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 June 30, 2015
or
|
¨ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ______________ to
______________
Zonzia Media, Inc.
(Name of small business issuer in its charter)
NEVADA |
|
84-0871427 |
(State of or other jurisdiction of incorporation or organization) |
|
(IRS Employer I.D. No.) |
74 N. Pecos Road, Suite D
Henderson, Nevada 89074
(Address of Principal Executive Office)
(702) 463-8528
(Registrant’s telephone number, including
area code)
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 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 “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large
accelerated filer o |
Accelerated filer o |
|
|
Non-accelerated
filer o |
Smaller reporting company x |
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x
The number of shares of
Common Stock, $0.001 par value, of the registrant outstanding at August 12, 2015 was 228,840,975.
TABLE OF CONTENTS
PART I – FINANCIAL INFORMATION |
Item 1. Financial Statements. |
|
|
4 |
|
CONDENSED BALANCE SHEETS |
|
|
4 |
|
CONDENSED STATEMENT OF OPERATIONS |
|
|
5 |
|
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) |
|
|
6 |
|
CONDENSED STATEMENT OF CASH FLOWS |
|
|
7 |
|
NOTES TO CONDENSED FINANCIAL STATEMENTS |
|
|
8 |
|
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
|
|
13 |
|
Item 3. Quantitative and Qualitative Disclosures About Market Risk |
|
|
17 |
|
Item 4. Controls and Procedures. |
|
|
17 |
|
PART II – OTHER INFORMATION |
Item 1. Legal Proceedings. |
|
|
18 |
|
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. |
|
|
18 |
|
Item 3. Defaults Upon Senior Securities. |
|
|
19 |
|
Item 4. Mine Safety Disclosures. |
|
|
19 |
|
Item 5. Other Information. |
|
|
19 |
|
Item 6. Exhibits. |
|
|
19 |
|
Signatures |
|
|
20 |
|
Exhibit Index |
|
|
21 |
|
Statement Regarding Forward-Looking Statements
Certain statements contained in this report
on Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created
thereby. All statements, other than statements of historical facts, are forward-looking statements. Forward-looking statements
include statements about matters such as: future prices and sales of, and demand for, our products; future industry market conditions;
future changes in our activities, future exploration, production, operating and overhead costs; operational and management restructuring
activities (including implementation of methodologies and changes in the board of directors); future employment and contributions
of personnel; tax and interest rates; capital expenditures and their impact on us; nature and timing of restructuring charges and
the impact thereof; productivity, business process, rationalization, investment, acquisition, consulting, operational, tax, financial
and capital projects and initiatives; contingencies; environmental compliance and changes in the regulatory environment; and future
working capital, costs, revenues, business opportunities, debt levels, cash flows, margins, earnings and growth.
The words “believe,” “expect,”
“anticipate,” “estimate,” “project,” “plan,” “should,” “intend,”
“may,” “will,” “would,” “potential” and similar expressions identify forward-looking
statements, but are not the exclusive means of doing so These statements are based on assumptions and assessments made by our management
in light of their experience and their perception of historical and current trends, current conditions, possible future developments
and other factors they believe to be appropriate. Forward-looking statements are not guarantees, representations or warranties
and are subject to risks and uncertainties that could cause actual results, developments and business decisions to differ materially
from those contemplated by such forward-looking statements. Some of those risks and uncertainties include the risk factors
set forth in this report and our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, and the following: current
global economic and capital market uncertainties; potential dilution to our stockholders from our recapitalization and balance
sheet restructuring activities; potential inability to continue to comply with government regulations; adoption of or changes in
legislation or regulations adversely affecting our businesses; permitting constraints or delays, business opportunities that may
be presented to, or pursued by, us; changes in the United States or other monetary or fiscal policies or regulations; changes in
generally accepted accounting principles; geopolitical events; potential inability to implement our business strategies; potential
inability to grow revenues organically; potential inability to attract and retain key personnel; assertion of claims, lawsuits
and proceedings against us; potential inability to maintain an effective system of internal controls over financial reporting;
potential inability or failure to timely file periodic reports with the SEC; potential inability to list our securities on any
securities exchange or market; and work stoppages or other labor difficulties. Occurrence of such events or circumstances could
have a material adverse effect on our business, financial condition, results of operations or cash flows or the market price of
our securities. All subsequent written and oral forward-looking statements by or attributable to us or persons acting on our behalf
are expressly qualified in their entirety by these factors. We undertake no obligation to publicly update or revise any forward-looking
statement.
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
ZONZIA MEDIA, INC.
(formerly HDIMAX Media, Inc. and Indigo-Energy,
Inc.)
CONDENSED BALANCE SHEETS
| |
June 30, 2015 | | |
December 31, 2014 | |
| |
(unaudited) | | |
| | |
ASSETS | |
| | | |
| | |
| |
| | | |
| | |
Current Assets | |
| | | |
| | |
Cash | |
$ | 9,173 | | |
$ | 208 | |
Prepaid professional fees | |
| 5,000 | | |
| – | |
| |
| | | |
| | |
Total current assets | |
| 14,173 | | |
| 208 | |
| |
| | | |
| | |
Other Assets | |
| | | |
| | |
Other assets | |
| 5,000 | | |
| – | |
| |
| | | |
| | |
Total assets | |
$ | 19,173 | | |
$ | 208 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | |
| | | |
| | |
| |
| | | |
| | |
Current Liabilities | |
| | | |
| | |
Accounts payable | |
$ | 775,944 | | |
$ | 710,769 | |
Accrued expenses | |
| 362,200 | | |
| 690,247 | |
Related party accounts payable | |
| – | | |
| 340,163 | |
Promissory notes payable | |
| 70,000 | | |
| – | |
Accrued compensation | |
| 269,917 | | |
| 495,167 | |
Accrued interest | |
| 668 | | |
| – | |
| |
| | | |
| | |
Total current liabilities | |
| 1,478,729 | | |
| 2,236,346 | |
| |
| | | |
| | |
| |
| | | |
| | |
Stockholders' Equity (Deficit) | |
| | | |
| | |
Preferred stock, $0.001 par value, 200,000,000 shares authorized and none
issued and outstanding at June 30, 2015 and December 31, 2014 | |
$ | – | | |
$ | – | |
Common stock, $0.001 par value, 2,000,000,000 shares authorized and 227,640,975 and 758,065,119
shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively | |
| 227,641 | | |
| 758,065 | |
Additional paid in capital | |
| 98,672,757 | | |
| 22,923,087 | |
Accumulated deficit | |
| (100,359,954 | ) | |
| (25,917,290 | ) |
| |
| | | |
| | |
Total stockholders' equity (deficit) | |
| (1,459,556 | ) | |
| (2,236,138 | ) |
| |
| | | |
| | |
Total liabilities and stockholders' equity (deficit) | |
$ | 19,173 | | |
$ | 208 | |
The accompanying notes are an integral part of these unaudited
condensed financial statements.
ZONZIA MEDIA, INC.
(formerly HDIMAX Media, Inc. and Indigo-Energy,
Inc.)
