UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

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

 

For the quarterly period ended November 30, 2014

 

OR

 

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

 

For the transition period from __________________ to __________________

 

Commission file number 000-52218

 

QUINT MEDIA INC.

(Exact Name of Registrant as Specified in Its Charter)

 

Nevada		20-2590810
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)
330 Clematis Street, Suite 217, West Palm Beach, Florida		33401
(Address of Principal Executive Offices)		(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: (561) 514-0936

 

N/A

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

 

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

 

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

 

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

 

Large accelerated filer [  ]	Accelerated filer [  ]
Non-accelerated filer [  ]	Smaller reporting company [X]
(Do not check if a smaller reporting company)

 

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

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 409,202,970 shares as of April 20, 2015.

 

 

 

QUINT MEDIA INC.

TABLE OF CONTENTS

 

			Page
Part I. Financial Information
Item 1.	Financial Statements		F-1
	Balance Sheets as of November 30, 2014 (unaudited) and February 28, 2014		F-1
	Statements of Operations for the three and nine months ended November 30, 2014 and 2013 (unaudited)		F-2
	Statements of Changes in Stockholders’ Deficit for the nine months ended November 30, 2014 (unaudited)		F-3
	Statements of Cash Flows for the nine months ended November 30, 2014 and 2013 (unaudited)		F-4
	Notes to Unaudited Financial Statements		F-5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		3
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		9
Item 4.	Controls and Procedures		9
Part II. Other Information
Item 1.	Legal Proceedings		10
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		10
Item 3.	Defaults Upon Senior Securities		10
Item 4.	Mine Safety Disclosures		10
Item 5.	Other Information		10
Item 6.	Exhibits		10
Signatures			11

 

 

PART I – FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

QUINT MEDIA INC.

BALANCE SHEETS

 

		November 30, 2014				February 28, 2014
		(Unaudited)
ASSETS
CURRENT ASSETS:
Cash		$	16,946			$	12,957
Prepaid expenses and other current assets			97				4,928
Total Current Assets			17,043				17,885
OTHER ASSETS:
Website and website development cost, net			-				331,360
Total Other Assets			-				331,360
TOTAL ASSETS		$	17,043			$	349,245
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES:
Short-term notes payable		$	625,000			$	450,000
Accounts payable and accrued liabilities			127,178				106,046
Accounts payable and accrued liabilities, related party			324,375				304,588
Liabilities from discontinued operations			-				109,449
Total Current Liabilities			1,076,553				970,083
STOCKHOLDERS’ DEFICIT:
Common stock: $.0001 par value, 450,000,000 shares authorized; 62,883,000 and 62,883,000 issued and outstanding at November 30, 2014 and February 28, 2014, respectively			6,288				6,288
Additional paid-in capital			2,697,541				2,697,541
Accumulated deficit			(3,763,339	)			(3,324,667	)
Total Stockholders’ Deficit			(1,059,510	)			(620,838	)
Total Liabilities and Stockholders’ Deficit		$	17,043			$	349,245

 

See accompanying notes to unaudited financial statements.

 

 

QUINT MEDIA INC.

STATEMENTS OF OPERATIONS

(Unaudited)

 

		For the Three Months Ended								For the Nine Months Ended
		November 30,								November 30,
		2014				2013				2014				2013
Total Revenues		$	-			$	-			$	74			$	-
OPERATING EXPENSES:
Professional fees			10,393				83,528				73,543				197,748
Website amortization			17,440				-				52,320				-
Consulting fees - related party			2,090				-				12,870				-
General and administrative expenses			26,709				79,137				100,284				150,699
Impairment loss			279,040				-				279,040				-
Total Operating Expenses			335,672				162,665				518,057				348,447
LOSS FROM OPERATIONS			(335,672	)			(162,665	)			(517,983	)			(348,447	)
OTHER INCOME (EXPENSES):
Interest expenses			(10,907	)			(6,575	)			(30,138	)			(24,668	)
Other income, net			-				55				-				622
Total Other Income/(Expense)			(10,907	)			(6,520	)			(30,138	)			(24,046	)
LOSS FROM CONTINUING OPERATIONS			(346,579	)			(169,185	)			(548,121	)			(372,493	)
INCOME (LOSS) FROM DISCONTINUED OPERATIONS			-				2,388				109,449				(3,922	)
NET LOSS		$	(346,579	)		$	(166,797	)		$	(438,672	)		$	(376,415	)
NET LOSS PER COMMON SHARE:
Loss from continuing operations - basic and diluted		$	(0.01	)		$	(0.00	)		$	(0.01	)		$	(0.01	)
Loss from discontinued operations - basic and diluted			0.00				0.00				0.00				(0.00	)
Net loss per common share - basic and diluted		$	(0.01	)		$	(0.00	)		$	(0.01	)		$	(0.01	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic and diluted			62,883,000				62,528,604				62,883,000				62,514,818

 

See accompanying notes to unaudited financial statements.

 

 

QUINT MEDIA INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE NINE MONTHS ENDED NOVEMBER 30, 2014

(Unaudited)

 

																		Total
		Common Stock								Additional				Accumulated				Stockholders’
		# of Shares				Amount				Paid-in Capital				Deficit				Equity
Balance, February 28, 2014			62,883,000			$	6,288			$	2,697,541			$	(3,324,667	)		$	(620,838	)
Net loss			-				-				-				(438,672	)			(438,672	)
Balance, November 30, 2014			62,883,000			$	6,288			$	2,697,541			$	(3,763,339	)		$	(1,059,510	)

 

See accompanying notes to financial statements.

 

 

QUINT MEDIA INC.

