Attached files
| file | filename |
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| EXCEL - IDEA: XBRL DOCUMENT - SunGame Corp | Financial_Report.xls |
| EX-32.1 - EXHIBIT321 - SunGame Corp | exhibit321.htm |
| EX-31.1 - EXHIBIT311 - SunGame Corp | exhibit311.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10K
ANNUAL REPORT FOR 2013
þ Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Fiscal Year Ended: 31 December 2013
o Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
For the Transition Period from _______________ to _______________.
SUNGAME CORP.
(Exact name of registrant as specified in its charter)
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DELAWARE
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**-*******
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State or other jurisdiction of incorporation
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IRS Employer Identification Number
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3091 West Tompkins Avenue, Las Vegas, Nevada 89103
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Address of principal Executive offices
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Registrants telephone number
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(702) 789-0848
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Securities Registered pursuant to §12(b) of the Act:
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Title of Each Class
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Name of Each Exchange on which registered
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N/A
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Securities Registered pursuant to §12(g) of the Act
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COMMON VOTING SHARES, $0.001 PV, OTCBB
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Title of Class
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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act o Yes þ No
Indicate by check mark if the registrant is not required to file reports pursuant to §13 or §13(d) of the Act o Yes þ No
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, as amended (the “Exchange Act”) 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. þ Yes o No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, 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). o Yes þ No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statement incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ
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 definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (check one):
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o
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Smaller Reporting Company þ
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Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.
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As of date
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Non-affiliate shares
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Closing Price
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Market Value
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28 June 2013
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9,555,734
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$4.50
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$43,000,803
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Indicate the number of the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
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As of Date
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Issued and Outstanding
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31 December 2013
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177,758,067
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11 April 2014
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177,758,067
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DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933.
None
SUNGAME CORP.
A Developmental Stage Company
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Part & Item
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Section
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Page
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PART I
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ITEM 1.
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3 | |
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ITEM 1A.
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10 | |
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ITEM 1B.
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10 | |
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ITEM 2.
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10 | |
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ITEM 3.
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10 | |
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ITEM 4.
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10 | |
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PART II
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ITEM 5.
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11 | |
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ITEM 6.
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14 | |
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ITEM 7.
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15 | |
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ITEM 7A.
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18 | |
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ITEM 8.
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19 | |
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ITEM 9.
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ITEM 9A.
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ITEM 9B.
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PART III
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ITEM 10.
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ITEM 11.
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ITEM 12.
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25 | |
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ITEM 13.
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26 | |
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ITEM 14.
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26 | |
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PART IV
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ITEM 15.
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27 | |
| 27 | ||
References in this Annual Report to, the terms “Company”, “Sungame Corp.”, “SGMZ”, “Sungame”, “Freevi”, “we”, “us” and “our” refer to Sungame Corp., unless otherwise stated or the context clearly indicates otherwise.
Forward Looking Statements
This report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “1934 Act”) and Section 27A of the Securities Act of 1933 (the “1933 Act”). Any statements contained in this report that are not statements of historical fact may be forward-looking statements. When we use the words “anticipates,” “plans,” “expects,” “believes,” “should,” “could,” “may,” “will” and similar expressions, we are identifying forward-looking statements. Further, all statements that express expectations, estimates, forecasts or projections are forward-looking statements within the meaning of the 1933 Act and 1934 Act, respectively. Forward-looking statements involve risks and uncertainties, which may cause our actual results, performance or achievements to be materially different from those expressed or implied by forward-looking statements. These factors include our limited experience with our business plan; pricing pressures on our product caused by competition; the risk that our products will not gain market acceptance; our ability to obtain additional financing; our ability to protect intellectual property; and our ability to attract and retain key employees.
Except as may be required by applicable law, we do not undertake or intend to update or revise our forward-looking statements, and we assume no obligation to update any forward-looking statements contained in this report as a result of new information or future events or developments. Thus, you should not assume that our silence over time means that actual events are bearing out as expressed or implied in such forward-looking statements. You should carefully review and consider the various disclosures we make in this report and our other reports filed with the Securities and Exchange Commission (“SEC”) that attempt to advise interested parties of the risks, uncertainties and other factors that may affect our business.
PART I
This annual report on Form 10-K contains forward-looking statements that are based on current expectations, estimates, forecasts and projections about the Company, us, our future performance, our beliefs and our Management's assumptions. In addition, other written or oral statements that constitute forward-looking statements may be made by us or on our behalf. Words such as “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” or variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict or assess. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. Except as required under the federal securities laws and the rules and regulations of the SEC, we do not have any intention or obligation to update publicly any forward-looking statements after the filing of this Form 10-K, whether as a result of new information, future events, changes in assumptions or otherwise.
History
Sungame Corporation was organized under the laws of the State of Delaware on November 14, 2006 as Sungame International, Inc. On November 17, 2006, we changed our name to Sungame Corporation. The Company merged with Freevi Corporation on April 15, 2011.
Overview
Background and History
We are an early development stage company. Prior to the merger with Freevi Corporation, Sungame was in the process of establishing 3D virtual world communities. Sungame (also known as the “Company”), trading under the symbol “SGMZ”, is the Company behind the Flightdeck.tv content management and discovery platform. Sungame also uses the brand “Freevi” from time to time as a d.b.a., as it acquired Freevi Corp. and the brand has retained its value sufficient to keep using the brand Freevi. Sungame’s mission is simple: to enrich people’s lives by becoming a leading social networking, content creation, content discovery and distribution platform. Integral to the site’s functionality is a central aggregation engine that excels at serving targeted, focused and high quality content and social media interactions based on the user’s specific interests and past usage history. Other tools available on the website are designed to simplify content creation and distribution for content producers, while providing these artists an engaged audience interested in consuming this content. Sungame is also the Company behind Vidirectory, a video based business directory that simplifies online marketing for small businesses.
Sungame builds products that support its mission by creating utility for users, developers and advertisers:
FLIGHTDECK
The Flightdeck platform is designed to be a web-based homepage that is able to pull social media, news and content feeds from all over the web into one easy to manage central location. This aggregation of feeds will allow Flightdeck members to integrate all their most important online activities into one completely customizable homepage. The platform’s chat functionality is designed to allow users to interact with their user’s Twitter and Facebook friends, as they use the platform. Flightdeck will allow users to post content and links to all their social media accounts through a central location inside the website. The platform will enhance user’s content consumption experience by layering in unique chat and sharing features, while they watch movies, listen to music or play games.
Flightdeck is designed to be the ultimate content discovery, distribution and consumption platform. The platform’s main differentiation compared to competing platforms is likely to include the platform’s multi-medium focus on audio, video, text and social content. The Flightdeck recommendation engine learns from tens of millions of small user interactions which improves the platform’s ability to serve content that is relevant to the interest and taste of the user. Flightdeck’s mission therefore is to become the user’s central online homepage that they can use to access all their social media and content needs.
Figure 1: Flightdeck landing page
VIDIRECTORY
Sungame will also offer Vidirectory a business directory service designed to help businesses attract customers to their online and physical location by providing increased online visibility under the Company’s Vidirectory service offering, Sungame provides both free and paid products to local businesses. Vidirectory will allow businesses to create a free online business account and claim an individual page for each of their businesses locations. With their complimentary business accounts, businesses can view business trends1, message customers2, update information3 and update their product prices and inventory. Premium versions of this directory listing service allows local businesses to promote themselves as a sponsored search result on the shopping platform when users are searching for related product keywords or are visiting related business pages.
Figure 2: Vidirectory landing page
__________________
1 e.g., statistics and charts reflecting the performance of a business’s page on the platform
2 e.g., by replying to customer inquiries either publicly or privately
3 e.g., address, hours of operation
Platform Features
CENTRAL SOCIAL MEDIA HUB FUNCTIONALITY
Flightdeck’s social media aggregation bundles multiple social media accounts into one single channel for each user so everything from Instagram photos, Facebook status updates, tweets and Soundcloud tracks can be found in one easy to access place. The platform’s differentiation will lie in its unique user experience, which will allow users to chat, share and consume content at the same time.
THE FD POST
The platform allows users to simultaneously broadcast updates to multiple social media websites without ever having to leave the platform. The feature will allow users to significantly streamline their sharing, communication and networking activity across social media platforms. This will allow user and content producers to post content to their Facebook, Twitter, LinkedIn and other social media accounts with a single click of the button.
USER PROFILING AND CONTENT DISCOVERY
The Flightdeck system has been built to offer users seamless content discovery through automatic interest and past usage analysis and profiling. The Flightdeck user profiling system allows the end-user experience to transition from having to search for the content they are looking for to a more organic and natural “curated content” strategy, where the user is exposed to relevant content and social media interactions automatically.
VILLAGES
Flightdeck will feature a community discussion board or a villages feature designed to discuss, collaborate and fund creative projects together. All users are able to apply to become members of different villages or creative projects, where they can contribute by either funding or volunteering for projects. This will allow users and content producers to connect and make creative projects happen.
