation. 
 
Use of estimates
 
The preparation of the unaudited financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and the related disclosures at the date of the financial statements and during the reporting period. Actual results could materially differ from these estimates. Significant estimates include the valuation of deferred tax assets, valuation of assets purchased from a related party and the value of stock-based compensation and fees.
 
Cash and cash equivalents
 
The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company places its cash with a high credit quality financial institution. The Company’s account at this institution is insured by the Federal Deposit Insurance Corporation ("FDIC") up to $250,000. At June 30, 2014, the Company has not reached bank balances exceeding the FDIC insurance limit. To reduce its risk associated with the failure of such financial institution, the Company evaluates at least annually the rating of the financial institution in which it holds deposits.
 
 
F-6
 
 
WALLY WORLD MEDIA, INC.
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2014
 
NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 
Fair Value Measurements and Fair Value of Financial Instruments
 
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants.    The Company classifies assets and liabilities recorded at fair value under the fair value hierarchy based upon the observability of inputs used in valuation techniques.   Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions.  The fair value measurements are classified under the following hierarchy:
 
 
●
Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets and liabilities in active markets;
 
●
Level 2—Observable inputs, other than quoted market prices, that are either directly or indirectly observable in the marketplace for identical or similar assets and liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets and liabilities; and
 
●
Level 3—Unobservable inputs that are supported by little or no market activity that is significant to the fair value of assets or liabilities.
 
The estimated fair value of certain financial instruments, including cash and cash equivalents and accounts payable are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.

Prepaid expenses
 
Prepaid expenses of $181,250 and $5,200 at June 30, 2014 and September 30, 2013, respectively, consist primarily of costs paid for future services which will occur within a year. Prepaid expenses include prepayments in cash and equity instruments for consulting, public relations and business advisory services, advertising and accounting fees which are being amortized over the terms of their respective agreements.
 
Property and equipment
 
Property and equipment are carried at cost less accumulated depreciation.    Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized.  When assets are retired or disposed of, the cost and accumulated depreciation are removed, and any resulting gains or losses are included in the Statement of Operations.
 
Software development costs

Costs incurred to develop internal-use software, including website development costs, during the preliminary project stage are expensed as incurred.   Internal-use software development costs are capitalized during the application development stage, which is after:   (i) the preliminary project stage is completed; and (ii) management authorizes and commits to funding the project and it is probable the project will be completed and used to perform the function intended.   Capitalization ceases at the point the software project is substantially complete and ready for its intended use, and after all substantial testing is completed.   Upgrades and enhancements are capitalized if it is probable that those expenditures will result in additional functionality.   Amortization is provided for on a straight-line basis over the expected useful life of three years of the internal-use software development costs and related upgrades and enhancements.   When existing software is replaced with new software, the unamortized costs of the old software are expensed when the new software is ready for its intended use.
 
Impairment of long-lived assets
 
The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. The Company recorded impairment loss in the amount of $0 and $35,000 during the nine months ended June 30, 2014 and 2013, respectively (see Note 2).
 
 
F-7
 
 
WALLY WORLD MEDIA, INC.
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2014
 
NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 
Revenue recognition
 
The Company will recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the purchase price is fixed or determinable and collectability is reasonably assured. For all revenue sources discussed below, in accordance with ASC 605-45 “Principal Agent Considerations”, the Company recognizes revenue net of amounts paid to third parties. The Company’s specific revenue recognition policies are as follows:
 
Users that register on the Company’s website may place job offerings for a service on the Company’s “Youpop” platform, a social media website (the “Job Offeror”). The Job Offeror will offer cash payments for a specific service to be completed. For example, the Job Offeror may require another user to provide a video of a specific content (i.e. personalized birthday wish, practical joke, dares, etc.). Other users that are looking to fulfill job postings (the “Job Offeree”) apply for the job. Once the Job Offeree applies, the Job Offeror can view the applicants profile, past jobs, user rating and ask direct questions. Once the Job Offeror engages a Job Offeree, the Company will charge the Job Offeror’s credit card for the service fee including its transaction fee of up to 30% of the transaction amount and the Company will hold the money until the work is completed by the job offeree and uploaded to Youpop for review and acceptance. At such time, the Company will record deferred revenue for the amount of the transaction fee and a customer deposit for the amount received from the Job Offeror. Upon acceptance of the completed task by the Job Offeror, the money is moved to the Job Offeree’s account and the Company will recognize transaction fee revenue. Job Offerees may request the funds be sent to them or they may leave it on account. Upon completion of the job, the Company recognizes revenue which consists of a transaction fee of up to 30% of the transaction amount with 50% paid by the Job Offeror and 50% by the Job Offeree.
 
Income taxes
 
The Company is governed by the Income Tax Law of the United States. The Company utilizes ASC Topic 740, "Accounting for Income Taxes," which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
 
Under ASC Topic 740, the evaluation of a tax position is a two-step process. The first step is to determine whether it is more likely than not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements.
 
A tax position is measured at the largest amount of benefit that is greater than 50% likelihood of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the threshold is no longer met. ASC Topic 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosures, and transition.

Stock-based compensation
 
The Company accounts for stock-based instruments granted to employees in accordance with ASC Topic 718. ASC Topic 718 requires companies to estimate and recognize the grant-date fair value of stock based awards issued to employees and directors.    The Company recognizes compensation on a straight-line basis over the requisite service period for each award.    There were 3,900,000 options outstanding as of June 30, 2014. The Company accounts for non-employee stock-based awards in accordance with the measurement and recognition criteria under ASC Topic 505-50.

