UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D. C. 20549

FORM 10-Q

 

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

For the quarterly period ended September 30, 2015

or

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

For the transition period from _______________ to _______________

  Commission File Number 000-55533

With, Inc.

 (Exact name of registrant as specified in its charter)

NEVADA (State or other jurisdiction of incorporation or organization)		80-0194367  (I.R.S. Employer Identification No.)

 18475 Bandilier Circle

Fountain Valley, California 92708

(Address of principal executive offices)

(714) 617-1991

(Issuer's telephone number)

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: 52,328,994 shares of common stock as of November 20, 2015.  

 

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NOTE REGARDING FORWARD-LOOKING STATEMENTS

Our disclosure and analysis in this Report contains forward-looking statements that provide our current expectations or forecasts of future events.  Forward-looking statements in this Report include, without limitation:

 

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information concerning possible or assumed future results of operations, trends in financial results and business plans, including those related to earnings, earnings growth, revenue and revenue growth;

 

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statements about the level of our costs and operating expenses relative to our revenues, and about the expected composition of our revenues;

 

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statements about expected future sales trends for our products and services;

 

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statements about our future capital requirements and the sufficiency of our cash and cash equivalents;

 

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other statements about our plans, objectives, expectations and intentions; and

 

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other statements that are not historical fact.

Forward-looking statements generally can be identified by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “intends, “plans,” “should,” “seeks,” “pro forma,” “anticipates,” “estimates,” “continues,” or other variations thereof (including their use in the negative), or by discussions of strategies, plans or intentions.  Such statements include but are not limited to statements under Part I, Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Report, and elsewhere in this Report.  A number of factors could cause results to differ materially from those anticipated by such forward-looking statements. The absence of these words does not necessarily mean that a statement is not forward-looking.  Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons.

You should not unduly rely on these forward-looking statements, which speak only as of the date of this Report. We undertake no obligation to publicly revise any forward-looking statement to reflect circumstances or events after the date of this Report, or to reflect the occurrence of unanticipated events.  You should, however, review the factors and risks we describe in the reports we file from time to time with the Securities and Exchange Commission.

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Table of Contents

		Page
	PART I
Item 1.	Financial Statements.	4
	Consolidated Balance Sheets as of September 30, 2015 (unaudited) and December 31, 2014	4
	Consolidated Statements of Operations for the three and nine months ended September 30, 2015 and 2014 (unaudited)	5
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2015 and 2014 (unaudited)	6
	Notes to Consolidated Financial Statements (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	29
Item 4.	Controls and Procedures.	29
	PART II
Item 1.	Legal Proceedings.	30
Item 1A.	Risk Factors.	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	30
Item 3.	Defaults Upon Senior Securities.	30
Item 4.	Mine Safety Disclosures.	30
Item 5.	Other Information.	30
Item 6.	Exhibits.	31
SIGNATURES			31

 

 

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ITEM 1. FINANCIAL STATEMENTS.

WITH, INC.
(FORMERLY MEDL MOBILE HOLDINGS, INC.)
CONSOLIDATED BALANCE SHEETS
			September 30, 2015		December 31, 2014
			(Unaudited)
ASSETS
Current assets:
Cash		$	73,857	$	50,330
Accounts receivable, net			4,880		247,953
Prepaid expenses			44,858		51,485
Total current assets			123,595		349,768
Fixed assets, net of depreciation			8,179		17,529
Other assets:
Security deposits			13,887		13,887
Intangible asset-customer base, net of amortization			15,000		42,000
Total other assets:			28,887		55,887
Total  assets		$	160,661	$	423,184
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses		$	404,834	$	262,169
Accrued compensation expenses			207,601		132,464
Security deposit payable			5,200		-
Deferred lease			2,580		-
Notes payable, net of original issue discounts of $9,275			140,725		-
Line of credit payable			549,100		-
Deferred revenue			90,144		-
Total current liabilities:			1,400,184		394,633
Long term liabilities:
Deferred lease			-		14,189
Note Payable			100,000		-
Notes Payable - related parties			150,000		-
Derivative liability			57,624		-
Line of credit payable			-		364,610
Security deposit payable			-		5,200
Total long term liabilities			307,624		383,999
Total liabilities			1,707,808		778,632
Stockholders' equity (deficit)
Preferred stock, $0.001 par value; 10,000,000 shares authorized; 250,000 issued and outstanding at September 30, 2015 and December 31, 2014, respectively			250		250
Common stock, $0.001 par value, 500,000,000 shares authorized; 52,203,994 and 50,734,876 issued and outstanding at September 30, 2015 and December 31, 2014, respectively			52,204		50,735
Additional paid-in capital			10,667,100		9,727,236
Accumulated deficit			(10,693,411)		(9,114,236)
Total With, Inc. stockholders'  equity			26,143		663,985
Non-controlling interest in subsidiary			(1,573,290)		(1,019,433)
Total stockholders' deficit			(1,547,147)		(355,448)
Total liabilities and stockholders' equity (deficit)		$	160,661	$	423,184
The accompanying notes are an integral part of these consolidated financial statements

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WITH, INC.
(FORMERLY MEDL MOBILE HOLDINGS, INC.)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
		Three months ended September 30,				Nine months ended September 30,
		2015		2014		2015		2014
Revenues	$	480,510	$	909,866	$	1,520,712	$	2,122,259
Cost of goods sold		134,754		387,757		471,930		972,557
Gross profit		345,756		522,109		1,048,782		1,149,702
Expenses:
Selling, general  and administrative		942,204		929,388		3,066,634		2,816,138
Total expenses		942,204		929,388		3,066,634		2,816,138
Net loss before other income (expense)		(596,448)		(407,279)		(2,017,852)		(1,666,436)
Other income (expense):
Warrant expense - value on issuance date		(91,500)		-		(91,500)		-
Change in fair value of warrants		33,876		24,840		33,876		63,389
Interest expense		(35,639)		(3,835)		(57,558)		(8,935)
Realized loss on marketable securities		-		(13,676)		-		(13,676)
Total other income (expense)		(93,263)		7,329		(115,182)		40,778
Net loss before provision for income taxes		(689,711)		(399,950)		(2,133,034)		(1,625,658)
Provision for income taxes		-		-		-		-
Net loss		(689,711)		(399,950)		(2,133,034)		(1,625,658)
Net loss attributable to non-controlling interest		172,873		148,283		553,857		426,227
Net loss attributable to With, Inc.	$	(516,838)	$	(251,667)	$	(1,579,177)	$	(1,199,431)
NET LOSS PER COMMON SHARE
Basic and Diluted	$	(0.01)	$	(0.01)	$	(0.03)	$	(0.02)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic and Diluted		51,577,189		50,159,876		51,354,753		50,133,561
The accompanying notes are an integral part of these consolidated financial statements

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WITH, INC.
(FORMERLY MEDL MOBILE HOLDINGS, INC.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
		Nine Months Ended September 30
		2015		2014
Cash flows from operating activities:
Net loss	$	(1,579,177)	$	(1,199,431)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		36,350		53,353
Stock based compensation on options granted		161,234		181,164
Realized loss on marketable securities		-		13,676
Change in fair value of derivative liability		57,624		(63,389)
Common stock issued for services		166,533		15,000
Change in allowance for doubtful accounts		-		3,700
Non-controlling interest		(553,857)		(426,227)
Subsidiary common stock issued for services		613,567		-
Changes in operating assets and liabilities:
Accounts receivable		243,073		(94,909)
Prepaid expenses		6,627		13,225
Security deposits		-		960
Accounts payable and accrued expenses		217,803		130,061
Deferred lease		(11,609)		(9,130)
Deferred revenue		90,144		-
Net cash used in operating activities		(551,688)		(1,381,947)
Cash flows from investing activities:
Proceeds from sale of marketable securities		-		36,324
Purchase of office equipment		-		(9,473)
Net cash provided by investing activities		-		26,851
Cash flows from financing activities:
Proceeds from line of credit payable, net		184,490		-
Proceeds from exercise of stock options		-		6,352
Proceeds from issuance of notes payable		140,725		-
Proceeds from issuance of subsidiary note payable		100,000		-
Proceeds from issuance of subsidiary notes payable to related parties		150,000		-
Proceeds from issuance of subsidiary stock		-		699,963
Net cash provided by financing activities		575,215		706,315
Net increase (decrease) in cash		23,527		(648,781)
Cash at beginning of period		50,330		887,322
Cash at end of period	$	73,857	$	238,541
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest	$	30,723	$	8,935
Income taxes	$	800	$	800
The accompanying notes are an integral part of these consolidated financial statements

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WITH, INC.

(FORMERLY MEDL MOBILE HOLDINGS, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

(Unaudited)

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION

 

With, Inc., formerly MEDL Mobile Holdings, Inc., (the “Registrant”) through its wholly owned subsidiary, MEDL Mobile, Inc. (“MEDL” and together with the Registrant, “we”, “our”, “us”, or the “Company”) is a developer, incubator, marketer and aggregator of mobile application software, or “Apps”.

The Registrant was incorporated in Nevada on May 22, 2008.  On June 24, 2011, the Registrant acquired MEDL Mobile, Inc. (“MEDL” and together with the Registrant, “we,” “our,” “us,” or the “Company”), a California corporation, and the business of MEDL became the sole line of business of the Registrant.  

On February 28, 2012, the Registrant acquired Inedible Software, LLC (“Inedible”), a developer of mobile Apps and related mobile App technologies whose principal asset was a customer list. While the acquisition of Inedible was structured as a purchase of an entity, the Registrant did not acquire any ongoing business operations and the purpose of the transaction was to acquire Inedible’s customer list as a conduit to Apple, Inc. for future potential. As a result, Inedible became a wholly owned subsidiary of the Registrant. The results of operations of Inedible are included on a going forward basis from the date of acquisition although Inedible is no longer actively engaged in any business activities.