SHARED ECONOMY
The Company will actively incentivize user engagement, usage and referrals through the use of its virtual currency system. Users will be able to either redeem these points for cash, through licensed debt cards, or use it to purchase the different content as well as fund other user’s creative projects. This virtual system will also provide independent artists a way to monetize the content they produce.
Figure 4: Shared Economy Wallet
Business Model
Flightdeck will generate revenue by monetizing both individual users and businesses. In regard to individuals, revenue will be generated through banner and video advertising, as well as the profit share deriving from our apps store. In regard to businesses, Sungame offers the possibility of inclusion in its database and platforms with both Free and Premium offerings.
Figure 5: Sungame’s business model
Sungame will also offer businesses several versions of a premium Vidirectory service offering complete with varying features at a variety of different price points. Fees for businesses looking to create a customized video listing for their business will be required to choose between silver, gold and platinum packages.
Figure 6: Vidirectory Business Membership Offering
Value Proposition
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Flightdeck’s primary value proposition is its successful functional integration of video streaming, social media, shopping and apps into one easy to use platform.
Access to high quality and original content will increase the long term customer value and increase unique visits, and engagement of the platform's users. The platform’s recommendation engine is expected to significantly streamline the content discovery process and increase consumption of high quality targeted content.
The platforms will also generate significant user interest by monetizing and rewarding users based on their engagement and usage of the website. This will provide users a strong economic incentive to use the website over other competing platforms. Developed with a content creator centric approach, Flightdeck will provide content producers a revenue sharing deal that is significantly better than agreements other larger content sites offer their content creators.
Access to a large number of engaged users will allow the platform to connect these users with small businesses through its Vidirectory service. The service will allow these businesses a proven video-based online marketing strategy at an affordable price.
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Future developments
Although a growing number of users is without question very relevant as a Company goal in 2014, Sungame’s team and its endless desire to grow and expand has already set up a few more objectives for the near term.
The first would be to make Sungame’s service available on mobile and tablet devices. The incredible growth in these segments of the market speaks for itself and Sungame wants to take advantage of a large potential adoption in that market.
Sungame has began selling glasses free 3D tablets on a limited scale. The Company is limiting the scale of its 3D tablet sales to make sure the manufacturing and logistics proceess is sound before committing to larger quantities, and has secured funding to place higher quantity orders through deposits from resellers and its master distributor.
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Number Of Persons Employed
As of December 31, 2013, we have 5 full-time employees.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide information under this item.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide information under this item.
We do not own any property, real or otherwise. Our operations are principally located at 3091 West Tompkins Avenue, Las Vegas, NV 89103. We pay market price in rent.
The Company was involved in litigation in Colorado during 2012. Broadway Holdings, Inc. (Broadway) vs. Sungame Corporation. The suit was a breach of contract by Broadway Holdings, Inc. filed on or about August 2, 2011, in the District Court, Denver County, Colorado. The case was settled on December 24, 2012. All claims and counterclaims were dismissed in the confidential settlement. All Sungame shares held by the Broadway Plaintiffs shareholders amounting to 10,780 shares were cancelled in 2013.
Item 4. Mine Safety Disclosures.
Not applicable.
PART II
Our common stock is quoted on the OTC Bulletin Board (the "OTCBB:) under the symbol SGMZ.
Quotations on the OTCBB reflect inter-dealer prices, without retail mark-up, markdown or commission and may not reflect actual transactions. Our common stock will be subject to certain rules adopted by the SEC that regulate broker-dealer practices in connection with transactions in “penny stocks.” Penny stocks generally are securities with a price of less than $5.00, other than securities registered on certain national exchanges or quoted on the system, provided that the exchange or system provides current price and volume information with respect to transaction in such securities. The additional sales practice and disclosure requirements imposed upon broker-dealers are and may discourage broker-dealers from effecting transactions in our shares which could severely limit the market liquidity of the shares and impede the sale of shares in the secondary market.
The penny stock rules require broker-dealers, prior to a transaction in a penny stock not otherwise exempt from the rules, to make a special suitability determination for the purchaser to receive the purchaser's written consent to the transaction prior to sale, to deliver standardized risk disclosure documents prepared by the SEC that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock. In addition, the penny stock regulations require the broker-dealer to deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt. A broker-dealer is also required to disclose commissions payable to the broker-dealer and the registered representative and current quotations for the securities. Finally, a broker-dealer is required to send monthly statements disclosing recent price information with respect to the penny stock held in a customer's account and information with respect to the limited market in penny stocks.
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Historical Equity Sales Prices for the Prior two Fiscal Years
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Quarter
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High
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Low
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Dividend Declared
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Year ended 31 December 20134
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4th Quarter
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$30.00
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$6.50
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None
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3rd Quarter
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$9.00
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$2.00
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None
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2nd Quarter
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$16.75
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$2.60
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None
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1st Quarter
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$11.25
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$3.87
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None
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Year ended 31 December 20124
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4th Quarter
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$11.50
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$6.00
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None
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3rd Quarter
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$10.00
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$1.55
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None
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2nd Quarter
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$20.00
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$4.75
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None
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1st Quarter
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$6.00
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$3.50
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None
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_____________
4 As reported by OTCBB, based upon the historical High and Low as of the last trading day of the quarter, adjusted for splits.
Graphical depiction of quarterly prices.
Actual price performance chart
We have not paid any dividends to shareholders. There are no restrictions which would limit our ability to pay dividends on common equity or that are likely to do so in the future. The Delaware Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend; we would not be able to pay our debts as they become due in the usual course of business; or our total assets would be less than the sum of the total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution.
As of December 31, 2013, we have 33 shareholders of record of our common stock pursuant to transfer agent records, not including various positions at the Depository Trust & Clearing Company. (“CEDE”).
No Issuer repurchases of any class were made during 2013.
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Issuer Purchases of Equity Securities
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Period
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(a)
Total number
of shares
(or units) purchased
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(b)
Average price
paid per share
(or unit)
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(c)
Total number of
shares (or units)
purchased as part
of publically
announced plans
or programs
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(d)
Maximum number
(or approximate
dollar volume)
of shares
(or units) that
may yet be
purchased under
the plans or program
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Quarter 1, 2013
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-0-
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-0-
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-0-
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-0-
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Quarter 2, 2013
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-0-
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-0-
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-0-
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-0-
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Quarter 3, 2013
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-0-
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-0-
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-0-
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-0-
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Quarter 4, 2013
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-0-
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-0-
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-0-
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-0-
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Totals
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-0-
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-0-
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-0-
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-0-
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We have sold securities within the past three years without registering the securities under the Securities Act of 1933 as shown in the following table:
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Securities sold by the Issuer within the past three years which were not registered
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Date
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Class
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Amount
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Underwriter
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Consideration5
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Exemption
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Conversion
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Use of Proceeds
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11/20/13
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CS
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79,333
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None
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$238,000
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4 (a) (2)
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N/A
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OPEX & Inv.
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9/13/13
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CS
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10,000
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None
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$30,000
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4 (a) (2)
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N/A
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OPEX & Inv.
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|
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8/23/13
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CS
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18,000
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None
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$54,000
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4 (a) (2)
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N/A
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OPEX & Inv.
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|
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6/13/13
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CS
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1,000
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None
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$3,000
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4 (a) (2)
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N/A
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OPEX & Inv.
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|
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5/29/13
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CS
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7,500
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None
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$22,500
|
4 (a) (2)
|
N/A
|
OPEX & Inv.
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|
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5/23/13
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CS
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10,000
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None
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$30,000
|
4 (a) (2)
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N/A
|
OPEX & Inv.
|
|
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4/24/13
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CS
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68,000
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None
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$204,000
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4 (a) (2)
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N/A
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OPEX & Inv.
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|
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4/15/2011
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CS
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300,000
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None
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Merger related services
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4 (a) (2)
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N/A
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OPEX 6
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|
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4/15/2011
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CS
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25,000
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None
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Merger related services
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4 (a) (2)
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N/A
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OPEX 6
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Class - CS – Common Voting Shares
Exemption - 4 (a) (2) – Securities and Exchange Act of 1933, as amended, §4 (a) (2)
Use of Proceeds – INV – inventory, OPEX – Operating Expense
_____________
5 No underwriting discounts or commissions are applicable.
6 Shares were issued for services which were expensed by Sungame.
Exemptions From Registration For Unregistered Sales
All of the sales by the Company of the unregistered securities listed immediately above were made by the Company in reliance upon Section 4(2) of the Act. All of the individuals and/or entities listed above that purchased the unregistered securities were all known to the Company and its management, through pre-existing business relationships, as long standing business associates, friends, and employees. All purchasers were provided access to all material information, which they requested, and all information necessary to verify such information and were afforded access to management of the Company in connection with their purchases. All purchasers of the unregistered securities acquired such securities for investment and not with a view toward distribution, acknowledging such intent to the Company. All certificates or agreements representing such securities that were issued contained restrictive legends, prohibiting further transfer of the certificates or agreements representing such securities, without such securities either being first registered or otherwise exempt from registration in any further resale or disposition.