CONDENSED STATEMENT OF OPERATIONS
| |
For the Three Months
Ended | | |
For the Six
Months Ended | | |
For the Periodfrom
Inception on May 24, 2014 | |
| |
June 30, | | |
June 30, | | |
to June 30, | |
| |
2015 | | |
2015 | | |
2014 | |
| |
(unaudited) | | |
(unaudited) | | |
(unaudited) | |
Revenue | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | |
Net revenue | |
$ | – | | |
$ | – | | |
$ | – | |
| |
| | | |
| | | |
| | |
Expenses | |
| | | |
| | | |
| | |
General and administrative | |
| 64,143 | | |
| 386,584 | | |
| 101 | |
Sales and marketing | |
| 135,086 | | |
| (162,842 | ) | |
| – | |
Officer and director compensation | |
| 7,214,200 | | |
| 72,889,877 | | |
| 54,800 | |
Professional fees | |
| 1,218,449 | | |
| 2,038,048 | | |
| 93,000 | |
| |
| | | |
| | | |
| | |
Total operating expenses | |
| 8,631,878 | | |
| 75,151,667 | | |
| 147,901 | |
| |
| | | |
| | | |
| | |
Gain (loss) from operations | |
| (8,631,878 | ) | |
| (75,151,667 | ) | |
| (147,901 | ) |
| |
| | | |
| | | |
| | |
Other income (expense) | |
| | | |
| | | |
| | |
Interest Expense | |
| (111,019 | ) | |
| (111,019 | ) | |
| – | |
| |
| | | |
| | | |
| | |
Net loss | |
$ | (8,742,897 | ) | |
$ | (75,262,686 | ) | |
$ | (147,901 | ) |
| |
| | | |
| | | |
| | |
Net loss per share - basic and diluted | |
$ | (0.04 | ) | |
$ | (0.27 | ) | |
$ | (0.00 | ) |
| |
| | | |
| | | |
| | |
Weighted average shares outstanding | |
| 222,421,326 | | |
| 275,532,037 | | |
| 48,500,000 | |
The accompanying notes are an integral part of these unaudited
condensed financial statements.
ZONZIA MEDIA, INC.
(formerly HDIMAX Media, Inc. and Indigo-Energy,
Inc.)
CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
(DEFICIT)
(Unaudited)
| |
| | |
| | |
| | |
| | |
Total | |
| |
Common
Stock | | |
Paid in | | |
Accumulated | | |
Equity | |
| |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
(deficit) | |
Balance, Inception May 24, 2014 | |
| – | | |
$ | – | | |
$ | 488 | | |
$ | – | | |
$ | 488 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Issuance of founder's shares in May 2014 | |
| 48,500,000 | | |
| 48 | | |
| (48 | ) | |
| – | | |
| – | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Cancellation of founder's shares related to reverse capitalization in November 2014 | |
| (48,500,000 | ) | |
| (48 | ) | |
| 47 | | |
| – | | |
| (1 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Reverse capitalization in November 2014 | |
| 757,689,386 | | |
| 757,689 | | |
| (488 | ) | |
| (820,022 | ) | |
| (62,821 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Common stock issued for debt settlement in December 2014 | |
| 375,733 | | |
| 376 | | |
| 123,088 | | |
| – | | |
| 123,464 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Stock based compensation | |
| – | | |
| – | | |
| 22,800,000 | | |
| – | | |
| 22,800,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net loss | |
| – | | |
| – | | |
| – | | |
| (25,097,268 | ) | |
| (25,097,268 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Balance December 31, 2014 | |
| 758,065,119 | | |
$ | 758,065 | | |
$ | 22,923,087 | | |
$ | (25,917,290 | ) | |
$ | (2,236,138 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Settlement agreement with former officers and directors in January 2015 | |
| (709,121,205 | ) | |
| (709,121 | ) | |
| 162,000 | | |
| 820,022 | | |
| 272,901 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Stock based compensation in January 2015 | |
| 145,000,000 | | |
| 145,000 | | |
| 63,846,061 | | |
| – | | |
| 63,991,061 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Common stock issued for previously accrued consulting fees in January 2015 | |
| 75,000 | | |
| 75 | | |
| 24,925 | | |
| – | | |
| 25,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Common stock issued for cash in January 2015 | |
| 307,971 | | |
| 308 | | |
| 34,692 | | |
| – | | |
| 35,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Common stock issued for employment agreement termination in January 2015 | |
| 5,000,000 | | |
| 5,000 | | |
| 1,895,000 | | |
| – | | |
| 1,900,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Common stock issued for cash in February 2015 | |
| 177,777 | | |
| 177 | | |
| 32,623 | | |
| – | | |
| 32,800 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Stock based compensation in February 2015 | |
| 4,092,500 | | |
| 4,093 | | |
| 774,455 | | |
| – | | |
| 778,548 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Common stock issued for settlement of related party accounts payable in February 2015 | |
| 7,500,000 | | |
| 7,500 | | |
| 332,663 | | |
| – | | |
| 340,163 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Common stock issued for cash in February 2015 | |
| 100,000 | | |
| 100 | | |
| 27,950 | | |
| – | | |
| 28,050 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Stock based compensation in April 2015 | |
| 5,000,000 | | |
| 5,000 | | |
| 1,495,000 | | |
| – | | |
| 1,500,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Common stock issued for previously accrued consulting fees in April 2015 | |
| 4,500,000 | | |
| 4,500 | | |
| 922,554 | | |
| – | | |
| 927,054 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Common stock issued in lieu of interest in April 2015 | |
| 440,000 | | |
| 440 | | |
| 64,330 | | |
| – | | |
| 64,770 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Common stock issued for cash in April 2015 | |
| 25,445 | | |
| 25 | | |
| 4,975 | | |
| – | | |
| 5,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Stock based compensation in May 2015 | |
| 3,200,000 | | |
| 3,200 | | |
| 964,800 | | |
| – | | |
| 968,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Common stock issued for previously accrued consulting fees in May 2015 | |
| 509,524 | | |
| 510 | | |
| 112,111 | | |
| – | | |
| 112,621 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Common stock issued in lieu of interest in May 2015 | |
| 250,000 | | |
| 250 | | |
| 45,332 | | |
| – | | |
| 45,582 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Common stock issued for cash in May 2015 | |
| 1,641,929 | | |
| 1,642 | | |
| 168,358 | | |
| – | | |
| 170,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Stock based compensation in June 2015 | |
| 150,000 | | |
| 150 | | |
| 49,350 | | |
| – | | |
| 49,500 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Common stock issued for previously accrued consulting fees in June 2015 | |
| 250,000 | | |
| 250 | | |
| 49,750 | | |
| – | | |
| 50,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Common stock issued for cash in June 2015 | |
| 476,915 | | |
| 477 | | |
| 84,523 | | |
| – | | |
| 85,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Stock based compensation | |
| – | | |
| – | | |
| 4,269,230 | | |
| – | | |
| 4,269,230 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Related party debt forgiveness | |
| | | |
| | | |
| | | |
| | | |
| | |
Services contributed by employees/officers | |
| – | | |
| – | | |
| 288,988 | | |
| – | | |
| 288,988 | |
Related party debt forgiveness | |
| – | | |
| – | | |
| 100,000 | | |
| – | | |
| 100,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net loss | |
| – | | |
| – | | |
| – | | |
| (75,262,686 | ) | |
| (75,262,686 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Balance June 30, 2015 | |
| 227,640,975 | | |
$ | 227,641 | | |
$ | 98,672,757 | | |
$ | (100,359,954 | ) | |
$ | (1,459,556 | ) |
The accompanying notes are an integral part of these unaudited
condensed financial statements.