On November 2, 2012, the Company formed Hang With, Inc. (“Hang With”) a Nevada corporation.  Hang With has 75,000,000 authorized shares of common stock with a par value of $0.001 per share and 20,000,000 authorized shares of preferred stock with a par value of $.001. Hang With allows live real-time video to be sent from one phone to many. The goal of the platform is twofold: 1) to become the premiere social media network for people around the globe to connect, communicate and share experiences via live streaming broadcasts; and 2) to enable celebrities and public figures to easily monetize their fan bases.  Any user can be a broadcaster and/or a follower. After a follower receives a notification that the broadcaster is live, the follower views a short pre-roll advertisement before watching a live video feed sent directly from the broadcaster’s smartphone camera. The follower is able to chat with the broadcaster and other followers during the broadcast. A post-roll advertisement ends the broadcast.  As of September 30, 2015, we own 73.08% of Hang With.

On October 26, 2015, we changed our name from MEDL Mobile Holdings, Inc. to With, Inc.

Going Concern

The consolidated financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future.  The Company incurred a net loss of $1,579,177 for the nine months ended September 30, 2015, has incurred losses since inception resulting in an accumulated deficit of $10,693,411 as of September 30, 2015, and has had negative cash flows from operating activities since inception.   The Company anticipates further losses in the development of its business.

The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. The Company’s ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of the Company’s contemplated plan of operations, or its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.

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NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of all of the entities that make up the Company.  All significant inter-company balances and transactions have been consolidated.

Basis of Accounting

The accompanying unaudited interim financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the United States Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, stockholders’ equity or cash flows. It is management's opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation.

The results of operations for the nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2015. The accompanying statements should be read in conjunction with the more detailed financial statements, and the related footnotes thereto, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 30, 2015.

Use of Estimates

The preparation of financial statements in conformity with GAAP 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.  On an on-going basis, the Company evaluates its estimates, including, but not limited to, those related to investment tax credits, bad debts, income taxes and contingencies. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments and other short-term investments with maturity of three months or less, when purchased, to be cash equivalents.  The Company maintains cash and cash equivalent balances at one financial institution that is insured by the Federal Deposit Insurance Corporation.  Any amounts of cash in financial institutions over FDIC insured limits, exposes the Company to cash concentration risk.  As of September 30, 2015 and December 31, 2014, the Company has no cash equivalents.

Revenue Recognition

Our main source of revenue is from the development of custom applications or “Apps” for customers. We use a hybrid method for recognizing revenue that includes elements from both ASC 985-605, Software Revenue Recognition and ASC 605-35, Construction-Type and Production-Type Contracts.

We recognize revenues in accordance with ASC 985-605 when persuasive evidence of an agreement exists, delivery of the software has occurred, the fee is fixed or determinable, and collectability is probable. Nonrecurring revenues related to perpetual license sales with multiple elements are recognized in accordance with the guidance on software revenue recognition.

When the arrangement with a customer includes significant production, modification, or customization of the software, we recognize the related revenue using the percentage-of-completion method in accordance with the accounting guidance and certain production-type contracts contained in ASC 605-35.  We use the percentage of completion method provided all of the following conditions exist:

·

the contract includes provisions that clearly specify the enforceable rights regarding goods or services to be provided and received by the parties, the consideration to be exchanged and the manner and terms of settlement;

·

the customer can be expected to satisfy its obligations under the contract;

·

the Company can be expected to perform its contractual obligations; and

·

reliable estimates of progress towards completion can be made.

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We measure completion based on achieving milestones detailed in the agreements with the customers. Costs of providing services, including services accounted for in accordance with ASC 605-35, are expensed as incurred.

The following is an example of how revenue is recognized involving an arrangement with a customer that includes significant production, modification, or customization of the software: a typical project will require between 50-100 working days from beginning to end.  On average 25-50 cumulative working days are expended prior to the start of development and this work typically includes, design, storyboards, and architecture. Prior to developing the App, hard costs are incurred as a number of variables are taken into account for preparation.  Those often include the following:

·

understanding the client's business situation and environment, including their competitive landscape;

·

researching and establishing the goals of the App;

·

understanding and researching the target and potential App use cases;

·

developing a monetization strategy;

·

determining functionality and articulating the functionality through a storyboard and functional specification document; and

·

determining the resources and timeline needed to complete the final work product.

Fifty percent (50%) of the work is completed upon completion of these six phases and at that point in time the customer typically signs our contract and makes a nonrefundable 50% payment. We record the 50% nonrefundable payment as revenue at that point in time. When the Beta version of the App is complete, or at such other time as may be specifically agreed to in the contract, the customer is invoiced for an additional 25% of the total contract price and such payment is booked as revenue.  When the App is completed and ready for App store release, the customer is invoiced for the final 25% of total contract price and such payment is booked as revenue.

We also generate revenue from in App advertising and the sale of Apps through the Apple store and other App marketplaces. Revenue from advertising is recognized in the period that the ad impressions are delivered, on an accrual basis.  Revenue from the sale of Apps is recognized in the period the App is sold to the end user, on an accrual basis.

Marketable Securities Marketable securities are investments in publicly traded equity securities and are generally restricted for sale under Federal securities laws. Since these securities are often restricted, the Company is unable to liquidate them until the restriction is removed. Pursuant to ASC Topic 320, “Investments –Debt and Equity Securities” the Company’s marketable securities have a readily determinable and active quoted price, such as from NASDAQ, NYSE Euronext, the Over the Counter Bulletin Board, and the OTC Markets Group.

Marketable securities are carried at fair value, with changes in unrealized gains or losses are recognized as an element of comprehensive income based on changes in the fair value of the security. Once liquidated, realized gains or losses on the sale of marketable securities will be reflected in the net income (loss) for the period in which the security was liquidated.

Intangible Assets 

Intangible assets are stated at cost. Expenditures of costs incurred to renew or extend the term of a recognized intangible asset and materially extend the useful life are capitalized. When assets are sold or otherwise written off due to asset impairment, the cost and the related accumulated amortization are removed from the accounts and any realized gain or loss is recognized at that time.   Useful lives of intangible assets are periodically evaluated for reasonableness and the assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may no longer be recoverable. 

Amortization is computed primarily on the straight-line method for financial statement purposes over the estimated useful life. Estimated useful lives will vary based on the nature of the intangible asset. 

Fair Value of Financial Instruments 

The Company adopted ASC 820, Fair Value Measurements and Disclosures, for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing US GAAP that requires the use of fair value measurements which establishes a framework for measuring fair value and expands disclosure about such fair value measurements. 

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ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

	Level 1:	Observable inputs such as quoted market prices in active markets for identical assets or liabilities
	Level 2:	Observable market-based inputs or unobservable inputs that are corroborated by market data
	Level 3:	Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.

The carrying amounts reported in the balance sheet for cash, accounts payable, and accrued liabilities approximate their estimated fair market value based on the short-term maturity of this instrument. 

In addition, FASB ASC 825-10-25, Fair Value Option was effective for January 1, 2008. ASC 825-10-25 expands opportunities to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value.

Fair value of financial instruments is as follows:

 

	September 30, 2015				Date of Issuance July 2015
	Fair Value		Input Level		Fair Value		Input Level
Derivative liability – 666,666 warrants issued July 8, 2015	$ 30,920		Level 3		$ 46,600		Level 3
Derivative liability – 242,424 warrants issued July 22, 2015	$ 11,244		Level 3		$ 17,505		Level 3
Derivative liability – 333,333 warrants issued August 7, 2015	$ 15,460		Level 3		$ 27,395		Level 3

The following table presents a reconciliation of the derivative liability measured at fair value on a recurring basis using significant unobservable input (Level 3) from the dates of issuance (July 8, July 22 and August 7, 2015) to September 30, 2015: 

		Conversion feature derivative liability
Fair value on issuance dates		$	91,500
Change in fair value			(33,876)
Balance September 30, 2014		$	57,624

 

Loss Per Share of Common Stock

Basic net loss per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share ("EPS") include additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options and warrants. Common stock equivalents, totaling 10,119,823 and 6,098,400 at September 30, 2015 and 2014, respectively, were not included in the computation of diluted earnings per share in 2015 and 2014 on the consolidated statement of operations due to the fact that the Company reported a net loss in 2015 and 2014 and to do so would be anti-dilutive for that period.

Goodwill and Other Intangible Assets 

In accordance with ASC 350-30-65 (formerly SFAS 142, Goodwill and Other Intangible Assets), the Company assesses the impairment of identifiable intangibles whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Intangible assets were comprised of website assets. Factors the Company considers to be important which could trigger an impairment review include the following:

1.

Significant underperformance relative to expected historical or projected future operating results;

2.

Significant changes in the manner of use of the acquired assets or the strategy for the overall business; and

3.

Significant negative industry or economic trends.

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When the Company determines that the carrying value of intangibles may not be recoverable based upon the existence of one or more of the above indicators of impairment and the carrying value of the asset cannot be recovered from projected undiscounted cash flows, the Company records an impairment charge. The Company measures any impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with the risk inherent in the current business model. Significant management judgment is required in determining whether an indicator of impairment exists and in projecting cash flows. The Company did not consider it necessary to record any impairment charges during the period ended September 30, 2015. 

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 consolidated 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 vesting 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.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue From Contracts With Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods and services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard will be effective for the Company on January 1, 2017. Early application is not permitted. ASU 2014-09 permits the use of either the retrospective or cumulative effect transition method. The Company has not yet selected a transition method nor has it determined the potential effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures.

In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements—Going Concern.” The provisions of ASU No. 2014-15 require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this ASU are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company is currently assessing the impact of ASU No. 2014-15 on the Company’s consolidated financial statements.

Other 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 consolidated 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 - RELATED PARTY TRANSACTIONS

In 2011 the Company entered into a sub-lease with a company in which the Company’s CEO and his family are shareholders.  The sublease is for approximately 4,500 square feet.  The term of the sub-lease is from January 1, 2011 and ends on November 30, 2015. In January 2014 we increased the amount of space under this sublease from 4,500 square feet to 6,800 square feet (see Note 5 for further details).

We have a consulting agreement with FA Corp, a consulting firm owned and controlled by Mr. Williams, our Chief Financial Officer, for providing SEC reporting, financial and bookkeeping related services by FA Corp at the rate of $100 per hour. The consulting agreement commenced on November 26, 2012 and shall continue unless terminated by either party by giving written notice to the other party.  For the three and nine months ended September 30, 2015 FA Corp earned $15,129 and $61,067, respectively, for services rendered.  For the three and nine months ended September 30, 2014 FA Corp earned $27,630 and $92,115, respectively, for services rendered.  As of September 30, 2015 and 2014, $0 and $3,994, respectively, was outstanding and reflected in accounts payable.