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Equity Compensation Plan Information
|
|||
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Plan Category
|
Number of
securities to be
issued upon exercise
of outstanding options,
warrants and rights
|
Weighted average
exercise price
of outstanding options,
warrants and rights
|
Number of
securities remaining
available for future
issuance under
equity compensation
plans (excluding
securities reflected
in column a))
|
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(a)
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(b)
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(c)
|
|
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Equity compensation plans approved by shareholders
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-0-
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-0-
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-0-
|
|
Equity compensation plans not approved by shareholders7
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8,334,0007
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$0.001
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5,334,0007
|
|
Total
|
-0-
|
-0-
|
-0-
|
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and Regulation S-K and are not required to provide information under this item.
______________
7 One employment agreement with Guy Robert includes an equity option, which dates to the merger of Freevi and Sungame. In the employment agreement, the options are only exercisable upon a trading volume of 500,000 average daily volume.
Statements contained in this report, which are not historical facts, may be considered forward looking information with respect to plans, projections, or future performance of the Company as defined under the Private Securities Litigation Act of 1995. These forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those projected. The words “anticipate”, “believe”, “estimate”, “expect”, “objective”, and “think” or similar expressions used herein are intended to identify forward-looking statements. The forward-looking statements are based upon the Company’s current views and assumptions and involve risks and uncertainties that include, among other things, the effects of the Company’s business, actions of competitors, changes in laws and regulations, including accounting standards, employee relations, customer demand, prices of purchased material and parts, domestic economic conditions, including housing starts and changes in consumer disposable income, and foreign economic conditions, including currency rate fluctuations. Some or all of the facts are beyond the Company’s control.
The following discussion and analysis should be read in conjunction with our audited financial statements and related footnotes included elsewhere in this report, which provide additional information concerning the Company’s financial activities and condition.
COMPARATIVE ANALYSIS YEAR ENDED DECEMBER 31, 2013 AND DECEMBER 31, 2012
Critical Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates. We based our estimates on historical experiences and on various other assumptions that we believe to be reasonable under the circumstances. These estimates and assumptions provide a basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions, and these differences may be material.
Risks And Uncertainties
We operate in an emerging industry that is subject to market acceptance and technological change. Our operations are subject to significant risks and uncertainties, including financial, operational, technological and other risks associated with operating an emerging business, including the potential risk of business failure.
Revenue Recognition
We recognize revenue from tablet sales when the products are shipped since title to the products has passed when the tablets leave our shipping area. We have no advertising revenues to date but will recognize advertising revenues as advertising services are provided in the future.
Capitalized Software Costs
Capitalized software costs are capitalized when technological feasibility is proven. These costs are amortized over the estimated life of the related assets.
Long Lived Assets
“Long-lived assets” are reviewed for impairment of value whenever events or changes in circumstances indicate that the carrying value of the assets might not be recoverable or at least at the end of each reporting period. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying value of an asset is not recoverable. For Long-lived assets to be held and used, management measures fair value based on quoted market prices or based on discounted estimates of future cash flows.
Income Taxes
We have effectively provided a full valuation allowance for the tax effects of our net operating losses during the years ended December 31, 2013 and December 31, 2012 and for the period from inception (October 21, 2010) to December 31, 2013 to offset the deferred tax asset that might otherwise have been recognized as a result of operating losses in the current period and prior periods since, because of our history of operating losses, management is unable to conclude at this time that realization of such benefit is currently more likely than not.
Recent Accounting Pronouncements
There were no recent accounting pronouncements that would have a significant effect on our future financial position, results of operations, and operating cash flows.
- 15 -
Liquidity and Capital Resources
We had $237,786 cash as of December 31, 2013 compared to $2,604 at December 31, 2012. This net increase of $235,183 consisted of cash provided by financing activities of $84,125 and cash provided by operating activities of $309,058 offset by cash used for investing activities of $158,000. Cash provided by financing activities consisted of stock sales and subscriptions totaling $343,976 and related party net payments of $289,851. Cash provided by operating activities was primarily our operating loss of $1,412,558 and an increase in prepaid expenses of $416,000 for amounts paid in advance to our tablet manufacturer for the year ended December 31, 2013, offset by deposits on future tablet sales and prepaid advertising of $1,875,253, an increase in accounts payable of $130,133, depreciation and amortization of $74,735, and compensatory stock issuance of $90,500. Cash paid for investing activities was $158,000 for capitalized software costs for the development of our tablet platform portal.
We have incurred significant losses and negative cash flows from operations since our inception in on November 14, 2006. We have an accumulated deficit of $3,121,681 and a working capital deficiency of $2,966,851 as of December 31, 2013. These conditions raise substantial doubt about our ability to continue as a going concern. We have historically financed our activities through the private placement of equity securities and through related party advances. Through December 31, 2013, we have dedicated our financial resources to the development of Flightdeck and Vidirectory and the expansion of our tablet business and general and administrative expenses as described later in the section titled Results of Operations.
Results of Operations - For the year ended December 31, 2013 compared to the year ended December 2012;
Revenues
We generated revenue of $122,399 for the year ended December, 2013, versus revenue of $22,504 for the year ended December 31, 2012. All of the revenue for the year ended December 31, 2013 is from tablet sales, $66,000 of which was to a related party, Chandran. The revenue of $22,504 for the year ended December 31, 2012 was primarily due to the product launch of ViDirectory and consulting revenue
Tablet related Revenue and Cost of Sales
Tablet related revenue and cost of sales were $122,399 and $51,135 for the years ended December 31, 2013. Of these sales, $66,000 and cost of sales of $27,616 were to a related party, Chandran. There were no tablet sales during the year ended December 31, 2012 as we did not begin selling tablets until the second quarter of 2013.
General and Administrative Expenses
General and administrative expenses were $1,404,424 and $656,520 for the years ended December 31, 2013 and 2012, respectively. This increase of $747,904 was primarily due to an increase in consulting fees of $337,889 primarily due to capital raising activities, and a stock bonus to our Chief Executive Officer of $90,500, an increase in travel and entertainment expense of $119,789 and an increase in advertising and conference and tradeshow expense of $73,607 for expected new business in the future and an increase in our legal and compliance expense of $108,992.
Interest Expense
Interest expense was $25,663 and $2,829 for the years ended December 31, 2013 and 2012, respectively. This increase of $22,834 was primarily due our borrowing $100,000 on notes payable to a lender, during the year ended December 31, 2013. These notes were paid back during the year ended December 31, 2013. There was no similar borrowing during the year ended December 31, 2012.
Net Loss
Net loss was $1,412,558 and $691,181 for the years ended December 31, 2013 and 2012, respectively. This increase in net loss of $721,377 was attributable to the changes in the revenue and expense captions as described above.
Results of Operations-For the year ended December 31, 2012 compared to the year ended December 31, 2011
Revenues
For the year ended December 31, 2012 we generated revenue of $22,504 compared to $4,569 for the year ended December 31, 2011. The increase of $17,935 is due to the product launch of Vidirectory.com.
General and Administrative Expense
General and administrative expenses for the year ended December 31, 2012 were $710,856 compared to $731,068 for the year ended December 31, 2011. This net decrease of $20,212 was the result of an increase of $39,825 in software development costs and a decrease in salaries and wages of $55,452 as we added four administrative people due to the merger and had a staff reduction during the year ended December 31, 2012.
Net Loss
The net loss for the year ended December 31, 2012 was $691,181 compared to a net loss of $727,294 for the year ended December 31, 2011. The decrease in net loss of $36,113 is directly attributable to the increase in revenue and decrease in operating expenses described above.
Off-Balance Sheet Arrangements
The Company has no Off-Balance Sheet Arrangements.
Tabular Disclosure of Contractual Obligations
Smaller Reporting Companies are not required to provide this information pursuant to Regulation S-X §229.303 (d). However, we have provided the information as a courtesy without any obligation to continue to provide the information in the future.
|
TABULAR DISCLOSURE OF OBLIGATIONS
|
|||||
|
Contractual Obligation
|
Payments due by period
|
3-5 years
|
More than 5 years
|
||
|
Total
|
Less Than one year
|
1-3 years
|
|||
|
Long Term Obligations
|
90,000
|
90,000 |
-
|
-
|
-
|
|
Capital Lease Obligations
|
-
|
-
|
-
|
-
|
-
|
|
Operating Lease Obligations
|
26,640
|
24,420
|
2,220
|
-0-
|
-0-
|
|
Purchase Obligations
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
|
Other Long Term
Liabilities Reflected on the
Registrants Balance Sheet
under GAAP
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
|
Total
|
116,640
|
114,420
|
2,220
|
-0-
|
-0-
|
Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred net losses of $1,412,558 and $691.181 for the years ended December 31, 2013 and 2012, respectively. The Company has a working capital deficiency of $2,966,851 and $1,935,503 as of December 31, 2013 and 2012, respectively and a stockholders’ deficiency of $2,761,930 and $1,813,848 at December 31, 2013 and 2012, respectively. The Company continues to incur recurring losses from operations and has an accumulated deficit since inception of $3,121,686.
