Friendable, Inc. - FORM 10-Q

Attached files

file	filename
EX-32.1 - SECTION 906 CERTIFICATIONS UNDER SARBANES-OXLEY ACT OF 2002 - Friendable, Inc.	exhibit_32-1.htm
EX-31.2 - SECTION 302 CERTIFICATION UNDER SARBANES-OXLEY ACT OF 2002 OF THE CHIEF FINANCIAL OFFICER - Friendable, Inc.	exhibit_31-2.htm
EX-31.1 - SECTION 302 CERTIFICATION UNDER SARBANES-OXLEY ACT OF 2002 OF THE CHIEF EXECUTIVE OFFICER - Friendable, Inc.	exhibit_31-1.htm

UNITED STATESSECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended: June 30, 2016

☐ 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: 000-52917

FRIENDABLE, INC.

(Exact name of registrant as specified in its charter)

Nevada		98-0546715
(State or other jurisdiction of incorporation)		(I.R.S. Employer Identification No.)

1821 S Bascom Ave., Suite 353, Campbell, California 95008

(Address of principal executive offices) (zip code)

(855) 473-8473

(Registrant’s telephone number, including area code)

_________________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.		☒ Yes ☐ 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 ☐ 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.

Large accelerated filer	☐		Accelerated filer	☐
Non-accelerated filer	☐	(Do not check if a smaller reporting company)	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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

663,551,343 shares of common stock and 21,771shares of preferred stock outstanding as of August 15, 2016

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION	1

ITEM 1. FINANCIAL STATEMENTS	1

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	15

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	19

ITEM 4. CONTROLS AND PROCEDURES	19

PART II - OTHER INFORMATION	20

ITEM 1. LEGAL PROCEEDINGS	20

ITEM 1A. RISK FACTORS	20

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	20

ITEM 3. DEFAULTS UPON SENIOR SECURITIES	21

ITEM 4. MINE SAFETY DISCLOSURES	21

ITEM 5. OTHER INFORMATION	21

ITEM 6. EXHIBITS	21

SIGNATURES	22

iii

As used in this report, the term “the Company” means Friendable, Inc., formerly known as iHookup Social, Inc., and its subsidiary, unless the context clearly indicates otherwise.

Special Note Regarding Forward-Looking Information

This quarterly report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The use of words such as “anticipates,” “estimates,” “expects,” “intends,” “plans” and “believes,” among others, generally identify forward-looking statements. These forward-looking statements include, among others, statements relating to: the Company’s future financial performance, the Company’s business prospects and strategy, anticipated trends and prospects in the industries in which the Company’s businesses operate and other similar matters. These forward-looking statements are based on the Company’s management's expectations and assumptions about future events as of the date of this quarterly report, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict.

Actual results could differ materially from those contained in these forward-looking statements for a variety of reasons, including, among others, the risk factors set forth below. Other unknown or unpredictable factors that could also adversely affect the Company’s business, financial condition and results of operations may arise from time to time. In light of these risks and uncertainties, the forward-looking statements discussed in this quarterly report may not prove to be accurate. Accordingly, you should not place undue reliance on these forward-looking statements, which only reflect the views of the Company’s management as of the date of this quarterly report. The Company does not undertake to update these forward-looking statements

In this quarterly report on Form 10-Q, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares in the Company’s capital stock.

An investment in the Company’s common stock involves a number of very significant risks. You should carefully consider the following risks and uncertainties in addition to other information in this quarterly report on Form 10-Q in evaluating the Company and its business before purchasing shares of the Company’s common stock. The Company’s business, operating results and financial condition could be seriously harmed as a result of the occurrence of any of the following risks. You could lose all or part of your investment due to any of these risks. You should invest in the Company’s common stock only if you can afford to lose your entire investment.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

FRIENDABLE, INC.

(FORMERLY IHOOKUP SOCIAL, INC.)

CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2016

(Unaudited)


Consolidated Balance Sheets as of June 30, 2016 and December 31, 2015		2

Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2016 and 2015		3

Consolidated Statements of Stockholders’ Deficiency for the period from December 31, 2014 to June 30, 2016		4

Consolidated Statements of Cash Flows for the six months ended June 30, 2016 and 2015		5

Notes to the Consolidated Financial Statements		6-14

FRIENDABLE, INC.

CONSOLIDATED BALANCE SHEETS

(Expressed in US dollars)

ASSETS	June 30, 2016 (Unaudited)	December 31, 2015

Current assets
Cash	$113,596	$15,880
Accounts receivable	1,418	3,848
Prepaid expenses	6,963	1,897
Debt issue costs (Note 10)	336,830	200,855
Total current assets	458,807	222,480

Intangible assets (Note 3)	35,000	35,000

TOTAL ASSETS	$493,807	$257,480


LIABILITIES AND STOCKHOLDERS' DEFICIENCY

LIABILITIES
Current liabilities
Accounts payable (Note 8)	1,525,584	1,183,169
Convertible debentures short-term (Note 10)	1,499,331	493,742
Deferred revenue	6,323	6,323
	3,031,238	1,683,234

Convertible debentures long-term (Note 10)	208,774	74,263

Total liabilities	3,240,012	1,757,497
Going concern (Note 1)
Commitments (Note 7)
Subsequent events (Note 11)

STOCKHOLDERS' DEFICIENCY
Preferred stock, 50,000,000 shares authorized at par value of $0.0001, 21,880 (December 31, 2015 – 22,165) shares issued and outstanding (Note 4)	2	2
Common stock, 10,000,000,000 shares authorized at par value of $0.0001, 568,806,056 (December 31, 2015 – 218,977,542) shares issued and outstanding (Note 4)	56,754	21,898
Additional paid-in capital	7,528,868	5,947,584
Common stock subscriptions receivable (Note 8)	(4,500)	(4,500)
Deficit	(10,327,329)	(7,465,001)
Total Stockholders' Deficiency	(2,746,205)	(1,500,017)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY	$493,807	$257,480

The accompanying notes are an integral part of these consolidated financial statements.