STATEMENTS OF CASH FLOWS

(Unaudited)

 

		For the Nine Months Ended
		November 30,
		2014				2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(438,672	)		$	(376,415	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization expense			52,320				-
Impairment loss			279,040				-
Gain from reversal of reserve for returns - discontinued operations			(109,449	)			-
Change in operating assets and liabilities:
Prepaid expenses and other assets			4,831				17,955
Accounts payable and accrued liabilities			21,132				207,006
Accounts payable and accrued liabilities - related party			19,787				22,780
Net cash used in continuing operations			(171,011	)			(128,674	)
Net cash provided by discontinued operations			-				52,442
NET CASH USED IN OPERATING ACTIVITIES			(171,011	)			(76,232	)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of SlickX and Flawsome			-				(50,000	)
Capitalized website and website development costs			-				(298,800	)
NET CASH USED IN INVESTING ACTIVITIES			-				(348,800	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of promissory notes			175,000				100,000
Principal payments of promissory notes			-				(200,000	)
Proceeds from issuance of common stock			-				75,000
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES			175,000				(25,000	)
NET INCREASE (DECREASE) IN CASH			3,989				(450,032	)
CASH, beginning of year			12,957				512,484
CASH, end of period		$	16,946			$	62,452
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest
Interest		$	-			$	-
Income taxes		$	-			$	-

 

See accompanying notes to unaudited financial statements.

 

 

QUINT MEDIA INC.

CONDENSED NOTES TO THE FINANCIAL STATEMENTS

NOVEMBER 30, 2014

(Unaudited)

 

NOTE 1 - ORGANIZATION AND NATURE OF OPERATIONS

 

Quint Media Inc. (formerly PediatRx Inc.) (the “Company”, “Quint”, “we” , “us” or “our”) was incorporated under the laws of the State of Nevada on March 18, 2005. From the date of its acquisition of Granisol^® (granisetron #C1) oral solution, on July 23, 2010, until early fiscal year 2014, Quint engaged in the pharmaceutical business. During the fiscal year ending February 28, 2014, Quint decided to divest itself of the balance of its pharmaceutical assets and engage in the digital media and entertainment business, which encompasses social discovery aspects of the internet, primarily through an engagement website with mobile and tablet applications.

 

Effective August 7, 2013, Quint affected a three-for-one forward stock split of our authorized, and issued and outstanding shares of common stock. Authorized common stock increased from 150,000,000 shares of common stock to 450,000,000 shares of common stock, and issued and outstanding capital increased from 20,836,000 shares of common stock to 62,508,000 shares of common stock. All share and per share data in the accompanying unaudited financial statements have been retroactively restated to reflect the effect of the forward split.

 

NOTE 2 - BASIS OF PRESENTATION, GOING CONCERN AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of presentation of interim financial statements

 

Management acknowledges its responsibility for the preparation of the accompanying unaudited condensed financial statements which reflect all adjustments, consisting of normal recurring adjustments, considered necessary in its opinion for a fair statement of its financial position and the results of its operations for the periods presented. The accompanying unaudited condensed financial statements for Quint Media Inc. have been prepared in accordance with accounting principles generally accepted in the United States of America (the “U.S. GAAP”) for interim financial information and with the instructions Article 8-03 of Regulation S-X. Operating results for interim periods are not necessarily indicative of results that may be expected for the fiscal year as a whole. Certain information and note disclosure normally included in financial statements prepared in accordance with U.S. GAAP has been condensed or omitted from these statements pursuant to such accounting principles and, accordingly, they do not include all the information and notes necessary for comprehensive financial statements These unaudited condensed financial statements should be read in conjunction with the summary of significant accounting policies and notes to the financial statements for the years ended February 28, 2014 and 2013 included in the Company’s Form 10-K.

 

Going concern

 

These unaudited condensed financial statements 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. As reflected in the accompanying unaudited condensed financial statements, the Company had a loss from continuing operations of $548,121 and $372,493 for the nine months ended November 30, 2014 and 2013, respectively, and net cash used in operations of $171,011 and $128,674 for the nine months ended November 30, 2014 and 2013, respectively. Additionally, the Company had an accumulated deficit, a stockholders’ deficit and a working capital deficit of $3,763,339, $1,059,510 and $1,059,510, respectively, at November 30, 2014, and minimal revenue for the nine months ended November 30, 2014. Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive, or raise additional debt and/or equity capital. Management believes that the Company’s capital resources are not currently adequate to continue operating and maintaining its business strategy for the fiscal year ending February 28, 2015.

 

The Company will seek to raise capital through additional debt and/or equity financings to fund its operations in the future. Although the Company has historically raised capital from sales of equity and from the issuance of promissory notes, there is no assurance that it will be able to continue to do so. If the Company is unable to raise additional capital or secure additional lending in the near future, management expects that the Company will need to curtail or cease operations. These financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

As of November 30, 2014, the Company was in the process of transitioning to its new operating business and expects to incur operating losses for the next twelve months as it moves forward. This new operating business encompasses entrance into the social discovery aspects of the internet; primarily development of an engagement website with mobile and tablet application. The Company may also seek merger or acquisition candidates.

 

 

QUINT MEDIA INC.

CONDENSED NOTES TO THE FINANCIAL STATEMENTS

NOVEMBER 30, 2014

(Unaudited)

 

NOTE 2 - BASIS OF PRESENTATION, GOING CONCERN AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Use of estimates

 

The preparation of the unaudited condensed financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Significant estimates during the nine months ended November 30, 2014 and 2013 include the valuation of deferred tax assets and assumptions used in assessing impairment of long-term assets.

 

Impairment of long-lived assets

 

In accordance with ASC Topic 360, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value.

 

Revenue recognition

 

The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the purchase price is fixed or determinable and collectability is reasonably assured. For all revenue sources discussed below, in accordance ASC 605-45 “Principal Agent Considerations”, the Company recognizes revenue net of amounts retained by third party entities. The Company recognizes revenues from the placement of banner ads on its websites upon placement of the banner and when collection is reasonably assured.