The Company’s plan of operations, even if successful, may not result in cash flow sufficient to finance and expand its business. Realization of assets is dependent upon continued operations of the Company, which in turn is dependent upon management’s plans to meet its financing requirements and the success of its future operations. The ability of the Company to continue as a going concern is dependent on the Company’s profitability, cash flows and securing additional financing.
While the Company believes in the viability of its strategy to generate revenues and profitability and in its ability to raise additional funds, and believes that the actions presently being taken by the Company provide the opportunity for it to continue as a going concern. However the Company provides no assurance that such financing will be available on terms advantageous to the Company, or at all and should the Company not be successful in obtaining the necessary financing to fund its operations, the Company would need to curtail certain or all of its operational activities detailed above.
Outlook
The United States has been experiencing a widespread and severe economic recession that, among other things, has reduced availability of credit and capital financing and heightened economic risks. We have been grossly undercapitalized in 2013 but were able to raise $343,976 of capital through sales of our common stock and continued to receive advances from our majority shareholder. The Company has received advanced deposits for tablet sales and prepaid advertising of $1,875,253.
The continuing effects and duration of these developments and related uncertainties on the Company’s future operations and cash flows cannot be estimated at this time but likely will be significant, and in its audit report on our consolidated financial statements, our independent registered accounting firm has expressed substantial doubt as to our ability to continue as a going concern (see Note 3 to our consolidated financial statements).
We presently are unable to satisfy our obligations as they come due and do not have enough cash to sustain our anticipated working capital requirements and our business expansion plans for the remainder of 2014. Subject to unforeseen effects of the economic risks and uncertainties discussed in the foregoing paragraph and to our ability to raise working capital, we expect to continue for the remainder of the calendar year 2014 to incur expenses related to software development. The further delay of the rollout of our virtual world products, will have material adverse effects on our cash flow, results of operations and financial condition including significant uncertainty as to our ability to continue as a going concern. No assurance can be given that we will be able to secure any third party financing or that such financing will be available to us on acceptable terms.
Given the current financial market disruptions, credit crisis and economic recession, it is difficult at this time to obtain any third-party financing on acceptable terms, whether public or private equity or debt, strategic relationships, capital leases or other arrangements. Furthermore, any additional equity financing may be dilutive to stockholders, and debt financing, if available, may involve restricting covenants. Strategic arrangements, if necessary to raise additional funds, may require that we relinquish rights to certain of our technologies or products or agree to other material obligations and covenants.
So far though, we cannot provide assurance that the market will ever accept our products. Any failure by us to sell our products within our expected schedule or on terms acceptable to us will likely have a material adverse impact on our cash flow, results of operations and financial condition. In addition, we expect to face competition from larger, more formidable competitors. A lack of market acceptance of our products, failure to obtain additional financing, or unforeseen adverse competitive, economic, or other factors may adversely impact our cash position, and thereby materially adversely affect our financial condition and business operations.
The Company is a “smaller reporting company” as defined by Regulation S-K and as such, are not required to provide the information contained in this item pursuant to Regulation S-K. The Financial Statements begin on page 19.
SUNGAME CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
Financial Statements
TABLE OF CONTENTS
|
Page
|
|
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
F-1
|
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
F-2
|
|
FINANCIAL STATEMENTS
|
|
|
Balance Sheets
|
F-3
|
|
Statements of Operations
|
F-4
|
|
Statements of Changes in Stockholders' Deficiency
|
F-5
|
|
Statements of Cash Flows
|
F-6
|
|
Notes to Financial Statements
|
F-7 - F-12
|
- 19 -
Cutler & CO., LLC.
Certified Public Accountants
12191 West 64th Avenue, Suite 205B
Arvada, Colorado 80004
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
Sungame Corporation
Las Vegas, Nevada
We have audited the accompanying balance sheet of Sungame Corporation (a development stage company) as of December 31, 2013, and the related statements of operations, changes in stockholders' deficiency and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements as of December 31, 2012, for the year then ended and for the period from October 21, 2010 (inception) through December 31, 2012 were audited by another auditor who expressed an unqualified opinion on March 8, 2013. Our opinion, in so far as it relates to the period from October 21, 2010 (inception) through December 31, 2012, is based solely on the report of the other auditor.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Sungame Corporation as of December 31, 2013, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements the Company has suffered a loss from operations and has negative working capital and a stockholders’ deficit that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ CUTLER & CO., LLC
CUTLER & CO., LLC
Arvada, Colorado
April 15, 2014
F - 1
RONALD R. CHADWICK, P.C.
Certified Public Accountant
2851 South Parker Road, Suite 720
Aurora, Colorado 80014
Telephone (303)306-1967
Fax (303)306-1944
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
Sungame Corporation
Las Vegas, Nevada
I have audited the accompanying balance sheet of Sungame Corporation (a development stage company) as of December 31, 2012, and the related statements of operations, stockholders' equity and cash flows for the year then ended and for the period from October 21, 2010 (inception of the development stage) through December 31, 2012. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Sungame Corporation as of December 31, 2012 and the results of its operations and its cash flows for the year then ended and for the period from October 21, 2010 (inception of the development stage) through December 31, 2012 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered recurring losses from operations and has a working capital deficit and stockholders' deficit. These conditions raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Aurora, Colorado /s/ Ronald R. Chadwick, P.C.
March 8, 2013 RONALD R. CHADWICK, P.C.
F - 2
SUNGAME CORPORATION
(A DEVELOPMENT STAGE COMPANY)
Balance Sheet
|
December 31,
|
December 31,
|
|||||||
|
2013
|
2012
|
|||||||
|
ASSETS:
|
||||||||
|
Current Assets:
|
||||||||
|
Cash
|
$ | 237,786 | $ | 2,604 | ||||
|
Inventory
|
27,795 | |||||||
|
Prepaid Expenses
|
416,000 | - | ||||||
|
Total Current Assets
|
681,581 | 2,604 | ||||||
|
Equipment
|
||||||||
|
Office Equipment
|
2,140 | 2,140 | ||||||
|
Accumulated Depreciation
|
(1,955 | ) | (1,528 | ) | ||||
|
Total Equipment
|
185 | 612 | ||||||
|
Capitalized Software
|
||||||||
|
Capitalized Software
|
341,419 | 183,419 | ||||||
|
Accumulated Depreciation
|
(136,683 | ) | (62,376 | ) | ||||
|
Total Capitalized Software
|
204,736 | 121,043 | ||||||
|
TOTAL ASSETS
|
$ | 886,502 | $ | 124,259 | ||||
|
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
|
||||||||
|
Current Liabilities:
|
||||||||
|
Accounts Payable
|
$ | 397,212 | $ | 267,079 | ||||
|
Related party advances
|
1,375,967 | 1,665,819 | ||||||
|
Unearned revenue
|
1,875,253 | |||||||
|
Other liabilities
|
- | 5,209 | ||||||
|
Total Current Liabilities
|
3,648,432 | 1,938,107 | ||||||
| Total Liabilities | 3,648,432 | 1,938,107 | ||||||
|
Stockholders' Deficiency:
|
||||||||
|
Preferred stock, $.001 par value;
|
||||||||
|
5,000,000 shares authorized with none outstanding
|
||||||||
|
Common stock subscriptions
|
30,000 | |||||||
|
Common stock, $.001 par value;
|
||||||||
|
300,000,000 authorized with:
|
||||||||
|
177,758,067 and 177,575,014 shares issued and outstanding
|
177,758 | 177,575 | ||||||
|
Additional paid in capital
|
151,998 | (282,295 | ) | |||||
|
Accumulated deficit
|
(3,121,686 | ) | (1,709,128 | ) | ||||
|
Total Stockholders' Deficiency
|
(2,761,930 | ) | (1,813,848 | ) | ||||
|
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY
|
$ | 886,502 | $ | 124,259 | ||||
The accompanying notes are an integral part of these financial statements
SUNGAME CORPORATION
(A DEVELOPMENT STAGE COMPANY)
Statement of Operations
|
October 21, 2010
|
||||||||||||
|
(Inception of
|
||||||||||||
|
Dev. Stage)
|
||||||||||||
|
Year ended
|
Through
|
|||||||||||
|
December 31,
|
December 31 2013
|
|||||||||||
|
2013
|
2012
|
2013
|
||||||||||
|
Revenues
|
$
|
56,399
|
$
|
22,504
|
$
|
83,472
|
||||||
|
Revenues – related party
|
66,000
|
-
|
66,000
|
|||||||||
|
Total revenue
|
122,399
|
22,504
|
149,472
|
|||||||||
|
Cost of goods sold
|
51,135
|
-
|
51,135
|
|||||||||
|
Gross profit
|
71,264
|
22,504
|
98,337
|
|||||||||
|
Costs and Expenses:
|
||||||||||||
|
Depreciation & amortization
|
74,735
|
54,336
|
137,860
|
|||||||||
|
General & administrative
|
1,404,424
|
656,520
|
3,073,876
|
|||||||||
|
Total Expenses
|
1,479,159
|
710,856
|
3,211,737
|
|||||||||
|
Loss From Operations
|
(1,407,895
|
)
|
(688,352
|
)
|
(3,113,399
|
)
|
||||||
|
Other Income and (Expenses)
|
||||||||||||
|
Interest income
|
-
|
-
|
10
|
|||||||||
|
Interest expense
|
(25,663
|
)
|
(2,829
|
)
|
(29,297
|
)
|
||||||
|
Other income
|
21,000
|
- |
|
21,000
|
||||||||
|
Total Other Income and (Expense)
|
(4,663
|
)
|
(2,829
|
)
|
(8,287
|
)
|
||||||
|
Net Loss
|
$
|
(1,412,558
|
)
|
$
|
(691,181
|
)
|
$
|
(3,121,686
|
)
|
|||
|
Per Share Information
|
||||||||||||
|
Loss per common share: Basic and Diluted
|
$
|
(0.00
|
)*
|
$
|
(0.00
|
)*
|
||||||
|
Weighted average number
|
||||||||||||
|
of shares outstanding: Basic and Diluted
|
177,645,230
|
177,575,014
|
||||||||||
* denotes a loss of less than $(0.01) per share.
