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 May 31, 2015

 

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: 416,205,062 shares as of July 20, 2015.

 

 

 

QUINT MEDIA INC.

TABLE OF CONTENTS

 

			Page
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements		F-1
	Balance Sheets as of May 31, 2015 (unaudited) and February 28, 2015		F-1
	Statements of Operations for the Three Months Ended May 31, 2015 and 2014 (unaudited)		F-2
	Statements of Changes in Stockholders’ Deficit for the Three Months Ended May 31, 2015 (unaudited)		F-3
	Statements of Cash Flows for the Three Months Ended May 31, 2015 and 2014 (unaudited)		F-4
	Condensed 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		10
Item 4.	Controls and Procedures		10
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		11
Item 6.	Exhibits		11
Signatures			13

 

 

PART I - FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

QUINT MEDIA, INC.

BALANCE SHEETS

 

		May 31, 2015				February 28, 2015
		(Unaudited)
ASSETS
CURRENT ASSETS:
Cash		$	10,381			$	6,809
Prepaid expenses and other current assets			-				97
Total Current Assets			10,381				6,906
TOTAL ASSETS		$	10,381			$	6,906
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES:
Short-term notes payable		$	-			$	625,000
Short-term notes payable - related parties, including put premium			14,286				-
Advances payable - related parties			10,000				-
Accounts payable and accrued liabilities			13,184				121,222
Accounts payable and accrued liabilities, related parties			65				304,943
Total Current Liabilities			37,535				1,051,165
STOCKHOLDERS’ DEFICIT:
Common stock: $.0001 par value, 450,000,000 shares authorized; 409,202,970 and 62,883,000 issued and outstanding at May 31, 2015 and February 28, 2015, respectively			40,920				6,288
Additional paid-in capital			3,875,029				2,697,541
Accumulated deficit			(3,943,103	)			(3,748,088	)
Total Stockholders’ Deficit			(27,154	)			(1,044,259	)
Total Liabilities and Stockholders’ Deficit		$	10,381			$	6,906

 

See accompanying condensed notes to unaudited financial statements.

 

 

QUINT MEDIA, INC.

STATEMENTS OF OPERATIONS

(Unaudited)

 

		For the Three Months Ended
		May 31,
		2015				2014
REVENUES		$	-			$	66
OPERATING EXPENSES:
Professional fees			15,332				34,938
Website amortization			-				17,440
General and administrative expenses			7,044				31,947
Total Operating Expenses			22,376				84,325
LOSS FROM OPERATIONS			(22,376	)			(84,259	)
OTHER EXPENSE:
Debt settlement loss, net			(167,090	)			-
Interest expense			(5,549	)			(8,817	)
Total Other Expense			(172,639	)			(8,817	)
NET LOSS		$	(195,015	)		$	(93,076	)
NET LOSS PER COMMON SHARE:
Net loss per common share - basic and diluted		$	(0.00	)		$	(0.00	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic and diluted			371,559,495				62,883,000

 

See accompanying condensed notes to unaudited financial statements.

 

 

QUINT MEDIA, INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE THREE MONTHS ENDED MAY 31, 2015

(Unaudited)

 

																		Total
		Common Stock								Additional				Accumulated				Stockholders’
		# of Shares				Amount				Paid-in Capital				Deficit				Deficit
Balance, February 28, 2015			62,883,000			$	6,288			$	2,697,541			$	(3,748,088	)		$	(1,044,259	)
Shares issued for debt settlement			346,319,970				34,632				1,177,488								1,212,120
Net loss			-				-				-				(195,015	)			(195,015	)
Balance, May 31, 2015 (Unaudited)			409,202,970			$	40,920			$	3,875,029			$	(3,943,103	)		$	(27,154	)

 

See accompanying condensed notes to unaudited financial statements.

 

 

QUINT MEDIA, INC.

STATEMENTS OF CASH FLOWS

(Unaudited)

 

		For the Three Months Ended
		May 31,
		2015				2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(195,015	)		$	(93,076	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization expense			-				17,440
Loss on debt settlement, net			167,090				-
Premium accretion - related parties			4,286				-
Change in operating assets and liabilities:
Prepaid expenses and other assets			97				4,839
Accounts payable and accrued liabilities			10,167				(9,054	)
Accounts payable and accrued liabilities - related parties			(3,053	)			751
NET CASH USED IN OPERATING ACTIVITIES			(16,428	)			(79,100	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from related party advances			10,000				-
Proceeds from issuance of related party promissory notes			10,000				75,000
NET CASH PROVIDED BY FINANCING ACTIVITIES			20,000				75,000
NET INCREASE (DECREASE) IN CASH			3,572				(4,100	)
CASH, beginning of year			6,809				12,957
CASH, end of period		$	10,381			$	8,857
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest
Interest		$	-			$	-
Income taxes		$	-			$	-
Non-cash investing activities:
Issuance of common shares for debt and account payable and accrued liabilities		$	1,038,960			$	-

 

See accompanying condensed notes to unaudited financial statements.