FRIENDABLE, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Expressed in US dollars)

(Unaudited)

	Three Months Ended June 30, 2016	Three Months Ended June 30, 2015	Six Months Ended June 30, 2016	Six Months Ended June 30, 2015
	$	$	$	$
REVENUES	7,189	47,573	18,580	85,258

OPERATING EXPENSES
Accretion and interest expense	570,789	375,079	1,178,796	647,390
App hosting (Note 8)	80,473	94,410	228,552	176,060
Commissions	2,157	14,271	5,544	25,577
Financing costs	37,768	61,625	75,458	78,214
General and administrative (Note 8)	270,391	250,005	460,723	486,459
Product development	64,113	24,147	159,234	44,695
Sales and marketing	557,098	87,937	772,601	149,034


TOTAL OPERATING EXPENSES	1,582,789	907,474	2,880,908	1,607,429

LOSS FROM OPERATIONS	(1,575,600)	(859,901)	(2,862,328)	(1,522,171)

OTHER INCOME
Gain on extinguishment of debt	-	-	-	5,096

NET LOSS AND COMPREHENSIVE LOSS	(1,575,600)	(859,901)	(2,862,328)	(1,517,075)

BASIC LOSS PER SHARE	(0.00)	(0.01)	(0.01)	(0.03)

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING	425,129,047	78,745,462	340,742,364	49,530,740

The accompanying notes are an integral part of these consolidated financial statements.

FRIENDABLE, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIENCY

FOR THE PERIOD FROM DECEMBER 31, 2014 TO JUNE 30, 2016

(Expressed in US dollars)

(Unaudited)

	Common # Stock		Common Stock Amount		Preferred #		Preferred Stock Amount		Additional Paid-in Capital			Common Stock Subscriptions			Deficit			Total

Balance December 31, 2014		8,802,940	$	881		22,807	$	2	$	3,340,495		$	(4,500	)	$	(4,310,032	)	$	(973,154	)

Shares issued for services		1,150,000		115		—		—		6,325			—			—			6,440

Conversion of convertible notes		190,385,736		19,038		—		—		269,629			—			—			288,667

Conversion of preferred shares		18,638,866		1,864		(642)		—		(1,864	)		—			—			—

Issuance of convertible notes (net)		—		—		—		—		2,332,999			—			—			2,332,999

Net loss for the year		—		—		—		—		—			—			(3,154,969	)		(3,154,969	)

Balance December 31, 2015		218,977,542	$	21,898		22,165	$	2	$	5,947,584		$	(4,500	)	$	(7,465,001	)	$	(1,500,017	)

Shares issued for services (Note 4)	18,785,714		1,879	—		—		80,221			—			—			82,100

Conversion of convertible notes (Note 4)	271,119,221		27,112	—		—		109,868			—			—			136,980

Conversion of preferred shares (Note 4)	32,929,677		3,293	(285)		—		(3,293	)		—			—			—

Issuance of convertible notes (net) (Note 10)	—		—	—		—		1,319,164			—			—			1,319,164

Warrants	26,993,902		2,699	—		—		75,197			—			—			77,896

Net loss for the period	—		—	—		—		—			—			(2,862,328	)		(2,862,328	)

Balance June 30, 2016	568,806,056	$	56,881	21,880	$	2	$	7,528,741		$	(4,500	)	$	(10,327,329	)	$	(2,746,205	)

The accompanying notes are an integral part of these consolidated financial statements.

FRIENDABLE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in US dollars)

(Unaudited)

	Six months ended June 30, 2016	Six months ended June 30, 2015
Cash Flows from Operating Activities:
Net loss	$(2,862,328)	$(1,517,075)

Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
Interest on promissory note	97,903	22,965
Accretion expense	1,073,925	590,510
Gain on extinguishment of debt	-	(5,096)
Shares issued for services	77,034	47,893
Changes in Operating Assets and Liabilities
Decrease (increase) in accounts receivable	2,430	(4,732)
Decrease in prepaid expenses	-	1,070
Increase in accounts payable	251,481	334,970
Net Cash Used in Operating Activities	(1,359,555)	(529,495)

Cash Flows from Investing Activities:
Acquisition of intangible assets	-	(35,000)

Net Cash Used in Investing Activities	-	(35,000)

Cash Flows from Financing Activities:
Proceeds from convertible debentures (net)	1,457,271	567,488

Net Cash Provided by Financing Activities	1,457,271	567,488

Net Increase in Cash	97,716	2,993

Cash (checks issued in excess of cash on hand) – Beginning	15,880	(945)

Cash – Ending	$113,596	$2,048

Supplemental Cash Flow Information:
Cash paid for interest	$—	$—
Cash paid for income taxes	$—	$—

Non-cash Investing and Financing Items:
Shares issued for conversion of debt (net)	$109,980	$234,231
Convertible debentures issued to extinguish promissory notes	$-	$261,425

The accompanying notes are an integral part of these consolidated financial statements.

FRIENDABLE, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE PERIOD JUNE 30, 2016

(Expressed in US dollars)

1. NATURE OF BUSINESS AND GOING CONCERN

Friendable, Inc., a Nevada corporation (the “Company”), was incorporated in the State of Nevada with a plan to produce user-friendly software that creates interactive digital yearbook software for schools.

Effective June 15, 2011, the Company completed a merger with its subsidiary, Titan Iron Ore Corp., a Nevada corporation, which was incorporated solely to effect a change in the Company’s name from “Digital Yearbook Inc.” to “Titan Iron Ore Corp.” The Company then began to pursue business in the area of mining exploration.

On February 3, 2014, the Company entered into an Agreement and Plan of Merger and Reorganization (the “Merger”) with iHookup Operations Corp., a wholly-owned Delaware subsidiary of the Company (“Acquisition Sub”) and iHookup-DE, whereby iHookup-DE was the surviving entity and became the wholly-owned subsidiary of the Company. iHookup-DE’s former stockholders exchanged all of their 6,000 shares of outstanding common stock for 25,000 shares of the Company’s designated Series A Preferred Stock.