The accompanying notes are an integral part of these financial statements
F - 4
SUNGAME CORPORATION
(A DEVELOPMENT STAGE COMPANY)
Statement of Changes in Stockholders’ Deficiency
|
Common
|
Deficit
|
||||||||||||||||||
|
Stock
|
Accumulated
|
||||||||||||||||||
|
Common
|
Amount
|
During The
|
Stockholders
|
||||||||||||||||
|
Stock
|
$ (0.001 |
Paid in
|
Development
|
Equity
|
|||||||||||||||
|
Shares
|
Par)
|
Capital
|
Stage
|
(Deficit)
|
|||||||||||||||
| Balances at December 31, 2009 | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
|
Issuance of founders’ stock for services
|
12,000,000 | 12,000 | - | - | 12,000 | ||||||||||||||
|
Shares issued for licensing agreement
|
165,000,000 | 165,000 | - | - | 165,000 | ||||||||||||||
| Net loss for year | - | - | - | (290,653 | ) | (290,653 | ) | ||||||||||||
|
Balances at December 31, 2010
|
177,000,000 | $ | 177,000 | - | $ | (290,653 | ) | $ | (113,653 | ) | |||||||||
|
Shares issued for reverse merger
|
250,000 | 250 | (282,295 | ) | - | (282,295 | ) | ||||||||||||
|
Shares issued for services
|
325,014 | 325 | - | - | 325 | ||||||||||||||
| Net loss for year | - | - | - | (727,294 | ) | (727,294 | ) | ||||||||||||
|
Balances at December 31, 2011
|
177,575,014
|
$
|
177,575
|
$
|
(282,295
|
) |
$
|
(1,017,947
|
) |
$
|
(1,122,667
|
) | |||||||
|
Net loss for year
|
- | - | - |
(691,181
|
) |
(691,181
|
) | ||||||||||||
|
Balances at December 31, 2012
|
177,575,014
|
$ |
177,575
|
$ |
(282,295
|
) | $ |
(1,709,128
|
) | $ |
(1,813,848
|
) | |||||||
|
Common stock issued for cash
|
118,333
|
118
|
343,869
|
- |
343,987
|
||||||||||||||
|
Compensatory stock issuance
|
75,500
|
76
|
90,424
|
- |
90,500
|
||||||||||||||
|
Common stock subscriptions
|
- | - | - | - |
30,000
|
||||||||||||||
|
Common stock cancelled
|
(10,780
|
) |
(11
|
) | - | - |
(11
|
) | |||||||||||
|
Net loss for the year
|
- | - | - |
(1,412,558
|
) |
(1,412,558
|
) | ||||||||||||
|
Balances at December 31, 2013
|
177,758,067
|
$
|
177,758
|
$
|
151,998
|
$
|
(3,121,686
|
) |
$
|
(2,761,930
|
) | ||||||||
The accompanying notes are an integral part of these financial statements
SUNGAME CORPORATION
(A DEVELOPMENT STAGE COMPANY)
Statement of Cash Flows
|
October 21, 2010
|
||||||||||||
|
(Inception of
|
||||||||||||
|
Dev. Stage)
|
||||||||||||
|
Year ended
|
Through
|
|||||||||||
|
December 31,
|
Dec 31, 2013
|
|||||||||||
|
2013
|
2012
|
2013
|
||||||||||
|
Cash Flows from Operating Activities
|
|
|
|
|
|
|
|
|
|
|||
|
Net Loss
|
$ | (1,412,558 | ) | $ | (691,181 | ) | $ | (3,121,686 | ) | |||
|
Adjustments to reconcile net loss to
|
||||||||||||
|
net cash provided by (used for)
|
||||||||||||
|
operating activities:
|
||||||||||||
|
Depreciation and amortization
|
74,735
|
54,336
|
137,860
|
|||||||||
|
Stock issued for licensing agreement
|
-
|
-
|
165,000
|
|||||||||
|
Compensatory stock issuances
|
90,500
|
-
|
102,825
|
|||||||||
|
Changes in operating assets and liabilities
|
||||||||||||
|
Inventory
|
(27,796
|
)
|
-
|
(27,796
|
)
|
|||||||
|
Unearned revenue
|
1,875,253
|
-
|
1,875,253
|
|||||||||
|
Prepaid expenses
|
(416,000
|
)
|
1,250
|
(416,000
|
)
|
|||||||
|
Accounts payable
|
130,133
|
30,353
|
276,494
|
|||||||||
|
Accrued liabilities
|
(5,209
|
)
|
890
|
(316
|
)
|
|||||||
|
Net cash provided by (used for)
|
||||||||||||
|
operating activities
|
309,058
|
(604,352
|
)
|
(1,008,366
|
)
|
|||||||
|
Cash Flows from Investing Activities
|
||||||||||||
|
Investment in capitalized
|
||||||||||||
|
software
|
(158,000
|
)
|
(59,975
|
)
|
(341,419
|
)
|
||||||
|
Net cash used for
|
||||||||||||
|
investing activities
|
(158,000
|
)
|
(59,975
|
)
|
(341,419
|
)
|
||||||
|
Cash Flows from Financing Activities
|
||||||||||||
|
Common stock issued
|
343,976
|
-
|
343,976
|
|||||||||
|
Common stock subscriptions
|
30,000
|
-
|
30,000
|
|||||||||
|
Related party advances
|
2,868,597
|
653,593
|
1,213,595
|
|||||||||
|
Related party payments
|
(3,158,449
|
)
|
-
|
-
|
||||||||
|
Borrowings on notes payable
|
100,000
|
|||||||||||
|
Payments on notes payable
|
(100,000
|
)
|
-
|
-
|
||||||||
|
Net cash provided by
|
||||||||||||
|
financing activities
|
84,124
|
653,593
|
1,587,571
|
|||||||||
|
Net Increase (Decrease) In Cash
|
235,182
|
(10,734
|
)
|
237,786
|
||||||||
|
Cash At The Beginning Of The Period
|
2,604
|
13,338
|
-
|
|||||||||
|
Cash At The End Of The Period
|
$
|
237,786
|
$
|
2,604
|
$
|
237,786
|
||||||
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
|
||||||||||||
|
Cash paid for interest expense
|
$
|
25,663
|
$
|
2,829
|
$
|
29,297
|
||||||
|
Cash paid for income taxes
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
|
NON-CASH TRANSACTIONS
|
||||||||||||
|
Stock issued for merger and consulting services
|
$
|
-
|
$
|
-
|
$
|
177,325
|
||||||
|
Net liabilities assumed in the merger
|
$
|
-
|
$
|
-
|
$
|
282,045
|
||||||
The accompanying notes are an integral part of these financial statements
SUNGAME CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
1. Business and Summary of Significant Accounting Policies
Business
The accompanying financial statements include the accounts of Sungame Corporation (“the Company”), a Delaware corporation. The Company is an early development stage company.
The Company, trading under the symbol “SGMZ”, is the Company behind the Flighteck.tv content management and discovery platform. Sungame also uses the brand “Freevi” as a d.b.a., as it acquired Freevi Corp. and the brand has retained its value sufficient to keep using the brand Freevi. Sungame’s mission is simple: to enrich people’s lives by becoming a leading social networking, content creation, content discovery and distribution platform. Integral to the site’s functionality is a central aggregation engine that excels at servicing targeted, focused and high quality content and social media interactions based on the user’s specific interests and past usage history. Other tools available on the website are designed to simplify content creation and distribution for content producers, while providing these artists an engaged audience interested in consuming this content. Sungame is also the Company behind Vidirectory, a video based business directory that simplifies online marketing for small businesses. The Company is making efforts to offer an innovative 3D line of tablets. This new tablet line, due to the proprietary and patented glass viewing screen assembly, has the ability to display HD quality glasses-free 3D pictures and videos, as well as maintaining the ability to act as standard 2D tablets to take full advantage of the existing content currently available.