 

 

QUINT MEDIA INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS

MAY 31, 2015

(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 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 its 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 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, 2015 and 2014 included in the Company’s annual report on 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 net loss $195,015 and $93,076 for the three months ended May 31, 2015 and 2014, respectively, and net cash used in operations of $16,428 and $79,100 for the three months ended May 31, 2015 and 2014, respectively. Additionally, the Company had an accumulated deficit, a stockholders’ deficit and a working capital deficit of $3,943,103, $27,154 and $27,154, respectively, at May 31, 2015, and no revenue for the three months ended May 31, 2015. 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, 2016. These matters raise substantial doubt about the Company’s ability to continue as a going concern.

 

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 May 31, 2015, the Company was in the process of transitioning to its new operating business and expects to incur operating losses for the next 12 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. (See Note 7)

 

 

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 three months ended May 31, 2015 and 2014 include the valuation of deferred tax assets, valuation of embedded conversions features on notes payable and assumptions used in assessing impairment of long-term assets.

 

Fair value of financial instruments and fair value measurements

 

The Company adopted the guidance of Accounting Standards Codification (“ASC”) 820 for fair value measurements which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:

 

	●	Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.
	●	Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.
	●	Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.

 

The carrying amounts reported in the balance sheets for cash, short-term notes payable, accounts payable, and accrued liabilities, approximate their fair market value based on the short-term maturity of these instruments. The Company did not have any non-financial assets or liabilities that are measured at fair value on a recurring basis as of February 28, 2015 and 2014.

 

ASC 825-10 “Financial Instruments”, allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding instruments.

 

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’s specific revenue recognition policies are as follows:

 

The Company recognizes revenues from the placement of banner ads on its websites upon placement of the banner and when collection is reasonably assured.

 

Stock-based compensation

 

Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the service period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company initially records compensation expense based on the fair value of the award at the reporting date.

 

 

Basic and diluted earnings per share

 

Pursuant to ASC 260-10-45, basic earnings per common share is computed by dividing income (loss) available to common shareholders by the weighted average number of shares of common stock outstanding for the periods presented. Diluted income per share is computed by dividing net income (loss) by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. Diluted income (loss) per share reflects the potential dilution that could occur if securities were exercised or converted into common stock or other contracts to issue common stock resulting in the issuance of common stock that would then share in the Company’s income (loss) subject to anti-dilution limitations.

 

Potentially dilutive common shares consist of common stock issuable for stock warrants (using the treasury stock method). These common stock equivalents may be dilutive in the future. All potentially dilutive common shares were excluded from the computation of diluted shares outstanding as they would have an anti-dilutive impact on the Company’s net losses and consisted of the following:

 

		May 31, 2015				February 28, 2015
Total stock warrants			375,000				375,000

 

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.

 

June 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-12, “Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period,” ASU 2014-12 requires that a performance target under stock-based compensation arrangements that could be achieved after the service period is treated as a performance condition and not reflected in the grant-date fair value of the award. Rather, the related compensation cost should be recognized when it becomes probable that the performance targets will be achieved. ASU 2014-12 is effective beginning with our Fiscal 2017, with early adoption and retrospective application permitted. We do not expect that ASU 2014-12 will have a significant impact on our consolidated financial statements.

 

In August 2014, FASB issued ASU 2014-15, Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern, that will require management to assess an entity’s ability to continue as a going concern, and to provide related footnote disclosures in certain circumstances. In connection with each annual and interim period, management will assess if there is substantial doubt about an entity’s ability to continue as a going concern within one year after the issuance date. Substantial doubt exists if it is probable that the entity will be unable to meet its obligations within one year after the issuance date. The new standard defines substantial doubt and provides example indicators. Disclosures will be required if conditions give rise to substantial doubt. However, management will need to assess if its plans will alleviate substantial doubt to determine the specific disclosures. This standard is effective for public entities for annual periods ending after December 15, 2016. Earlier application of this standard is permitted. This standard is not expected to have a material effect on our financial position, results of operations and cash flows.

 

Accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures.

 

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 five 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 year ended February 28, 2015 which reduced the value of intangible assets acquired to $0. The Company did not record any impairment charge on website and website development costs during the three months ended May 31, 2015 or 2014. For the three months ended May 31, 2015 and 2014, amortization expense related to these costs amounted to $0 and $17,440, respectively.