Advertising
 
Advertising is expensed as incurred and is included in general and administrative expenses in the accompanying condensed statements of operations. For the nine months ended June 30, 2014 and 2013, advertising expense was approximately $53,000 and $0, respectively.
 
 
F-8
 
 
WALLY WORLD MEDIA, INC.
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2014
 
NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 
Research and development
 
Research and development costs are expensed as incurred. The Company did not incur any research and development cost for the nine months ended June 30, 2014 and 2013.
 
 Net loss per share of common stock
 
Basic net loss per share is computed by dividing the net loss by the weighted average number of common shares during the period. Diluted net loss per share is computed using the weighted average number of common shares and potentially dilutive securities outstanding during the period. At June 30, 2014, the Company has 3,900,000 potentially dilutive securities outstanding in connection with stock options  that may dilute any future earnings per share .
 
Recent accounting pronouncements
 
In June 2014, the FASB issued ASU 2014-10, “Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements”. ASU 2014-10 eliminates the distinction of a development stage entity and certain related disclosure requirements, including the elimination of inception-to-date information on the statements of operations, cash flows and stockholders’ equity. The amendments in ASU 2014-10 will be effective prospectively for annual reporting periods beginning after December 15, 2014, and interim periods within those annual periods, however early adoption is permitted. The Company evaluated and adopted ASU 2014-10 for the interim reporting period ended June 30, 2014.

Accounting standards which were not effective until after June 30, 2014 are not expected to have a material impact on the Company’s financial position or results of operations.

NOTE 2 – RELATED PARTY TRANSACTIONS
 
During the nine months ended June 30, 2014, the Company repaid $2,675 to the Company’s CEO for certain office expenses on behalf of the Company that was incurred during the fiscal year ending September 30, 2013, leaving a balance of $0 at June 30, 2014.
 
The following related party from time to time, provided advances to the Company for working capital purposes. At June 30, 2014, the Company had a payable to this individual of $5,000. These advances were short-term in nature and non-interest bearing.

Name
 
Balance at
June 30,
2014
   
Balance at
September 30, 2013
 
Relationship
Robb Knie
 
$
5,000
   
$
5,000
 
Former CEO and employee
Darin Myman
   
-
     
2,675
 
CEO, director and shareholder
   
$
5,000
   
$
7,675
   

On October 22, 2012, the Company paid $35,000 to Robb Knie, the Company’s majority stockholder and employee and former chief executive officer (the “Seller”) for the purchase of certain intellectual properties consisting URL’s, trademarks and programming code (the “Purchased Assets”). In connection with the acquisition of the Purchased Assets, the Company recorded intellectual properties of $35,000, which is less than the Seller’s original cost basis.
 
The Company recorded an impairment loss in the amount of $0 and $35,000 during the nine months ended June 30, 2014 and 2013, respectively.
 
 
F-9
 
 
WALLY WORLD MEDIA, INC.
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2014
 
NOTE 3 – STOCKHOLDERS’ EQUITY
 
On August 1, 2013, the Board of Directors and holders of a majority of the Company’s outstanding capital stock of the Company approved the Company's 2013 Equity Incentive Plan, which reserves 8,000,000 shares of common stock for issuance to the Company's officers, directors, and employees.
 
Preferred stock
 
The Company authorized 50,000,000 preferred shares.  Preferred shares may be designated by the Company’s board of directors.   There were no shares designated as of June 30, 2014.
 
Common stock
 
In October 2013, the Company issued 90,000 shares of its common stock at $0.10 per common share to a company owned by its Chief Financial Officer as payment for accounting services rendered pursuant to an engagement letter. The Company valued these common shares at the fair value of $0.10 per common share based on the contemporaneous sale of common stock in a private placement at $0.10 per common share. In connection with issuance of these common shares, the Company recorded stock-based compensation of $9,000.
 
In December 2013, the Company sold 3,565,000 shares of its common stock at $0.10 per common share for proceeds of $356,500.
 
Between January 2014 and March 2014, the Company sold 4,750,000 shares of the Company’s common stock at a per share purchase price of $0.10 and raised gross proceeds of $475,000.
 
On January 13, 2014, the Company issued an aggregate of 1,025,000 vested shares of its common stock to three employees for services rendered. The Company valued these common shares at the fair value of $0.10 per common share based on the contemporaneous sale of common stock in a private placement at $0.10 per common share. In connection with issuance of these common shares, the Company recorded stock-based compensation of $102,500.
 
On January 13, 2014, the Company issued an aggregate of 850,000 vested shares of its common stock to three consultants for services rendered. The Company valued these common shares at the fair value of $0.10 per common share based on the contemporaneous sale of common stock in a private placement at $0.10 per common share. In connection with issuance of these common shares, the Company recorded stock-based compensation of $85,000.
 
On January 24, 2014, the Company issued 500,000 vested shares of its common stock to a consultant in connection with a 12 month investor relations consulting agreement. The Company valued these common shares at the fair value of $0.10 per common share based on the contemporaneous sale of common stock in a private placement at $0.10 per common share. In connection with the issuance of these common shares, the Company recorded stock based consulting of $21,667 and prepaid expenses of $28,333 to be amortized over the term of the consulting agreement. Additionally, the Company paid $100,000 pursuant to the consulting agreement.