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On May 28, 2015, our Hang With subsidiary borrowed $100,000 from one of its members of its board of directors.  The note carries interest at 1.53% per annum and is due on the earlier of (i) May 28, 2023 or (ii) within 15 days after Hang With, Inc. receives $2,000,000 or more in cash from an equity or debt financing.

On July 23, 2015, we issued 400,000 shares of common stock, valued at $37,600, to our CFO, Murray Williams, as an incentive for him to remain with the Company. The Company immediately expensed $14,100 of the value, representing one hundred and fifty thousand of the shares, and the remaining $23,500 was recorded as a prepaid expense to be amortized over five quarters at $4,700 per quarter. The 400,000 shares were issued from the Company’s 2011 Equity Incentive Plan.

On August 19, 2015, Dave Swartz, our President and Secretary, loaned $50,000 to our subsidiary, Hang With, Inc.  The note carries interest at 1.53% per annum and is due on the earlier of (i) August 18, 2023 or (ii) within 15 days after Hang With, Inc. receives $2,000,000 or more in cash from an equity or debt financing.  

NOTE 4 - COMMITMENTS AND CONTINGENCIES

Lease

The Company is party to two non-cancelable lease agreements for office space through 2015. The first lease is a sub-lease for approximately 4,500 square feet of space located at 18475 Bandilier Circle, unit A, Fountain Valley, CA.  In January 2014 we increased the amount of space under this sublease from 4,500 square feet to 6,800 square feet. The term of the sub-lease is from January 1, 2011 and ends on November 30, 2015.   The second lease is for approximately 6,034 square feet of space located at 18475 Bandilier Circle, unit B, Fountain Valley, CA.  The term of this lease is from May 1, 2012 and ends on November 30, 2015.  In November 2015, the company signed a 32-month lease agreement for new office space that the company will move into in December 1, 2015.

At September 30, 2015, aggregate future minimum payments under these leases is as follows:

2015		$	27,836

The Company subleased the 6,034 square feet of space located at 18475 Bandilier Circle, unit B, Fountain Valley, CA with its landlord’s approval from September 1, 2013 through November 30, 2015, with an annual base rent of $61,547.

 

The rents received from this sublease are used to offset the corresponding rental expense. The total future minimum lease rental income under the rental lease agreement is as follows:

2015		$	10,258

Litigation   

From time to time, the Company may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business. Litigation is, however, subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe would or could have, individually or in the aggregate, a material adverse effect on us.

NOTE 5 – NOTES PAYABLE

Short Term Notes Payable

On July 8, 2015, the Company issued a $110,000 promissory note and a warrant to purchase 666,666 shares of common stock for net proceeds of $100,000.  The note carries a one-time upfront 10% interest charge of $11,000, which was expensed to interest expense on July 8, 2015 and is included in accounts payable as of September 30, 2015. If the note is not repaid by the 7-month maturity date of February 8, 2015 it becomes convertible into shares of the Company’s common stock at a price equal to sixty percent (60%) of the lowest last trade price (as reported by Bloomberg LP) of the Company’s common stock for the twenty five (25) trading days immediately preceding the date of conversion.  The warrant has a three year term and may be exercised at an exercise price of $0.30 per share, subject to adjustment in the case of stock splits, distributions, reorganizations, recapitalizations and the like, and may be exercised on a cashless basis under certain circumstances. The warrant contains full ratchet anti-dilution protection in the case of a share issuance for consideration less than the then exercise price of the warrant, subject to customary exceptions.

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On July 21, 2015, the Company issued a $40,000 promissory note and a warrant to purchase 242,424 shares of common stock for net proceeds of $36,000.  The note carries a one-time upfront 10% interest charge, making the outstanding amount of the note equal to $44,000.   If the note is not repaid by the 7-month maturity date of February 21, 2015 it becomes convertible into shares of the Company’s common stock at a price equal to sixty percent (60%) of the lowest last trade price (as reported by Bloomberg LP) of the Company’s common stock for the twenty five (25) trading days immediately preceding the date of conversion.  The warrant has a three year term and may be exercised at an exercise price of $0.30 per share, subject to adjustment in the case of stock splits, distributions, reorganizations, recapitalizations and the like, and may be exercised on a cashless basis under certain circumstances. The warrant contains full ratchet anti-dilution protection in the case of a share issuance for consideration less than the then exercise price of the warrant, subject to customary exceptions.

Long Term Notes Payable

On May 28, 2015, our Hang With subsidiary borrowed $100,000 from one of its members of its board of directors.  The note carries interest at 1.53% per annum and is due on the earlier of (i) May 28, 2023 or (ii) within 15 days after Hang With, Inc. receives $2,000,000 or more in cash from an equity or debt financing.  In the event that this loan is not repaid within ten (10) months, the lender shall have the option to convert all or any portion of the note into shares of Hang With, Inc. common stock at a conversion price of $1.50 per share.   

On August 19, 2015, Dave Swartz, our President and Secretary, loaned our subsidiary, Hang With, Inc., $50,000.  The note carries interest at 1.53% per annum and is due on the earlier of (i) August 18, 2023 or (ii) within 15 days after Hang With, Inc. receives $2,000,000 or more in cash from an equity or debt financing.  In the event that this loan is not repaid within ten (10) months, the lender shall have the option to convert all or any portion of the note into shares of Hang With, Inc. common stock at a conversion price of $1.50 per share.   

On August 20, 2015, an investor loaned our subsidiary, Hang With, Inc., $100,000.  The note carries interest at 18.36% per annum and is due on the earlier of (i) August 18, 2023 or (ii) within 15 days after Hang With, Inc. receives $2,000,000 or more in cash from an equity or debt financing. In the event that this loan is not repaid within ten (10) months, the lender shall have the option to convert all or any portion of the note into shares of Hang With, Inc. common stock at a conversion price of $1.50 per share.   

NOTE 6 – LINE OF CREDIT

On January 17, 2013, we entered into a three-year, $500,000 secured revolving credit agreement (the “Line”) with an investment fund. The Line is a revolving line of credit that allows us to repay principal amounts and re-borrow them at any time during the three-year term.  The interest rate on borrowed funds is 10% per annum and the interest rate on undrawn funds is 2.0% per annum.  Interest is due within 10 business days following the end of each calendar month.  All borrowed funds from the Line are secured by all of our assets.  The outstanding balance under the Line as of September 30, 2015 and December 31, 2014 was $549,100 and $364,610, respectively.  On August 7, 2015, the Line was increased by $50,000 to $550,000.  All other terms of the Line remained the same.  As consideration for the increase, the company issued a warrant to purchase 333,333 shares of common stock. The warrant has a three year term and may be exercised at an exercise price of $0.30 per share, subject to adjustment in the case of stock splits, distributions, reorganizations, recapitalizations and the like, and may be exercised on a cashless basis under certain circumstances. The warrant contains full ratchet anti-dilution protection in the case of a share issuance for consideration less than the then exercise price of the warrant, subject to customary exceptions.

 

NOTE 7 – STOCKHOLDERS’ EQUITY

Preferred Stock

The authorized preferred stock of the Company consists of 10,000,000 shares of preferred stock at a par value of $0.001.  As of September 30, 2015 and 2014, the Company had 250,000 and 0 shares of Series A Preferred Stock issued and outstanding, respectively.

Common Stock

The authorized common stock of the Company consists of 500,000,000 shares of common stock with a par value of $0.001.  As of September 30, 2015 and December 31, 2014, the Company had 52,203,994 and 50,734,876 shares of common stock issued and outstanding, respectively.  See Note 8 – Subsequent Events.

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The Company issued the following shares of common stock during the nine months ended September 30, 2015:

	Value of Shares			Number of Shares
Shares issued for services rendered	$	166,533		1,469,118
Total shares issued	$	166,533		1,469,118

On March 11, 2015, the company issued 400,000 shares of common stock, valued at $44,000, to a consultant for business development services.  

On April 13, 2015, the Company issued 275,000 shares of common stock, valued at $34,667, to a consultant for business development services.

On July 23, 2015, we issued 400,000 shares of common stock, valued at $37,600, to our CFO, Murray Williams, as an incentive for him to remain with the Company.

On July 23, 2015, we issued 29,412 shares of common stock, valued at $2,500, to a consultant for technology programming services.

On August 17, 2015, three hundred sixty four thousand seven hundred six (364,706) shares of common stock, were issued to a consultant for work preformed Q1 and Q2 of 2015 in connection with strategic mergers and licenses. The shares had an aggregate value of $47,766 on the grant dates and that amount was reflected as common stock payable as of June 30, 2015.

The foregoing shares were issued in reliance upon an exemption from the registration requirements pursuant to Section 4(2) of the Securities Act of 1933, as amended.

Hang With, Inc. Subsidiary Common Stock

The authorized common stock of Hang With, Inc. consists of 75,000,000 shares of common stock with a par value of $0.001 per share. The authorized preferred stock of Hang With, Inc. consists of 20,000,000 shares of preferred stock with a par value of $0.001 per share.

Between January 10, 2013 and September 30, 2015, our Hang With subsidiary raised an aggregate of $3,344,465 from the sale of 3,023,984 shares of Hang With common and preferred stock to accredited investors.  The sales of the Hang With shares were effected as private placements intended to be exempt under Rule 506 of Regulation D and Regulation S.  On May 28, 2015, our Hang With subsidiary borrowed $100,000 from one of the independent members of its board of directors, and on August 19, 2015, our Hang With subsidiary borrowed $50,000 from Dave Swartz, our President and Secretary.  The notes carry interest at 1.53% per annum and are due on the earlier of (i) May 28, 2023 or (ii) within 15 days after Hang With, Inc. receives $2,000,000 or more in cash from an equity or debt financing.  As of September 30, 2015, non-controlling shareholders own 3,684,232 shares of common stock, equal to 26.92% of Hang With.  As of September 30, 2015, 660,248 shares of Hang With common stock have been issued for services and for licenses to use celebrities’ names and likeness on the Hang With platform and for Hang With marketing purposes.  In accordance with GAAP, the financial results of Hang With are consolidated in the Company’s financial statements, and the portion of net loss attributable the non-controlling interest is disclosed as a separate line item in the Company’s unaudited financial statements included herein.