Sungame shapes products that support its mission by creating utility for users, developers and advertisers as follows:
1. Flightdeck enables people to stay connected, access and discover new content as well as socialize with their friends and family across different social medial platforms. The platform allows its users to create, discover, share, and fund content they care about.
2. Flightdeck allows developers to use the Flightdeck Platform to create audio, video, editorial content and applications (apps) that they can market and distribute to the platform’s global network of users.
3. Sungame enables advertisers to engage subsets of users based on information the users have chosen to share with the platform such as their age, location, gender or interests. Flightdeck’s content focused strategy gives advertisers a unique combination of reach, relevance, social context, and engagement to enhance the value of their ads.
The Company merged with Freevi Corporation on April 15, 2011. Freevi brings a rich media platform to the Company revolving around its core product the “Freevi Flightdeck” ™, a graphical user interface that allows users to consume video and audio content, network with other Freevi users, engage in e-commerce transactions, and access games and other applications. Freevi’s proprietary technologies were licensed from Chandran Holding Media, Inc., its majority shareholder at the time of its acquisition by the Company.
The Company was incorporated in Delaware on November 14, 2006. The Company’s fiscal year end is December 31st.
SUNGAME CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
(continued)
Summary of Significant Accounting Policies
Development Stage Company
The Company is a development stage company as defined by Accounting Standards Codified No. 915. The Company is devoting substantially all of its present efforts to establish a new business. All losses accumulated since inception, have been considered as part of the Company’s development stage activities.
Risks and Uncertainties
Our business is rapidly evolving and intensely competitive, and is subject to changing technology, shifting user needs and frequent introductions of new products and services. We have many competitors in different industries, including traditional search engines, vertical search engines, e-commerce sites, social networking sites, traditional media companies, and providers of online products and services. Our current and potential competitors range from large and established companies to emerging startups. Established companies have longer operating histories and more established relationships with customers and end users, and they can use their experience and resources against us in a variety of competitive ways, including by making acquisitions, investing aggressively in research and development, and competing aggressively for advertisers and websites. Emerging startups may be able to innovate and provide products and services faster than we can. If our competitors are more successful than we are in developing competing products or in attracting and retaining users, advertisers, and content providers, our revenues and growth rates could decline.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts and timing of revenue and expenses, the reported amounts and classification of assets and liabilities, and disclosure of contingent assets and liabilities. These estimates and assumptions are based on management’s future expectations for the Company’s operations. The Company’s actual results could vary materially from management’s estimates and assumptions.
Revenue Recognition
We recognize revenue from tablet sales when the products are shipped since title to the products has passed when the tablets leave our shipping area. We have no advertising revenues to date but will recognize advertising revenues as advertising services are provided in the future.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents. Included in cash of $2,064 at December 31, 2012 is $1,986 held in reserve by the Company’s sales processing agency.
Equipment
Equipment, when acquired, is stated at cost. Depreciation will be computed using the straight-line method to allocate the cost of depreciable assets over the estimated useful lives of the assets.
SUNGAME CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
(continued)
Capitalized Software Costs
Capitalized software costs are capitalized when technological feasibility is proven. These costs are amortized over the estimated life of the related assets. Capitalized software costs were $183,419 in prior years for two products that have proven technological feasibility. There were $158,000 of capitalized software costs for the development of the tablet platform portal during the year ended December 31, 2013.
Long Lived Assets
“Long-lived assets” are reviewed for impairment of value whenever events or changes in circumstances indicate that the carrying value of the assets might not be recoverable or at least at the end of each reporting period. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying value of an asset is not recoverable. For long-lived assets to be held and used, management measures fair value based on quoted market prices or based on discounted estimates of future cash flows.
Concentration of Credit Risk
The Company’s financial instruments that are exposed to concentrations and credit risk primarily consist of amounts due to related parties. (see Note 4).
Income Taxes
Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to be applied to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided for significant deferred tax assets when it is more likely than not, that such asset will not be recovered.
At December 31, 2013 and 2012, the Company had net operating loss carry-forwards of approximately $3,122,000 and $1,709,000, which begin to expire in 2026. At December 31, 2013 and 2012 the Company had deferred tax assets of approximately $1,093,000 and $598,000 in 2013 and 2012 created by the net operating losses, which have been offset by a 100% valuation allowance.
Net Loss Per Share
Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the year. Potentially dilutive securities are stock options for 8,334,000 shares (see Note 10) which were not considered outstanding shares because the effect would have been anti-dilutive.
2. REVERSE MERGER
Effective April 15, 2011 Sungame Corporation entered into a merger agreement (the "Agreement") with Freevi Corporation, acquiring 100% of the outstanding common stock of Freevi Corporation through the issuance of 177,000,000 shares of its common stock with no readily available market price. Freevi Corporation was incorporated in Nevada on October 21, 2010. The transaction was accounted for as a reverse merger as the shareholders of Freevi Corporation retained the majority of the outstanding common stock of Sungame Corporation
SUNGAME CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
(continued)
after the share exchange. Effective with the Agreement, the Company's stockholders' equity was recapitalized as that of Freevi Corporation, while 100% of the assets and liabilities of Sungame Corporation valued at $(282,045), consisting of cash $231, net fixed assets $1,361, accounts payable $121,265, and related party advances $162,372, were recorded as being acquired in the reverse merger for its outstanding common shares (250,000) on the merger date. Subsequent to the April 15, 2011 recapitalization Freevi Corporation ceased to exist, with Sungame Corporation as the sole surviving entity.
3. Going Concern Uncertainty and Managements’ Plans
In the Company’s audited financial statements for the fiscal year ended December 31, 2013, the Report of the Independent Registered Public Accounting Firm includes an explanatory paragraph that describes substantial doubt about the Company’s ability to continue as a going concern. The Company’s financial statements for the year ended December 31, 2013 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company reported a net loss of $1,412,558 and $691,181 for the years ended December 31, 2013 and 2012, respectively, and an accumulated deficit of $3,131,686 as of December 31, 2013. As of December 31, 2012 the accumulated deficit was $1,709,128. At December 31, 2013, the Company’s total current liabilities exceed total current assets by $2,966,851. At December 31, 2012 this amount was $1,935,503.
The future success of the Company is likely dependent on its ability to attain additional capital, or to find an acquisition to add value to its present shareholders and ultimately, upon its ability to attain future profitable operations. There can be no assurance that the Company will be successful in obtaining such financing, or that it will attain positive cash flow from operations. Management believes that actions presently being taken to revise the Company’s operating and financial requirements provide the opportunity for the Company to continue as a going concern.
4. Related Party Transactions
Two former principals of Freevi Corporation and shareholders of the Company have consulting agreements with the Company. Guy Robert, the Company’s Chief Development Officer, entered into an independent contractor agreement with the Company on September 23, 2011 for three years at an annual payment of $120,000 which is paid to Adversor, a company 49% owned by Guy Robert. Neil Chandran, the Company’s Chief Executive Officer provides monthly consulting services to the Company and was paid $96,689 and $19,240 for the years ended December 31, 2013 and 2012, respectively. In addition, the Company issued stock bonuses totaling 75,500 shares to its Chief Executive Officer and charged consulting expense $90,500 during the year ended December 31, 2013.
At December 31, 2013 the Company had working capital advances due to a related party shareholder, Adversor, Inc. (“Adversor”) of $162,372. These funds are non-interest bearing and are due on demand. Included in the Company’s accounts payable at December 31, 2013 and 2012 was $282,087 and $238,013 owed to Adversor. Due to the merger with Freevi Corporation on April 15, 2011, Adversor is a minority shareholder.
During 2013 and 2012, the Company’s majority shareholder, Chandran Holding Media, Inc. (Chandran) advanced funds to the Company for operations. The Company and Chandran also share certain members of executive management and certain employees. At December 31, 2013 and 2012, the Company owed Chandran $1,213,595 and $1,503,447. These funds are non-interest bearing and due on demand. During the year ended December 31, 2013, Chandran advanced funds of $2,868,598 to the Company and the Company paid back $3,158,449 to Chandran. During the year ended December 31, 2012, Chandran advanced $653,573 to the Company.
The Company sold 3D tablets to Chandran totaling $66,000 at a cost of $27,616, and profit of $38,384 during the year ended December 31, 2013.
SUNGAME CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
(continued)
5. Note Payable
During the year ended December 31, 2013, the Company borrowed $100,000 on a six month term with a 60% interest rate. There was no balance outstanding at December 31, 2013.