ZONZIA MEDIA, INC.
(formerly HDIMAX Media, Inc. and Indigo-Energy,
Inc.)
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
| |
| | |
For the Period | |
| |
For the Six Months | | |
from Inception | |
| |
Ended | | |
on May 24, 2014 | |
| |
June 30, | | |
to June 30, | |
| |
2015 | | |
2014 | |
Cash Flows from Operating Activities | |
| | | |
| | |
| |
| | | |
| | |
Net loss | |
$ | (75,262,686 | ) | |
$ | (147,901 | ) |
| |
| | | |
| | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |
| | | |
| | |
Stock-based compensation | |
| 74,711,014 | | |
| – | |
Non-cash interest | |
| 110,352 | | |
| – | |
Gain on non-cash settlement of accrued expenses | |
| (809,714 | ) | |
| – | |
Change in prepaid professional fees | |
| (5,000 | ) | |
| – | |
Change in other assets | |
| (5,000 | ) | |
| (488 | ) |
Change in accounts payable | |
| 190,175 | | |
| – | |
Change in accrued expenses | |
| 94,401 | | |
| – | |
Change in accrued compensation | |
| 558,905 | | |
| – | |
Change in accrued interest | |
| 668 | | |
| – | |
| |
| | | |
| | |
Net cash used in operating activities | |
| (416,885 | ) | |
| (148,389 | ) |
| |
| | | |
| | |
Cash Flows from Financing Activities | |
| | | |
| | |
Proceeds from issuance of promissory notes payable | |
| 70,000 | | |
| 200,000 | |
Proceeds from issuance of common stock | |
| 355,850 | | |
| 488 | |
| |
| | | |
| | |
Net cash provided by financing activities | |
| 425,850 | | |
| 200,488 | |
| |
| | | |
| | |
Net increase in cash | |
| 8,965 | | |
| 52,099 | |
| |
| | | |
| | |
Cash at beginning of the period | |
| 208 | | |
| – | |
| |
| | | |
| | |
Cash at end of the period | |
$ | 9,173 | | |
$ | 52,099 | |
| |
| | | |
| | |
Supplementary Disclosures of Cash Flow Information | |
| | | |
| | |
Cash paid for income taxes | |
$ | – | | |
$ | – | |
Cash paid for interest | |
$ | – | | |
$ | – | |
The accompanying notes are an integral part
of these unaudited condensed financial statements.
ZONZIA MEDIA, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2015
(Unaudited)
1. Interim Financial Statements
The accompanying interim unaudited condensed
financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and six month periods ended June 30, 2015, are not necessarily indicative of the
results that may be expected for the year ending December 31, 2015. For further information, refer to the financial statements
and footnotes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014.
The accompanying condensed financial statements
have been prepared in conformity with accounting principles generally accepted in the United States of America which contemplate
continuation of the Company as a going concern.
Description of Business
Zonzia Media, Inc, initially organized as HDIMAX
Media, Inc., and incorporated in the State of Delaware in May 2014, is a digital publishing and broadcast Company focused on content
development and multi-platform content distribution, advertising, and ecommerce.
Reverse Merger with Indigo-Energy, Inc.
On November 21, 2014, through a wholly-owned
subsidiary of a public shell Company then known as Indigo-Energy, Inc., HDIMAX Acquisition Corporation, a Nevada corporation, was
merged with and into HDIMAX, Inc., a Delaware corporation (“HDIMAX”) (such merger, the “Merger”) pursuant
to the Agreement and Plan of Merger, effective as of September 2, 2014, and as amended effective as of November 20, 2014, by and
among Indigo-Energy, Inc. (our “company” or “we” or “us”), HDIMAX and HDIMAX Acquisition Corporation
(the “Merger Agreement”). HDIMAX was the surviving corporation of the Merger and as such will continue as a wholly-owned
subsidiary of our Company. Upon closing the merger, we changed our name to HDIMAX Media, Inc.
As a result of the Merger, all of HDIMAX’s
common stock was converted into 712,121,205 shares of our Company’s common stock, which represents approximately 94% of the
outstanding shares of our company’s common stock after giving effect to the Merger. The common stock issuance, representing
94% of the outstanding shares of the consolidated Company was accounted for as a reverse capitalization in accordance with accounting
principles generally accepted in the United States (“US GAAP”) and the Rules and Regulations as promulgated by the
United States Securities and Exchanges Commission (“SEC”).
On January 22, 2015, we entered into a Settlement
Agreement in which we cancelled all of the 712,121,205 shares of restricted and unregistered common stock previously issued to
effectuate the merger with Rajinder Brar, the previous sole owner of HDIMAX, Inc. In consideration for the shares being cancelled,
we forfeited our rights to sell advertising and other products on websites previously controlled Mr.
Brar and related entities, with the exception of www.hdimax.com. An outline of the significant terms of the Settlement Agreement
includes, but is not limited to, the following:
|
· |
The 712,121,205 million shares of HDIMAX Media, Inc. (formerly Indigo-Energy) common stock issued to Rajinder Brar, the owner of 100% of the previously outstanding stock of HDIMAX, Inc. immediately preceding the reverse acquisition transaction, were cancelled. |
|
· |
Rajinder Brar, Aneliya Vasileva, and Myles Pressey III, previously appointed as the Company’s officers and Board of Directors immediately following the completion of the reverse acquisition, resigned and forfeited future compensation terms associated with any and all previously agreed upon employment agreements, inclusive of the compensation accrued as of December 31, 2014. |
|
· |
Mr. James C. Walter Sr. was reappointed to serve as a Director charged with appointing new officers. Mr. Walter Sr. served as the Sole Officer and Director of the Company immediately preceding the completion of the reverse acquisition transaction. |
|
· |
The Company’s option agreement to acquire Fashion Style Magazine, Inc., an entity wholly owned by Rajinder Brar, was cancelled. |
|
· |
The Omnibus Agreement and License dated November 21, 2014, by and between the Company and Fashion Style Magazine, Inc. was terminated. The brands and assets wholly owned by Rajinder Brar through Fashion Style Magazine, Inc. were intended to be a core portion of the consolidated Company’s business operations subsequent to the completion of the reverse acquisition. |
|
· |
The Company forfeited all rights to Frontlinewire.com, a brand and website acquired in the reverse acquisition. |
|
· |
The Company maintained all rights to hdimax.com, a brand and website acquired in the reverse acquisition, but agreed to assign those assets back to their original owners by May 1, 2015. We do not intend to further develop or publish content at www.hdimax.com. |
For additional details, including a copy of
the Settlement Agreement, please see our Current Report on Form 8-K filed on January 29, 2015.