 

Recent accounting pronouncements

 

The Company has elected to early adopt Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. The adoption of this ASU allows the company to remove the inception to date information and all references to development stage.

 

NOTE 3 - WEBSITE AND WEBSITE DEVELOPMENT COSTS

 

Websites acquired and website development costs were being amortized on a straight-line method over the estimated useful life of 5 years. In November 2014, the Company assessed its long-lived assets for any impairment and concluded that there were indicators of impairment as of November 30, 2014 and the Company calculated that the estimated undiscounted cash flows were less than the carrying amount of the intangible asset. Based on the Company’s analysis, the Company recognized an impairment loss of $279,040 for the three and nine months ended November 30, 2014 which reduced the value of intangible assets acquired to $0. The Company did not record any impairment charge during the 2013 period. For the three and nine months ended November 30, 2014, amortization expense related to these costs amounted to $17,440 and $52,320, respectively.

 

NOTE 4 - SHORT-TERM NOTES PAYABLE

 

On March 31, 2014, the Company accepted a subscription from one non-US investor and issued a promissory note in the amount of $75,000. The promissory note is payable in full at maturity on March 31, 2015, and the principal amount or such portion thereof as shall remain outstanding from time to time accrues simple interest, calculated monthly, at a rate of 7% per annum commencing on the date of the promissory note.

 

On July 15, 2014, the Company accepted a subscription from one non-US investor and issued a promissory note in the amount of $100,000. The promissory note is payable in full at maturity on March 31, 2015, and the principal amount or such portion thereof as shall remain outstanding from time to time accrues simple interest, calculated monthly, at a rate of 7% per annum commencing on the date of the promissory note.

 

 

QUINT MEDIA INC.

CONDENSED NOTES TO THE FINANCIAL STATEMENTS

NOVEMBER 30, 2014

(Unaudited)

 

NOTE 4 - SHORT-TERM NOTES PAYABLE (continued)

 

Accrued interest on promissory notes payable totaled $106,469 and $76,330 at November 30, 2014 and February 28, 2014, respectively, and is included in accounts payable and accrued liabilities on the accompanying balance sheets.

 

At November 30, 2014 and February 28, 2014, short-term notes payables consisted of the following:

 

		November 30, 2014				February 28, 2014
		(Unaudited)
Issued on June 15, 2009, this unsecured promissory note, originally bearing interest at five percent (5%) per annum on the principal balance of $50,000, was originally due on June 15, 2011. Effective May 18, 2011 this promissory note was amended whereby the maturity date of the note was extended until February 28, 2013. The promissory note became past due on February 28, 2013 and the principal amount or such portion thereof as shall remain outstanding from time to time accrued simple interest, calculated monthly in arrears, at a rate of 12% per annum commencing on the date of the promissory note and payable at maturity. Effective September 1, 2013, this promissory note was again amended whereby the maturity date of the note was extended until June 30, 2014 and the interest rate was reduced to 7%. In default as of November 30, 2014.		$	50,000			$	50,000
Issued on May 6, 2011, this unsecured promissory note, originally bearing interest at five percent (5%) per annum on the principal balance of $250,000, was originally due on February 28, 2013. The promissory note became past due on February 28, 2013 and the principal amount or such portion thereof as shall remain outstanding from time to time accrued simple interest, calculated monthly in arrears, at a rate of 12% per annum commencing on the date of the promissory note and payable at maturity. Effective September 1, 2013, this promissory note was again amended whereby the maturity date of the note was extended until June 30, 2014 and the interest rate was reduced to 7%. In default as of November 30, 2014.			250,000				250,000
Issued on September 24, 2013, this unsecured promissory note, bears interest at seven percent (7%) per annum on the principal balance of $100,000 and is due on June 30, 2014. In default as of November 30, 2014.			100,000				100,000
Issued on February 13, 2014, this unsecured promissory note, bears interest at seven percent (7%) per annum on the principal balance of $50,000 and is due on February 13, 2015.			50,000				50,000
Issued on March 31, 2014, this unsecured promissory note, bears interest at seven percent (7%) per annum on the principal balance of $75,000 and is due on March 31, 2015.			75,000				-
Issued on July 15, 2014, this unsecured promissory note, bears interest at seven percent (7%) per annum on the principal balance of $100,000 and is due on March 31, 2015.			100,000				-
Total Short-term Notes Payable		$	625,000			$	450,000

 

In March 2015, all short-term notes were settled by the issuance the Company’s common stock (See Note 7 – Subsequent Events).

 

 

QUINT MEDIA INC.

CONDENSED NOTES TO THE FINANCIAL STATEMENTS

NOVEMBER 30, 2014

(Unaudited)

 

NOTE 5 - RELATED PARTY TRANSACTIONS

 

On May 17, 2013, the Company entered into a definitive Web Site Asset Purchase Agreement (the “Agreement”) with Lakefield Media Holding AG and its wholly-owned subsidiary, Flawsome XLerator GmbH (“Flawsome”). Constantin Dietrich, our current president and director of our company, is the founder and Chief Executive Officer of Lakefield Media Holding AG, which wholly-owns Flawsome. Pursuant to the Agreement, the Company acquired the internet domain name “Slickx.com”, the website and related software, intellectual property rights, accounts, contracts, goodwill and infrastructure for $50,000. This transaction was completed on May 21, 2013.