6. Unearned Revenue
During the year ended December 31, 2013, the Company entered into a Master Distribution Agreement for its 3D tablets with an individual. This individual will distribute 3D tablets through resellers across the country. At December 31, 2013, the master distributor and resellers advanced $1,375,121 for 3D tablets to be manufactured and distributed in the future. In addition, prepaid advertisers for the Flightdeck web advertising was $522,832 at December 31, 2013. These advanced deposits have been included in unearned revenue at December 31, 2013. The Company has used $416,000 of the tablet advances to prepay tablet production to be delivered in 2014.
7. Equity
The Company issued 193,833 shares of common stock at $3 per share for a total capital raise of $343,976 during the year ended December 31, 2013. An investor has subscribed for 10,000 shares at $3 per share, which has been included in the balance sheet as common stock subscriptions at December 31, 2013.
8. Lease and Obligation Commitments
The Company had an operating lease for building space with monthly payments of $3,466, which expired in April, 2013. The Company leases its corporate headquarters on a month-to-month basis for $1,650. The Company also leases office space in Beverly Hills, California for $2,220 per month under a one-year operating lease which began in February, 2014. The Company also has a $120,000 annual obligation to Guy Robert, a consultant, for future development services through September 2014. Details of the lease commitment and future payments in 2014 and beyond are as follows:
|
|
Future
|
Total
|
||||||||||||||
|
Expense
|
Expenses
|
After
|
Future
|
|||||||||||||
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
Expenses
|
||||||||||
|
Adversor consulting agreement
|
120,000 | 90,000 | 210,000 | |||||||||||||
|
|
|
|
|
|||||||||||||
|
Office lease
|
24,420 | 2,220 | 26,640 | |||||||||||||
|
Office lease
|
16,392
|
16,392 | ||||||||||||||
|
TOTAL
|
136,392
|
114,420
|
2,220
|
0
|
0
|
0
|
236,640
|
|||||||||
SUNGAME CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
(continued)
9. Legal Matters
The Company was involved in litigation in Colorado. Broadway Holdings, Inc. (Broadway) vs. Sungame Corporation. The suit was a breach of contract by Broadway Holdings, Inc. filed on or about August 2, 2011, in the District Court, Denver County, Colorado. The case was settled on December 24, 2012. All claims and counterclaims were dismissed in the confidential settlement. All Sungame shares held by the Broadway Plaintiffs shareholders, which amounted to 10,780 shares, were cancelled in 2013.
10. Commitments and Contingencies
On September 23, 2011, the Company entered into an independent contractor agreement with Guy Robert, a Board member and key development consultant. The term of the agreement was for three years at an annual payment of $120,000 to Adversor, a company 49% owned by Guy Robert, with an option agreement granting the following tranches of contingent stock options with an exercise price of $0.001 per share: 3,000,000 on April 1, 2011, 2,667,000 on April 1, 2012, 2,667,000 on April 1, 2013, 2,667,000 on April 1, 2014, and 2,667,000 upon severance of this agreement, excluding severance of the term of this agreement. The options will be issued and exercised upon the average daily trading volume exceeding 500,000 for the prior 90 days, which has never occurred since the inception of this agreement. Guy Robert, is also to receive performance based compensation for all deals, projects, and assets that he initiates. The performance compensation shall be 2.5% of the net realizable value brought into the Company, which has been zero thus far.
11. Subsequent Events
These financial statements have been prepared based upon subsequent events reviewed through April 15, 2014, the date of issuance of these financial statements.
The Company does not have any disagreements with our current accountant or financial officers at this time. There was no outstanding disagreement with accounting principles, or practices, and Ronald Chadwick, P.C. is authorized to discuss all matters with the new certifying accountant, Cutler & Co. L.L.C. Furthermore, in the accounting report dated April 15, 2014, Cutler and Co. LLC included an explanatory paragraph indicating that there is a substantial doubt about the Company’s ability to continue as a going concern.
Evaluation of Disclosure Controls and Procedures
Our Chief Executive Officer who also functions as our Chief Financial Officer has reviewed and evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Securities Exchange Act of 1934), as of December 31, 2013. 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 disclosures.
A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. The design of any system of controls also is based in part on certain assumptions regarding the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Given these and other inherent limitations of control systems, there is only reasonable assurance that our controls will succeed in achieving their stated goals under all potential future conditions.
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this annual report on Form 10-K. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures were effective as of such date, at a reasonable level of assurance, in ensuring that the information required to be disclosed by our company in the reports we file or submit under the Exchange Act is: (i) accumulated and communicated to our management (including the Chief Executive Officer and Chief Financial Officer) in a timely manner, and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
Internal Control Over Financial Reporting
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) and Rule 15d-15(f) of the Exchange Act. Internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, and effected by the board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States (“US GAAP”), including those policies and procedures that:
|
●
|
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company,
|
|
●
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with US GAAP, and that receipts and expenditures are being made only in accordance with authorizations of management and directors of the company, and
|
|
●
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
|
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies and procedures may deteriorate.
Under the supervision and with the participation of our management, we have assessed the effectiveness of our internal control over financial reporting as of December 31, 2013. In making this assessment, our management used the criteria described in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Due to the inherent issue of segregation of duties in a small company, we have relied heavily on entity or management review controls to lessen the issue of segregation of duties. Based on this assessment and those criteria, our management concluded that the Company did maintain effective internal control over financial reporting as of December 31, 2013.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.
Changes in Internal Control Over Financial Reporting
There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended) during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
None
PART III
The following individuals were serving as our executive officers and directors on December 31, 2013:
|
Name
|
Age
|
Position
|
|
Guy M. Robert8
|
50
|
Chief Development Officer and Director
|
|
Neil Chandran
|
42
|
President, CEO, and CFO
|
|
Raj Ponniah9
|
38
|
Secretary and Director
|
Guy M. Robert - Mr. Robert served as the President, Chief Executive Officer, Chief Financial Officer and a Director of Sungame until the Company’s merger with Freevi Corporation. He also serves as President of Adversor, Inc., a beneficial owner of Sungame Corporation, since incorporation. After a career in IT consulting and Global Product Management for Ericsson 1989-1992 and Vodafone from 1992-1995, Mr. Robert has focused his entrepreneurial spirit and management capabilities within the international IT community. He established and was a Director or CEO of companies such as XPonCard Thailand Ltd.1999-2004, MobylNet SL, Spain, 2002-2005 and Communication Information Services 2000-2004 which was acquired by a publicly listed group. Mr. Robert is a Market Economist, graduated from the Stockholm Market Institute. Mr. Robert resigned as a director on 3 September 2013.
Neil Chandran – President, CEO and CFO.
For the past 20 years, Mr. Chandran has been involved in the interactive media industry. In 1990, Neil founded Intent Communications, a telecommunications firm that specialized in Interactive Voice Response (IVR) programs for 800 and 900 numbers – the predecessor to the modern day Internet. In 1995, he co-founded IEM, Interactive Electronic Media Inc., which developed video-streaming technology long before the feature was commonplace throughout the web. His experience with video led to the launch of Energy TV in 2006, his first broadcast television program and the flagship media property of CHMI. Also formed in 2006, CHMI was the holding company and licensor of Chandran’s concepts. Since then CHMI has raised and generated almost $40 Million through its various media properties. Mr. Chandran lives in Las Vegas
Mr. Chandran holds a Bachelor of Management Degree from the University of Lethbridge, Alberta, Canada.
Raj Ponniah – Director.
Started his education in electronic engineering and transferred into the business division at Fullerton College. Founded his first company in 1994 servicing local attorneys and paralegals in Southern California area and grew to one of the most trusted servers in the special needs division. In 1998, Raj went on into the auto industry where he opened up the first Daewoo car dealerships in Toronto, Canada. After selling the dealership Raj spent the next decade in finance, starting from running a small savings and loan in Southern California to running and owning a call center in the subprime mortgage industry servicing loans in over 40 states in the Union. Once the industry took a turn, Raj consulted for a few start up broker companies until he found himself recreated by CHMI to open up the retail division of CHMI in the US market which eventually morphed into the vidirectory, an online geotargeted video directory system for local business and the LOFT, a retail co-working space for local production and development teams.
Mr. Ponniah started his education in Electronical Engineering from DeVry Institute and made his way over to Business Management at Fullerton College. Mr. Ponniah resigned as our Chief Operating Officer in 2012 and resigned as director and secretary on 29 November 2013.
____________
8 Resigned as a director on Tuesday, 3 September 2013 [see 8K dated 9 September 2013]
9 Resigned as a director and secretary on Friday, 29 November 2013 [see 8K dated 3 December 2013]
Compliance With Section 16(a) Of The Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the registrant's officers and directors, and persons who own more than 10% of a registered class of the registrant's equity securities, to file reports of ownership and changes in ownership of equity securities of the Registrant with the Securities and Exchange Commission. Officers, directors and greater-than 10% shareholders are required by the Securities and Exchange Commission regulation to furnish the registrant with copies of all Section 16(a) forms that they file.
The Company has not adopted a code of ethics to date because there are too few Officers, Directors and key employees to proceduralize behavior and independent reporting.
All directors serve for a term of one year or until their successors are duly elected. All officers serve at the discretion of the Board of Directors.