The Merger was regarded as a reverse recapitalization whereby iHookup-DE was considered to be the accounting acquirer as its stockholders retained control of the Company after the Merger. During the year ended December 31, 2014, the Merger was completed and as a result, iHookup-DE acquired the net liabilities of the Company.

As a result of the Merger, the Company ceased its prior operations and its business became the development and dissemination of a “proximity based” mobile-social media application that facilitates connections between people, utilizing the intelligence of global positioning system and localized recommendations.

On September 28, 2015 the Company filed a Certificate of Amendment to its Articles of Incorporation changing the name of the Company from “iHookup Social, Inc.” to “Friendable, Inc.”. On October 27, 2015 the Company’s trading symbol on the OTC Pink marketplace was changed from “HKUP” to “FDBL”. This change was made in conjunction with the re-branding of the Company’s app from "iHookup Social" to "Friendable".

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which implies that the Company would continue to realize its assets and discharge its liabilities in the normal course of business. The Company has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. As of June 30, 2016 the Company has a working capital deficiency of $2,572,431 and has an accumulated deficit of $10,327,329 since inception and its operations continue to be funded primarily from sales of its stock and issuance of convertible debentures. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to obtain the necessary financing from sales of its stock financings. The consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Management plans to raise financing through the issuance of convertible notes. No assurance can be given that any such additional financing will be available, or that it can be obtained on terms acceptable to the Company and its stockholders.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

These consolidated financial statements include the accounts of Friendable, Inc., from the date of acquisition, and its wholly owned subsidiary, iHookup-DE from inception.

Interim financial statements

The unaudited interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim consolidated financial information and with the instructions for Securities and Exchange Commission (“SEC”) Form 10-Q and they do not include all of the information and footnotes required by generally accepted accounting principles for complete consolidated financial statements. Therefore, these consolidated financial statements should be read in conjunction with the Company’s audited annual consolidated financial statements and notes thereto for the year ended December 31, 2015, included in the Company’s Annual Report on Form 10-K filed on April 15, 2016, with the SEC.

In the opinion of management, all adjustments (consisting of normal and recurring accruals) considered necessary for fair presentation of the Company’s financial position, results of operations and cash flows have been included. Operating results for the six months ended June 30, 2016, are not necessarily indicative of the results that may be expected for future quarters or the year ending December 31, 2016.

FRIENDABLE, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE PERIOD JUNE 30, 2016

(Expressed in US dollars)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Use of Estimates

The preparation of these statements in accordance with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to the useful life and recoverability of long-lived assets, valuation of convertible debenture conversion options, deferred income tax asset valuations, financial instrument valuations, share-based payments, other equity-based payments, and loss contingencies. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Revenue Recognition

Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is probable. Revenue generally is recognized net of allowances for returns and any taxes collected from customers and subsequently remitted to governmental authorities. The Company derives revenues from the sale of application software, unlimited messaging subscriptions for periods varying from one to twelve months, and arrangements for virtual gifts and access to special features referred to as coin packs. Revenue from the sale of application software is recognized upon download. Revenue from messaging subscriptions is recognized as revenue ratably over the subscription period beginning on the date the service is made available to customers. Revenue from coin packs is recognized on a consumption basis commensurate with the customer utilization of such resources.

Advertising Costs

The Company’s policy regarding advertising is to expense advertising when incurred. During the six months ended June 30, 2016, the Company incurred $772,601 (June 30, 2015: $149,034) in advertising costs.

Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents.

Intangible Assets

The Company accounts for intangible assets in accordance with ASC 350, Intangibles – Goodwill and Other. The Company assesses potential impairments to intangible assets when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recovered.

Intangible assets with estimated lives and other long-lived assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of intangible assets with estimated lives and other long-lived assets is measured by comparing the carrying amount of the asset to its fair value. If the future value of the asset is lower than its carrying value, the Company recognizes an impairment loss for the amount by which the carrying value of the asset exceeds the related estimated fair value.

Intangible assets with indefinite lives are tested for impairment annually or more frequently are tested for impairment annually or more frequently if events or changes in circumstances indicate that it is more likely than not that the intangible asset is impaired.

Impairment of Long-Lived Assets

The Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows.

If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell.

FRIENDABLE, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE PERIOD JUNE 30, 2016

(Expressed in US dollars)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Stock-based Compensation

The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Based Compensation and ASC 505, Equity Based Payments to Non-Employees, which requires the measurement and recognition of compensation expense based on estimated fair values for all share-based awards made to employees and directors, including stock options.

ASC 718 requires companies to estimate the fair value of share-based awards on the date of grant using an option-pricing model. The Company uses the Black-Scholes option pricing model as its method in determining fair value. This model is affected by the Company’s stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to the Company’s expected stock price volatility over the terms of the awards, and actual and projected employee stock option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the statement of comprehensive loss over the requisite service period.

All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

Allowance for Doubtful Accounts

The Company receives revenues from sales of its software application. The Company monitors its outstanding receivables for timely payments and potential collection issues. During the six months ended June 30, 2016, the Company did not have any allowance for doubtful accounts.

Financial Instruments

Financial assets and financial liabilities are recognized in the balance sheet when the Company has become party to the contractual provisions of the instruments.

The Company’s financial instruments consist of accounts receivable, accounts payable, promissory notes, and convertible debentures. The fair values of these financial instruments approximate their carrying value, due to their short term nature, and current market rates for similar financial instruments. Fair value of a financial instrument is defined 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. The Company’s financial instruments recorded at fair value in the balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair value.

Basic and Diluted Loss Per Share

The Company computes net loss per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the statement of comprehensive loss. Basic EPS is computed by dividing net income (loss) available to common stockholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.

As of June 30, 2016, there were approximately 8,877,618,899 potentially dilutive shares outstanding.