On March 18, 2014, the Company issued 500,000 vested shares of its common stock to a consultant for consulting and business advisory services rendered. The Company valued these common shares at the fair value of $0.10 per common share based on the contemporaneous sale of common stock in a private placement at $0.10 per common share. In connection with issuance of these common shares, the Company recorded stock-based compensation of $50,000.

On March 18, 2014, the Company issued 180,000 shares of its common stock at $0.10 per common share to a company owned by its Chief Financial Officer as payment for accounting services rendered pursuant to an engagement letter. The Company valued these common shares at the fair value of $0.10 per common share based on the contemporaneous sale of common stock in a private placement at $0.10 per common share. In connection with issuance of these common shares, the Company recorded stock-based compensation of $18,000.

In April 2014, the Company issued 500,000 vested shares of its common stock to a consultant in connection with a 6 month investor relations consulting agreement. The Company valued these common shares at the fair value of approximately $0.33 per common share or $165,000 based on the quoted trading price on the grant date. In connection with the issuance of these common shares, the Company recorded stock based consulting of $68,750 and prepaid expenses of $96,250 to be amortized over the term of the consulting agreement.
 
 
F-10
 
 
WALLY WORLD MEDIA, INC.
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2014
 
NOTE 3 – STOCKHOLDERS’ EQUITY (continued)
 
In April 2014, the Company issued 150,000 vested shares of its common stock to two consultants in connection with investor relations services rendered. The Company valued these common shares at the fair value of approximately $0.33 per common share or $49,500 based on the quoted trading price on the grant date. In connection with issuance of these common shares, the Company recorded stock-based consulting of $49,500.

Stock options

On January 13, 2014, the Company granted an aggregate of 1,650,000 three year options to purchase shares of common stock exercisable at $0.25 per share to four employees of the Company. The options shall vest 25% every 90 days from the date of grant. The 1,650,000 options were valued on the grant date at approximately $0.09 per option or a total of $155,450 using a Black-Scholes option pricing model with the following assumptions: stock price of $0.10 per share (based on the contemporaneous sale of common stock in a private placement), volatility of 240% (based from volatilities of similar companies), expected term of 3 years, and a risk free interest rate of 0.74%.

On January 13, 2014, the Company granted an aggregate of 3,000,000 three year options to purchase shares of common stock exercisable at $1.00 per share to the Chief Executive Officer of the Company. The options shall vest 25% every 90 days from the date of grant. The 3,000,000 options were valued on the grant date at approximately $0.09 per option or a total of $268,457 using a Black-Scholes option pricing model with the following assumptions: stock price of $0.10 per share (based on the contemporaneous sale of common stock in a private placement), volatility of 240% (based from volatilities of similar companies), expected term of 3 years, and a risk free interest rate of 0.74%.

In April 2014, the Company granted 50,000 three year options to purchase shares of common stock exercisable at $0.50 per share to an employee of the Company. The options shall vest 25% every 90 days from the date of grant. The 50,000 options were valued on the grant date at approximately $0.31 per option or a total of $15,645 using a Black-Scholes option pricing model with the following assumptions: stock price of $0.33 per share (based on the quoted trading price on the grant date), volatility of 234% (based from volatilities of similar companies), expected term of 3 years, and a risk free interest rate of 0.82%.

During the nine months ended June 30, 2014, the Company recorded stock based compensation expense related to vested options granted in fiscal 2014 in the amount of $186,932. As of June 30, 2014, there were total unrecognized compensation costs related to non-vested share-based compensation arrangements of $252,619.
 
Stock option activities for the period ended June 30, 2014 are summarized as follows:
 
   
Number of
Options
   
Weighted
Average
Exercise Price
   
Weighted
Average
Remaining
Contractual
Life (Years)
   
 
Aggregate
Intrinsic Value
 
Balance at September 30, 2013
   
-
   
$
-
    -     -  
Granted
   
4,700,000
     
0.88
   
3.00
       
Forfeited
   
(800,000)
     
0.25
   
2.75
       
Balance at June 30, 2014
   
3,900,000
   
$
0.83
     
2.55
   
$
-
 
Options exercisable at June 30, 2014
   
-
   
$
-
     
-
   
$
-
 

The weighted-average grant-date fair value of options granted to employees/consultants during the nine months ended June 30, 2014 was $0.09.
 
 
F-11
 
 
WALLY WORLD MEDIA, INC.
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2014
 
NOTE 4 – COMMITMENTS AND CONTINGENCIES

On February 19, 2013 the Company entered into a one year renewable contract (the “Agreement”) with a consultant to recruit approved celebrities to be featured on the Company’s website and in accordance with the Company’s standard written terms and conditions which are set forth on the website.    The consultant’s compensation agreement is as follows:
 
With respect to any approved celebrity that becomes an activated celebrity during the Term and/or for a period of twelve (12) months after the termination of this Agreement (the “Tail Period”), the Company shall pay the consultant the following compensation (which shall be non-refundable notwithstanding the termination of this Agreement):

 
(a)
  Cash Compensation. The Company shall pay the consultant, or to consultant’s designee, a non-refundable monthly retainer in the amount of $2,500 payable as follows, (i) $ 7,500 payable upon the execution of this Agreement and (i) $2,500 commencing on the four (4) month anniversary of this Agreement and every month on the monthly anniversary of this Agreement thereafter during the term. Notwithstanding the forgoing, in the event that the Company shall secure debt or equity financing, in one or more financings, of at least $500,000 in the aggregate during the initial one year Term of this Agreement, then the monthly retainer shall retroactively increase from the effective date to $5,000 per month and the Company shall remit to the consultant the additional cash compensation within five (5) business days after the closing of any such financing.