 

On May 29, 2013 the Company entered into a consulting agreement with Flawsome, whereby Flawsome agreed to provide certain services, including general management, product management, requirements engineering, quality management, project management, design creation, development team lead, deployment management, content management, reporting services, web development, mobile development, basic content creation, server hosting and monitoring and update services. The agreement expired December 31, 2013, but is continuing on a month-to-month basis. During the nine months ended November 30, 2014 and 2013, respectively, the Company capitalized $0 and $298,800 in web development costs contracted through Flawsome related to the “Exley.com” website and expensed $12,870 and $0 in website management expenses. As of November 30, 2014 and February 28, 2014, the Company owed $182,900 and $196,500 to Flawsome, respectively.

 

As of November 30, 2014 and February 28, 2014, respectively, the Company owed $15,000 and $30,000 for consulting services to a director and $94,555 and $70,500 to a Company whose shareholder is a director of the Company. Additionally, the Company owed $31,920 and $7,588 to an officer for expenses paid on behalf of the Company as of November 30, 2014 and February 28, 2014, respectively. The payables do not bear interest.

 

NOTE 6 - DISCONTINUED OPERATIONS

 

During the period ended February 28, 2014, the Company’s management elected to discontinue the operations of its pharmaceutical business, divest itself of the balance of its pharmaceutical assets and engage in the digital media and entertainment business. As such, all assets, liabilities and expenses of the pharmaceutical business have been presented as discontinued operations in the financial statements. A summary of those assets and liabilities as of November 30, 2014 and February 28, 2014 and revenues and expenses for the nine months ended November 30, 2014 and 2013 are as follows:

 

		November 30, 2014				February 28, 2014
Assets from Discontinued Operations		$	-			$	-
Liabilities from Discontinued Operations:
Accounts payable and accrued liabilities		$	-			$	109,449

 

		For the Nine Months Ended
		November 30,
		2014				2013
Net Revenues		$	-			$	-
Expenses
Cost of goods sold			-				6,310
Total Expenses			-				(6,310	)
Other Income
Gain on expiration of product return liability			109,449				-
Net Income (Loss) From Discontinued Operations		$	109,449			$	(6,310	)

 

 

QUINT MEDIA INC.

CONDENSED NOTES TO THE FINANCIAL STATEMENTS

NOVEMBER 30, 2014

(Unaudited)

 

NOTE 6 - DISCONTINUED OPERATIONS (continued)

 

Certain terms with prior customers allowed the return of product within a certain period of the product’s expiration date. As such, upon shipment of product an estimate for returns was recorded. During the nine months ended November 30, 2014, the Company’s management deemed the remaining product return liabilities to be expired and no remaining liability exists. Accordingly, during the nine months ended November 30, 2014, the Company recognized a gain of $109,449 from the expiration of product return liabilities.

 

NOTE 7 - SUBSEQUENT EVENTS

 

On March 10, 2015, the Company entered into a debt settlement agreement (the “Debt Settlement Agreement”) with Leone Group, LLC (“Leone”), American Capital Ventures, Inc. (“ACV”), Georgia Georgopoulos, Catherine Cozias and Trels Investments, Ltd. (“Trels” and collectively with Leone, ACV, Ms. Georgopoulos and Ms. Cozias, the “Holders”). Pursuant to the Debt Settlement Agreement, the Company and the Holders agreed to settle all of the outstanding debt owed under certain promissory notes and accounts payable, to Leone, ACV, Ms. Georgopoulos, Ms. Cozias and Trels, and the Holders agreed to convert their respective portions of the debt into shares of restricted common stock of the Company at $0.003 per share. The Company agreed to issue an aggregate of 346,319,970 shares of common stock in settlement of outstanding short-term notes payable with aggregate principal amounts of $625,000, accrued interest payable of $118,205 and accounts payable – related parties of $295,754, as follows:

 

	a.	142,193,090 shares to Leone, in settlement of $234,375 in principal and $44,327 of accrued and unpaid interest pursuant to certain promissory notes, and $147,877 of accounts payable by the Company;
	b.	142,193,090 shares to ACV in settlement of $234,375 in principal and $44,327 of accrued and unpaid interest pursuant to a promissory note, and $147,877 of accounts payable by the Company;
	c.	21,225,001 shares to Ms. Georgopoulos, in settlement of $53,548 in principal and $10,127 of accrued and unpaid interest pursuant to a promissory note;
	d.	21,225,001 shares to Ms. Cozias, in settlement of $53,548 in principal and $10,127 of accrued and unpaid interest pursuant to a promissory note; and
	e.	19,483,788 shares to Trels, in settlement of $49,154 in principal and $9,297 of accrued and unpaid interest pursuant to a promissory note.

 

Pursuant to the terms of the Debt Settlement Agreement, at any time before the Company’s entrance into a definitive agreement for the effectuation of a merger or acquisition that results in a change of control of the Company, the Holders shall have a first right of refusal, subject to the terms of the Debt Settlement Agreement, to participate in any future financing sought by the Company, on a pro rata basis, with the maximum funding amount of each future financing for each respective party being in proportion to that respective party’s total ownership percentage of the Company at that time, which shall only be triggered after a total of $50,000 in the aggregate in funding is obtained by the Company subsequent to the effective date of the Debt Settlement Agreement.

 

If the Company, at any time before the Company’s entrance into a definitive agreement for the effectuation of a merger or acquisition that results in a change of control of the Company, issues common stock at a price per share below $0.003 (the “Settlement Price”), or issues a security convertible at a conversion price per share below the Settlement Price, taking into account any applicable adjustments for a consolidation, recapitalization or reorganization of the Company (the “Lower Issuance Price”), the Holders shall have the right to receive additional shares of the Company’s common stock, without additional payment, such that the effective Settlement Price pursuant to the Debt Settlement Agreement would be equal to the Lower Issuance Price.

 

The Company is currently evaluating the nature and fair value of the transaction in order to quantify any loss on debt settlement. 