Warrants

The Company has warrants outstanding to purchase 1,242,423 shares of common stock at $0.30 per share as of September 30, 2015. The warrants are subject to full ratchet anti-dilution protection if the Company sells shares or share equivalents at less than the $0.30 exercise price.  The warrants do not meet the conditions for equity classification and are required to be carried as a derivative liability, at fair value.  Management estimates the fair value of the warrants on the inception date, and subsequently at each reporting period, using the Lattice option-pricing model, adjusted for dilution, because that technique embodies all assumptions (including volatility, expected terms, dilution and risk free rates) that are necessary to determine the fair value of freestanding warrants. This resulted in a derivative liability value of $57,624 at September 30, 2015. Significant inputs in calculating this valuation using the Lattice option-pricing model are as follows:

 

	September 30, 2014
Expected volatility	87%
Expected term	2.75 Years
Risk-free interest rate	0.20%
Expected dividend yield	0%

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Share-Based Compensation and Options Issued to Consultants

2011 Equity Incentive Plan  

The board of directors adopted the 2011 Equity Incentive Plan, as amended, (the “Plan”) of MEDL Mobile Holdings, Inc. (Nevada) that provided for the issuance of a maximum of 10,000,000 shares of common stock.   As of September 30, 2015, there were options to purchase 8,877,400 shares outstanding under the Plan and approximately 79,758 shares remained available for future grant under the Plan.

The Company generally grants stock options to employees and directors at exercise prices equal to the fair market value of the Company's stock on the dates of grant. Stock options are typically granted throughout the year and generally vest over four years of service thereafter and expire ten years from the date of the award, unless otherwise specified. The Company recognizes compensation expense for the fair value of the stock options over the requisite service period for each stock option award.

 

Total share-based compensation expense included in the consolidated statements of operations for the nine months ended September 30, 2015 and 2014 was $161,234 and $181,164, respectively. For the nine months ended September 30, 2015 and 2014, compensation expense included in selling, general and administration is $103,368 and $121,488, respectively. Compensation expense included in cost of goods sold for the nine months ended September 30, 2015 and 2014 is $57,866 and $59,676, respectively.

To estimate the value of an award, the Company uses the Black-Scholes option-pricing model.  This model requires inputs such as expected life, expected volatility and risk-free interest rate.  The forfeiture rate also impacts the amount of aggregate compensation.  These inputs are subjective and generally require significant analysis and judgment to develop.  While estimates of expected life, volatility and forfeiture rate are derived primarily from the Company’s historical data, the risk-free rate is based on the yield available on U.S. Treasury constant maturity rates with similar terms to the expected term of the stock option awards.  The fair value of share-based awards was estimated using the Black-Scholes model with the following weighted-average assumptions during the three months ended September 30, 2015:

Assumptions: 

Dividend yield	0.00
Risk-free interest rate	.10%
Expected volatility	49.1%
Expected life (in years)	10.00

Option activity for the nine months ended September 30, 2015 was as follows:

	Options			Weighted Average Exercise Price ($)			Weighted Average Remaining Contractual Life (Yrs.)				Aggregate Intrinsic Value ($)
Options outstanding at December 31, 2014		8,223,400			0.24				8.02		$	56,520
Granted		400,000			.093				9.54		$	-
Exercised		-			-				-			N/A
Forfeited or cancelled		-			-				-			N/A
Options outstanding at September 30, 2015		8,877,400			0.245				7.44		$	-
Options expected to vest in the future as of September 30, 2015		2,666,034			0.184				8.90		$	-
Options exercisable at September 30, 2015		6,211,366			0.255				6.83		$	-
Options vested, exercisable and options expected to vest at September 30, 2015		8,877,400			0.233				7.44		$	-

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of our common stock as of September 30, 2015 for those awards that have an exercise price currently below the closing price.

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Unvested share activity for the nine months ended September 30, 2015 was as follows:

		Unvested			Weighted
		Number of			Average Grant
		Options			Fair Value
Unvested balance at December 31, 2014			3,506,052		$	0.11
Granted			654,000		$	0.164
Vested			(1,494,018)		$	0.108
Cancelled			-		$	n/a
Unvested balance at September 30, 2015			2,666,034		$	0.090

At September 30, 2015, there was $238,079 unrecognized share-based compensation expense related to unvested employee share options with a weighted average remaining recognition period of 2.70 years.

NOTE 8 – SUBSEQUENT EVENTS

On October 15, 2015, the Company issued 125,000 shares of common stock, valued at $37,500, to a consultant for services rendered in connection with strategic licenses with celebrities for our subsidiary’s Hang w/ App.

According to the Company’s records, as of September 30, 2015, the Company had issued and outstanding a total of 52,203,994 shares of common stock.  On October 22, 2015, the Company was contacted by one of its stockholders regarding the stockholder’s rights under two Securities Purchase Agreements entered into in 2012 and 2013 (the “Issuance Documents”).  The stockholder claims that certain stock issuances made by the Company in 2015 at a price below $0.275 triggered the anti-dilution provisions of the Issuance Documents and that, as a result, the stockholder is entitled to receive not less than 4,770,030 additional shares of common stock.  The Company is evaluating the basis and validity of the stockholder’s claim, the exemptions from the anti-dilution provisions available for certain stock issuances, and the number of shares that the stockholder alleges that it is entitled to receive if the exemptions are not available.  As of the date of this filing, the Company has not finalized its analysis regarding the stockholder’s demand, and no additional shares have been issued to the stockholder.  Should the Company hereafter conclude that the stockholder is entitled to receive additional shares, the number of issued and outstanding shares of common stock will increase.  Since neither the validity of the stockholder’s demands, nor the number of shares that the stockholder may be entitled to receive, have been established, the effect of the stockholder’s demands on the number of outstanding shares is not known.  Accordingly, none of the references in this Report on Form 10-Q to shares outstanding as of September 30, 2015, or any other date, and none of the other information based on the number of outstanding shares (such as net loss per share, average common shares outstanding, and other similar information) include any possible adjustment that may be effected following an analysis of the demand made under the Issuance Documents for the issuance of additional shares.  

On October 26, 2015 the Company changed its name to With, Inc. and changed its stock trading ticker symbol to WWTH.

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On November 2, 2015, the Company issued a $100,000 note, due November 2, 2018, for net proceeds of $91,000. If the $100,000 is not repaid by May 2, 2016 it becomes convertible into shares of the Company’s common stock at a price equal to sixty percent (60%) of the lowest last trade price (as reported by Bloomberg LP) of the Company’s common stock for the twenty five (25) trading days immediately preceding the date of conversion.  The note was issued pursuant to a Securities Purchase Agreement dated October 30, 2015 whereby the investor agreed to purchase up to an aggregate of $375,000 of notes for $338,500 under three separate notes.  All three notes contain the same terms except have different dollar amounts, the first of which is the aforementioned November 2, 2015 $100,000 note purchased for $91,000, the 2^nd is a $125,000 note and to be purchased some time between January 1, 2016 and February 1, 2016 (the “Second Closing Date”) for $112,500 and the 3^rd is a $150,000 note to be purchased, at any time between sixty one (61) to ninety (90) days after the Second Closing, for $135,000.  The execution and issuance of both the 2^nd and 3^rd notes are subject to the mutual agreement of the investor and the Company.  The notes are redeemable by the Company, upon not more than two (2) days written notice, for an amount equal to: (i) if the redemption date is ninety (90) days or less from the date of issuance of the note, one hundred percent (100%) of the sum of the principal amount so redeemed plus accrued interest, if any; (ii) if the redemption date is greater than or equal to ninety one (91) days from the date of issuance of the note and less than or equal to one hundred twenty (120) days from the date of issuance of the note, one hundred ten percent (110%) of the sum of the principal amount so redeemed plus accrued interest, if any; (iii) if the redemption date is greater than or equal to one hundred twenty one (121) days from the date of issuance of the note and less than or equal to one hundred fifty (150) days from the date of issuance of the note, one hundred fifteen percent (115%) of the sum of the principal amount so redeemed plus accrued interest, if any; (iv) if the redemption date is greater than or equal to one hundred fifty one (151) days from the date of issuance of the note and less than or equal to one hundred eighty (180) days from the date of issuance of the note, one hundred twenty five percent (125%) of the sum of the principal amount so redeemed plus accrued interest, if any; and (v) if the redemption date is greater than or equal to one hundred eighty one (181) days from the date of issuance of the note, one hundred thirty percent (130%) of the sum of the principal amount so redeemed plus accrued interest, if any.  The note does not bear interest, however, in the event of default by the Cthe investor has the option to in increase the interest rate applicable to the applicable note to the lesser of eighteen percent (18%) per annum and the maximum interest rate allowable under applicable law.

On November 4, 2015, the company entered into a Sublease for approximately 3,000 square feet to replace the office space that the Company is currently pursuant to a lease agreement the expires on November 30, 2015.  The new office space is located in Irvine, California and the Company expects to be fully moved in to the new office space by November 30, 2015.  The initial term is thirty two (32) months and the Company has the option to extend the lease for an additional sixteen (16) months. “Base Rent” for the initial Term of the Lease shall be payable in the following amounts:

Months	Base Rent
1	$4,500/mo.
2-14	$4,635/mo.
15-27	$4,774/mo.
28-32	$4,917/mo.

On November 17, 2015, the company’s Chief Financial Officer resigned but agreed to continue to provide services on a consulting basis.

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

Forward Looking Statements

This Quarterly Report of With, Inc., formerly MEDL Mobile Holdings, Inc., on Form 10-Q contains forward-looking statements, particularly those identified with the words, “anticipates,” “believes,” “expects,” “plans,” “intends," “objectives,” and similar expressions. These statements reflect management's best judgment based on factors known at the time of such statements. Actual events or results may differ materially from those discussed herein. The forward-looking statements specified in the following information have been compiled by our management on the basis of assumptions made by management and considered by management to be reasonable. Our future operating results, however, are impossible to predict and no representation, guaranty, or warranty is to be inferred from those forward-looking statements. The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. No assurance can be given that any of the assumptions relating to the forward-looking statements specified in the following information are accurate, and we assume no obligation to update any such forward-looking statements.