Income Taxes

The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, Income Taxes. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

FRIENDABLE, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE PERIOD JUNE 30, 2016

(Expressed in US dollars)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent Accounting Pronouncements

In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements - Going Concern (Subtopic 205-40). Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-15”). ASU 2014-15 is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosure. This ASU provides guidance to an organization’s management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations today in the financial statement footnotes. The amendments are effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early adoption is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. The Company is evaluating the impact the revised guidance will have on its consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 supersedes the revenue recognition requirements in ASC Topic 605, “Revenue Recognition” and some cost guidance included in ASC Subtopic 605-35, Revenue Recognition -Construction-Type and Production-Type Contracts”. 2014-09 requires the disclosure of sufficient information to enable users of the financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. The Company will also be required to disclose information regarding significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. Early adoption is not allowed. ASU 2014-09 provides two methods of retrospective application. The first method would require the Company to apply ASU 2014-09 to each prior reporting period presented. The second method would require the Company to retrospectively apply with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. The Company is currently evaluating the impact that the adoption of ASU 2014-09 may have on its consolidated financial statements.

3. INTANGIBLE ASSETS

On June 24, 2015, the Company completed the acquisition of the Friendable Properties which includes domain names, logos, icons, and registered trademarks for cash consideration of $35,000.

4. COMMON AND PREFERRED STOCK

Common Stock:

During the six months ended June 30, 2016, the Company issued 271,119,221 shares of common stock to various convertible note holders for full and partial conversion of the notes (Note 10).

During the six months ended June 30, 2016, the Company issued 18,785,714 shares of common stock to consultants in exchange for investor relations and advertising services.

During the six months ended June 30, 2016, the Company issued 32,929,677 shares of common stock to various Series A preferred stockholders on conversion of 285 preferred shares.

During the six months ended June 30, 2016, the Company issued 26,993,902 shares of common stock to various warrant holders for exercise of the warrants.

Preferred Stock:

The Series A Preferred Stock is convertible into nine (9) times the number of common stock outstanding until the closing of a Qualified Financing (i.e. the sale and issuance of the Company’s equity securities that results in gross proceeds in excess of $2,500,000). The number of shares of common stock issued on conversion of preferred stock is based on the ratio of the number of shares of preferred stock converted to the total number of shares of preferred stock outstanding at the date of conversion multiplied by nine (9) times the number of common stock outstanding at the date of conversion.

FRIENDABLE, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE PERIOD JUNE 30, 2016

(Expressed in US dollars)

5. SHARE PURCHASE WARRANTS

			Weighted Average
			Exercise
	Number of Warrants		Price $
Balance, December 31, 2015		119,471,154		0.014
Warrants exercised		27,609,756		0.004
Warrants issued		304,474,359		0.004
Balance, June 30, 2016		396,335,757		0.007

6. STOCK-BASED COMPENSATION

On November 22, 2011, the Board of Directors of Titan Iron Ore Corp. (see Note 1) approved a stock option plan (“2011 Stock Option Plan”), the purpose of which is to enhance the Company’s stockholder value and financial performance by attracting, retaining and motivating the Company’s officers, directors, key employees, consultants and its affiliates and to encourage stock ownership by such individuals by providing them with a means to acquire a proprietary interest in the Company’s success through stock ownership. Under the 2011 Stock Option Plan, officers, directors, employees and consultants who provide services to the Company may be granted options to acquire common shares of the Company. The aggregate number of options authorized by the plan shall not exceed 4,974 shares of common stock of the Company.

The following table summarizes the options outstanding and exercisable under the 2011 Stock Option Plan as of June 30, 2016:

	Option Price
Expiry Date	Per Share($)		Number
December 21, 2021		1,680		1,725
June 21, 2022		400		500
June 25, 2023		134		850
	$	1,044		3,075

The Board of Directors and the stockholders holding a majority of the voting power approved a 2014 Equity Incentive Plan (the “2014 Plan”) on February 28, 2014, with a to be determined effective date. The purpose of the 2014 Plan is to assist the Company and its affiliates in attracting, retaining and providing incentives to employees, directors, consultants and independent contractors who serve the Company and its affiliates by offering them the opportunity to acquire or increase their proprietary interest in the Company and to promote the identification of their interests with those of the stockholders of the Company. The 2014 Plan will also be used to make grants to further reward and incentivize current employees and others.

There are 120,679 shares of common stock reserved for issuance under the 2014 Plan. The Board shall have the power and authority to make grants of stock options to employees, directors, consultants and independent contractors who serve the Company and its affiliates. Any stock options granted under the 2014 Plan shall have an exercise price equal to or greater than the fair market value of the Company’s shares of common stock. Unless otherwise determined by the Board of Directors, stock options shall vest over a four-year period with 25% being vested after the end of one (1) year of service and the remainder vesting equally over a 36-month period. The Board may award options that may vest based upon the achievement of certain performance milestones. As of June 30, 2016, no options have been awarded under the 2014 Plan.

The following table summarizes the Company’s stock options outstanding and exercisable:

	Number of Options		Weighted Average Exercise Price		Weighted- Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
					$		$
Outstanding and exercisable, December 31, 2015		3,075		1,044		7.57		-
Outstanding and exercisable, June 30, 2016		3,075		1,044		7.07		-

FRIENDABLE, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE PERIOD JUNE 30, 2016

(Expressed in US dollars)

7. COMMITMENTS

The following table summarizes the Company’s significant contractual obligations as of June 30, 2016:

	$

Employment Agreements (1)		450,000
		450,000

(1) Employment agreements with related parties.

8. RELATED PARTY TRANSACTIONS AND BALANCES

During the six months ended June 30, 2016, the Company incurred $221,723 (2015: $224,883) in salaries to officers and directors with such costs being recorded as general and administrative expenses. Of the $221,723 incurred, $150,000 has been deferred.

During the six months ended June 30, 2016, the Company incurred $408,552 (2015: $243,560) in app hosting, app development, office expenses, and rent to a company with two officers and directors in common with such costs being recorded as general and administrative and product development expenses.