 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Cautionary Note Regarding Forward-Looking Information and Factors That May Affect Future Results

 

This quarterly report on Form 10-Q contains forward-looking statements regarding our business, financial condition, results of operations and prospects. The Securities and Exchange Commission (the “SEC”) encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This quarterly report on Form 10-Q and other written and oral statements that we make from time to time contain such forward-looking statements that set out anticipated results based on management’s plans and assumptions regarding future events or performance. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance. In particular, these include statements relating to future actions, future performance or results of current and anticipated sales efforts, expenses, the outcome of contingencies, such as legal proceedings, and financial results. Factors that could cause our actual results of operations and financial condition to differ materially are set forth in the “Risk Factors” section of our annual report on Form 10-K for the fiscal year ended February 28, 2014, as filed with the SEC on June 13, 2014.

 

We caution that these factors could cause our actual results of operations and financial condition to differ materially from those expressed in any forward-looking statements we make and that investors should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time, and it is not possible for us to predict all of such factors. Further, we cannot assess the impact of each such factor on our results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

 

The following discussion should be read in conjunction with our unaudited financial statements and the related notes that appear elsewhere in this quarterly report on Form 10-Q.

 

Overview

 

We are a digital and social media and entertainment company founded to connect people with content relating to their passions and interests, and with each other. As a key component of our cross-platform implementation, we are pioneering a mobile-native philosophy to transform the way the public consumes news and information. This philosophy is supported by both proprietary technology and a team of international experts that are enabling content creation and consumption specifically for any smartphone or tablet device. In doing so, we believe we offer substantial value to businesses, brands and advertisers. This value will be facilitated by leveraging user data to offer specific targeted advertising and by integrating online marketing such as native and programmatic advertising, including real-time bidding. With real-time bidding, the value of an advertisement is determined in real-time based on the demographic of the user who will see the advertisement and the outcome of an auction, which selects the winning advertiser.

 

The concept of our network is being engineered with a powerful digital ecosystem at its core. In addition to matching each user with content that is customized to that user’s interests, this center of activities processes and organizes all of the information and user data across our entire digital and social network. Feature-rich applications for iPhone, Android and Blackberry will allow users to follow the stories that matter most to them and receive up-to-the-second updates on those stories as they evolve over time. In doing so, they have important facts, statistics, quotes and multimedia without fluff, and remain updated without re-reading old information.

 

We strive to become an industry leader through innovation. For example, our ecosystem supports citizen journalism, a socially innovative feature that puts reporting into the public’s hands. Both efficient and interactive, it allows individuals to submit stories (scoops), photos and video of breaking news in any industry and monetize their own content. Bloggers and other individual authors can also partner with us by contributing sought-after content to its communities. In return, partners can generate both traffic and revenue.

 

We are initially focused on brands relating to lifestyle, entertainment and fashion, with plans to expand our ecosystem to include social networking. Our underlying technology can be applied to any type of content community, regardless of the industry vertical. It is enterprise-grade and infinitely scalable, providing an excellent opportunity to support acquisitions and expansion.

 

 

We believe our users are a ready audience for businesses and brands seeking to promote their products and services. By incorporating a secure business intelligence data collection strategy across our ecosystem, we can leverage our valuable user data as a saleable commodity. The power of data analytics coupled with real-time access will help marketers effectively reach their target audiences.

 

Our Business

 

Exley

 

In 2013, we acquired the internet domain name “Slickx.com,” the website and related software, intellectual property rights, accounts, contracts, goodwill and infrastructure from Lakefield Media Holding AG (“Lakefield”) for $50,000. The platform was subsequently developed further and rebranded “Exley” (getexley.com). Constantin Dietrich, our President, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer, and a member of our board of directors, is the founder and Chief Executive Officer of Lakefield.

 

Functions and Services

 

We plan to enable users to not only consume digital content from the lifestyle, fashion and entertainment industry, but also to find, create and share the content within these verticals in which they are interested. Our service will connect consumers, creators and advertisers in an environment that is both engaging and social. By building a media network that delivers curated quality content we will offer a global platform that will enable the user to find, share and connect with like-minded people and opinion-leaders. The service is planned to be available on multiple platforms including web, tablet and mobile.

 

Revenue Model

 

We plan to generate revenue from advertisements and subscriptions.

 

Advertisements. One of the major benefits of advertising on a social media site is that advertisers can take advantage of the users’ demographic information and target their ads appropriately. We may sell advertisement space to companies that may be interested in targeting our subscribers. We anticipate that interested advertisers will include premium brand advertisers as well as local and regional advertisers who are looking for innovative new and exciting formats to carefully target the consumer to create an experience that benefits consumers and advertisers. The focus will be to offer content with targeted advertising that reaches the right audience with the right content and the right advertising.

 

Subscriptions. As the service matures, we may offer paid subscription services that enhance and augment the user experience. Further, there may be a cost for the consumer to download the application.

 

Competition

 

We expect that we will face substantial competition from dominant digital media and entertainment companies and websites such as gawker.com and Mode Media’s glam.com, as well as Facebook application providers in the social media space such as Pinterest. We believe that users often utilize multiple digital and social media and entertainment websites or applications, and the use of one of these website or application is not necessarily to the exclusion of others.

 

Achieving a critical mass of users or subscribers is crucial for digital and social websites and applications. Even though we seek to offer products and services that are unique in the industry, superior in quality, and more appealing than those of our competitors, we will need to establish a solid initial user base and critical mass.

 

Although we believe that we have access to the tools and certain inherent efficiencies to attract the initial user base, we need to do that at a lower cost per visitor than certain of our traditional online competitors in order to become successful. We also believe that the industry offers substantial room for growth as social networking application platforms and mobile platforms continue to expand and as the Internet especially mobile continues to become the primary source to engage with social media activities and consume, create and share news, events and other lifestyle-related content.