 

NOTE 4 - SHORT-TERM NOTES PAYABLE

 

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.

 

In connection with this debt settlement, for the three months ended May 31, 2015, the Company recorded debt settlement expense of $173,160. Additionally, remaining liabilities of $6,070 due to the Company’s CEO and a Company controlled by him was forgiven by him in March 2015, resulting in a gain on settlement of $6,070.

 

Accrued interest on promissory notes payable totaled $0 and $117,007 at May 31, 2015 and February 28, 2015, respectively, and is included in accounts payable and accrued liabilities on the accompanying balance sheets.

 

At May 31, 2015 and February 28, 2015, short-term notes payables consisted of the following:

 

		May 31, 2015				February 28, 2015
Unsecured promissory note dated June 15, 2009, originally bearing interest at 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 and 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%. On March 10, 2015, this note and all accrued interest were settled by the issuance of the Company’s common stock.		$	-			$	50,000
Unsecured promissory note dated May 6, 2011, originally bearing interest at 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%. On March 10, 2015, this note and all accrued interest were settled by the issuance of the Company’s common stock.			-				250,000
Unsecured promissory note dated September 24, 2013, bearing interest at 7% per annum on the principal balance of $100,000 and due on June 30, 2014. On March 10, 2015, this note and all accrued interest were settled by the issuance of the Company’s common stock.			-				100,000
Unsecured promissory note dated February 13, 2014, bearing interest at 7% per annum on the principal balance of $50,000 and due on February 13, 2015. On March 10, 2015, this note and all accrued interest were settled by the issuance of the Company’s common stock.			-				50,000
Unsecured promissory note dated March 31, 2014, bearing interest at 7% per annum on the principal balance of $75,000 and due on March 31, 2015. On March 10, 2015, this note and all accrued interest were settled by the issuance of the Company’s common stock.			-				75,000
Unsecured promissory note dated July 15, 2014, bearing interest at 7% per annum on the principal balance of $100,000 and due on March 31, 2015. On March 10, 2015, this note and all accrued interest were settled by the issuance of the Company’s common stock.			-				100,000
Total short-term notes payable		$	-			$	625,000

 

NOTE 5 - STOCKHOLDERS’ EQUITY

 

On March 10, 2015, the Company issued 346,319,970 common shares in settlement of certain liabilities (see Note 4).

 

 

NOTE 6 - RELATED-PARTY TRANSACTIONS

 

Consulting agreements

 

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 three months ended May 31, 2015 and 2014, respectively, the Company did not capitalize any web development costs contracted through Flawsome related to the “Exley.com” website and did not expense any website management expenses. As of May 31, 2015 and February 28, 2015, the Company owed $0 and $182,900 to Flawsome, respectively.

 

As of May 31, 2015 and February 28, 2015, respectively, the Company owed $0 and $15,000 for consulting services to a director and $0 and $75,123 to a Company whose shareholder is a director of the Company. Additionally, the Company owed $0 and $731,920 to an officer for expenses paid on behalf of the Company as of May 31, 2015 and February 28, 2015, respectively. The payables do not bear interest.

 

Convertible notes payable – related parties

 

On April 27, 2015, the Company issued a two promissory notes to related party principal shareholders, ACV and Leone, in the aggregate amount of $10,000 ($5,000 each investor). The promissory notes are payable in full at maturity on September 10, 2015, and the principal amounts or such portion thereof as shall remain outstanding from time, to time accrues simple interest, calculated monthly, at a rate of 8% per annum commencing on the date of the promissory notes. The holders of the Notes have an option to convert all or any portion of the accrued interest and unpaid principal balance of the Notes into the common stock of the Company or its successors, at 70% of the lowest bid price of the common stock for any of the ten previous trading days of conversion date. Pursuant to ASC Topic 480, “Distinguishing Liabilities from Equity” since this convertible note had fixed conversion percentages of 70% of the stock price, the Company determined it had a fixed monetary settlement amount. Accordingly, at May 31, 2015, the Company recorded a premium and related interest expense amounting to $4,286 on the accompanying balance sheet since these convertible notes are convertible at a fixed monetary amount valued at $14,286. At May 31, 2015, principal amount due under these convertible notes amounted to $10,000. On June 17, 2015, the Note holders fully converted this note and all unpaid interest into shares of the Company’s common stock. Accordingly, on the date of conversion, the premium of $4,286 was reclassified to additional paid-in capital. (See Note 7)

 

Advances payable – related parties

 

On March 10, 2015, ACV and Leone advanced an aggregate of $10,000 to the Company for working capital purposes. The advances are non-interest bearing and are payable on demand.