 
(b)
Stock Compensation.
 
   
(i)
The Initial Shares. Within ten (10) business days after the Effective Date, the Company shall issue to the consultant 250,000 shares of the Company’s common stock (the “Initial Shares”).
       
  
 
(ii)
The Additional Shares. Within ten (10) business days after twenty (20) activated celebrities shall be offering services on the Company’s website, the Company shall issue to the consultant an additional 250,000 shares of the Company’s common stock (the “Additional Shares”).
       
  
 
(iii)
The Bonus Shares. For every additional ten activated celebrities (above and beyond the initial twenty (20) activated celebrities) that shall commence offering services on the Company’s website, the Company shall issue to the consultant within ten (10) business days after reaching such threshold, an additional 5,000 shares (or in the case of any Hall of Fame, All-Star, or award winning celebrity, 10,000 shares) of the Company’s stock per each additional activated celebrity that shall list an offer for services on the Company website (the “Bonus Shares”, and together with the Initial Shares and the Additional Shares, collectively, the “Shares ”).
       
  
 
(iv)
If at any time the Company shall determine to file with the Securities and Exchange Commission a registration statement relating to an offering for its own account or for the account of others under the Securities Act of 1933, as amended (the “Securities Act”), of any of its equity securities (other than (i) any amendment to the registration statement (file number 333-185694) previously filed with the Securities and Exchange Commission or the re-filing of a registration statement that was previously filed and withdrawn; or (ii) on Form S-4, Form S-8 or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other bona fide, employee benefit plans), the Company shall use its best efforts to include in such registration statement all of the Shares. Notwithstanding the foregoing, the Company shall not be obligated to register the Shares as contemplated herein if all of the Shares may be sold without restriction pursuant to Rule 144 promulgated pursuant to the Securities Act of 1933, as amended.
 
 
F-12
 
 
WALLY WORLD MEDIA, INC.
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2014
 
NOTE 4 – COMMITMENTS AND CONTINGENCIES (continued)
 
 
(c)
Bonus Compensation.   In the event that the aggregate group of the activated celebrities shall generate gross revenue to the Company in excess of the cash compensation, then the consultant shall also receive a cash bonus in the amount of five percent of the gross revenue generated to the Company by aggregate group of the activated celebrities during the term and for a period that is the longer of (i) two years after the termination of this Agreement or (ii) two years after the expiration of the Tail Period, if any.
 
The Company may terminate this Agreement with 30 days prior written notice to the consultant (provided that the consultant shall still be entitled to the cash, stock and bonus compensation they had previously earned). On June 19, 2013, the Company terminated the contract and the consultant agreed to waive the minimum payment of $2,500 per month (See Note 3).
 
On April 1, 2013, the Company executed a lease agreement for approximately 1,400 square feet of office space located in Brunswick, New Jersey, which shall serve as the Company’s permanent offices.    The initial term of the lease shall be for 36 months, with one option to renew for an additional 36 months.    The base monthly rental for the premises is $2,100 plus common area maintenance charges.    In addition, the lease required a security deposit and one month of prepaid rent in the amount of $8,400 and $2,100, respectively.
 
Future minimum rental payments required under this operating lease are as follows:
 
   
Total
   
1 year
   
1-3 years
   
3-5 years
   
5+ years
 
Operating lease
 
$
44,100
   
$
25,200
   
$
18,900
     
-
     
-
 
Total
 
$
44,100
   
$
25,200
   
$
18,900
   
$
-
   
$
-
 
 
Rent expense was $24,659 and $12,158 for the nine months ended June 30, 2014 and 2013, respectively.
 
On April 1, 2013, the Company entered into a consulting agreement (the “Agreement”) with a consultant to recruit and sign celebrities and entertainers who will offer services on the Company’s website. In consideration of this contract, on April 1, 2013 the Company issued 100,000 shares of its common stock to consultants for services. The Company valued these common shares at the fair value of $0.10 per common share based on the sale of common stock in a private placement at $0.10 per common share. The term of this Agreement shall be for a period of (12) twelve months from the date of this Agreement (the “Term”). Upon the expiration of the Term, this Agreement shall be automatically renewed for successive 12 month terms unless either party shall send written notice to the other party of its intention not to renew this Agreement at least thirty (30) days prior to the expiration of the then current Term. The consultant’s compensation shall be as follows:
 
With respect to any approved entertainer that becomes an activated entertainer during the Term and/or for a period of twelve (12) months after the termination of this Agreement, the Company shall pay the consultant the following compensation (which shall be non-refundable notwithstanding the termination of this Agreement):
 
 
(a)
Cash Compensation.  The Company shall pay the consultant for each entertainer or celebrity that signs up as a result of his introduction at the following fee schedule: $100 for each non-famous entertainer, $250 for a moderately famous entertainer and $500 for a well-known entertainer. The Company was required to pay the consultant a minimum of $2,500 per month.
 
 
F-13
 
 
WALLY WORLD MEDIA, INC.
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2014
 
NOTE 4 – COMMITMENTS AND CONTINGENCIES (continued)
 
 
(b)
Stock Compensation.
 