On March 9, 2015 we changed our name to Zonzia
Media, Inc. and we are developing a new multi-platform entertainment distribution channel with the goal of being a unique hybrid
of a linear channel, a video-on-demand channel and an over-the-top channel. Our technology will allow our viewers instant access
to our available content.
Use of Estimates
In preparing financial statements in conformity
with generally accepted accounting principles, we are required to make estimates and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues
and expenditures during the reported periods. Actual results could differ materially from those estimates.
Cash and Cash Equivalents
We consider all highly liquid instruments with
an original maturity of 90 days or less at the time of purchase to be cash equivalents. We did not have any cash equivalents at
June 30, 2015 or December 31, 2014.
Recently Issued Accounting Pronouncements
There have been no recently issued accounting
pronouncements that were not previously disclosed in our annual report on Form 10-K filed on April 15, 2015 through the date of
this report that we believe will have a material impact on our financial position, results of operations, or cash flows.
2. Going Concern
Since our inception on May 24, 2014, we have
generated immaterial revenues resulting in the incurrence of net losses through June 30, 2015. This has further led to negative
working capital, all which results in substantial doubt about the Company’s ability to continue as a going concern. The financial
statements do not include any adjustments that might result from the outcome of this uncertainty.
Our management, Board, and Advisory Board has
focused its efforts and our limited resources on raising additional capital through debt or equity offerings at terms not detrimental
to our planned future operations. As of the date of this report we do not have any firm funding commitments.
3. Related Party Transactions
During the six months ended June 30, 2015 we
settled prior obligations due to a related party totaling $340,163 via the issuance of 7,500,000 shares of restricted and unregistered
shares of common stock. The settled obligation also represents that balance outstanding as of December 31, 2014.
During the six months ended June 30, 2015 a
total of four of our Officers agreed to waive all or portions of their base salaries or previously accrued bonuses earned during
the year ended December 31, 2014 and through June 30, 2015 totaling $288,988. Since we consider our Officers related parties we
have determined the bonus and salary forgiveness was in the nature of a capital contribution and no gain was recognized in the
accompanying condensed statement of operations.
We issued a Director 250,000 shares of restricted
and unregistered shares of common stock for cash proceeds totaling $25,000 in January 2015.
As part of the Settlement Agreement we entered
into on January 22, 2015 we cancelled restricted stock award grants to two of our former officers. Since we did not replace a cancelled
award totaling 52,500,000 shares of restricted and unregistered shares of common stock, and effectively repurchased the award for
no consideration as assumed by the application of accounting principles generally accepted in the United States, the unrecognized
grant-date fair value of the award totaling $9,975,000 was recognized during the six months ended June 30, 2015. Additionally,
we cancelled a restricted stock award granted to our current Interim Chief Executive Officer totaling 67,500,000 shares and replaced
the award with the grant of 125,000,000 shares of restricted and unregistered shares as part of a new employment agreement on January
29, 2015. The total compensation cost recognized during the six months ended June 30, 2015 associated with the cancellation and
replacement of this restricted stock award was $47,500,000.
During the six months ended June 30, 2015
we issued 2,000,000 shares of unregistered and restricted common stock to an affiliate for consulting services valued at $680,000.
A promissory note in the amount of $35,000 was issued to the same affiliate of the company, for cash proceeds of $35,000 in April
2015. As additional consideration on the promissory note, this same affiliate received 215,000 shares of unregistered and restricted
common stock valued at $32,039. Upon renewal of this promissory note in May 2015 this affiliate received 100,000 shares of unregistered
and restricted common stock valued at $17,260.
Employment Agreement Amendment
On May 29, 2015, we amended our Chairman and
Chief Business Development Office, Mr. Myles Pressey III’s, employment agreement. Mr. Pressey III was originally going to
be granted 25,000,000 shares of fully vested restricted and unregistered shares of common stock on January 29, 2016 whereas the
amendment calls for Mr. Pressey III to receive up to 62,500,000 shares of restricted and unregistered common stock subject to the
achievement of performance benchmarks set by the Board of Directors. On the modification date, the modification of Mr. Pressey
III’s equity award resulted in the recognition of $4,269,230 during the six months ended June 30, 2015.
4. Stockholders’ Equity
The following provides information for the
shares of restricted and unregistered shares of common stock that we issued (or cancelled) from January 1, 2015 through the date
of this report:
In January 2015 we issued 75,000 shares of
restricted and unregistered common stock for consulting services valued at $25,000.
In January 2015 we issued 57,971 shares restricted
and unregistered shares of common stock for cash totaling $10,000.
We issued a Director 250,000 shares of restricted
and unregistered shares of common stock for cash proceeds totaling $25,000 in January 2015.
In January 2015 we issued a total of 145,000,000
shares of restricted and unregistered shares of common stock as compensation to our officers, directors, and other consultants
valued at $54,016,061.
In January 2015 we issued 5,000,000 shares
of restricted and unregistered shares of common stock to a former employee of HDIMAX, Inc. valued at $1,900,000.
In January 2015, in accordance with the terms
of our Settlement Agreement with our former Chairman and Chief Executive Officer, we cancelled 712,121,205 shares of unregistered
and restricted common stock. We recognized settlement expense, included in the general and administrative expenses in the accompanying
condensed statement of operations, totaling $107,901 and reversed the previously recognized accumulated deficit adjustment of $820,022
associated with the Settlement.
In February 2015 we issued 142,500 shares of
restricted and unregistered common stock for accounting and legal services valued at $21,179.
In February 2015 we issued a total of 200,000
shares of restricted and unregistered shares of common stock as compensation directors valued at $38,348.
In February 2015 we issued 3,750,000 shares
of restricted and unregistered common stock for consulting services valued at $719,021.
In February 2015 we issued 177,777 restricted
and unregistered shares of common stock for cash totaling $32,800.
In February 2015 we issued 7,500,000 shares
of restricted and unregistered common stock in settlement of previously accrued related party liabilities totaling $340,163.
In March 2015 we issued 100,000 restricted
and unregistered shares of common stock for cash totaling $28,050.
In April 2015 we issued 440,000 shares of restricted
and unregistered common stock in conjunction with the issuance of notes payable for total consideration of $70,000.
In April 2015 we issued 4,500,000 shares of
restricted and unregistered common stock for consulting services valued at $927,054.
In April 2015 we issued a total of 5,000,000
shares of restricted and unregistered shares of common stock as compensation to our officers valued at $1,500,000.
In April 2015 we issued 25,445 shares of restricted
and unregistered shares of common stock for cash totaling $5,000.
In May 2015 we issued a total of 3,200,000
shares of restricted and unregistered shares of common stock as compensation to our officers and directors valued at $968,000.
In May 2015 we issued 509,524 shares of restricted
and unregistered common stock for consulting services valued at $112,621.
In May 2015 we issued 1,641,929 shares of restricted
and unregistered shares of common stock for cash totaling $170,000.
In May 2015 we issued Warrants for the Purchase
of 1,500,000 shares of restricted and unregistered shares of common stock as additional incentive for a $150,000 cash investment
in the company that was part of the $170,000 in the previous footnote.