 

NOTE 7 - SUBSEQUENT EVENTS

 

Share Exchange Agreement

 

On June 23, 2015, the Company entered into a share exchange agreement (the “Exchange Agreement”) with OncBioMune, Inc. (“ONC”) and the shareholders of ONC. Pursuant to the Exchange Agreement, the Company agreed to acquire up to 47,000,000 of the issued and outstanding shares of ONC, representing 100% of ONC’s issued and outstanding common stock, from the ONC shareholders in exchange for the issuance of one share of the Company’s common stock and 0.0212765957446809 of the Company’s Series A preferred stock for each share of ONC’s common stock (the “Exchange”), after giving effect to a 1-for-138.73502066667 (or such other number that will result in the reduction of the number of issued and outstanding shares of Company common stock, prior to closing, to 3,000,000 shares) reverse stock split (the “Reverse Stock Split”) and other transactions provided for in the Exchange Agreement. Fractional shares will not be issued as a result of the Reverse Stock Split. Rather, fractional shares will be rounded up to the next whole share.

 

 

On the closing date of the Exchange, the ONC shareholders will become shareholders of the Company and ONC will become a subsidiary of the Company. Immediately after the Exchange and the Reverse Stock Split, 47,000,000 shares of the Company’s common stock, representing 94% of the outstanding common stock, will be owned by the ONC shareholders. In addition, at closing, the Company will designate 1,000,000 shares of Series A preferred stock. Each share of Series A preferred stock will be entitled to 500 votes on all matters that come before shareholders for a vote. Immediately after the Exchange and the Reverse Stock Split, 1,000,000 shares of the Company’s Series A preferred stock, representing 100% of the Series A preferred shares, will be owned by the ONC shareholders. For federal income tax purposes, it is intended that the Exchange qualify as a reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended.

 

The consummation of the transactions contemplated by the Exchange Agreement is subject to certain customary conditions, including, among others, the accuracy of the representations and warranties. In addition, the Exchange Agreement is subject to the following closing conditions:

 

	1.	The Company’s board of directors shall have approved the Exchange.
	2.	The Company’s board of directors shall have approved the Reverse Stock Split.
	3.	The Company’s board of directors shall have approved the Company’s name change to OncBioMune Pharmaceuticals, Inc., and
	4.	The Company shall have designated 1,000,000 shares of Series A preferred stock, with each share being entitled to 500 votes on all matters submitted to the Company’s stockholders for a vote.

 

The Exchange is expected to close no later than August 31, 2015, but in no event before the Exchange Agreement has been signed by shareholders of ONC holding 100% of ONC’s outstanding common stock.

 

The Exchange Agreement may be terminated by each of the ONC shareholders or by the Company only (a) in the event that the Company or ONC do not meet the conditions precedent set forth in the Exchange Agreement, or (b) if the closing of the Exchange has not occurred by August 31, 2015.

 

Convertible notes payable – related parties

 

In June 2015, the Company issued four promissory notes to related party principal shareholders, ACV and Leone, in the aggregate amount of $9,000 ($4,500 each investor). The promissory notes are payable in full at maturity on September 10, 2015, and the principal amounts or such portion thereof as shall remain outstanding from time to time, accrues simple interest, calculated monthly, at a rate of 8% per annum commencing on the date of the promissory notes. The holders of the Notes have an option to convert all or any portion of the accrued interest and unpaid principal balance of the Notes into the common stock of the Company or its successors, at 70% of the lowest bid price of the common stock for any of the ten previous trading days of conversion date. Pursuant to ASC Topic 480, “Distinguishing Liabilities from Equity” since these convertible notes had fixed conversion percentages of 70% of the stock price, the Company determined it had a fixed monetary settlement amount. Accordingly, in June 2015, the Company recorded a premium and related interest expense amounting to $3,857 since these convertible notes are convertible at a fixed monetary amount of $12,857. On June 17, 2015, the Note holders fully converted these notes and all unpaid interest into shares the Company’s common stock. Accordingly, on the date of conversion, the premium of $3,857 was reclassified to additional paid-in capital.

 

Shares issued for debt conversions

 

On June 17, 2015, the Company entered into a debt settlement agreement (the “Debt Settlement Agreement”) with Leone and ACV and together with Leone, 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 to the Holders, and the Holders agreed to convert their respective portions of the debt into shares of restricted common stock of the Company at a conversion price of $0.003 per share. The Company agreed to issue an aggregate of 6,377,093 shares of common stock in settlement of $19,132 of debt owed by the Company, as follows:

 

	a.	3,188,546 shares to Leone, in settlement of an aggregate of $9,500 in principal and approximately $66 of accrued and unpaid interest pursuant to two promissory notes; and
	b.	3,188,546 shares to ACV, in settlement of an aggregate of $9,500 in principal and approximately $66 of accrued and unpaid interest pursuant to two promissory notes.