   
(v)
The Initial Shares.  The Company shall issue to the consultant, 100,000 shares of the Company’s common stock.
 
   
(vi)
The Additional Shares. When fifty (50) activated entertainers shall be offering services on the Company’s website, the Company shall issue to the consultant an additional 100,000 shares of the Company’s common stock.
 
   
(vii)
The Bonus Shares. For each additional activated entertainer that shall commence offering services on the Company’s website the Company shall issue to the consultant 1,000 shares for each non-famous entertainer, an additional 5,000 shares for each moderately famous entertainer and 10,000 for each famous Entertainer. 
   
(viii)
Expenses.  The Company shall reimburse the consultant reasonable out of pocket expenses pre-approved by the Company.    The Company will set a pre-approved expense budget with the consultant every month.
 
The Company may terminate this Agreement with 30 days prior written notice to the consultant (provided that the consultant shall still be entitled to the cash, stock and bonus compensation they had previously earned). On May 1, 2013, the Company terminated the contract and the consultant agreed to waive the minimum payment of $2,500 per month (See Note 3).
 
On April 1, 2014 through its newly formed subsidiary, Vape Shop Holdings, Inc. (“Vape Shop”), the Company acquired the rights to Bongshop.com from a related party. The purchase price for such acquisition shall be 500,000 shares of   Vape Shop’s common stock.   In May 2014, the Company cancelled the agreement in connection with this proposed acquisition of a certain right. There have been no shares issued for this purchase as a result of the cancellation.
 
On April 20, 2014, through its subsidiary, Vape Shop, the Company has signed a joint venture agreement with Vapir, Inc. (“Vapir”), a leading manufacturer and distributor of electronic vaporizers.  Vapir also is the holder of several patents going back to 1998 covering vaporizer technology.   Under terms of the agreement Vape Shop will make available its Youpop, a multi media sharing platform for pictures, video and social media technology platform and other expertise to Vapir, and in return, Vape Shop will receive 1.5 million shares of Vapir’s common stock and warrants to purchase an additional 1.5 million shares of Vapir’s common stock. In June 2014, the Company cancelled the joint venture agreement in connection with Vapir. The Company did not receive any shares and warrants of Vapir as a result of the cancellation.
 
NOTE 5 – SUBSEQUENT EVENTS
 
None. 
 
 
F-14
 
 
Item 2.        Management’s Discussion and Analysis of Financial Condition and Results of Operations.
 
The following discussion and analysis should be read in conjunction with our financial statements and the related notes. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties, such as its plans, objectives, expectations and intentions. Its actual results and the timing of certain events could differ materially from those anticipated in these forward-looking statements.

Overview

Wally World Media, Inc. was incorporated in the State of Nevada on May 17, 2012.  We are a start-up business and are still working on our software and platform. We have developed a social media website that we refer to as “YouPop.” Our “YouPop” platform launched for public use in April 2013. We expect that “YouPop” will facilitate transactions between buyers and sellers of micro-services by pooling together the needs and products of these users and providing a platform for negotiation and completion of these transactions. We expect that YouPop will allow registered users to place job offers or solicit services, such as a video production or other virtual needs such as designing personalized birthday wishes.  At the same time, other users will either bid for the services or pool together resources with other users to provide that service.
  
The YouPop Platform
 
The following is how we expect YouPop to operate and what our users can expect from the YouPop experience. Users are permitted to register on our website and place job offerings for a service. For example, a user will be able to post a job offer to provide a video of a specific content (i.e. personalized birthday wish, practical joke, dares, etc.).  Other users will be able to view that offer and fulfill that offer by contacting the person and agreeing to provide that service. If the offer is accepted, the person who posted the job will provide us with their credit card information and we will hold the information until the service provider successfully completes the work.  It is intended that upon acceptance of the completed task, we will charge the credit card the amount that was to be paid plus a service fee and credit the service provider’s account with the agreed upon amount.  We will generate revenue by charging both the person looking for services to be provided and the service provider with a transaction fee or service charge of up to 15% from each party.
 
Our payment processing is being set up and structured as a conditional payment system. We expect to get a customer’s authorization to charge his or her credit card at some future time when the services are complete. This method of payment pre-authorizes the charge but we do not actually charge the credit card until the services are completed. In the event that services are completed and we attempt to charge the credit card but it is rejected or the financial institution does not accept the charge, if possible, the services will be blocked and will not be delivered. We will not guarantee payment and this is a risk that the service provider takes. If the payment is not made at the end of the services, then the service provider does not get paid and the person requesting the service will not get access to the material he or she requested.
 
In order to resolve any disputes that may arise between two contracting parties as to whether service was successfully completed, we will be implementing dispute resolution policies and procedures. These policies will include a process for the service provider to submit a request for review by an independent panel consisting of officers of the Company that will review, arbitrate and mediate any dispute. We recognize and understand that there may be disputes and disagreements between parties and we will do our best to resolve them. But, in the event there is no resolution, each party bears the risk of non-performance or non-payment.
  
We expect that YouPop will be attractive for both businesses and individuals. We expect that people will use our service to complete specific micro-services, such as:
 
●
Providing Testimonials for businesses or services
 
●
Advertising to increase user generated ads
  
●
Converting an excel document into other formats
 
●
Producing viral videos
 
●
Searching for talented people to provide radio and TV show content

 
2
 
 
We do recognize that it is possible that some users may try to use our platform for unlawful transactions. We plan to implement the following steps to try to prevent, or limit, unlawful transactions or acts, from occurring on or through the platform. We will have a procedure for manual review of each posting and a reporting mechanism for users of the site to notify us of any inappropriate content that may appear. While we will do our best to prevent these unlawful postings, we do recognize that they may occur and it is possible that we could potentially incur substantial liability if these unlawful postings do occur.