In May 2015 we issued 250,000 shares of restricted
and unregistered shares of common stock for interest on outstanding notes and payables valued at $45,582.
In June 2015 we issued a total of 150,000 shares
of restricted and unregistered shares of common stock as compensation to our officers and directors valued at $49,500.
In June 2015 we issued 250,000 shares of restricted
and unregistered common stock for settlement of an obligation valued at $50,000.
In June 2015 we issued 476,915 shares of restricted
and unregistered shares of common stock for cash totaling $85,000.
Warrants
During the quarter ended June 30, 2015 we issued
warrants to certain investors as part of the private placements of our restricted and unregistered common stock.
The following table presents a summary of our
warrant activity through June 30, 2015:
Warrants | |
Number | | |
Weighted Average Exercise Price | | |
Weighted Average Remaining Contractual Term (years) | |
Outstanding at December 31, 2014 | |
| 871,591 | | |
$ | 0.88 | | |
| 2.3 | |
Warrants granted | |
| 1,500,000 | | |
| 0.28 | | |
| 3.0 | |
Exercised | |
| – | | |
| – | | |
| | |
Forfeited, canceled or expired | |
| – | | |
| – | | |
| | |
| |
| | | |
| | | |
| | |
Outstanding at June 30,2015 | |
| 2,371,591 | | |
$ | 0.50 | | |
| 2.7 | |
The warrants did not have any intrinsic value
as of June 30, 2015 and December 31, 2014 and were fully vested. Of the outstanding warrants, 862,500 are contingently exercisable
only in the event that other equity-linked instruments are exercised.
5. Accrued Expenses
During the quarter ended March 31, 2015 our
management, with the assistance of our defense attorney, analyzed the merit and likelihood of an unfavorable outcome in the matter
of Congoo, LLC v. HDIMAX Max Media, Inc. Civ. Action No. 3:15-cv-01423. Based on the facts and circumstances, we determined
the likelihood of an unfavorable outcome to be remote. Correspondingly, we reversed the previously accrued obligation of $422,448
as presented in sales and marketing expense in the accompanying condensed statement of operations.
6. Subsequent Events
In July 2015 we issued 1,050,000 shares of
restricted and unregistered common stock for cash totaling $60,000 to an investor. The investor also received a total of 1,500,000
warrants, each convertible into one share of restricted and unregistered common stock at an exercise price of $0.165 per share
for a period of three years.
On July 31, 2015, the Company and simplyME entered into an addendum
to the Channel Distribution Agreement, providing that while the Company is engaged in acquiring its own content, it may use programming
content provided by simplyME. The addendum clarifies that simplyME shall not be paid compensation for this content, but that
the revenue sharing agreement that is in place under the Channel Distribution Agreement above will also serve to compensate simplyME
for the use of its content. Under the Addendum, the Company has the right to broadcast content supplied by simplyME for a
period of two years. simplyME also represents and warrants in the addendum that is owns, or has the right to license and
sublicense, all of the content being provided to the Company pursuant to the Addendum.
In August 2015 we issued 102,564 shares of
restricted and unregistered common stock for cash totaling $10,000 to an investor.
On June 30, 2015, we entered into an addendum
to our Channel Distribution Agreement with simplyME Distribution to secure an additional cable channel through simplyME, which
we plan to dedicate to children’s programming. To secure this channel, we agreed to commence making monthly payments on November
1, 2015, with the launch of Zonzia Kidz expected to occur by January 1, 2016.
On July 9, 2015, we entered into a Submission/Insertion
Order Agreement with Sonifi Solutions, Inc. Pursuant to the agreement, commencing July 15, 2015, Sonifi agrees to make audio-video
content provided by the Company available in hotel rooms on both a looping, free-to-guest linear channel and on a free-to-guest
Video-on-Demand (“VOD”) basis. Submissions for distribution on either the linear basis or VOD basis will be scheduled
monthly. The agreement provides that initiall, submissions offered on a linear basis will be distributed to a minimum of 450,000
hotel guest rooms that are served by Sonifi and through Sonifi’s mobile applications. Sonifi has agreed to use commercially
reasonable efforts to distribute VOD submissions to 900,000 guest rooms at Sonifi-served hotels under the Agreement. The Submission/Insertion
Order agreement was put in place among the parties pending the launch of the distribution channel.
Payments to Sonifi for linear based and VOD
based submissions are structured as follows: for the first twelve months of the term, the Company shall pay Sonifi the greater
of $55,000 or fifty percent (50%) of the Company’s gross advertising sales (net of any ad agency commission) per month, subject
to a $140,000 monthly cap. For the second twelve months, the Company shall pay Sonifi the greater of $70,000 or fifty percent (50%)
of the Company’s gross advertising sales (net of any ad agency commission) per month, subject to the same monthly cap. Thereafter
for the remainder of the initial term, the Company would pay $110,000 per month. The agreement has an initial term ending in June
2018, subject to earlier termination rights in accordance with the agreement.
On August 1, 2015, distribution under the Sonifi Solutions Hotel
Network platform was launched, with initial linear based distribution to approximately 545,000 hotel guest rooms.
Item 2. Management’s Discussion
and Analysis of Financial Condition and Results of Operations.
The following discussion provides information
that we believe is relevant to an assessment and understanding of the results of operations and financial condition of the Company
as of and for the six months ended June 30, 2015, as well as our future results. It should be read in conjunction with the condensed
financial statements and accompanying notes also included in this 10-Q and our Annual Report on Form 10-K as of and for the period
ended December 31, 2014.
Overview
Zonzia Media, Inc. is a multi-platform entertainment
company focused on delivering compelling content with the objective of generating advertising revenue and subscription revenue.
We plan to distribute content through three distinct platforms:
1) Cable television;
2) Hotel in-room channel;
and
3) our website Zonzia.com.
Through an “Over-The-Top” software
technology, we plan to allow instant access to our available content from internet connected devices including home computers,
tablets, smart phones and other mobile devices. Upon the full launch of all three of our delivery platforms, which is contingent
upon our receipt of adequate funding, we plan to deliver a variety of content including:
| · | Original Programming – featuring TV series, mini-series, and
documentaries. |
| · | Feature Films – full-length feature films from major Hollywood
studios and independent production companies. |
| · | Television Shows – TV series from major networks and independent
production companies. |
| · | Concerts, Sports and Live Events – streaming live music concerts,
live sports events and other live events. |
Initially, we are distributing licensed content through our cable
television and hotel network distribution platforms.
Zonzia (Over-The-Top) Channel
We plan to make our content readily available
on computers, tablets, mobile devices, and other internet connected devices. Our content will be posted on www.zonzia.com. Over-The-Top
(OTT) refers to any content not delivered as specifically programmed linear channels from the pay TV operator, which may encompass
even on-demand content provided as TV Everywhere by the pay TV operator. Further, OTT has the component of running on the "open
internet" or an unmanaged network.