 

Dietrich Share Grant

 

On June 17, 2015, the Company’s Board of Directors granted to Constantin Dietrich, the Company’s President and Chief Executive Officer, 625,000 shares of the Company’s common stock in exchange for services rendered by Mr. Dietrich to the Company in his capacity as President and Chief Executive Officer. The shares were valued at the quoted trading price of $0.007 per share or total of $4,375 which was expensed immediately.

 

 

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, 2015, as filed with the SEC on May 29, 2015.

 

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 digital and social media and entertainment 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

 

Share Exchange Agreement

 

On June 23, 2015, the Company entered into a share exchange agreement (the “Exchange Agreement”) with OncBioMune, Inc. (“ONC”) and the shareholders of ONC. Pursuant to the Exchange Agreement, the Company agreed to acquire up to 47,000,000 of the issued and outstanding shares of ONC, representing 100% of ONC’s issued and outstanding common stock, from the ONC shareholders in exchange for the issuance of one share of the Company’s common stock and 0.0212765957446809 of the Company’s Series A preferred stock for each share of ONC’s common stock (the “Exchange”), after giving effect to a 1-for-138.73502066667 (or such other number that will result in the reduction of the number of issued and outstanding shares of Company common stock, prior to closing, to 3,000,000 shares) reverse stock split (the “Reverse Stock Split”) and other transactions provided for in the Exchange Agreement. Fractional shares will not be issued as a result of the Reverse Stock Split. Rather, fractional shares will be rounded up to the next whole share.

 

On the closing date of the Exchange, the ONC shareholders will become shareholders of the Company and ONC will become a subsidiary of the Company. Immediately after the Exchange and the Reverse Stock Split, 47,000,000 shares of the Company’s common stock, representing 94% of the outstanding common stock, will be owned by the ONC shareholders. In addition, at closing, the Company will designate 1,000,000 shares of Series A preferred stock. Each share of Series A preferred stock will be entitled to 500 votes on all matters that come before shareholders for a vote. Immediately after the Exchange and the Reverse Stock Split, 1,000,000 shares of the Company’s Series A preferred stock, representing 100% of the Series A preferred shares, will be owned by the ONC shareholders. For federal income tax purposes, it is intended that the Exchange qualify as a reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended.

 

The consummation of the transactions contemplated by the Exchange Agreement is subject to certain customary conditions, including, among others, the accuracy of the representations and warranties. In addition, the Exchange Agreement is subject to the following closing conditions:

 

	1.	The Company’s board of directors shall have approved the Exchange.
	2.	The Company’s board of directors shall have approved the Reverse Stock Split.
	3.	The Company’s board of directors shall have approved the Company’s name change to OncBioMune Pharmaceuticals, Inc., and
	4.	The Company shall have designated 1,000,000 shares of Series A preferred stock, with each share being entitled to 500 votes on all matters submitted to the Company’s stockholders for a vote.

 

The Exchange is expected to close no later than August 31, 2015, but in no event before the Exchange Agreement has been signed by shareholders of ONC holding 100% of ONC’s outstanding common stock.

 

The Exchange Agreement may be terminated by each of the ONC shareholders or by the Company only (a) in the event that the Company or ONC do not meet the conditions precedent set forth in the Exchange Agreement, or (b) if the closing of the Exchange has not occurred by August 31, 2015.

 

ONC is headquartered in Baton Rouge, Louisiana and was founded in 2005. ONC is a biotechnology company specializing in innovative cancer treatment therapies. It has proprietary rights to a breast and prostate patent vaccine, as well as a process for the growth of cancer tumors. ONC’s mission is to improve the overall patient condition through innovative bio immunotherapy with proven treatment protocols, to lower deaths associated with cancer and reduce the cost of cancer treatment. ONC’s technology is safe, and utilizes clinically research proven methods of treatment to provide optimal success of patient recovery.

 

ONC was established to potentiate the commercial opportunities being derived from the scientific research and development of the proponents’ cancer treatments to pursue licensing and/or acquisition of its therapies and proprietary technologies. The Company’s founders, Robert L. Elliott, MD, and Jonathan F. Head, PhD, have conducted their activities in association with the Elliott-Elliott-Head Breast Cancer Research and Treatment Center, a proponent related entity, in Baton Rouge, Louisiana, where an average of 40 patients are treated daily.

 

ONC’s current product portfolio consists of three target therapies and a vaccine platform that allows the company to create a therapeutic vaccine for any solid tumor cancer. The vaccine platform has treated over 300 patients with no toxicity.