As of June 30, 2016, the Company had a stock subscription receivable totaling $4,500 (December 31, 2015: $4,500) from an officer and director and from a company with an officer and director in common.

As of June 30, 2016, accounts payable includes $285,123 (December 31, 2015: $236,571) payable to a company with two officers and directors in common, and $325,000 (December 31, 2015: $175,000) payable in salaries to directors and officers of the Company. The amounts are unsecured, non-interest bearing and are due on demand.

The above transactions were recorded at their exchange amounts, being the amounts agreed by the related parties.

9. FAIR VALUE MEASUREMENTS

ASC 820, Fair Value Measurements and Disclosures, require an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Valuations are based on quoted prices that are readily and regularly available in an active market and do not entail a significant degree of judgment.

Level 2

Level 2 applies to assets or liabilities for which there are other than Level 1 observable inputs such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 2 instruments require more management judgment and subjectivity as compared to Level 1 instruments. For instance: determining which instruments are most similar to the instrument being priced requires management to identify a sample of similar securities based on the coupon rates, maturity, issuer, credit rating and instrument type, and subjectively select an individual security or multiple securities that are deemed most similar to the security being priced; and determining whether a market is considered active requires management judgment.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The determination of fair value for Level 3 instruments requires the most management judgment and subjectivity.

Pursuant to ASC 825, cash and cheques issued in excess of cash on hand is based on Level 1 inputs. The Company believes that the recorded values of accounts payable approximate their current fair values because of their nature or respective relatively short durations. The fair value of the Company’s promissory notes and convertible debentures approximates their carrying values as the underlying imputed interest rates approximates the estimated current market rate for similar instruments.

FRIENDABLE, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE PERIOD JUNE 30, 2016

(Expressed in US dollars)

9. FAIR VALUE MEASUREMENTS (CONTINUED)

As of June 30, 2016, there were no assets or liabilities measured at fair value on a recurring basis presented on the Company’s balance sheet, other than cash.

10. CONVERTIBLE DEBENTURES

Short-term Convertible Debentures:

Conversion Feature	Issuance	Principal ($)	Discount ($)	Carrying Value ($)	Interest Rate	Maturity Date
a)	02-Apr-13	5,054	-	5,054	0%	02-Jan-14
b)	05-Aug-15	750,000	544,166	205,834	7%	05-Feb-17
b)	05-Aug-15	18,750	13,605	5,145	7%	05-Feb-17
d)	07-Oct-14	70,000	-	70,000	8%	07-Oct-15
d)	15-Jan-15	40,000	-	40,000	8%	15-Jan-16
d)	15-Feb-15	35,000	-	35,000	8%	15-Feb-16
d)	17-Feb-15	4,072	-	4,072	8%	17-Feb-16
d)	17-Feb-15	102,135	-	102,135	8%	17-Feb-16
d)	17-Feb-15	5,000	-	5,000	8%	17-Feb-16
c)	27-Feb-15	37,500	-	37,500	8%	27-Feb-16
c)	12-Mar-15	37,500	-	37,500	8%	11-Mar-16
d)	19-Mar-15	53,551	-	53,551	8%	19-Mar-16
d)	19-Mar-15	8,000	-	8,000	8%	19-Mar-16
c)	27-Mar-15	50,000	-	50,000	8%	26-Mar-16
c)	11-May-15	50,000	-	50,000	8%	10-May-16
d)	02-Jun-15	29,500	-	29,500	8%	01-Jun-16
d)	02-Jun-15	45,966	-	45,966	8%	01-Jun-16
d)	02-Jun-15	10,000	-	10,000	8%	01-Jun-16
d)	02-Jun-15	58,540	-	58,540	8%	01-Jun-16
d)	02-Jun-15	35,408	-	35,408	8%	01-Jun-16
d)	02-Jun-15	20,757	-	20,757	8%	01-Jun-16
c)	11-Jun-15	50,000	-	50,000	8%	10-Jun-16
d)	16-Jun-15	30,464	-	30,464	8%	15-Jun-16
d)	19-Jun-15	30,000	-	30,000	8%	18-Jun-16
d)	19-Jun-15	35,408	-	35,408	8%	18-Jun-16
c)	24-Jun-15	37,500	-	37,500	8%	23-Jun-16
d)	24-Jun-15	35,000	-	35,000	8%	23-Jun-16
c)	24-Jun-15	37,500	-	37,500	8%	23-Jun-16
d)	07-Jul-15	75,000	-	75,000	8%	07-Oct-15
d)	17-Jul-15	27,000	6,236	20,764	8%	17-Jul-16
d)	01-Aug-15	17,408	5,835	11,573	8%	04-Aug-16
d)	01-Aug-15	30,000	10,940	19,060	8%	01-Aug-16
d)	01-Aug-15	35,408	13,404	22,004	8%	01-Aug-16
d)	21-Sep-15	64,744	43,549	21,195	8%	21-Sep-16
b)	03-May-16	50,000	48,876	1,124	8%	03-May-17
c)	03-May-16	50,000	-	50,000	8%	03-May-17
d)	03-May-16	29,500	-	29,500	8%	03-May-17
d)	03-May-15	45,965	-	45,965	8%	03-May-17
b)	24-May-16	61,571	60,646	925	8%	24-May-17
d)	24-May-16	30,464	-	30,464	8%	24-May-17
b)	26-May-16	157,500	156,460	1,040	8%	26-May-17
d)	15-Jun-16	50,000	49,333	667	8%	15-Jun-17
c)	07-Apr-16	106,500	104,758	1,742	8%	07-Apr-17

FRIENDABLE, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE PERIOD JUNE 30, 2016

(Expressed in US dollars)