All written forward-looking statements made in connection with this Form 10-Q that are attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements. Given the uncertainties that surround such statements, you are cautioned not to place undue reliance on such forward-looking statements.

In this section, unless the context indicates otherwise, all references herein to “WWTH,” “the Company,” “we,” “our” or “us” refer collectively to With, Inc., formerly MEDL Mobile Holdings, Inc., and its wholly owned subsidiaries.

Organizational History

On June 24, 2011, we acquired MEDL Mobile, Inc., a California corporation (“MEDL”), which became our wholly owned subsidiary.  In connection with this acquisition, we changed our name from Resume in Minutes, Inc. to MEDL Mobile Holdings, Inc., discontinued our former business, and succeeded to the software business of MEDL Mobile, Inc. as our primary line of business.

On February 28, 2012, we acquired Inedible Software, LLC (“Inedible”), a developer of mobile apps and related mobile app technologies whose principal asset was a customer list. While the acquisition of Inedible was structured as a purchase of an entity, we did not acquire any ongoing business operations and the purpose of the transaction was to acquire Inedible’s customer list as a conduit to Apple for future potential. As a result, Inedible became a wholly owned subsidiary of the Company. The results of operations of Inedible are included on a going forward basis from the date of acquisition, although Inedible is no longer actively engaged in any business activities.

On November 2, 2012, we formed Hang With, Inc. to focus on creating a live social mobile video platform.  Hang With, Inc. has issued shares to third party investors to fund its operations and, as a result, it now operates as a standalone company with WWTH as its largest shareholder.

On October 26, 2015, we changed our name from MEDL Mobile Holdings, Inc. to With, Inc. (“WWTH”)

Current Business

We currently operate two related businesses.  Through our MEDL Mobile, Inc. subsidiary, we have developed a proprietary system for developing mobile application software, or “Apps”. To date, we have architected, designed and developed a library of several hundred apps and related technologies designed predominately for iPhone, iTouch, iPad and Android Devices. MEDL and MEDL Apps have been featured on CNBC, BBC, ABC, CBS, NBC, CNN, in the pages and web pages of USA Today, Esquire, Billboard, Fast Company, The New York Times, The LA Times, The Chicago Tribune, The Orange County Register, The Washington Post and The Guardian; and by top sites such as Mashable, Macworld, Yahoo, Huff Post College, TNW and Gizmodo.  Multiple MEDL Apps have reached #1 in their category on the Apple App Store.  Through our Hang With, Inc. subsidiary, we operate our “Hang w/” live social mobile video platform that is available for download on iPhone and android phones via the Apple App Store and the Google Apps Marketplace.

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Our principal executive offices are located at 18475 Bandilier Circle, Fountain Valley, California 92708, and our current telephone number at that address is (714) 617-1991.  We maintain a website at: www.medlmobile.com.  Our annual reports, quarterly reports, current reports on Form 8-K and amendments to such reports filed or furnished pursuant to section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), and other information related to this company are available on our website as soon as we electronically file those documents with, or otherwise furnish them to, the Securities and Exchange Commission.  Our Hang With, Inc. subsidiary also maintains a website at www.hangwith.com.  Our Internet websites and the information contained therein, or connected thereto, are not, nor are they intended to be, incorporated into this Quarterly Report on Form 10-Q.

Our business today is primarily organized in two areas of opportunity:

1.

MEDL Custom Development

Mission: To develop the cutting edge standard for mobile applications across platform, operating system and classification - as work for hire on behalf of third parties and in partnership with exceptional clients.

2.

Hang With, Inc.

Mission: To become the world’s premiere live content creation and distribution platform and to monetize live streaming video on behalf of content creators.

In November 2012, we incorporated Hang With, Inc. and transferred the Hang w/ assets to that entity.  Hang With, Inc. has issued shares to third party investors to fund its operations and, as a result, it now operates as a standalone company with WWTH as its largest shareholder.

1. Custom Development

Our custom development arm develops Apps for customers that vary in size from small start-ups to large multinational corporations, in a diverse range of industries including retailing, fast food, air travel, medical devices, higher education and fashion.  We are typically paid a fixed price for development of the App.  Our customers cover the development costs and own the final work product while we retain ownership of the elements of the computer code.  

MEDL believes it is known for high quality strategic mobile development, securing development and consulting contracts with companies such as: Hyundai, Disney, Experian, Goodwill Industries, UCLA, BBK Worldwide, Taco Bell, Iconix Brand Group, Monster.com, Emirates Airlines, Teleflora, Medtronic, Kaiser Permanente and About.com.

At the present time, we prepare for our customers, packages for sale in the Apple App Store and the Google Android Marketplace. This package includes App store copy, sample screen shots and SEO tags to improve discovery of the Apps in the App stores. We are familiar with the App stores’ requirements and our average approval time is 5-10 days.  We also work with customers to develop a custom launch plan, or to augment their existing plans. We use tools including social network marketing, viral videos, bloggers, banner marketing, public relations and integration into our clients’ existing advertising and marketing strategies to further this launch plan.  We also leverage our extensive marketing and advertising experience to work with advertising, media and PR agencies.

In addition, we provide maintenance, reporting and upgrades and also integrate third party vendors into an App to provide a complete suite of user analytics, which allows customers to track downloads, total number of App user sessions, time spent per session, features of the App accessed and advertising click-through.

In some cases, MEDL will enter into a partnership with clients in which the client is charged a discounted development rate in exchange for revenue participation on said platform.  MEDL believes that as its skills in mobile development increase, and its understanding of the mobile market grows, the company is in a position to align itself with clients and development projects with a high likelihood of success by sharing in the potential upside of such development.

Current partnership projects include but are not limited to:

A multi-player turn based story-telling game;

An internet-of-things hardware/software solution to address an important element of automobile safety;

An “uber like” service in an auto-related industry;

Walter Foster Learn to Draw - the oldest purveyor of Learn to Draw books and content;

Marlee Matlin, academy award winning deaf actress - multiple projects.

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Our custom development team is well versed in working closely with in-house IT departments and other third party technology providers in order to deliver complex back-end integrations that result in simple-to-use front end user experiences.

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In recent months, the company has taken steps to promote key employees who’s experience and background, we believe, have enabled the company to streamline development services, diversify the base of clients, increase the number of clients and develop new libraries of re-usable code which can greatly reduce cost and speed time to market for future projects.

Current custom development projects span multiple categories and areas of mobile expertise. Projects include but are not limited to:

-

Health and Beauty Retail

-

Internet of Things

-

Navigation

-

Gaming

-

Photo sharing and manipulation

-

Charity Fundraising

-

mHealth

-

Major Film Studio Promotion

-

Location sharing and rating

-

Fashion/Retail

-

Uber like platform

2. Hang With, Inc.

The patent-pending “Hang w/” App allows live real-time video to be sent from one phone to many. The goal of the platform is twofold: 1) to become the premiere social media network for people around the globe to connect, communicate and share experiences via live streaming broadcasts; and 2) to enable celebrities, public figures and content creators to easily monetize their fan bases.

The “Hang w/” live social mobile video platform was approved for release by Apple on March 20, 2013 and is available for download on the Apple App Store. The “Hang w/” live social mobile video platform was approved for release by Google on July 9, 2013 and is available for download on android phones via the Google Apps Marketplace.

Hang w/ allows content creators with large audiences, celebrities, athletes, musicians and even ordinary people to use their mobile device to connect directly and authentically with hundreds, thousands - and eventually millions of live viewers simultaneously.

Hang w/ generates revenue for content creators through two revenue streams.

1.

Content creators share in a portion of the revenue generated via pre-broadcast and post-broadcast advertising.

2.

Content creators can charge their followers to attend a ticketed live event using the new Hang w/ Digital Ticket feature. The content creator can set the price. Set the time. Share to followers on the app. Share to social media. And create the actual live content - all within the application.

Broadcasts can be viewed live in the app, on Facebook, on the web, and via links shared on Twitter.  Archived content can be viewed in the App, shared via social media, and distributed to content distribution partners. The App is free to use and is available on both iOS and Android.

Ad serving technology is fully embedded. Every broadcast can begin with a short video or image-based ad unit and can end with a clickable rich media ad unit.

An in-app digital coin system has been fully implemented and is used as the basis by which viewers purchase tickets to Digital Ticket events. The coin system also serves as the foundation for an in-app “tipping” system - for which development is currently underway.  

Application features include:

- Live streaming broadcast from one to many with variable bit rate broadcasting and simultaneous chat 

- Push Notification, user profile management, and user relational database powered by a proprietary back end system

- Integrated advertising platform capable of running video and rich media

- 24 hour moderation platform with user protections

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- #hashtag content tagging and related channels

- Broadcasts can be scheduled or spontaneous

- Viewers chat with the broadcaster and with each other

- 60 minute broadcasts are available for all users

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- Broadcasters can choose to make archived broadcasts public or private

- Broadcasts stream live and on-demand to web, Twitter and Facebook.

- Integrated “Coin” monetization platform

- Live broadcast filters to alter video 

- Ability to broadcast live to a private audience or broadcast to a public audience but only allow a private group to chat

- Ability to save a high quality back up to the broadcaster's device

- In-app user-to-user messaging system

- Operates on IOS, Android, web and mobile web

- Allows a user to export content directly to YouTube

- Offers an embed widget for users to stream live to their own websites

- Stream live via GoPro

- Create, promote, publish and monetize a Digital Ticket PPV event

- Fully integrated web-based broadcasting and viewing from www.hangwith.com

- Allows a user to publish a “live link overlay” which can direct users to web content during a live broadcast - without leaving the actual broadcast experience

New features are constantly being developed in rapid response to the quickly evolving live streaming category - of which Hang w/ helped create and continues to shape.