 

 

Through the transaction with Quint Media, ONC plans to further develop its proprietary cancer technologies. ONC is currently in the planning stage of a Phase 2 clinical trial of the company’s lead product, ProscaVax®. The trial will be under the direction of Glenn Bubley, MD and the lead site will be Harvard’s Beth Israel Deaconess Medical Center, with additional other hospitals in the Harvard Health System. The trial will expand the results that ONC found in its Phase 1 in a different patient population. ONC will file a new drug application after the completion of the Phase 2.

 

In addition to the funding of the development of ProscaVax®, the Exchange will also help ONC finance the development of its other proprietary technologies, such as the paclitaxel-albumin conjugate that ONC plans to file an orphan drug indication within the next two years.

 

Convertible Notes and Related Debt Settlement Agreement

 

On April 27, 2015, we issued two promissory notes to related party principal shareholders, ACV and Leone, in the aggregate amount of $10,000 ($5,000 each investor). The promissory notes are payable in full at maturity on September 10, 2015, and the principal amounts or such portion thereof as shall remain outstanding from time to time accrues simple interest, calculated monthly, at a rate of 8% per annum commencing on the date of the promissory notes. The holders of the Notes have an option to convert all or any portion of the accrued interest and unpaid principal balance of the Notes into the common stock of the Company or its successors, at 70% of the lowest bid price of the common stock for any of the ten previous trading days of conversion date.

 

In June 2015, we issued four promissory notes to related party principal shareholders, ACV and Leone, in the aggregate amount of $9,000 ($4,500 each investor). The promissory notes are payable in full at maturity on September 10, 2015, and the principal amounts or such portion thereof as shall remain outstanding from time to time accrues simple interest, calculated monthly, at a rate of 8% per annum commencing on the date of the promissory notes. The holders of the Notes have an option to convert all or any portion of the accrued interest and unpaid principal balance of the Notes into the common stock of the Company or its successors, at 70% of the lowest bid price of the common stock for any of the ten previous trading days of conversion date.

 

On June 17, 2015, the Company entered into a debt settlement agreement (the “Debt Settlement Agreement”) Leone and ACV and together with Leone, 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 to the Holders, and the Holders agreed to convert their respective portions of the debt into shares of restricted common stock of the Company at a conversion price of $0.003 per share. The Company agreed to issue an aggregate of 6,377,093 shares of common stock in settlement of $19,131.28 of debt owed by the Company, as follows:

 

	a.	3,188,546 shares to Leone, in settlement of an aggregate of $9,500.00 in principal and approximately $65.64 of accrued and unpaid interest pursuant to two promissory notes; and
	b.	3,188,546 shares to ACV, in settlement of an aggregate of $9,500.00 in principal and approximately $65.64 of accrued and unpaid interest pursuant to two promissory notes.

 

Dietrich Share Grant

 

On June 17, 2015, the Company’s Board of Directors granted to Constantin Dietrich, the Company’s President and Chief Executive Officer, 625,000 shares of the Company’s common stock in exchange for $4,375 in services previously rendered by Mr. Dietrich to the Company in his capacity as President and Chief Executive Officer.

 

Results of Operations

 

Revenues

 

During the three months ended May 31, 2015 and 2014, we generated revenue of $0 and $66, respectively.

 

Operating Expenses

 

During the three months ended May 31, 2015, we incurred operating expenses totaling $22,376 compared with $84,325 for the three months ended May 31, 2014. The decrease of $61,949 in operating expenses is mainly attributable to a reduction of professional fees of $19,606 related to a reduction in consulting fees, a decrease in website amortization of $17,440 dues to the impairment of capitalized website costs in fiscal 2015, and a reduction of general and administrative expenses of $24,903 due to cost cutting measures.

 

Other Expenses

 

During the three months ended May 31, 2015, we incurred interest expense of $5,549 as compared with $8,817 for the three months ended May 31, 2014. The increase was due to a decrease in outstanding short-term notes payable which were converted to common stock in March 2015.

 

During the three months ended May 31, 2015, we recognized a loss from debt settlement expense of $167,090. In connection with this debt settlement discussed elsewhere in this report, for the three months ended May 31, 2015, we recorded debt settlement expense of $173,160. Additionally, remaining liabilities of $6,070 due to the Company’s CEO and a Company controlled by him was forgiven by him in March 2015. We did not incur such expense during the 2014 period.

 

Net Loss

 

During the three months ended May 31, 2015, we realized a net loss of $195,015, or $(0.00) per common share as compared with a net loss of $93,076 or $(0.00) per common share for the three months ended May 31, 2014.