10. CONVERTIBLE DEBENTURES (CONTINUED)

b)	02-Jun-16	160,000	159,206	794	7%	02-Jun-17
b)	02-Jun-16	4,000	3,931	69	7%	02-Jun-17
b)	15-Jun-16	50,000	49,379	621	7%	15-Jun-17
b)	15-Jun-16	1,250	1,193	57	7%	15-Jun-17
b)	17-May-16	100,000	99,103	897	7%	17-May-17
b)	17-May-16	2,500	2,424	76	7%	17-May-17
b)	19-May-16	110,000	109,116	884	7%	19-May-17
b)	19-May-16	2,750	2,674	76	7%	19-May-17

		2,984,165	1,484,834	1,499,331

Long-term Convertible Debentures:

Conversion Feature	Issuance	Principal ($)	Discount ($)	Carrying Value ($)	Interest Rate	Maturity Date
b)	27-Jan-16	250,000	63,949	186,051	7%	27-Jul-17
b)	08-Mar-16	110,000	108,384	1,616	7%	08-Sep-17
b)	27-Jan-16	18,750	-	18,750	7%	27-Jul-17
b)	08-Mar-16	5,000	4,186	814	7%	08-Sep-17
b)	08-Mar-16	90,000	88,457	1,543	7%	08-Sep-17
		473,750	264,976	208,774

The conversion price per share equal to the lower of:

100% of the average price of the Company’s common stock for the 5 trading days preceding the conversion date;

ii)

70% of the daily average price of the Company’s common stock for the 10 trading days preceding the conversion date.

The conversion price is a range of $0.0025-$0.0078.

The conversion price equal to 50% of the lowest closing bid price of the Company’s common stock in the 20-25 trading days prior to the conversion.

The conversion price of $0.0005.

During the six months ended June 30, 2016, the Company received net proceeds from convertible debentures of $1,457,271.

During the six months ended June 30, 2016, $136,980 of convertible debentures were settled by issuing 271,119,221 shares of common stock of the Company.

During the six months ended June 30, 2016, the Company incurred $83,500 in transaction costs in connection with the issuance of the convertible debentures.

As of June 30, 2016, the Company had debt issuance costs of $336,830 (December 31, 2015: $200,855).

At June 30, 2016, convertible debentures with the principal amount of $1,763,362 have a General Security Agreement covering substantially all of the Company’s assets.

The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The terms of the contracts do not permit net settlement, as the shares delivered upon conversion are not readily convertible to cash. The Company’s trading history indicated that the shares are thinly traded and the market would not absorb the sale of the shares issued upon conversion without significantly affecting the price. As the conversion features would not meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25, the conversion features are not required to be separated from the host instrument and accounted for separately. As a result, at June 30, 2016 the conversion features and non-standard anti-dilutions provisions would not meet derivative classification.

FRIENDABLE, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE PERIOD JUNE 30, 2016

(Expressed in US dollars)

11. SUBSEQUENT EVENTS

a)	Subsequent to June 30, 2016 the Company issued 77,261,620 shares of common stock in connection with conversion of convertible notes in the amount of $38,631 and issued 17,483,667 shares of common stock in connection with conversion of 110 shares of Series A preferred stock.

Subsequent to June 30, 2016 the Company obtained proceeds of $324,000 for various convertible notes agreements (“Debentures”) entered into with face value totaling $324,000, with interest rates at 7-8% per annum and maturing twelve months from the dates of issuance. The principal and interest of the Debentures are convertible into common shares of the Company at various conversion rates as outlined in each agreement.

The Company paid $21,000 in legal fees and other expenses in connection with these debentures.

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

The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes thereto included in Item 1 “Financial Statements” in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that involve risks and uncertainties. The Company’s actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section titled “Risk Factors” included elsewhere in this Quarterly Report on Form 10-Q.

Corporate Overview

We were incorporated in the State of Nevada on June 5, 2007. Effective June 15, 2011, we completed a merger with our subsidiary, Titan Iron Ore Corp., a Nevada corporation, which was incorporated solely to effect a change in our name to “Titan Iron Ore Corp.”

Also effective June 15, 2011, we effected a 37 to one forward stock split of our issued and outstanding common and preferred stock. As a result, our authorized capital increased from 100,000,000 shares of common stock with a par value of $0.0001 to 3,700,000,000 shares of common stock with a par value of $0.0001 of which 5,151,000 shares of common stock outstanding increased to 190,587,000 shares of common stock. Subsequently, on June 20, 2011, we issued 2,100,000 common shares pursuant to a private placement unit offering, increasing the number of shares of common stock outstanding to 192,687,000.

Effective June 30, 2011 and in connection with the entry into an agreement (the “Acquisition Agreement”) with J2 Mining Ventures Ltd. (“J2 Mining”) dated June 13, 2011 and attached as Exhibit 10.1 to our Current Report on Form 8-K filed June 16, 2011, we completed the acquisition of a 100% right, title and interest in and to a properties option agreement (the “Option Agreement”) from J2 Mining with respect to iron ore mineral properties located in Albany County, Wyoming, by way of entering an assignment of mineral property option agreement with J2 Mining and Wyomex LLC (the “Assignment Agreement”), whereby our company was assigned 100% of the right, title and interest in and to the Option Agreement from J2 Mining.

In connection with the closing of the Acquisition Agreement, Ohad David, Ruth Navon and Service Merchant Corp. (the “Vendors”), entered into an affiliate stock purchase agreement, whereby, among other things, the Vendors surrendered 142,950,000 common shares for cancellation.

As described above, on February 3, 2014 we completed a merger with iHookup pursuant to the Merger Agreement dated January 31, 2014. Pursuant to the Merger Agreement, we incorporated a new subsidiary called iHookup Operations Corp, a Delaware corporation, which merged with and into iHookup, causing the subsidiary’s separate existence to cease and iHookup to become a wholly-owned subsidiary of the Company. iHookup’s stockholders exchanged all of six thousand (6,000) shares of outstanding common stock for twenty five thousand (25,000) shares of the Company’s newly designated Series A Preferred Stock. Each share of common stock entitles its holder to one vote on each matter submitted to the stockholders. The holders of the Series A Preferred Stock are entitled to cast votes equal to nine (9) times the total number of shares of common stock which are issued and outstanding, voting together with the holders of common stock as a single class. Such Series A Preferred Stock shall also be convertible into the number of shares of common stock which equals nine (9) times the total number of shares of common stock which are issued and outstanding at the time of conversion until the closing of a Qualified Financing (i.e. the sale and issuance of our equity securities that results in gross proceeds in excess of $2,500,000). As a result of the transaction, the former iHookup stockholders received a controlling interest in the Company.