The company believes that the live streaming category, recently popularized by apps such as Persicope (acquired by Twitter), will continue to grow and expand to include multiple “flavors” of live streaming experiences.  While many companies compete for the free live broadcasting space, Hang w/ believes it is well positioned and suited to capture a large portion of the live-streaming industry for those content creators who wish to be compensated for their live content.  Compensation comes in the form of a percentage of the advertising revenue from an advertisement viewed, actual money paid to attend a live event, or future monetization strategies such as tipping.

Additionally, while some live streaming solutions focus on a single platform such as either Facebook, YouTube or Twitter, we believe Hang w/ is unique in that it publishes content to multiple platforms simultaneously - including Facebook, Twitter, the web, and a post-broadcast export to YouTube.

Industry Background and Trends

Apps are designed to help a user perform specific tasks and are generally downloaded by users from an App store directly onto their smartphone or tablet. Apps have become increasingly popular which is evidenced by the following statistics published by the noted sources:

- 80% of all online adults now own a smartphone. TechChrunch, January 12, 2015

- Apple has sold 591 million iPhones since its launch in 2007. – Statista.com 2015

- Up from 19.4% in 2013, mobile search will comprise an estimated 26.7% of the [Google’s] total ad revenues this year. – eMarketer 2014

- Mobile app use [grew] 115% in 2013 – Flurry 2014

- 92 of the top 100 best global brands ranked by Interbrand were present in the Apple App Store, while 75 of the brands were present on Google Play. – Distimo 2013

- On a typical day in November 2013, Distimo estimates the global revenues for the top 200 grossing apps at over $18M in the Apple App Store and over $12M for Google Play. In November 2012, these estimates were at $15M for the Apple App Store and only at $3.5M for Google Play. – Distimo 2013

- Consumer spend on music apps increased 77% in 2013. – App Annie 2014

- Apps are a now vital marketing tool for Hollywood movies, and provide additional revenue. In 2012, seven of the top 10 grossing movies had associated tie-in apps. In 2013, all of the top 10 grossing movie titles had tie-in apps. – App Annie, 2014

- Nearly all Generation Y consumers owned a mobile phone of some kind and 72% owned smartphones. - Forrester, 2013

- 1.2 billion people worldwide were using mobile apps at the end of 2012. This is forecast to grow at a 29.8 percent each year, to reach 4.4 billion users by the end of 2017. – Portio Research 2013 

- In Q1 2013, there were 13.4 billion app downloads, up 11 percent from Q4 2012, creating revenue of US$2.2 billion. – Canalys 2013

- By 2017, 25 percent of enterprises will have an enterprise app store – Gartner 2013

- Global mobile traffic now accounts for 15% of all Internet traffic. – Internet Trends 2013

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- 85% of people prefer mobile apps to mobile websites - WebDAM 2014

- 40% of CNN’s website traffic came from mobile in 2013 – CNN 2014

- En route to the store, 70 percent of smartphone shoppers use a store locator to plan their shopping trip – Nielsen 2013

- Mobile coupons are redeemed 10 times as often as traditional coupons. – eMarketer 2013

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Results of Operations

Three Months Ended September 30, 2015 Compared to the Three Months Ended September 30, 2014 (unaudited)

The following table presents our results of operations for the three months ended September 30, 2015 compared to the three months ended September 30, 2014.

	Three Months ended September 30,
	2015			2014				$ Change			% Change
Revenues	$	480,510		$	909,866			$	(429,356)		-47%
Cost of goods sold		134,754			387,757				(253,003)		-65%
Gross profit		345,756			522,109				(176,353)		-34%
Expenses:
Selling, general and administrative		942,204			929,388				12,816		1%
Net loss before other income (expense)		(596,448)			(407,279)				189,169		46%
Other income (expense):
Warrant expense – value on issuance date		(91,500)			-				(91,500)		-100%
Change in fair value of warrants		33,876			24,840				9,036		36%
Realized loss on marketable securities		-			(13,676)				13,676		-100%
Interest expense		(35,639)			(3,835)				(31,804)		829%
Total other income (expense)		(93,263)			7,329				(100,592)		-1372%
Net loss before provision for income taxes		(689,711)			(399,950)				289,760		72%
Provision for income taxes		-			-				-		0%
Net loss		(689,711)			(399,950)				289,760		72%
Less: Net loss attributable to non-controlling interest		172,873			148,283				24,590		17%
Net loss attributable to With, Inc., formerly MEDL Mobile Holdings, Inc.	$	(516,838)		$	(251,667)			$	265,170		105%

Revenues  

Revenues primarily consist of fees we received for developing custom Apps for third parties.  Revenues for Q3 2015 decreased to $480,510 as compared to $909,866 for Q3 2014, a decrease of $429,356 or 47%.  The decrease is primarily attributable to fewer customers placing orders for our customized mobile applications during Q3 2015 as compared to Q3 2014.  

Based on the unpredictability of market and customer demand for our services, we cannot accurately predict revenue trends on a quarter-to-quarter basis.

Cost of Goods Sold

Cost of goods sold consists primarily of the cost of our employees and the cost of our contractors engaged in developing Apps for our customers.  Cost of goods sold for Q3 2015 decreased to $134,754 as compared to $387,757 for Q3 2014, a decrease of $253,003 or 65%. The decrease is primarily due to the reduction in employees and outside contractors that worked on third party applications primarily due to fewer customers placing orders for our customized mobile applications but also due to better management and cost controls during Q3 2015 as compared to Q3 2014.  

Selling, General and Administrative Expenses

Selling, general and administrative expenses for Q3 2015 increased to $942,204 as compared to $929,388 for Q3 2014, an increase of $12,816 or 1%.  The increase is primarily attributable our Hang With subsidiary incurring an expense of $169,401 in Q3 2015 for common stock issuances for services and for licenses to use celebrities’ names and likeness on the Hang With platform and for Hang With marketing purposes, which was offset by our overall company-wide focused effort to reduce costs which resulted in a $36,384 reduction in payroll and contractors expense, a reduction of $82,229 in professional fees and a net reduction in all other expenses of $38,624.

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Other Income(Expense)

Other expense of $93,263 for Q3 2015 is comprised of $13,319 interest expense on our $550,000 line of credit, $15,000 for 1-time upfront 10% interest charges on WWTH’s two notes payable issued in July 2015, $4,725 for the amortization of the original issue discount on WWTH’s two notes payable, $91,500 warrant expense for the value of the 999,999 warrants issued in connection with the July notes payable and $2,595 interest expense on Hang With’s three outstanding notes payable, offset by a $33,876 gain from the decrease in the recorded fair value of warrants from the issuance dates in Q3 2015 to September 30, 2015.  Other Income of $21,005 for Q3 2014 is the result of a $24,840 decrease in the recorded fair value of warrants issued in a private placement in March 2012 less $3,835 of interest expense on our $550,000 line of credit.  The warrants from the March 2012 private placement expired in March 2015.

Net Loss

Net loss attributable to With, Inc., formerly MEDL Mobile Holdings, Inc., for the three months ended September 30, 2015 increased $265,170 or 105% as compared to Q3 2014. The increase in net loss was primarily the result of our custom App development division gross profit decreasing by $176,353 due to fewer customers placing orders for our customized mobile applications and the other expenses as described in the previous paragraph..

Nine Months Ended September 30, 2015 Compared to the Nine Months Ended September 30, 2014 (unaudited)

The following table presents our results of operations for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014.

	Nine Months ended September 30,
	2015			2014			$ Change			% Change
Revenues	$	1,520,712		$	2,122,259		$	(601,547)		-28%
Cost of goods sold		471,930			972,557			(500,627)		-51%
Gross profit		1,048,782			1,149,702			(100,920)		-9%
Expenses:
Selling, general and administrative		3,066,634			2,816,138			250,496		9%
Net loss before other income (expense)		(2,017,852)			(1,666,436)			351,416		21%
Other income (expense):
Warrant expense – value on issuance date		(91,500)			-			(91,500)		-100%
Change in fair value of warrants		32,706			63,389			(29,513)		-47%
Realized loss on marketable securities		-			(13,676)			13,676		-100%
Interest expense		(57,558)			(8,935)			(48,623)		544%
Total other income (expense)		(115,182)			40,778			(155,960)		-382%
Net loss before provision for income taxes		(2,133,034)			(1,625,658)			507,376		31%
Provision for income taxes		-			-			-		0%
Net loss		(2,133,034)			(1,625,658)			507,376		31%
Less: Net loss attributable to non-controlling interest		553,857			426,227			127,630		30%
Net loss attributable to With, Inc., formerly MEDL Mobile Holdings, Inc.	$	(1,579,177)		$	(1,199,431)		$	379,746		32%

 

Revenues  

Revenues primarily consist of fees we received for developing custom Apps for third parties.  Revenues for the nine months ended September 30, 2015 decreased to $1,520,712 as compared to $2,122,259 for the nine months ended September 30, 2014, a decrease of $601,547 or 28%.  The decrease is primarily attributable to fewer customers placing orders for our customized mobile applications during the nine months ended September 30, 2015 as compared to the same period in 2014.  

Based on the unpredictability of market and customer demand for our services, we cannot accurately predict revenue trends on a quarter-to-quarter basis.

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Cost of Goods Sold

Cost of goods sold consists primarily of the cost of our employees and the cost of our contractors engaged in developing Apps for our customers.  Cost of goods sold for the nine months ended September 30, 2015 decreased to $471,930 as compared to $972,557 for the nine months ended September 30, 2014, a decrease of $500,627 or 51%. The decrease is primarily due to the reduction in employees and outside contractors that worked on third party applications partially due to fewer customers placing orders for our customized mobile applications but primarily due to better management and cost controls during the nine months ended September 30, 2015 as compared to the same period in 2014.  Our custom App development division experienced a 28% reduction in revenues but we reduced our cost of goods sold by 51% so our gross profit only decreased by 9%.  Gross margins increased from 54% to 69%.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the nine months ended September 30, 2015 increased to $3,066,634 as compared to $2,816,138 for the nine months ended September 30, 2014, an increase of $250,496 or 9%.  The increase is primarily attributable to our Hang With subsidiary incurring an expense of $613,567, in the nine months ended September 30, 2105 and no such expenses in the same period of 2014 for common stock issuances for services and for licenses to use celebrities’ names and likeness on the Hang With platform and for Hang With marketing purposes, offset by decreases of $140,292 in recruiting, payroll and benefits due to fewer employees, and further offset by decreases of $126,604 in accounting, legal fees and other professional fees and a net decrease of $96,175 in all other expenses due to our continued focused effort to reduce costs.