 

Marketing and Sales Strategy

 

The use of the Internet is continuing to evolve as a global platform for doing business. We anticipate that initially, our major focus will be to enhance the getexley.com website and the cultivation of our user base. We anticipate using various online marketing methods such as Facebook’s viral channels, online marketing programs and other advertising and marketing programs in order to drive traffic to our own website. We plan to take advantage of a well balanced mix of online and offline marketing strategies.

 

Our primary target market is focused on Internet users who already participate in social media websites. We, therefore, plan to take advantage of various well-established online marketing programs and make them an integral part of our long-term strategy. Our marketing campaigns will monitor daily statistics and track information such as interests, favorite topics and most read stories in order to quickly get synchronized with our Internet audience.

 

We plan to participate in other marketing activities that will also aim to raise awareness of the EXLEY brand and attract users by promoting the unique content and quality of our product and services. We plan to primarily advertise through Internet and mobile advertising and will have to run extensive user acquisition campaigns at any given time, targeting various classifications of users.

 

We plan to use media buying and in-house tools to effectively and efficiently track, measure and optimize the success of our advertising campaigns. We plan to initiate a marketing strategy with a focus on campaigns that we believe will produce a positive return on ad-spend in the medium- to long-term.

  

 

Online Advertising

 

The majority of our advertising and promotional activities will be concentrated on online advertising campaigns and search engine marketing (“SEM”). SEM is a form of internet marketing that involves the promotion of websites by increasing their visibility in search engine results pages like Google or Bing through optimization and advertising. SEM may use search engine optimization (“SEO”) that adjusts or rewrites website content to achieve a higher ranking in search engine results pages or use pay per click listings. SEO is a technique which helps search engines find and rank a website or –page higher than others by affecting their visibility in a search engine’s “natural” or un-paid (“organic”) search results. Its objective is getting traffic from the “free,” “organic,” “editorial” or “natural” listings on search engines such as the major search engines Google, Yahoo and Bing that have such results. In general it is believed that a result (site) that appears earlier or higher and more frequently in the search results list on search engine results pages will get more visitors (traffic) from that search engine.

 

We have selected Google because of its success and popularity for web users wishing to find something using internet search. The Google Adwords program will allow us to customize the text of our advertisements, the frequency of each advertisement’s appearance, and the length of the advertising contract. For our purposes, we believe that this will give us the maximum amount of flexibility and allow us to closely monitor the costs of the marketing campaign.

 

Using this strategy will allow us also to design our own ads, and to select target locations such as a city or state and use keywords in our ads. A keyword is a word that is used by an Internet user who is performing an online search to find out information on a specific topic.

 

Optimizing Our Website

 

We plan to work with the website development contractor to optimize our website in terms of SEO. SEO may target various kinds of search, including name search, local or image search, video search or search for events and news. Based on the type of search, search engine results pages and other content such as videos or local listings are shown and ranked based on what the search engine considers most relevant to users. Payment is not involved, as it is with paid SEM search ads.

 

As part of our internet marketing strategy, we regard SEO to consider how search engines work, what users search for, the actual search terms or keywords typed into search engines and which search engines are preferred by their targeted audience. Thus, SEO may involve editing our website’s and pages’ content, HTML and associated coding to both increase its relevance to specific keywords and to remove barriers to the indexing activities of search engines. We therefore plan to work with the web site development contractor to develop a series of keywords or meta-tags for each of the pages of our web site. Meta-tags are keywords that are added to a web page to make it easier to find that specific web page through search engines, web browser software and other applications. The information is not intended to be seen by the casual Internet user. Search engines like Google and Yahoo are designed to seek out these keywords when someone is performing an Internet search for a specific topic.

 

Intellectual Property

 

We own one registered trademark for Granisol and an unregistered trade-mark “EXLEY.”

 

We are planning to develop the EXLEY website and intend to protect its contents by registering for appropriate copyright and trademark protection where we deem such registration necessary or beneficial. We have not conducted any independent searches or other inquiry into patents or other intellectual property which may be owned by others and which may constrain our business plan, nor have we received independent opinions of counsel on such matters.

 

 

Recent Developments

 

On March 10, 2015, we entered into a debt settlement agreement (the “Debt Settlement Agreement”) with Leone Group, LLC (“Leone”), American Capital Ventures, Inc. (“ACV”), Georgia Georgopoulos, Catherine Cozias and Trels Investments, Ltd. (“Trels” and collectively with Leone, ACV, Ms. Georgopoulos and Ms. Cozias, the “Holders”). Pursuant to the Debt Settlement Agreement, the Company and the Holders agreed to settle all of the outstanding debt owed under certain promissory notes and accounts payable, to each of the Holders, and the Holders agreed to convert their respective portions of the debt into shares of restricted common stock of the Company. The Company agreed to issue an aggregate of 346,319,970 shares of common stock in settlement of approximately $1,039,359.89 of debt owed by the Company to the Holders. As a result of the issuance of shares pursuant to the Debt Settlement Agreement, Leone and ACV each hold approximately 37% of the Company’s common stock. As of March 10, 2015, we had a total of approximately 409,202,970 shares of common stock issued and outstanding.

 

On March 10, 2015, Joseph Carusone submitted his resignation as Vice President, Investor Relations, and a member of our Board of Directors. On November 13, 2014, Joseph Arcuri submitted his resignation as a member of our Board of Directors. There were no disagreements between us and Mr. Arcuri or Mr. Carusone as to our operations, policies (including accounting or financial policies), or practices.

 

Results of Operations

 

Revenues

 

During the three and nine months ended November 30, 2014, we generated revenue of $0 and $74, respectively. We did not generate revenue during the three and nine months ended November 30, 2013.