On April 29, 2014, FINRA approved a 20 for 1 reverse stock split whereby 937,459,274 shares of the Company’s common stock then issued and outstanding, were exchanged for 46,872,964 shares of the Company’s common stock.

On March 19, 2015, FINRA approved a 100 for 1 reverse stock split whereby 2,355,489,991, shares of the Company’s common stock then issued and outstanding, were exchanged for 23,554,923 shares of the Company’s common stock.

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

On October 26, 2015 the Company issued a press release announcing that FINRA had approved a change to our trading symbol for our common stock which is quoted on the OTC Pink marketplace. Effective October 27, 2015 our trading symbol was changed from “HKUP” to “FDBL”. This change was made in conjunction with the Company’s filing of a Certificate of Amendment on September 28, 2015 to its Articles of Incorporation changing the name of the Company from “iHookup Social, Inc.” to “Friendable, Inc.” The company had previously announced a re-branding our app from "iHookup Social" to "Friendable". As a result, the company desired to change its name to match the rebranding so as to be more recognizable and create less confusion.

Results of Operations

For the three months ended June 30, 2016 compared to 2015

Revenues

The Company had revenue of $7,189 and $47,573 during the three months ended June 30, 2016 and 2015, respectively. The decrease in revenue during the three months ended June 30, 2016 was due to lower subscription fees as the Company focuses on increasing the user base.

General and Administrative Expenses

General and administrative expenses were incurred in the amount of $270,391 and $250,005 for the three months ended June 30, 2016 and 2015, respectively. The increase in expenses as compared to the same period in the prior year was primarily due to higher health insurance and filing fees expense.

Product Development Expenses

Product development expenses were incurred in the amount of $64,113 and $24,147 during the three months ended June 30, 2016 and 2015, respectively. The increase was primarily due to Android development.

Interest Expense

Financing Expenses

During the three months ended June 30, 2016, financing costs decreased to $37,768 as compared to $61,625 at June 30, 2015. The decrease was due to fewer legal fees incurred in connection with convertible notes.

Sales and Marketing Expenses

Sales and marketing expenses were incurred in the amount of $557,098 and $87,937 during the three months ended June 30, 2016 and 2015, respectively. The increase was primarily due to advertising with the use of celebrities.

Net Loss

The Company had a net loss for the three months ended June 30, 2016 of $1,575,600 as compared to a net loss of $859,901 for the three months ended June 30, 2015. The increase in net loss income was due primarily to increased sales and marketing and accretion and interest expenses.

For the six months ended June 30, 2016 compared to 2015

Revenues

The Company had revenue of $18,580 and $85,258 during the six months ended June 30, 2016 and 2015, respectively. The decrease in revenue during the six-month period ended June 30, 2016 was primarily due to lower subscription fees as the Company focuses on increasing the user base.

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

General and Administrative Expenses

General and administrative expenses were incurred in the amount of $460,724 and $486,459 for the six months ended June 30, 2016 and 2015, respectively. The decrease in expenses as compared to the same period in the prior year was primarily due to fewer legal expenses incurred.

Product development expenses

Product development expenses were incurred in the amount of $159,234 and $44,695 during the six months ended June 30, 2016 and 2015, respectively. The increase was primarily due to Android development.

Financing Expenses

During the six months ended June 30, 2016, financing costs decreased to $75,458 as compared to $78,214 at June 30, 2015.

Sales and Marketing Expenses

Sales and marketing expenses were incurred in the amount of $772,601 and $149,034 during the six months ended June 30, 2016 and 2015, respectively. The increase was primarily due to advertising with the use of celebrities.

Net Loss

The comparable net loss for the six months ended June 30, 2016 was $2,862,328 as compared to the net loss of $1,517,075 for the six months ended June 30, 2015. This increased net loss was due primarily to increased sales and marketing and accretion and interest expenses.

Liquidity and Capital Resources

Working Capital

	June 30, 2016	December 31, 2015
	(unaudited)	(audited)
Current Assets	$458,807	$222,480
Current Liabilities	3,031,238	1,683,234
Working Capital (Deficiency)	$(2,572,431)	$(1,460,754)

Current assets for the quarter ended June 30, 2016 increased compared to December 31, 2015 primarily due to increased cash and debt issue costs.

Current liabilities for the quarter ended June 30, 2016 increased compared to December 31, 2015 primarily due to increased accounts payable and convertible notes.

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

Cash Flows

	Six months	Six months
	Ended	Ended
	June 30, 2016	June 30, 2015
Net Cash Provided by (Used in) Operating Activities	$(1,359,555)	$(529,495)
Net Cash Provided by (Used in) Investing Activities	-	$(35,000)
Net Cash Provided by (Used in) Financing Activities	1,457,271	567,488
Net Increase (Decrease) in Cash	$97,716	$2,993

Net Cash Provided by (Used in) Operating Activities

Our cash used in operating activities of $1,359,555 for the six-month period ended June 30, 2016 consisted primarily of interest on promissory note of $97,903, accretion expense of $1,073,925, shares issued for services of $77,034, decrease in accounts receivable of $2,430 and an increase in accounts payable of $251,481.

Net Cash Provided by (Used in) Investing Activities

We did not use cash in investing activities for the six-month period ended June 30, 2016.

Net Cash Provided by Financing Activities

Our cash provided by financing activities of $1,457,271 for the six-month period ended June 30, 2016 consisted primarily of net proceeds from convertible debentures.

The Company derives the majority of its financing by issuing convertible notes to investors. The investors have the right to convert the notes into common shares of the Company after the requisite Rule 144 waiting period. The notes generally call for the shares to be issued at a deep discount to the market price at the time of conversion.