Other Income/Expense

Other expense of $115,182 for the nine months ended September 30, 2015 is comprised of $35,238 interest expense on our $550,000 line of credit, $15,000 for 1-time upfront 10% interest charges on WWTH’s two notes payable issued in July 2015 (the “Notes), $4,725 for the amortization of the original issue discount on the Notes, $91,500 warrant expense for the value of the 999,999 warrants issued in connection with the Notes and $2,595 interest expense on Hang With’s three outstanding notes payable, offset by a $33,876 gain from the decrease in the recorded fair value of warrants from the issuance dates in Q3 2015 to September 30, 2015.  Other Income of $40,778 for the nine months ended September 30, 2014 is the result of a $63,389 decrease in the recorded fair value of warrants issued in a private placement in March 2012 less $8,935 of interest expense on our $550,000 line of credit and $13,676 realized loss on marketable securities.  The warrants from the March 2012 private placement expired in March 2015.

 

Net Loss

Net loss attributable to With, Inc., formerly MEDL Mobile Holdings, Inc., for the nine months ended September 30, 2015 increased $379,746 or 32% as compared to the nine months ended September 30, 2014. The increase in net loss was primarily the result of our Hang With subsidiary incurring expenses of $613,567 for common stock issuances for services and for licenses to use celebrities’ names and likeness on the Hang With platform and for Hang With marketing purposes, and also due to gross profit decreasing by $100,920, offset by a $334,741 reduction in expenses as noted in the previous two paragraphs primarily due or our overall company-wide focused effort to reduce costs.

Liquidity and Capital Resources

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, the availability of credit facilities, levels of accounts receivable and accounts payable and capital expenditures.

To date we have financed our operations through internally generated revenue from operations, the sale of equity securities, borrowings under a line of credit, the sale of original issue discount notes, and shareholder loans.

As of September 30, 2015, we had cash of $73,857 and a working capital deficit of $1,276,589.   As of September 30, 2015, our Hang With subsidiary raised an aggregate of $3,344,465 from the sale of shares of Hang With common and preferred stock to accredited investors and borrowed $250,000 from three accredited investors.  Portions of these funds have been used to fund Hang With’s product development and commercialization efforts.  Since we are compensated by Hang With for providing services, a portion of these funds have been paid to the Company and used by the Company to support this Company’s liquidity needs.  In accordance with GAAP, Hang With’s cash is consolidated with the Company’s cash in the Company’s consolidated financial statements included herein.  

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Net cash used in operating activities for the nine months ended September 30, 2015 was $551,688 compared to net cash used in operating activities of $1,381,947 for the nine months ended September 30, 2014.  The $830,259 decrease in net cash used in operating activities from the nine months ended September 30, 2014 to the nine months ended September 30, 2015 was primarily attributable to the $613,567 increase in the issuance of subsidiary stock for services, $90,144 increase in the balance of the prepayment for future custom App development projects, a $337,982 fluctuation in accounts receivable due to a reduction in accounts receivable from 2014 to 2015 and an increase in accounts receivable from 2013 to 2014, an $87,742 increase in the amount by which the change accounts payable and accrued expenses increased from 2014 to 2015 versus 2013 to 2014, a $151,533 increase in the amount by which common stock issued for services increased from 2014 to 2015 versus 2013 to 2014, a $121,013 fluctuation in the change in fair value of derivative liability.  These increases were offset by the $379,746 increase in our net loss, a $127,630 increase in the net loss attributable non-controlling interest in our Hang With subsidiary, a combined $50,609 decrease in depreciation, amortization, stock based compensation on options granted and the realized loss on marketable securities, and a net decrease of $13,737 in other non cash items.  The $26,851 net cash provided by investing activities for the nine months ended September 30, 2014 is due to $36,324 of proceeds from the sale of marketable securities, offset by $9,473 of purchases of office equipment. There were no investing activities for the nine months ended September 30, 2015.   The $131,100 reduction in net cash provided by financing activities from the nine months ended September 30, 2014 to the nine months ended September 30, 2015 was primarily the result of subsidiary stock sales of $699,963 in the nine months ended September 30, 2014 and no subsidiary stock sales in the nine months ended September 30, 2015, offset by the issuance $250,000 of subsidiary notes payable, $140,725 of original issue discount notes and a $184,490 increase in proceeds from the line of credit in the nine months ended September 30, 2015.

On January 17, 2013, we entered into a three-year, $500,000 secured revolving credit agreement (the “Line”) with an investment fund. The Line is a revolving line of credit that allows us to repay principal amounts and re-borrow them at any time during the three-year term.  The interest rate on borrowed funds is 10% per annum and the interest rate on undrawn funds is 2.0% per annum.  Interest is due within 10 business days following the end of each calendar month.  All borrowed funds from the Line are secured by all of our assets.  The outstanding balance under the Line as of September 30, 2015 and December 31, 2014 was $549,100 and $364,610, respectively.  On August 7, 2015, the Line was increased by $50,000 to $550,000.  All other terms of the Line remained the same.  As consideration for the increase, the company issued a warrant to purchase 333,333 shares of common stock. The warrant has a three year term and may be exercised at an exercise price of $0.30 per share, subject to adjustment in the case of stock splits, distributions, reorganizations, recapitalizations and the like, and may be exercised on a cashless basis under certain circumstances. The warrant contains full ratchet anti-dilution protection in the case of a share issuance for consideration less than the then exercise price of the warrant, subject to customary exceptions.

On July 8, 2015, the Company issued a $110,000 promissory note and a warrant to purchase 666,666 shares of common stock for net proceeds of $100,000.  The note carries a one-time upfront 10% interest charge of $11,000, which was expensed to interest expense on July 8, 2015 and is included in accounts payable as of September 30, 2015. If the note is not repaid by the 7-month maturity date of February 8, 2015 it becomes convertible into shares of the Company’s common stock at a price equal to sixty percent (60%) of the lowest last trade price (as reported by Bloomberg LP) of the Company’s common stock for the twenty five (25) trading days immediately preceding the date of conversion.  The warrant has a three year term and may be exercised at an exercise price of $0.30 per share, subject to adjustment in the case of stock splits, distributions, reorganizations, recapitalizations and the like, and may be exercised on a cashless basis under certain circumstances. The warrant contains full ratchet anti-dilution protection in the case of a share issuance for consideration less than the then exercise price of the warrant, subject to customary exceptions.

On July 21, 2015, the Company issued a $40,000 promissory note and a warrant to purchase 242,424 shares of common stock for net proceeds of $36,000.  The note carries a one-time upfront 10% interest charge, making the outstanding amount of the note equal to $44,000.   If the note is not repaid by the 7-month maturity date of February 21, 2015 it becomes convertible into shares of the Company’s common stock at a price equal to sixty percent (60%) of the lowest last trade price (as reported by Bloomberg LP) of the Company’s common stock for the twenty five (25) trading days immediately preceding the date of conversion.  The warrant has a three year term and may be exercised at an exercise price of $0.30 per share, subject to adjustment in the case of stock splits, distributions, reorganizations, recapitalizations and the like, and may be exercised on a cashless basis under certain circumstances. The warrant contains full ratchet anti-dilution protection in the case of a share issuance for consideration less than the then exercise price of the warrant, subject to customary exceptions.

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On November 2, 2015, the Company issued a $100,000 note, due November 2, 2018, for net proceeds of $91,000. If the $100,000 is not repaid by May 2, 2016 it becomes convertible into shares of the Company’s common stock at a price equal to sixty percent (60%) of the lowest last trade price (as reported by Bloomberg LP) of the Company’s common stock for the twenty five (25) trading days immediately preceding the date of conversion.  The note was issued pursuant to a Securities Purchase Agreement dated October 30, 2015 whereby the investor agreed to purchase up to an aggregate of $375,000 of notes for $338,500 under three separate notes.  All three notes contain the same terms except have different dollar amounts, the first of which is the aforementioned November 2, 2015 $100,000 note purchased for $91,000, the 2^nd is a $125,000 note and to be purchased some time between January 1, 2016 and February 1, 2016 (the “Second Closing Date”) for $112,500 and the 3^rd is a $150,000 note to be purchased, at any time between sixty one (61) to ninety (90) days after the Second Closing, for $135,000.  The execution and issuance of both the 2^nd and 3^rd notes are subject to the mutual agreement of the investor and the Company.  The notes are redeemable by the Company, upon not more than two (2) days written notice, for an amount equal to: (i) if the redemption date is ninety (90) days or less from the date of issuance of the note, one hundred percent (100%) of the sum of the principal amount so redeemed plus accrued interest, if any; (ii) if the redemption date is greater than or equal to ninety one (91) days from the date of issuance of the note and less than or equal to one hundred twenty (120) days from the date of issuance of the note, one hundred ten percent (110%) of the sum of the principal amount so redeemed plus accrued interest, if any; (iii) if the redemption date is greater than or equal to one hundred twenty one (121) days from the date of issuance of the note and less than or equal to one hundred fifty (150) days from the date of issuance of the note, one hundred fifteen percent (115%) of the sum of the principal amount so redeemed plus accrued interest, if any; (iv) if the redemption date is greater than or equal to one hundred fifty one (151) days from the date of issuance of the note and less than or equal to one hundred eighty (180) days from the date of issuance of the note, one hundred twenty five percent (125%) of the sum of the principal amount so redeemed plus accrued interest, if any; and (v) if the redemption date is greater than or equal to one hundred eighty one (181) days from the date of issuance of the note, one hundred thirty percent (130%) of the sum of the principal amount so redeemed plus accrued interest, if any.  The note does not bear interest, however, in the event of default by the Cthe investor has the option to in increase the interest rate applicable to the applicable note to the lesser of eighteen percent (18%) per annum and the maximum interest rate allowable under applicable law.