 

 

Liquidity and Capital Resources

 

Our financial condition at May 31, 2015 and February 28, 2015 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

 

		May 31, 2015				February 28, 2015
Current Assets		$	10,381			$	6,906
Current Liabilities			(37,535	)			(1,051,165	)
Working Capital Deficit		$	(27,154	)		$	(1,044,259	)

 

From February 28, 2015 to May 31, 2015, our working capital deficit decreased by $1,017,105, mainly due to the conversion of debt of approximately $1,039,000 to equity.

 

Cash Flows

 

		Three Months Ended May 31, 2015				Three Months Ended May 31, 2014
Cash used in operating activities		$	(16,428	)		$	(79,100	)
Cash used in investing activities			-				-
Cash provided by (used in) financing activities			20,000				(75,000	)
Net increase (decrease) in cash and cash equivalents		$	3,572			$	(4,100	)

 

Cash Used in Operating Activities

 

Our cash used in operating activities for the three months ended May 31, 2015, compared to our cash used in operating activities for the three months ended May 31, 2014, decreased by $62,672, mainly due to a decrease in net operating expenses.

 

Cash Provided By Financing Activities

 

Our cash provided by financing activities for the three months ended May 31, 2015 was $20,000 compared to $75,000 for the three months ended May 31, 2014, a decrease of $55,000 due to a decrease in funds borrowed during the respective period.

 

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 May 31, 2015 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 $195,015 for the three months ended May 31, 2015, and had a stockholders deficit, accumulated deficit and working capital deficit of $27,154, $3,943,103 and $27,154 at May 31, 2015, 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 May 31, 2015, we had cash and cash equivalents of $10,381. 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.

 

 

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. 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 this evaluation, our principal executive officer and principal financial officer concluded that as of May 31, 2015, our disclosure controls and procedures were not effective.

 

The ineffectiveness of our disclosure controls and procedures was due to the following material weaknesses in our internal control over financial reporting: (1) the lack of multiples 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.

 

A material weakness is a deficiency or a combination of control deficiencies in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

 

Changes in internal control over financial reporting

 

There were no changes in our internal control over financial reporting during the quarter ended May 31, 2015 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

 

None.

 

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 annual report on Form 10-K for the year ended February 28, 2015.

 

ITEM 6. EXHIBITS

 

Exhibit No.		Description of Exhibit
3.1		Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the registrant’s registration statement on Form 10-SB filed with the SEC on September 8, 2006).
3.2		Certificate of Change (incorporated by reference to Exhibit 3.1 to the registrant’s current report on Form 8-K filed with the SEC on September 15, 2008).
3.3		Articles of Merger (incorporated by reference to Exhibit 3.1 to the registrant’s current report on Form 8-K filed with the SEC on December 28, 2010).
3.4		Certificate of Change effective August 7, 2013 (incorporated by reference to Exhibit 3.1 to the registrant’s current report on Form 8-K filed with the SEC on August 8, 2013).
3.5		Articles of Merger dated effective August 7, 2013 (incorporated by reference to Exhibit 3.2 to the registrant’s current report on Form 8-K filed with the SEC on August 8, 2013).
3.6		Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to the registrant’s current report on Form 8-K filed with the SEC on November 1, 2013).
10.1		Form of promissory note dated June 15, 2009 (incorporated by reference to Exhibit 10.5 to the registrant’s quarterly report on Form 10-Q filed with the SEC on June 16, 2009).
10.2		Form of Promissory Note dated July 26, 2010 (incorporated by reference to Exhibit 10.2 to the registrant’s current report on Form 8- K filed with the SEC on July 29, 2010).
10.3		Form of Promissory Note dated September 16, 2010 (incorporated by reference to Exhibit 10.3 to the registrant’s current report on Form 8- K filed with the SEC on September 28, 2010).
10.4+		2011 Stock Option Plan (incorporated by reference to Exhibit 10.1 to the registrant’s current report on Form 8- K filed with the SEC on February 22, 2011).
10.5		Form of Promissory Note Amendment dated May 18, 2011 (incorporated by reference to Exhibit 10.1 to the registrant’s current report on Form 8- K filed with the SEC on May 18, 2011).
10.6		Form of Promissory Note Amendment dated May 23, 2011 (incorporated by reference to Exhibit 10.1 to the registrant’s current report on Form 8- K filed with the SEC on May 23, 2011).
10.7		Form of $50,000 Promissory Note Amendment dated April 19, 2012(incorporated by reference to Exhibit 4.2 to the registrant’s annual report on Form 10-K for the fiscal year ended February 29, 2012 filed with the SEC on May 18, 2012).
10.8		Form of $250,000 Promissory Note Amendment dated April 19, 2012 (incorporated by reference to Exhibit 4.3 to the registrant’s annual report on Form 10-K for the fiscal year ended February 29, 2012 filed with the SEC on May 18, 2012).
10.9		Termination Agreement dated June 27, 2012 with Apricus Biosciences, Inc. (incorporated by reference to Exhibit 10.1 to the registrant’s current report on Form 8-K filed with the SEC on June 28, 2012).
10.10		Form of $200,000 Promissory Note Amendment dated July 25, 2012 (incorporated by reference to Exhibit 10.1 to the registrant’s current report on Form 8-K filed with the SEC on July 27, 2012).
10.11		Form of $50,000 Promissory Note Amendment dated July 25, 2012 (incorporated by reference to Exhibit 10.1 to the registrant’s current report on Form 8-K filed with the SEC on July 31, 2012).
10.12		Form of $250,000 Promissory Note Amendment dated July 25, 2012 (incorporated by reference to Exhibit 10.2 to the registrant’s current report on Form 8-K filed with the SEC on July 31, 2012).