Going Concern

At June 30, 2016, we had an accumulated deficit of $10,327,329 and incurred a net loss of $2,862,328 for the six-month period ended June 30, 2016. We expect to incur further losses in the development of our business, all of which casts substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to generate future profitable operations and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due.

We have generated minimal revenues and have incurred losses since inception. Accordingly, we will be dependent on future additional financing in order to finance operations and growth. We are considered an early stage company and has only focused on our current business in the iHookup application since December 3, 2013. Since we are an early stage company, there is no assurance that we will generate sufficient revenue to sustain our operations.

Off-Balance Sheet Arrangements

As of June 30, 2016, the Company had no off-balance sheet arrangements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We do not hold any derivative instruments and do not engage in any hedging activities.

ITEM 4. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

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

As required by paragraph (b) of Rules 13a-15 under the Securities Exchange Act of 1934, our management, with the participation of our principal executive officer and our principal financial officer, evaluated our company’s disclosure controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q. Based on this evaluation, our management concluded that as of the end of the period covered by this quarterly report on Form 10-Q, our disclosure controls and procedures were not effective.

Management’s Report on Internal Control over Financial Reporting

Our management, including our principal executive officer, principal financial officer and our Board of Directors, is responsible for establishing and maintaining a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Our management, with the participation of our principal executive officer and our principal financial officer, evaluated the effectiveness of our internal control over financial reporting as of June 30, 2016. Our management’s evaluation of our internal control over financial reporting was based on the framework in Internal Control—Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management concluded that our internal control over financial reporting was not effective as of June 30, 2016 due to the following material weaknesses which are indicative of many small companies with small staff: (i) inadequate segregation of duties and ineffective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines. To remediate such weaknesses, we believe we would need to implement the following changes: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out in (i) and (ii) are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may not be undertaken. Until we have the required funds, we do not anticipate implementing these remediation steps.

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

Our principal executive officer and our principal financial officer do not expect that our disclosure controls or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in allcontrol systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making canbe faulty, and that breakdowns can occur because of a simple error or mistake. Additional controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of anysystem of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the fiscal quarter ended June 30, 2016 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our Company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

ITEM 1A. RISK FACTORS.

We believe there are no changes that constitute material changes from the risk factors previously disclosed in our Annual Report on Form 10-K, filed with the SEC on April 14, 2016.

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

During the six months ended June 30, 2016, the Company issued 271,119,221 shares of common stock to various convertible note holders for full and partial conversion of the notes (Note 10). The shares were issued as follows; January 13, 2016: 4,658,385, January 14, 2016: 21,500,000, March 11, 2016: 25,000,000, April 19, 2016: 29,000,000, April 28, 2016: 20,000,000, May 2, 2016: 3,000,000, May 3, 2016: 28,917,560, May 6, 2016: 13,937,320, May 10, 2016: 20,000,000, May 23,2016: 30,000,000, June 3, 2016: 26,105,956, June 20, 2016: 39,000,000, and June 31, 2016: 10,000,000. During the six months ended June 30, 2016, the Company issued 18,785,714 shares of common stock to consultants in exchange for investor relations and advertising services. The shares were issued as follows; March 8, 2016: 17,000,000, and June 3, 2016: 1,785,714.

During the six months ended June 30, 2016, the Company issued 32,929,677 shares of common stock to various Series A preferred stockholders on conversion of 285 preferred shares. The shares were issued as follows; January 6, 2016: 6,222,235, April 21, 2016: 15,999,627, and April 28, 2016: 10,707,815.

During the six months ended June 30, 2016, the Company issued 26,993,902 shares of common stock to various warrant holders for exercise of the warrants. The shares were issued as follows; May 17, 2016: 12,493,902, May 26, 2016: 4,500,000, and June 16, 2016: 10,000,000.

The issuance of the above securities was exempt from registration pursuant to Section 4(2) of the Securities Act and Regulation D promulgated thereunder.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

There has been no default in the payment of principal, interest, sinking or purchase fund installment, or any other material default, with respect to any indebtedness of the Company.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

Subsequent to June 30, 2016 the Company issued 77,261,620 shares of common stock in connection with conversion of convertible notes in the amount of $38,631 and issued 17,483,667 shares of common stock in connection with conversion of 110 shares of Series A preferred stock.

The issuance of such securities was exempt from registration pursuant to Section 4(2) of the Securities Act and Regulation D promulgated thereunder.

ITEM 6. EXHIBITS

The exhibits listed on the Exhibit Index immediately preceding such exhibits, which is incorporated herein by reference, are filed or furnished as part of this Quarterly Report on Form 10-Q.

Exhibit Number	Description
(31)	Rule 13a-14(a)/15d-14(a) Certification
31.1*	Section 302 Certification under Sarbanes-Oxley Act of 2002 of the Chief Executive Officer
31.2*	Section 302 Certification under Sarbanes-Oxley Act of 2002 of the Chief Financial Officer
(32)	Section 1350 Certification
32.1+	Section 906 Certifications under Sarbanes-Oxley Act of 2002
(101)	XBRL
101.INS*	XBRL INSTANCE DOCUMENT
101.SCH*	XBRL TAXONOMY EXTENSION SCHEMA
101.CAL*	XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
101.DEF*	XBRL TAXONOMY EXTENSION DEFINITION LINKBASE
101.LAB*	XBRL TAXONOMY EXTENSION LABEL LINKBASE
101.PRE*	XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE

* Filed herewith.

+ In accordance with SEC Release 33-8238, Exhibits 32.1 is being furnished and not filed.

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.

	FRIENDABLE, INC.

Date: August 15, 2016	By:	/s/ Robert Rositano, Jr.
		Name: Robert Rositano, Jr.
		Title: CEO, Secretary, and Director (Principal Executive Officer)



Date: August 15, 2016	By:	/s/ Frank Garcia
		Name: Frank Garcia
		Title: Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

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