Between January 10, 2013 and September 30, 2015, Hang With raised an aggregate of $3,344,465 from the sale of shares of Hang With common and preferred stock to accredited investors in private placements and borrowed an aggregate of $2500,000 from 3 accredited investors. Two of the notes, in the aggregate amount of $150,000 have interest rates of 1.53 per annum and the remaining $100,000 note has an interest rate of 18.36 per annum.  These funds were allocated to the development of Hang With’s live social mobile video App. Since we have been providing the development and maintenance services to Hang With on a fee for services basis, a portion of the funds raised by Hang With have been paid to us for these services.

We do not have any material commitments for capital expenditures during the next twelve months. Although we believe our net revenues, future stock sales and proceeds from the above described Line of Credit are sufficient to fund our current operating expenses, we may seek to raise additional funds in the future particularly if we are unable to generate positive cash flow as a result of our operations or require additional capital to expand our operations. Therefore our future operations may be dependent on our ability to secure additional financing.  Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the trading price of our common stock and a downturn in the U.S. equity and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. The inability to obtain additional capital may restrict our ability to grow and may reduce our ability to continue to conduct business operations. If we are unable to obtain additional financing, we may have to curtail our marketing and development plans and possibly cease our operations.

Critical Accounting Policies

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts in our consolidated financial statements and related notes. Our significant accounting policies are described in Note 1 to our consolidated financial statements included in our Annual Report dated December 31, 2014. We have identified below our critical accounting policies and estimates that we believe require the greatest amount of judgment. These estimates and judgments have a significant impact on our consolidated financial statements. Actual results could differ materially from those estimates. The accounting policies that reflect our more significant estimates and judgments and that we believe are the most critical to fully understand and evaluate our reported financial results include the following:

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·

Revenue Recognition

·

Securities Available for Sale

·

Intangible Assets

·

Fair Value of Financial Instruments

·

Goodwill and Other Intangible Assets

·

Stock-Based Compensation

 

Revenue Recognition

Our main source of revenue is from the development of custom applications or “Apps” for customers. We use a hybrid method for recognizing revenue that includes elements from both ASC 985-605, Software Revenue Recognition and ASC 605-35, Construction-Type and Production-Type Contracts.

We recognize revenues in accordance with ASC 985-605 when persuasive evidence of an agreement exists, delivery of the software has occurred, the fee is fixed or determinable, and collectability is probable. Nonrecurring revenues related to perpetual license sales with multiple elements are recognized in accordance with the guidance on software revenue recognition.

When the arrangement with a customer includes significant production, modification, or customization of the software, we recognize the related revenue using the percentage-of-completion method in accordance with the accounting guidance and certain production-type contracts contained in ASC 605-35.  We use the percentage of completion method provided all of the following conditions exist:

·

the contract includes provisions that clearly specify the enforceable rights regarding goods or services to be provided and received by the parties, the consideration to be exchanged and the manner and terms of settlement;

·

the customer can be expected to satisfy its obligations under the contract;

·

the Company can be expected to perform its contractual obligations; and

·

reliable estimates of progress towards completion can be made.

We measure completion based on achieving milestones detailed in the agreements with the customers. Costs of providing services, including services accounted for in accordance with ASC 605-35, are expensed as incurred.

The following is an example of how revenue is recognized involving an arrangement with a customer that includes significant production, modification, or customization of the software: a typical project will require between 50-100 working days from beginning to end.  On average 25-50 cumulative working days are expended prior to the start of development and this work typically includes, design, storyboards, and architecture. Prior to developing the App, hard costs are incurred as a number of variables are taken into account for preparation.  Those often include the following:

·

understanding the client's business situation and environment, including their competitive landscape;

·

researching and establishing the goals of the App;

·

understanding and researching the target and potential App use cases;

·

developing a monetization strategy;

·

determining functionality and articulating the functionality through a storyboard and functional specification document; and

·

determining the resources and timeline needed to complete the final work product.

Fifty percent (50%) of the work is completed upon completion of these six phases and at that point in time the customer typically signs our contract and makes a nonrefundable 50% payment. We record the 50% nonrefundable payment as revenue at that point in time. When the Beta version of the App is complete, or at such other time as may be specifically agreed to in the contract, the customer is invoiced for an additional 25% of the total contract price and such payment is booked as revenue.  When the App is completed and ready for App store release, the customer is invoiced for the final 25% of total contract price and such payment is booked as revenue.

We also generate revenue from in App advertising and the sale of Apps through the Apple store and other App marketplaces. Revenue from advertising is recognized in the period that the ad impressions are delivered, on an accrual basis.  Revenue from the sale of Apps is recognized in the period the App is sold to the end user, on an accrual basis.

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Intangible Assets 

Intangible assets are stated at cost. Expenditures of costs incurred to renew or extend the term of a recognized intangible asset and materially extend the useful life are capitalized. When assets are sold or otherwise written off due to asset impairment, the cost and the related accumulated amortization are removed from the accounts and any realized gain or loss is recognized at that time.   Useful lives of intangible assets are periodically evaluated for reasonableness and the assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may no longer be recoverable. 

Amortization is computed primarily on the straight-line method for financial statement purposes over the estimated useful life. Estimated useful lives will vary based on the nature of the intangible asset. 

Fair Value of Financial Instruments 

The Company adopted ASC 820, Fair Value Measurements and Disclosures, for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing US GAAP that requires the use of fair value measurements which establishes a framework for measuring fair value and expands disclosure about such fair value measurements. 

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

	Level 1:	Observable inputs such as quoted market prices in active markets for identical assets or liabilities
	Level 2:	Observable market-based inputs or unobservable inputs that are corroborated by market data
	Level 3:	Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.

The carrying amounts reported in the balance sheet for cash, accounts payable, and accrued liabilities approximate their estimated fair market value based on the short-term maturity of this instrument. 

In addition, FASB ASC 825-10-25, Fair Value Option was effective for January 1, 2008. ASC 825-10-25 expands opportunities to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value.

Fair value of financial instruments is as follows:

 

	September 30, 2015				Date of Issuance July 2015
	Fair Value		Input Level		Fair Value		Input Level
Derivative liability – 666,666 warrants issued July 8, 2015	$ 30,920		Level 3		$ 46,600		Level 3
Derivative liability – 242,424 warrants issued July 22, 2015	$ 11,244		Level 3		$ 17,505		Level 3
Derivative liability – 333,333 warrants issued August 7, 2015	$ 15,460		Level 3		$ 27,395		Level 3

The following table presents a reconciliation of the derivative liability measured at fair value on a recurring basis using significant unobservable input (Level 3) from the dates of issuance (July 8 and July 22, 2015) to September 30, 2015: 

		Conversion feature derivative liability
Initial balance in July 2015		$	91,500
Change in fair value			(33,876)
Balance September 30, 2015		$	57,624

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Goodwill and Other Intangible Assets 

In accordance with ASC 350-30-65 (formerly SFAS 142, Goodwill and Other Intangible Assets), the Company assesses the impairment of identifiable intangibles whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Intangible assets were comprised of website assets. Factors the Company considers to be important which could trigger an impairment review include the following:

1.

Significant underperformance relative to expected historical or projected future operating results;

2.

Significant changes in the manner of use of the acquired assets or the strategy for the overall business; and

3.

Significant negative industry or economic trends.

When the Company determines that the carrying value of intangibles may not be recoverable based upon the existence of one or more of the above indicators of impairment and the carrying value of the asset cannot be recovered from projected undiscounted cash flows, the Company records an impairment charge. The Company measures any impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with the risk inherent in the current business model. Significant management judgment is required in determining whether an indicator of impairment exists and in projecting cash flows. The Company did not consider it necessary to record any impairment charges during the period ended September 30, 2015. 

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 consolidated 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 vesting 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.

Off Balance Sheet Arrangements

 

We do not engage in any activities involving variable interest entities or off-balance sheet arrangements.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 4. CONTROLS AND PROCEDURES.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e)) under the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time specified in the Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

Pursuant to Rule 13a-15(b) under the Exchange Act, the Company carried out an evaluation with the participation of the Company's management, including the Company's Chief Executive Officer ("CEO") and the Company's Chief Financial Officer ("CFO"), of the effectiveness of the Company's disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the quarter ended September 30, 2015. Based upon that evaluation, the Company's CEO and CFO concluded that the Company's disclosure controls and procedures were not effective as of September 30, 2015 due to the Company’s limited internal resources and lack of ability to have multiple levels of transaction review.

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Management is in the process of determining how best to change our current system and implement a more effective system to insure that information required to be disclosed in this quarterly report on Form 10-Q has been recorded, processed, summarized and reported accurately. Our management acknowledges the existence of this problem, and intends to developed procedures to address them to the extent possible given limitations in financial and manpower resources. While management is working on a plan, no assurance can be made at this point that the implementation of such controls and procedures will be completed in a timely manner or that they will be adequate once implemented.

CHANGES IN INTERNAL CONTROLS

There have been no changes in our internal control over financial reporting during the quarter ended September 30, 2015 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

 

PART II--OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business. Litigation is, however, subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe would or could have, individually or in the aggregate, a material adverse effect on us.

ITEM 1A. RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

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

On March 11, 2015, the company issued 400,000 shares of common stock, valued at $44,000, to a consultant for business development services.  

On April 13, 2015, the Company issued 275,000 shares of common stock, valued at $34,667, to a consultant for business development services.

On July 23, 2015, we issued 400,000 shares of common stock, valued at $37,600, to our CFO, Murray Williams, as an incentive for him to remain with the Company.

On July 23, 2015, we issued 29,412 shares of common stock, valued at $2,500, to a consultant for technology programming services.  

On August 17, 2015, three hundred sixty four thousand seven hundred six (364,706) shares of common stock, were issued to a consultant for work preformed Q1 and Q2 of 2015 in connection with strategic mergers and licenses. The shares were valued at $47,765 on the grant dates and that amount was reflected as common stock payable as of June 30, 2015.

The foregoing shares were issued in reliance upon an exemption from the registration requirements pursuant to Section 4(2) of the Securities Act of 1933, as amended.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4- MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5 - OTHER INFORMATION

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ITEM 6 - EXHIBITS.

 

 

 

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.

 

With, Inc., formerly Mobile Holdings, Inc.

November 20, 2015	By: /s/ Andrew Maltin
	Andrew Maltin        Chief Executive & Financial Officer        (Principal Executive & Financial Officer)

 

 

 

 

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