Since the Board of Directors has historically and will in the immediate future consist of only a small number of members, we have not formed any Board Committees. All matters relating to audit, compensation, nominations and corporate governance are considered and acted upon by the entire Board of Directors.
No Board member, or executive officer, is known to have been convicted of any crime, excluding any traffic violations and other minor offenses, if any, or have had an adverse adjudication by a Self Regulated organization having jurisdiction or an inhibitive order inhibiting any Director or Executive Officer from any financial activity, or have had a discharge in bankruptcy, all within the previous ten years from the date of this filing.
Promoters
(None)
Compensation.
The following table sets forth compensation awarded to, earned by or paid to our Chief Executive Officer and the four other most highly compensated executive officers for the years ended December 31, 2013 and 2012 (collectively, the “Named Executive Officers”).
|
SUMMARY COMPENSATION TABLE
|
|||||||||
|
Non-Qualified
|
|||||||||
|
Non-Equity
|
Deferred
|
||||||||
|
Name & Principal
|
Stock
|
Option
|
Incentive Plan
|
Compensation
|
All Other
|
||||
|
Position
|
Year
|
Salary
|
Bonus
|
Awards
|
Awards
|
Compensation
|
Earnings
|
Compensation
|
Total
|
|
Neil Chandran
|
2013
|
$96,689
|
0
|
90,500
|
0
|
0
|
0
|
0
|
187,189
|
|
2012
|
$19,240
|
0
|
0
|
0
|
0
|
0
|
0
|
19,240
|
|
|
Guy Robert
|
2013
|
120,000
|
0
|
0
|
0
|
0
|
0
|
0
|
120,000
|
|
2012
|
$120,000
|
0
|
0
|
0
|
0
|
0
|
0
|
120,000
|
|
|
Raj Ponniah
|
2013
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|
2012
|
34,750
|
0
|
0
|
0
|
0
|
0
|
0
|
34,750
|
|
|
OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2013
|
|||||||||
|
OPTION AWARDS
|
STOCK AWARDS
|
||||||||
|
Name
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Equity Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
|
Market Value
of Shares
or Units
of Stock
That Have
Not Vested
($)
|
Equity
Incentive Plan
Awards:
Number of
Unearned Shares,
Units or
Other Rights
That Have
Not Vested
(#)
|
Equity
Incentive Plan
Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
(#)
|
|
Neil Chandran
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|
Guy Robert
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|
Raj Ponniah
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Employment Contracts
We have one employment contract with Guy Robert.
We have made no Long Term Compensation payouts.
Director Compensation
|
DIRECTOR COMPENSATION
|
|||||||
|
Name
|
Fees
Earned or
Paid in
Cash
|
Stock
Awards
|
Option
Awards
|
Non-Equity
Incentive
Plan
Compensation
|
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
|
All
Other
Compensation
|
Total
|
|
Guy Robert
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|
Neil Chandran
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|
Raj Ponniah
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Our directors do not receive compensation for their attendance at meetings of the board of directors.
All of our officers and/or directors will continue to be active in other companies. All officers and directors have retained the right to conduct their own independent business interests.
It is possible that situations may arise in the future where the personal interests of the officers and directors may conflict with our interests. Such conflicts could include determining what portion of their working time will be spent on our business and what portion on other business interest. To the best ability and in the best judgment of our officers and directors, any conflicts of interest between us and the personal interests of our officers and directors will be resolved in a fair manner which will protect our interests. Any transactions between us and entities affiliated with our officers and directors will be on terms which are fair and equitable to us. Our Board of Directors intends to continually review all corporate opportunities to further attempt to safeguard against conflicts of interest between their business interests and our interests.
We have no intention of merging with or acquiring an affiliate, associated person or business opportunity from any affiliate or any client of any such person.
The following table and the notes thereto set forth information, as of December 31, 2013 (except as otherwise set forth herein), concerning beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934) of common stock by: (i) each director of the Company, (ii) each executive officer (iii) all executive officers and directors as a group, and (iv) each holder of 5% or more of the Company’s outstanding shares of common stock.
|
Name and Address of Beneficial Owner10
(All shares are common voting shares)
|
Number of Shares of
common stock
Beneficially Owned11
|
Percentage of
common stock
Outstanding12
|
|||
|
Chandran Media Holdings Inc.
|
165,000,000
|
92.82
|
%
|
||
|
Neil Chandran, President, CEO, CFO (voting power only)
|
165,000,000
|
92.82
|
%
|
||
|
Raj Ponniah, Secretary and Director (resigned)
|
1,300,000
|
0.01
|
%
|
||
|
Guy M. Robert13, Chief Development Officer and Director (resigned)
|
95,000
|
0.01
|
%
|
||
|
Owen Cran, Comptroller
|
875,000
|
0.4922
|
%
|
||
|
Officers and Directors as a group
|
167,270,000
|
93.33
|
%
|
||
|
Equity Compensation Plan Information
|
|||
|
Plan Category
|
Number of securities
to be issued upon
exercise of outstanding
options, warrants and rights
|
Weighted average
exercise price of
outstanding options,
warrants and rights
|
Number of securities
remaining available
for future issuance
under equity compensation
plans (excluding securities
reflected in column a))
|
|
(a)
|
(b)
|
(c)
|
|
|
Equity compensation plans approved by shareholders
|
-0-
|
-0-
|
-0-
|
|
Equity compensation plans not approved by shareholders14
|
8,334,00014
|
$0.001
|
5,334,00014
|
|
Total
|
-0-
|
-0-
|
-0-
|
_____________
10 Unless otherwise stated above, the address of beneficial owner is c/o Sungame Corporation, 3091 West Tompkins Avenue, Las Vegas, Nevada 89103.
11 Beneficial ownership of each person is shown as calculated in accordance with Rule 13d-3 of the Securities Exchange Act of 1934, which includes all securities that the person, directly, or indirectly through an contract, arrangement, understanding, relationship or otherwise has or shares voting power which includes the power to vote or direct the voting of a security, or investment power, which includes the power to dispose, or direct the disposition of such security.12 Based on 177,758,067 shares of common stock outstanding as of December 31, 2013.
13 Guy Robert is the beneficiary of 62,500 shares indirectly through Adversor, Inc., as president thereof.
14 One employment agreement with Guy Robert includes an equity option, which dates to the merger of Freevi and Sungame. In the employment agreement, the options are only exercisable upon a trading volume of 500,000 average daily volume.
Other than the stock transactions discussed below, we have not entered into any transaction nor are there any proposed transactions in which any of our founders, directors, executive officers, shareholders or any members of the immediate family of any of the foregoing had or is to have a direct or indirect material interest within the fiscal and calendar year 2013.
None
|
Principal Accounting Fees and Services
|
||||||||
|
Audit Fees
|
Audit Related Fees
|
Tax Fees
|
All Other Fees
|
|||||
|
2012
|
2013
|
2012
|
2013
|
2012
|
2013
|
2012
|
2013
|
|
|
Ronald Chadwick, P.C.
|
$12,992
|
$14,045
|
||||||
|
Cutler & Co., L.L.C.15
|
||||||||
Preapproval Policy
Our Board of Directors’ current policy is to pre-approve all audit and non-audit services that are to be performed and fees to be charged by our independent auditor to assure that the provision of these services does not impair the independence of the auditor. Our board pre-approved all audit and non-audit services rendered by our principal accountant in 2013 and 2012.
______________
15 Cutler & Co. L.L.C. was paid $4,000 as a retainer for audit services in 2014 for the 2013 audit.
PART IV
(a) Financial Statements and Schedules. The following financial statements and schedules for the Company as of December 31, 2013 are filed as part of this report.
(1) Financial statements of the Company and its subsidiaries.
(2) Financial Statement Schedules:
All schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.
(A) EXHIBITS.
The following Exhibits are incorporated herein by reference or are filed with this report as indicated below.
|
Exhibit No.
|
Description of Exhibits
|
|
|
3.01
|
Certificate of Incorporation15
|
|
|
3.01(a)
|
Certificate of Amendment of Certificate of Incorporation16
|
|
|
3.02
|
By-laws17
|
|
|
3.02(a)
|
Certificate of Amendment of Bylaws17
|
|
|
21.1
|
Subsidiaries17
|
|
|
31.1
|
||
|
32.1
|
____________
15 Incorporated by reference to our Registration Statement on Form S-1 filed with the SEC on May 1, 2009.
16 Incorporated by reference to our Registration Statement on Form S-1/A filed with the SEC on August 7, 2009.
17 Incorporated by reference to our Registration Statement on Form S-1/A filed with the SEC on January 19, 2010.
In accordance with Section 13 or 15(d) 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.
Sungame Corporation:
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
|
By:
|
/s/ Neil Chandran
|
|
Name:
|
Neil Chandran
|
|
Title:
|
President, Chief Executive Officer,
Principal Accounting Officer,
Chief Accounting Officer, Director
|
|
Date:
|
April 15, 2014
|
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