Video on Demand (VOD) / Subscription Video
on Demand (SVOD)
We anticipate that our Video on Demand (VOD)
and Streaming Video on Demand (SVOD) offerings will include full length feature films, TV series, documentaries, live events and
general programming. We are cross-soliciting film, TV and live event promoters, offering them a number of favorable deal options
which will allow them to have direct access to our targeted demographics including charging them up-front production fees and entering
into revenue sharing deals. By matching video and live event producers and promoters with our advertising customers, advertisers
will have the ability to produce and embed user-targeted commercials in our VOD and SVOD offerings. Our intention is that by providing
entertaining content to an expanding end user base, our brand awareness will increase, enabling us to develop strong relationships
and retention rates with our advertisers, ecommerce and other brand partners.
In addition to being able to deliver innovative
and entertaining content across all of our delivery platforms, our overall success is heavily dependent on our ability to develop
nationwide brand recognition which is intended to result in a significant viewer and ultimately consumer base. Our brand recognition
and viewer base are expected to drive rapid expansion of individual consumer impressions that are essential in the development
and effectiveness of our advertising program offerings. Since we generate advertising revenue from the number of user impressions
we achieve, our content and other product offerings must be attractive to our individual users.
Viewer Subscriptions
As we launch our delivery platforms, particularly
our website and mobile applications, our content and accompanying interactive services may be initially available for free for
limited periods in order to aggressively increase our brand awareness and consumer base.
As our brand awareness and consumer base gains
momentum, we will launch a targeted subscription campaign drive which we anticipate will begin in the fourth quarter of 2015 or
the first quarter of 2016. Subsequent to the initial launch and trial period, we expect to begin charging subscribers a monthly
fee of $4.99 per month. Our content offerings may include sporting events, concerts, and live performances.
Results of Operations
The following discussion contains forward-looking
statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the
forward looking statements. Additionally we were not incorporated until May of 2014, correspondingly, the following analysis of
our results will not be materially based on comparisons to the period from our inception on May 24, 2014 to June 30, 2014, rather
other periods within our history as deemed applicable.
The financial statements and dollar amounts
included herein are stated in United States dollars and are prepared in accordance with United States generally accepted accounting
principles. The results of operations may not be indicative of our future operations as we continue to develop our content delivery
platforms.
The following discussion of the financial condition
and results of operations should be read together with our condensed financial statements for the three and six month period ended
June 30, 2015.
Revenue
We did not generate any revenue during the
three and six months ended June 30, 2015 or during the period from our inception through June 30, 2014. Through the second half
of 2015, we expect to begin to recognize revenue, initially expected to not be material to results of operations for the fiscal
year ended December 31, 2015, as we ramp up our content offerings. Additionally, if we are successful in our funding and brand
awareness campaigns we may be able to launch our subscription service in early to mid-2016.
Sales and Marketing
For the three and six months ended June 30,
2015 we incurred sales and marketing expenses totaling approximately $135,000 and $585,000 (net of the non-cash reversal of a non-recurring
accrued obligations of approximately $422,000), respectively. Through June 30, 2015, we incurred $279,000 of costs for the construction
and development of our content delivery platforms.. As we continue to build our brand awareness and video and other content libraries,
along with our infrastructure, we expect our sales and marketing expenses to increase throughout the next twelve months and beyond.
Officer and Director Compensation
Officer compensation for the three and six
months ended June 30, 2015 of approximately $7,200,00 and $72,900,000 is primarily the result of non-recurring stock awards to
our officers and directors, inclusive of the modification of previously issued awards. Included in officer and director compensation
during the six month period was the recognition, totaling $9,975,000, of unrecognized compensation cost associated with the cancellation
of an unvested restricted stock award issued to a former officer and $2,770,833 of accrued compensation cost due to a previously
issued, but unvested restricted stock award issued to a current officer that has been cancelled. During the three months ended
June 30, 2015 we recognized total compensation cost of $4,269,230, associated with a stock based award granted to Mr. Myles Pressey
III, inclusive of the incremental cost associated with the modification of the award originally contained in the employment agreement
with an effective date of January 29, 2015. Pursuant to the modification, a stock based-award to Mr. Pressey III, consisting of
25,000,000 shares of restricted stock that was previously scheduled to be granted upon the first anniversary of his employment
agreement, was replaced with a performance-based stock award. Under the performance based award, Mr. Pressey III is eligible to
receive 62,500,000 shares of restricted stock upon the Company’s achievement of $25,000,000 in revenue on a consolidated
reporting basis for any calendar year, or upon the achievement of another corporate performance benchmark to be set by the Board
of Directors Our officer compensation cost for the period ended June 30, 214 of approximately $54,800 was associated with payments
made to our former CEO and Chairman under an informal arrangement.
We believe a significant portion of the stock
awards granted during the first six months of 2015 were necessary to attract and retain individuals to serve in officer, director,
and other consulting roles. In this regard, we issued a total of 157,447,500 shares of fully vested, restricted and unregistered
shares of common stock to these individuals. Throughout the remainder of the fiscal year it is not anticipated that officers will
accrue compensation in excess of monthly salaries.
Professional Fees
The Company incurred approximately $1,200,000
and $2,000,000 of professional fees during the three and six month period ended June 30, 2015, respectively. The majority of these
fees were incurred on a non-cash and non-recurring basis via the issuance of 5,334,524 shares of restricted and unregistered common
stock granted to various consultants for business development and contract review and generation. Professional fees of $93,000
incurred during the period from inception through June 30, 2014 we the result of our initial entity creation. We expect our professional
fees to steadily decline as we approach the launch date of our principal business activities.
General & Administrative
Our general and administrative expenses totaling
approximately $64,000 and $387,000 for the three and six month periods ended June 30, 2015 were primarily associated with our on-going
capital raising efforts and other administrative costs. Additionally, we incurred one-time charges totaling approximately $298,000
associated with the Settlement Agreement with our former Officers and Directors. Our general and administrative costs are expected
to significantly fluctuate until we fully commence our planned principal business operations expected to occur in the second half
of 2015.
Liquidity and Capital Resources
Working Capital
At June 30, 2015, we had a working capital
deficit of approximately $1,465,000, primarily due to professional service providers, officers and directors, and other related
parties. Our working capital is not sufficient to meet our operations, inclusive of plans for rapid growth. Additionally, our ability
to execute our content strategy and meet our day to day liquidity needs through the remainder of the year requires us to raise
additional capital.
As part of our agreements and insertion order
with Sonifi we are required make payments, beginning in August 2015, at the greater of $55,000 or fifty percent (50%) of the of
our gross advertising sales (net of any ad agency commission) per month, subject to a $140,000 monthly cap through August of 2016.
During the second and third years of the agreements with Sonifi we are obligated to pay greater of $70,000 or fifty percent (50%)
of the Company’s gross advertising sales (net of any ad agency commission) per month subject to the same monthly cap, and
$110,000 per month, respectively. The agreement has an initial term ending in June 2018, subject to earlier termination rights
in accordance with the agreement.
Accordingly, our plans presented in this Report,
particularly under “Plan of Operations” below, are dependent upon our ability to raise significant capital in the near
term. If we are unsuccessful in generating sufficient cash through operations or raising additional capital through means such
as debt issuances, equity offerings or short-term advances from related parties, we will be required to significantly reduce our
operational efforts and curtail our rapid growth strategy. Further, as of the date of this Report we do not have any firm funding
commitment.