ReShoot Technology
 
The Company has developed an app for the iPhone and iPad based on its reShoot technology.  reShoot, a video camera app for Apple iPhones and iPads running iOS 7.   Featuring its patent- pending “on the Fly” video editing technology, reShoot makes it easy to correct videos while recording. It provides the capability to rewind and reshoot over unwanted footage.  Utilizing the iPhone’s camera, reShoot provides the capability to record, rewind, pause, annotate and reshoot videos of any length, and post them to social networks and video sharing platforms such as Facebook, Twitter, , Vimeo, YouPop and Dropbox.  reShoot’s  videoArc feature, users can add new footage to existing video recordings stored in their VideoArc or camera roll. Instead of capturing dozens of clips, VideoArc provides a single video stream or montage that can be edited and extended.

With the Insert reShoot features users can record new video into video they have already taken.  It also allows users to insert new footage into a previously recorded VideoArc clip or clip from their camera roll.

The Company has changed its focus to concentrate its efforts on the reShoot technology which is developing new features such as video sound effects, thought bubbles, video emoticons and adding sound to traditional photographs.

Plan of Operations

We have commenced limited operations and our reShoot App has been available in the iTunes Store since March 18, 2014.
 
Our principal business intends to focus on creating a large user base for our reShoot technology that includes adding new features, new ways to monetize the mobile app through In-App purchases of special features, creating specific genre based videos entertainment and licensing the technology.   We plan to use the YouPop platform we have developed to connect the reShoot app and allow its users to share long form videos without exchanging the files using our cloud.
 
We are a development stage company, and to date, our development efforts have been focused primarily on the development and marketing of our business model. In addition, to date we have limited operating history for investors to evaluate the potential of our business development. As such, we have not built our customer base or our brand name. In addition, our sources of cash are not adequate for the next 12 months of operations. If we are unable to raise additional cash, we will have to reduce our expansion plans.
 
Limited Operating History

We have generated limited financial history and have not previously demonstrated that we will be able to expand our business. Our business is subject to risks inherent in growing an enterprise, including limited capital resources and possible rejection of our business model and/or sales methods.
 
Critical Accounting Policies and Estimates

While our significant accounting policies are more fully described in Note 1 to our financial statements for the nine months ended June 30, 2014, we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating this management discussion and analysis.
 
Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We continually evaluate our estimates, including those related to bad debts, recovery of long-lived assets, income taxes, and the valuation of equity transactions. We base our estimates on historical experience and on various other assumptions that we believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Any future changes to these estimates and assumptions could cause a material change to our reported amounts of revenues, expenses, assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of the financial statements.

 
3
 
 
Software development costs
 
Costs incurred to develop internal-use software, including website development costs, during the preliminary project stage are expensed as incurred. Internal-use software development costs are capitalized during the application development stage, which is after: (i) the preliminary project stage is completed; and (ii) management authorizes and commits to funding the project and it is probable the project will be completed and used to perform the function intended. Capitalization ceases at the point the software project is substantially complete and ready for its intended use, and after all substantial testing is completed. Upgrades and enhancements are capitalized if it is probable that those expenditures will result in additional functionality. Amortization is provided for on a straight-line basis over the expected useful life of three years of the internal-use software development costs and related upgrades and enhancements. When existing software is replaced with new software, the unamortized costs of the old software are expensed when the new software is ready for its intended use.
 
Impairment of long-lived assets
 
In accordance with ASC Topic 360, we review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. We recognize an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. For the nine months ended June 30, 2014 and 2013, we incurred impairment expense of $0 and $35,000, respectively.
 
Revenue recognition
 
The Company will recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the purchase price is fixed or determinable and collectability is reasonably assured. For all revenue sources discussed below, in accordance ASC 605-45 “Principal Agent Considerations”, the Company recognizes revenue net of amounts retained by third party entities pursuant to revenue sharing agreements. The Company’s specific revenue recognition policies are as follows:
  
Users that register on the Company’s website may place job offerings for a service on the Company’s “Youpop” platform, a social media website (the “Job Offeror”). The Job Offeror will offer cash payments for a specific service to be completed. For example, the Job Offeror may require another user to provide a video of a specific content (i.e. personalized birthday wish, practical joke, dares, etc.). Other users that are looking to fulfill job postings (the “Job Offeree”) apply for the job. Once the Job Offeree applies, the Job Offeror can view the applicants profile, past jobs, user rating and ask direct questions. Once the Job Offeror engages a Job Offeree, the Company will charge the Job Offeror’s credit card for the service fee including its transaction fee of up to 30% of the transaction amount and the Company will hold the money until the work is completed by the job offeree and uploaded to Youpop for review and acceptance. At such time, the Company will record deferred revenue for the amount of the transaction fee and a customer deposit for the amount received from the Job Offeror. Upon acceptance of the completed task by the Job Offeror, the money is moved to the Job Offeree’s account and the Company will recognize transaction fee revenue. Job Offerees may request the funds be sent to them or they may leave it on account. Upon completion of the job, the Company recognizes revenue which consists of a transaction fee of up to 30% of the transaction amount with 50% paid by the Job Offeror and 50% by the Job Offeree.
 