 

Operating Expenses

 

During the three months ended November 30, 2014, we incurred operating expenses totaling $335,672 compared with $162,665 for the three months ended November 30, 2013. The increase of $173,007 in operating expenses is mainly attributable to the recognition of an impairment loss of $279,040 for the three months ended November 30, 2014 which reduced the value of intangible assets acquired to $0, an increase of $17,440 in amortization of capitalized website development costs, and an increase in consulting fees – related party of $2,090 offset by a decrease in professional fees of $73,135 and a decrease of $52,428 in general and administrative expenses due to cost cutting measures.

 

During the nine months ended November 30, 2014, we incurred operating expenses totaling $518,057 compared with $348,447 for the nine months ended November 30, 2013. The increase of $169,610 in operating expenses is mainly attributable to an increase in impairment losses of $279,040 from the recognition of an impairment loss of $279,040 for the nine months ended November 30, 2014 which reduced the value of intangible assets acquired to $0, an increase of $52,320 in amortization of capitalized website development costs, and an increase in consulting fees – related party of $12,870 offset by a decrease in professional fees of $124,205 and a decrease of $50,415 in general and administrative expenses due to cost cutting measures.

 

 

Other Expenses

 

During the three and nine months ended November 30, 2014, we incurred interest expense of $10,907 and $30,138 as compared with $6,575 and $24,668 for the three and nine months ended November 30, 2013, respectively. The increase was due to an increase in short-term notes payable.

 

Loss from Operations

 

During the three months ended November 30, 2014, we realized a loss from continuing operations of $346,579 compared with a loss from continuing operations of $169,185 for the three months ended November 30, 2013. The $177,394 increase in loss from continuing operations is mainly attributable to an increase of $173,007 in operating expenses as discussed above.

 

During the nine months ended November 30, 2014, we realized a loss from continuing operations of $548,121 compared with a loss from continuing operations of $372,493 for the nine months ended November 30, 2013. The $175,628 increase in loss from continuing operations mainly attributable to an increase of $169,610 in operating expenses as discussed above.

 

Income (Loss) from Discontinued Operations

 

During the three and nine months ended November 30, 2014, we recorded a gain (loss) from discontinued operations of $0 and $109,449 as compared with $2,388 and $(3,922) for the three and nine months ended November 30, 2013, respectively. During the nine months ended November 30, 2014, we deemed the remaining product return liabilities to be expired and determined that no remaining liability exists. Accordingly, during the nine months ended November 30, 2014, we recognized a gain of $109,449 from the extinguishment of product return liabilities.

 

Net Loss

 

During the three months ended November 30, 2014, we realized a net loss of $346,579 or $(0.01) per common share as compared with a net loss of $166,797 or $(0.00) per common share for the three months ended November 30, 2013.

 

During the nine months ended November 30, 2014, we realized a net loss of $438,672 or $(0.01) per common share as compared with a net loss of $376,415 or $(0.01) per common share for the nine months ended November 30, 2013.

 

Liquidity and Capital Resources

 

Our financial condition at November 30, 2014 and February 28, 2014 for the respective items are summarized below. We have suffered recurring losses from inception. Our ability to meet our financial liabilities and commitments is primarily dependent upon the continued financial support of our directors and shareholders, the continued issuance of equity to new or existing shareholders, and our ability to achieve and maintain profitable operations.

 

Working Capital Deficit

 

		November 30, 2014				February 28, 2014
Current Assets		$	17,043			$	17,885
Current Liabilities			1,076,553				970,083
Working Capital Deficit		$	(1,059,510	)		$	(952,198	)

 

From February 28, 2014 to November 30, 2014, our working capital deficit increased by approximately $107,300, mainly due to the issuance of $175,000 in short-term promissory notes offset be a net decrease in other liabilities of approximately $70,000 during the nine months ended November 30, 2014.

 

Cash Flows

 

		Nine Months Ended November 30, 2014				Nine Months Ended November 30, 2013
Cash used in operating activities		$	(171,011	)		$	(76,232	)
Cash used in investing activities			-				(348,800	)
Cash provided by (used in) financing activities			175,000				(25,000	)
Net increase (decrease) in cash and cash equivalents		$	3,989			$	(450,032	)

 

 

Cash Used in Operating Activities

 

Our cash used in operating activities for the nine months ended November 30, 2014, compared to our cash used in operating activities for the nine months ended November 30, 2013, increased $94,779, mainly due to the ramp up of the digital media and entertainment business.

 

Cash Used in Investing Activities

 

Our cash used in investing activities for the nine months ended November 30, 2014 was $0, compared to $348,800 for the nine months ended November 30, 2013 from the acquisition of SlickX (now Exley) assets and the capitalization of website development costs.

 

Cash Provided By (Used in) Financing Activities

 

Our cash provided by financing activities for the nine months ended November 30, 2014 was $175,000 due to the issuance of two short-term promissory notes, compared to cash used in financing activities of $25,000 for the nine months ended November 30, 2013 from the repayment of short-term promissory notes of $200,000 offset from proceeds received from the sale of our common stock of $75,000 and proceeds from promissory notes of $100,000.

 

Cash Requirements

 

We estimate our operating expenses, excluding stock based compensation and amortization expense, and working capital requirements for the next 12 months to be as follows:

 

Expense		Amount
Bank charges and interest		$	200
Filing fees			10,000
Investor relations			10,000
Legal and accounting fees			100,000
Licenses and permits			10,000
Marketing expense			20,000
Insurance expense			5,000
Personnel and consulting expense			50,000
Transfer agent fees			10,000
Other general & administrative expense			15,000
Total		$	230,200

 

Our management does not believe that our current capital resources will be adequate to continue operating our company and maintaining our business strategy for more than 12 months. Accordingly, we will have to raise additional capital in the near future to meet our working capital requirements. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, if and when it is needed, we will be forced to scale down or perhaps even cease the operation of our business.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to our stockholders.