Cash Flow
Cash Used in Operating Activities
Our cash used in operations totaling approximately
$417,000 primarily consisted of payments to service providers to prepare and execute our Settlement Agreement with our former officers
and directors. Our operational cash used significantly declined from the quarter ended December 31, 2014 as a result of significant,
non-recurring, stock based compensation of nearly $75,000,000. For the near term, and under informal agreements, many of our services
providers and related parties have agreed to defer payment until we increase our liquidity, which resulted in off-sets to our net
loss and cash used in operations totaling approximately $554,000. Additionally, we recognized non-cash gains of approximately $917,000
related to the reversal of previously accrued compensation due to our former officers and an internet marketing service provider
that we were released from during the period, partially off-set by the approximately $108,000 expense for our Settlement Agreement.
As noted above, we will require additional capital in order to monetize our content strategy and overall plan of operations.
Cash Provided by Financing Activities
Cash for the period was provided by the issuance
of 2,730,037 shares of restricted and unregistered shares of common stock totaling $355,850 and the issuance of two promissory
notes in the amount of $70,000.
Our ability to continue as a going concern
for at least the next 12 months will depend on our ability to raise the money we require through equity or debt financing. Through
the end of July 2015 we raised an additional $60,000 through the issuance of 1,050,000 shares of restricted and unregistered shares
of common stock. In addition, in August 2015 we raised an additional $10,000 through the issuance of 102,564 shares of restricted
and unregistered shares of common stock. There is no assurance that we will be able to obtain further funds required for our continued
operations or that additional financing will be available to us when needed or, if available, that it can be obtained on reasonable
terms. If we are not able to obtain the additional financing on a timely basis, we will not be able to meet our other obligations
as they become due, and we will be forced to scale down or perhaps even cease our operations. As of the date of this Report we
do not have any firm funding commitment.
Plan of Operations
Much of the six months ended June 30, 2015
was spent modifying our business model and dissolving our business relationship with our former Chairman and Chief Executive Officer
which initially culminated in the entry into a Settlement Agreement on January 22, 2015. Subsequent to the Settlement Agreement,
we spent significant amounts of time and effort on administrative tasks such as changing our Company name, assessing our on-going
liabilities and operational plans, and maintaining our regulatory compliance. An integral part of these activities was to attract
and retain highly experienced individuals to form our management team, Board of Directors, and Advisory Board. We believe that
we have successfully attracted and retained these individuals. Once in place, our team began the process of rebranding the Company
into Zonzia Media and assessing the value of various content delivery platforms and developing the corresponding relationships
with applicable service providers.
Capital Raising
Since late in 2014 through the date of this
report, our Officers, Directors and other consultants and Advisory Board Members have devoted significant time and effort to raising
the capital necessary to fully implement our principal business plans including securing content and building the required content
delivery infrastructure. While we have received positive feedback from these efforts , we do not have any firm funding commitments
as of the date of this report sufficient to fully implement our business strategies in the near term.
Content Storage and Delivery
In November of 2014 we engaged a third party,
who has since been named to serve on our Advisory Board, to build the infrastructure to store our anticipated content library on
a cloud based server; provide necessary display setting conversions allowing the content to be viewed on multiple devices including
mobile phones, tablets, and televisions as well as in high definition; and allow for direct delivery to our strategic content delivery
interface partners who ultimately provide the material to our targeted viewers.
In April 2015 we began a test of this process
in which we provided our content interface partner with a small amount of programming that became available on-demand to a number
of cable subscribers in the Southeast Region of the United States. The purpose of the test was not intended to determine number
of users, advertising placement, or consumer interest in the actual content, rather the test was solely to determine our ability
to securely deliver and make the content available to its end user. While we have not extensively analyzed the results of the test,
it does appear that we have the ability to reach our end user in a Video On Demand format.
Since we appear to have demonstrated our ability
to digitally deliver content, we are focusing our near term efforts on building a Digital Rights Management (“DRM”)
system. Through an Advisory Board member, we have made contact with several parties to begin building the platforms that will allow
us to distribute our content securely in a variety manners including television on demand, mobile devices, and other devices with
internet capability.
On August 1, 2015, distribution under the Sonifi
Solutions Hotel Network platform was launched, with initial linear based distribution to approximately 546,000 scheduled
hotel guest rooms. We plan to continue to develop our three content distribution platforms: 1) Cable television; 2) Hotel
in-room channel; and 3) our website Zonzia.com.
Content Development
Initially, we are distributing content that
we license from our partner simplyME Distribution across two platforms: the cable and hotel network platforms. The Company’s
objective is to provide its own content for distribution as it developed and acquired over time. Under the direct supervision of
our Officers we have made significant contacts within the industry and have had preliminary meetings with various entertainers,
producers, and other developers to provide a significant volume of video and other live streaming events pending the financial
ability to acquire and develop our intended content library.
Brand Awareness
Through our officers and other relationships
within in the industry we have begun a social media brand awareness campaign designed to attract consumers to our content delivery
platforms.
Critical Accounting Policies And Estimates
There have not been any material changes to
the critical accounting policies and estimates previously disclosed in our Annual Report on Form 10-K for the year ended December
31, 2014.
Off- Balance Sheet Arrangements
None.
Item 3. Quantitative and Qualitative Disclosures
About Market Risk.
Not applicable for smaller reporting companies.
Item 4. Controls and Procedures.
A. Disclosure
Evaluation of Disclosure Controls and
Procedures
As of the end of the period covered by this
Quarterly Report on Form 10-Q, management performed, with the participation of our Principal Executive Officer and our Principal
Accounting Officer, an evaluation of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e)
and 15d-15(e) of the Securities Exchange Act of 1934 (“Exchange Act”). Our disclosure controls and procedures are designed
to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed,
summarized, and reported within the time periods specified in the Exchange Act and SEC’s rules, and that such information
is accumulated and communicated to our management, including our Principal Executive, to allow timely decisions regarding required
disclosures. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including
the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective
disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Our Principal Executive
and Accounting Officer concluded that, as of June 30, 2015, our disclosure controls and procedures were not effective.
The determination that our disclosure controls and procedures were
not effective was based on the following factors identified in our Annual Report on Form 10-K for the year ended December 31, 2014:
Our controls were deemed ineffective primarily
as the result of our lack of separation of duties and ineffective monitoring and oversight on behalf of our Board of Directors,
inclusive of our lack of a formally organized and independent audit committee.
As we increase our principal operations and
corresponding cash flows, we intend to implement material changes in our internal control structure to ensure reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles.
B. Internal Control over Financial Reporting
No change in our internal control over financial
reporting, as such term is defined in Exchange Act Rule 13(a)-15 occurred during the fiscal quarter ended June 30, 2015, that materially
affected or is reasonably likely to materially affect our internal control over financial reporting.
PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
Congoo, LLC v. HDIMAX Max Media, Inc. Civ.