Stock-based compensation
 
We account for stock-based instruments issued to employees in accordance with ASC Topic 718. ASC Topic 718 requires companies to recognize in the statement of operations the grant-date fair value of stock options and other equity based compensation issued to employees.

 
4
 
 
Recent Accounting Pronouncements

In June 2014, the FASB issued ASU 2014-10, “Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements”. ASU 2014-10 eliminates the distinction of a development stage entity and certain related disclosure requirements, including the elimination of inception-to-date information on the statements of operations, cash flows and stockholders’ equity. The amendments in ASU 2014-10 will be effective prospectively for annual reporting periods beginning after December 15, 2014, and interim periods within those annual periods, however early adoption is permitted. The Company evaluated and adopted ASU 2014-10 for the interim reporting period ended June 30, 2014.
 
Accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption.
 
Results of Operations
 
The following table presents a summary of operating information for the three and nine months ended June 30, 2014 and 2013:

 
For the Three Months Ended
 
For the Nine Months Ended
 
 
June 30,
2014
 
June 30,
2013
 
June 30,
2014
 
June 30,
 2013
 
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
Net Revenues
  $ -     $ -     $ -     $ -  
Total Operating Expenses
    480,735       200,425       1,362,906       542,790  
Interest Income
    -       45       129       414  
Net Loss
  $ (480,735 )   $ (200,380 )   $ (1,362,777 )   $ (542,376 )
 
For the nine months ended June 30, 2014 and 2013 we generated no revenue.
 
Operating Expenses
 
Expenses for the three months ended June 30, 2014 and 2013 totaled $480,735 and $200,425, respectively. Expenses for the nine months ended June 30, 2014 and 2013 totaled $1,362,906 and $542,790, respectively, and consisted of the following:

   
For the Three Months Ended
   
For the Nine Months Ended
 
   
June 30,
2014
   
June 30,
2013
   
June 30,
2014
   
June 30,
2013
 
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
 
Compensation
 
$
237,656
   
$
128,109
   
$
772,598
   
$
364,160
 
Professional fees
   
189,227
     
50,125
     
402,187
     
97,493
 
Rent expense
   
6,453
     
770
     
24,659
     
12,158
 
Impairment expense
   
-
     
-
     
-
     
35,000
 
General and administrative
   
47,399
     
21,421
     
163,462
     
33,979
 
 
·
During the three and nine months ended June 30, 2014, compensation increased primarily due to increased stock based compensation to our officer and employees. We expect compensation to increase as we implement our business plan.
   
·
We expect professional fees to increase substantially as we incur significant costs associated with our public company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission.
 
 
5
 
 
·
For the three months ended June 30, 2014 and 2013, we incurred rent expense of $6,453 and $770, respectively. For the nine months ended June 30, 2014 and 2013, we incurred rent expense of $24,659 and $12,158, respectively. The increase in both periods is primarily attributable to our new office lease agreement which was executed in April 2013.
   
·
For the nine months ended June 30, 2014 and 2013, we incurred impairment expense of $0 and $35,000, respectively. We did not have a comparable expense for the current period.
   
·
For the three months ended June 30, 2014 and 2013, we incurred general and administrative expenses of $47,399 and $21,421, respectively. For the nine months ended June 30, 2014 and 2013, we incurred general and administrative expenses of $163,462 and $33,979, respectively. We expect general and administrative expenses to increase as we implement our business plan.
 
Net Loss
 
As a result of the factors described above, our net loss for the three months ended June 30, 2014 and 2013, was $480,735 and $200,380, respectively, or $(0.01) and $(0.01) per common share, respectively, (basic and diluted). As a result of the factors described above, our net loss for the nine months ended June 30, 2014 and 2013 was $1,362,777 and $542,376, respectively, or $(0.04) and $(0.02)per common share respectively (basic and diluted).

Liquidity and Capital Resources
 
Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. We have been funding our operations through the sale of our common stock.
 
Our primary uses of cash have been for salaries and fees paid to third parties for the development of our products. All funds received have been expended in the furtherance of growing the business and establishing brand portfolios. The following trends are reasonably likely to result in a material decrease in our liquidity over the near to long term:
 
●
An increase in working capital requirements to finance additional product development,
 
●
Addition of administrative and sales personnel as the business grows,
 
●
Increases in advertising, public relations and sales promotions for existing and new brands as the company expands within existing markets or enters new markets,
 
●
The cost of being a public company, and
 
●
Capital expenditures to add additional technology.
 
We are not aware of any known trends or any known demands, commitments or events that will result in our liquidity increasing or decreasing in any material way. We are not aware of any matters that would have an impact on future operations.
 
Our net revenues are not sufficient to fund our operating expenses.  At June 30, 2014 we had a cash balance of $103,259. During the nine months ended June 30, 2014, we raised approximately $832,000 from the sale of common stock to fund our operating expenses, pay our obligations, and grow our company. We currently have no material commitments for capital expenditures. We may be required to raise additional funds, particularly if we are unable to generate positive cash flow as a result of our operations.   We estimate that based on current plans and assumptions, that our available cash will not be sufficient to satisfy our cash requirements under our present operating expectations, without further financing, for up to 12 months. Other than working capital, we presently have no other alternative source of working capital. We may not have sufficient working capital to fund the expansion of our operations and to provide working capital necessary for our ongoing operations and obligations. We will need to raise significant additional capital to fund our operating expenses, pay our obligations, and grow our company. We do not anticipate we will be profitable in the rest of fiscal 2014.  Therefore our future operations will be dependent on our ability to secure additional financing.  Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the trading price of our common stock and a downturn in the U.S. equity and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. The inability to obtain additional capital will restrict our ability to grow and may reduce our ability to continue to conduct business operations. If we are unable to obtain additional financing, we will likely be required to curtail our marketing and development plans and possibly cease our operations. 
 