 

 

10.13		Web Site Asset Purchase Agreement dated May 17, 2013 between Lakefield Media Holding AG, Flawsome XLerator GmBH and Pediatrix Inc. (incorporated by reference to Exhibit 10.49 to the registrant’s annual report on Form 10-K for the fiscal year ended February 28, 2013 filed with the SEC on June 28, 2013).
10.14		Consulting Agreement dated May 29, 2013 with Flawsome XLerator GmBH (incorporated by reference to Exhibit 10.50 to the registrant’s annual report on Form 10-K for the fiscal year ended February 28, 2013 filed with the SEC on June 28, 2013).
10.15		Form of Private Placement Subscription Agreement including Form of Promissory Note (incorporated by reference to Exhibit 10.1 to the registrant’s current report on Form 8-K filed with the SEC on September 26, 2013).
10.16		Form of Promissory Note Amendment dated August 31, 2013 (incorporated by reference to Exhibit 10.2 to the registrant’s current report on Form 8-K filed with the SEC on September 26, 2013).
10.17		Form of Promissory Note Amendment dated August 31, 2013 (incorporated by reference to Exhibit 10.3 to the registrant’s current report on Form 8-K filed with the SEC on September 26, 2013).
10.18		Form of Private Placement Subscription Agreement (incorporated by reference to Exhibit 10.1 to the registrant’s current report on Form 8-K filed with the SEC on December 2, 2013).
10.19		Form of Warrant Certificate (incorporated by reference to Exhibit 10.2 to the registrant’s current report on Form 8-K filed with SEC on December 2, 2013).
10.20		Form of subscription agreement with promissory note attached (incorporated by reference to Exhibit 10.1 to the registrant’s current report on Form 8-K filed with the SEC on February 18, 2014).
10.21		Form of subscription agreement with promissory note attached (incorporated by reference to Exhibit 10.1 to the registrant’s current report on Form 8-K filed with the SEC on April 4, 2014).
10.22		Form of subscription agreement with promissory note attached (incorporated by reference to Exhibit 10.23 to the registrant’s quarterly report on Form 10-Q for the fiscal quarter ended May 31, 2014, filed with the SEC on July 21, 2014).
10.23		Form of subscription agreement with promissory note attached (incorporated by reference to Exhibit 10.23 to the registrant’s quarterly report on Form 10-Q for the fiscal quarter ended August 31, 2014, filed with the SEC on October 14, 2014).
10.24		Debt Settlement Agreement dated March 10, 2015 by and between Quint Media Inc., Leone Group, LLC, American Capital Ventures, Inc., Georgia Georgopoulos, Catherin Cozias and Trels Investments, Ltd. (incorporated by reference to Exhibit 10.1 to the registrant’s current report on Form 8-K filed with the SEC on March 16, 2015).
10.25		Share Exchange Agreement dated as of June 23, 2015 by and among Quint Media Inc., OncBioMune, Inc. and the shareholders of OncBioMune, Inc. (incorporated by reference to Exhibit 10.1 to the registrant’s current report on Form 8-K filed with the SEC on June 24, 2015).
10.26		Debt Settlement Agreement dated June 17, 2015 by and among Leone Group, LLC, American Capital Ventures, Inc. and Quint Media Inc. (incorporated by reference to Exhibit 10.1 to the registrant’s current report on Form 8-K filed with the SEC on June 24, 2015).
31.1		Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act Of 2002.
32.1		Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002.
101.INS		XBRL INSTANCE DOCUMENT
101.SCH		XBRL TAXONOMY EXTENSION SCHEMA
101.CAL		XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
101.DEF		XBRL TAXONOMY EXTENSION DEFINITION LINKBASE
101.LAB		XBRL TAXONOMY EXTENSION LABEL LINKBASE
101.PRE		XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE

 

+ Management contract or other compensatory plan, contract or arrangement.

 

 

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: July 20, 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)