 

Going Concern

 

Our unaudited financial statements and information for the period ended November 30, 2014 have been prepared by our management on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. We have generated limited revenues to date, had a net loss of $438,672 for the nine months ended November 30, 2014 and had a stockholders deficit, accumulated deficit and working capital deficit of $1,059,510, $3,763,339 and $1,059,510 at November 30, 2014, respectively. We cannot provide any assurance that we will ultimately achieve profitable operations or become cash flow positive, or raise additional funds through the sale of debt and/or equity.

 

On November 30, 2014, we had cash and cash equivalents of $16,946. Our management does not believe that our current capital resources will be adequate to continue operating our company and maintaining our business strategy for more than 12 months. If we are unable to raise additional capital in the near future, we expect that we will need to curtail operations, liquidate any assets that we might own, seek additional capital on less favorable terms and/or pursue other remedial measures. Our financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

 

 

Future Financing

 

We will require additional financing to fund our planned operations. We currently do not have committed sources of additional financing and may not be able to obtain additional financing particularly, if the volatile conditions of the stock and financial markets, and more particularly the market for early development stage company stocks persist.

 

There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, if and when it is needed, we will be forced to further delay or further scale down some or all of our activities or perhaps even cease the operations of the business.

 

Since inception we have funded our operations primarily through equity and debt financings and we expect that we will continue to fund our operations through the equity and debt financing, either alone or through strategic alliances. If we are able to raise additional financing by issuing equity securities, our existing stockholders’ ownership will be diluted. Obtaining commercial or other loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

 

There is no assurance that we will be able to maintain operations at a level sufficient for an investor to obtain a return on his, her, or its investment in our common stock. Further, we may continue to be unprofitable.

 

Critical Accounting Policies

 

We have identified the following policies as critical to our business and results of operations. Our reported results are impacted by the application of the following accounting policies, certain of which require management to make subjective or complex judgments. These judgments involve making estimates about the effect of matters that are inherently uncertain and may significantly impact quarterly or annual results of operations. For all of these policies, management cautions that future events rarely develop exactly as expected, and the best estimates routinely require adjustment. Specific risks associated with these critical accounting policies are described in the following paragraphs.

 

Impairment of long-lived assets

 

In accordance with ASC Topic 360, we review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. We recognize an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. Based on our analysis, we recognized an impairment loss of $279,040 for the three and nine months ended November 30, 2014 which reduced the value of intangible assets acquired to $0.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Disclosure controls and procedures

 

We maintain “disclosure controls and procedures,” as that term is defined in Rule 13a-15(e), promulgated by the SEC pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer to allow timely decisions regarding required disclosure.

 

As required by paragraph (b) of Rule 13a-15 under the Exchange Act, our management, with the participation of our principal executive officer and principal financial officer, evaluated our company’s disclosure controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q. Based on that evaluation, our principal executive and financial officer concluded that, as of November 30, 2014, our disclosure controls and procedures were not effective.

 

 

The ineffectiveness of our disclosure controls and procedures was due to the following material weaknesses which we identified in our internal control over financial reporting: (1) the lack of multiple levels of management review on complex accounting and financial reporting issues, and (2) a lack of adequate segregation of duties and necessary corporate accounting resources in our financial reporting process and accounting function as a result of our limited financial resources to support hiring of personnel and implementation of accounting systems. Until such time as we expand our staff to include additional accounting personnel and hire a full-time chief financial officer, it is likely we will continue to report material weaknesses in our internal control over financial reporting.

 

Changes in internal control over financial reporting

 

There have been no changes in our internal control over financial reporting during our fiscal quarter ended November 30, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting,

 

PART II – OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

 

ITEM 1A. RISK FACTORS

 

Not applicable to smaller reporting companies.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

At November 30, 2014, we were in default under six promissory notes, dated June 15, 2009, May 6, 2011, September 24, 2013, February 13, 2014, March 31, 2014, and July 15, 2014, originally issued by us to Trels Investments, Ltd., in the original principal amounts of $50,000, $250,000, $100,000, $50,000, $75,000, and $100,000, respectively, which all bore interest at the rate of 7% per annum (collectively, the “Notes”). On November 30, 2014, we were also in default with respect to an aggregate of $106,469 in accrued and unpaid interest pursuant to the Notes, and an aggregate of $324,375 in accounts payable – related parties.

 

On March 10, 2015, we entered into a debt settlement agreement (the “Debt Settlement Agreement”), pursuant to which we and the holders of the Notes agreed to settle all of the outstanding debt owed under the Notes and certain accounts payable owed to the holders of the Notes, and the holders of the Notes agreed to convert their respective portions of the debt into shares of restricted common stock of the Company. We agreed to issue an aggregate of 346,319,970 shares of common stock in settlement of approximately $1,038,959 of debt owed by the Company in accounts payable and pursuant to the Notes.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

There have been no material changes to the procedures by which security holders may recommend nominees to our Board of Directors since the filing of our quarterly report on Form 10-Q for the quarter ended August 31, 2014.

 

ITEM 6. EXHIBITS

 

Exhibit Number		Description
31.1		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer and Chief Financial Officer
32.1		Section 1350 Certifications
101.INS*		XBRL Instance Document
101.SCH*		XBRL Taxonomy Extension Schema
101.CAL*		XBRL Taxonomy Extension Calculation
101.DEF*		XBRL Taxonomy Extension Definition
101.LAB*		XBRL Taxonomy Extension Labels
101.PRE*		XBRL Taxonomy Extension Presentation Linkbase

 

* XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of this quarterly report on Form 10-Q for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 

 

SIGNATURES

 

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

 

	QUINT MEDIA INC.
Dated: April 21, 2015	By:	/s/ Constantin Dietrich
		Constantin Dietrich
		President, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer
		(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)