Action No. 3:15-cv-01423
The Plaintiff’s in the case provide online
advertising opportunities for a fee. The Plaintiff alleged the Company owes them in excess of $422,000 based on an agreement, dated
prior to our merger, with an entity controlled by our former Chairman and Chief Executive Officer. The plaintiff alleges that the
entity with the prior agreement merged into our Company and changed the name. We are contesting the claim and have filed an initial
response on March 23, 2015.
On April 24, 2015 the Plaintiff’s attorney
notified the district court judge requesting our adjournment from participation in the complaint and that we may be entitled to
a dismissal.
From time to time, we are involved in lawsuits,
claims, investigations and proceedings that arise in the ordinary course of business. There are no matters pending that we expect
to have a material adverse impact on our business, results of operations, financial condition or cash flows.
Item 2. Unregistered Sales of
Equity Securities and Use of Proceeds.
In April 2015 we issued 440,000 shares of restricted
and unregistered common stock in conjunction with the issuance of notes payable for total consideration of $70,000.
In April 2015 we issued 4,500,000 shares of
restricted and unregistered common stock for consulting services valued at $927,054.
In April 2015 we issued a total of 5,000,000
shares of restricted and unregistered shares of common stock as compensation to our officers valued at $1,500,000.
In April 2015 we issued 25,445 shares of restricted
and unregistered shares of common stock for cash totaling $5,000.
In May 2015 we issued a total of 3,200,000
shares of restricted and unregistered shares of common stock as compensation to our officers and directors valued at $968,000.
In May 2015 we issued 509,524 shares of restricted
and unregistered common stock for consulting services valued at $112,621.
In May 2015 we issued 1,641,929 shares of restricted
and unregistered shares of common stock for cash totaling $170,000.
In May 2015 we issued Warrants for the Purchase
of 1,500,000 shares of restricted and unregistered shares of common stock as additional incentive for a $150,000 cash investment
in the company that was part of the $170,000 in the previous footnote.
In May 2015 we issued 250,000 shares of restricted
and unregistered shares of common stock for interest on outstanding notes and payables valued at $45,582.
In June 2015 we issued a total of 150,000 shares
of restricted and unregistered shares of common stock as compensation to our officers and directors valued at $49,500.
In June 2015 we issued 250,000 shares of restricted
and unregistered common stock for settlement of an obligation valued at $50,000.
In June 2015 we issued 476,915 shares of restricted
and unregistered shares of common stock for cash totaling $85,000.
In July 2015 we issued 1,050,000 shares of
restricted and unregistered shares of common stock for cash totaling $60,000.
In August 2015 we issued 102,564 shares of
restricted and unregistered shares of common stock for cash totaling $10,000.
All other sales of unregistered equity securities
that occurred during the first quarter of 2015 were previously disclosed in our annual report on Form 10-K for the period ended
December 31, 2014.
Item 3. Defaults Upon Senior
Securities.
None.
Item 4. Mine Safety Disclosure.
Not applicable.
Item 5. Other Information.
Effective August 1, 2015, the Company terminated
its Consulting Agreement dated May 5, 2015 with Benchmark Advisory Partners LLC, pursuant to which Benchmark Advisory Partners
was to provide investor relations services to the Company. The term of the Consulting Agreement was six months, and the Company
paid this consultant a one-time fee of 500,000 shares of restricted stock upon signing the agreement. The Company did not incur
a termination penalty in connection with ending this engagement.
Item 6. Exhibits.
(a) The following
documents are filed as part of this Report:
(2) Exhibits filed as part of this Report:
Exhibit
Number |
|
Description |
|
|
|
10.1 |
|
Addendum to Distribution Channel Agreement with simplyME dated June 30, 2015 (1) |
|
|
|
31 |
|
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended. |
|
|
|
32 |
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
|
|
101 |
|
Interactive Data File (Quarterly Report
on Form 10-Q, for the quarterly period ended June 30, 2015, furnished in XBRL (eXtensible Business Reporting Language)). |
(1) |
Incorporated by reference to the exhibit 10.1 to our Current Report on Form 8-K filed on July 7, 2015. |
|
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.
|
ZONZIA MEDIA, INC. |
|
(Registrant) |
|
|
Date: August 19, 2015 |
By: |
/s/ Myles Pressey III |
|
|
Name: Myles Pressey III |
|
|
Title: Principal Executive Officer |
|
|
|
|
|
|
|
|
/s/ Frank McEnulty |
|
|
Name: Frank McEnulty |
|
|
Title: Principal Accounting Officer |
Exhibit Index
Exhibit
Number |
|
Description |
|
|
|
10.1 |
|
Addendum to Distribution Channel Agreement with simplyME dated June 30, 2015 (1) |
|
|
|
31 |
|
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended. |
|
|
|
32 |
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
|
|
101 |
|
Interactive Data File (Quarterly Report
on Form 10-Q, for the quarterly period ended June 30, 2015, furnished in XBRL (eXtensible Business Reporting Language)). |
(1) |
Incorporated by reference to the exhibit 10.1 to our Current Report on Form 8-K filed on July 7, 2015. |
|
EXHIBIT 31.1
CERTIFICATION
I, Myles Pressey III, certify
that:
1. I have reviewed this quarterly report on Form 10-Q of Zonzia
Media, Inc.;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in this report;
4. I am responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the
period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or
caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures,
as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal
quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's
internal control over financial reporting; and
5. I have disclosed, based on my most recent evaluation of internal
control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or
persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's
ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: August 19, 2015
/s/ Myles Pressey III |
|
Myles Pressey III |
Principal Executive Officer |
EXHIBIT 31.2
CERTIFICATION
I, Frank McEnulty, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Zonzia
Media, Inc.;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in this report;
4. I am responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the
period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or
caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures,
as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal
quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's
internal control over financial reporting; and
5. I have disclosed, based on my most recent evaluation of internal
control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or
persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's
ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: August 19, 2015
/s/ Frank McEnulty |
|
Frank McEnulty |
Principal Accounting Officer |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF
2002
Section 1350 Certification
In connection with the Quarterly
Report of Zonzia Media, Inc (the “Company”) on Form 10-Q for the fiscal quarter ended June 30, 2015, as filed
with the Securities and Exchange Commission on the date hereof (the “Report”), I, Myles Pressey III,
Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of
the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of
section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C 78m(a) or 78o(d)); and
(2) The information contained in the Report fairly presents,
in all material respects, the financial condition and result of operations of the Company.
Date: August 19, 2015
/s/ Myles
Pressey III |
|
Myles Pressey III |
Principal Executive Officer |
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF
2002
Section 1350 Certification
In connection with the Quarterly Report
of Zonzia Media, Inc (the “Company”) on Form 10-Q for the fiscal quarter ended June 30, 2015, as filed with the
Securities and Exchange Commission on the date hereof (the “Report”), I, Frank McEnulty, Principal Accounting
Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley
Act of 2002, that:
(1) The Report fully complies with the requirements of
section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C 78m(a) or 78o(d)); and
(2) The information contained in the Report fairly presents,
in all material respects, the financial condition and result of operations of the Company.
Date: August 19, 2015
/s/ Frank McEnulty |
|
Frank McEnulty |
Principal Financial Officer |
Zonzia Media (CE) (USOTC:ZONX)
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