 
6
 
 
We anticipate that depending on market conditions and our plan of operations, we may incur operating losses in the foreseeable future. Therefore, our auditors have raised substantial doubt about our ability to continue as a going concern.
 
Our liquidity may be negatively impacted by the significant costs associated with our public company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly.

Our business plan within 12 months is outlined below:
 
If we continue to develop the YouPop website and we receive a positive reaction from our launch, we will attempt to raise additional money through a private placement, public offering or long-term loans to continue development and marketing our web sites to attract larger numbers of users. We will also continually refine our web sites and optimize our marketing efforts from the market feedback we receive during the initial marketing phase and from our user’s feedback. We do not at this time have an estimate of time or cost for this stage.
 
If we are unable to maintain our web site or successfully launch our marketing efforts because we don't have enough money, we will cease our development and/or marketing operations until we raise money. Attempting to raise capital after failing in any phase of our development plan could be difficult. As such, if we cannot secure additional proceeds we will have to cease operations and investors would lose their entire investment.  At the present time, we have not made any arrangements to raise additional cash. However, we intend to raise additional capital through private placements.  If we need additional cash but are unable to raise it, we will either suspend marketing operations until we do raise the cash, or cease operations entirely. Other than as described in this paragraph, we have no other financing plans.
  
Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Contractual Obligations
 
We have certain potential commitments that include future estimated payments. Changes in our business needs, cancellation provisions, changing interest rates, and other factors may result in actual payments differing from the estimates. We cannot provide certainty regarding the timing and amounts of payments. We have presented below a summary of the most significant assumptions used in our determination of amounts presented in the tables, in order to assist in the review of this information within the context of our financial position, results of operations, and cash flows. 
 
The following tables summarize our contractual obligations as of June 30, 2014, and the effect these obligations are expected to have on our liquidity and cash flows in future periods:

Contractual obligations:
 
Total
   
1 year
   
1-3 years
   
3-5 years
   
5+ years
 
Operating leases
 
$
44,100
   
$
25,200
   
$
18,900
   
$
-
   
$
-
 
Total
 
$
44,100
   
$
25,200
   
$
18,900
   
$
-
   
$
-
 
 
 
7
 
 
Item 3.        Quantitative and Qualitative Disclosures About Market Risk.

Smaller reporting companies are not required to provide the information required by this item.
   
Item 4.        Controls and Procedures.

We carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its   principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based upon our evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective as of June 30, 2014, in ensuring that material information that we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms.

Changes in Internal Control over Financial Reporting

No changes were made to our internal control over financial reporting during our most recently completed 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.

From time to time, the Company may become involved in litigation relating to claims arising out of its operations in the normal course of business. We are not involved in any pending legal proceeding or litigation and, to the best of our knowledge, no governmental authority is contemplating any proceeding to which we are a party or to which any of our properties is subject, which would reasonably be likely to have a material adverse effect on the Company.

Item 1A.     Risk Factors

Smaller reporting companies are not required to provide the information required by this item.
 
Item 2.        Unregistered Sales of Equity Securities and Use of Proceeds.
 
None.
   
Item 3.        Defaults Upon Senior Securities.

None.
Item 4.        Mine Safety Disclosure.

Not applicable.

 
8
 
 
Item 5.        Other Information.
 
On April 20, 2014, our wholly-owned subsidiary, Vape Shop Holdings, Inc. entered into a joint venture agreement with Vapir, Inc., a California company. In June 2014, this joint venture was terminated by mutual consent. We did not issue any shares of common stock or warrants to Vapir, Inc. and do not owe Vapir, Inc. any further consideration under the terms of the joint venture or its termination.
 
Item 6.        Exhibits.
 
Exhibit
Number
 
Description
31.1
 
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes - Oxley Act of 2002.
31.2
 
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes - Oxley Act of 2002.
32.1*
 
Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002
101.INS**
 
XBRL Instance Document
101.SCH**
 
XBRL Taxonomy Extension Schema Document
101.CAL**
 
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF**
 
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB**
 
XBRL Taxonomy Extension Label Linkbase Document
101.PRE**
 
XBRL Taxonomy Extension Presentation Linkbase Document

* The certification attached as Exhibit 32.1 accompanying this Quarterly Report on Form 10-Q is being furnished and is not deemed filed with the Securities and Exchange Commission.

** 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.
 
 
9
 
 
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.
 
 
WALLY WORLD MEDIA, INC.
   
Dated : August 11 , 2014
By:
/s/ Darin Myman
   
Darin Myman
   
Chief Executive Officer
(Duly Authorized and Principal Executive Officer)
 
Dated: August 11 , 2014
By:
/s/ Adam Wasserman
   
Adam Wasserman
   
Chief Financial Officer
(Duly Authorized, Principal Financial Officer and
Principal Accounting Officer)
 
 
10 
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