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: June 30, 2018

 

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: 333-220325

 

Yappa World Incorporated
(Exact name of registrant as specified in its charter)

 

Delaware		47-2998023
(State or other jurisdiction of Incorporation or organization)		(IRS Employer Identification No.)

 

4201 Via Marina, Unit D402

Marina Del Rey, CA 90292

(Address of principal executive offices and zip code)

 

(424) 288-9022
(Registrant’s telephone number, including area code)

 

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.

[X] 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).

[X] 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,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

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

 

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period of complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act [  ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

[  ] Yes [X] No

 

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

 

Class		Outstanding at August 20, 2018
Common stock, $0.0001 par value		14,408,506

 

 

 

Yappa World Incorporated

 

Form 10-Q

 

INDEX

 

		Page
Part I	Financial Information
Item 1	Financial Statements	3
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	10
Item 3	Quantitative and Qualitative Disclosures About Market Risk.	13
Item 4	Controls and Procedures.	14
Part II	Other Information
Item 1	Legal Proceedings.	15
Item 1A	Risk Factors	15
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds.	15
Item 3	Defaults Upon Senior Securities.	15
Item 4	Mine Safety Disclosures	15
Item 5	Other Information	15
Item6	Exhibits	16
Signatures		17

 

 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

YAPPA WORLD INCORPORATED

BALANCE SHEETS

(Unaudited)

 

		June 30, 2018				December 31, 2017
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	2,582			$	22,992
Total current assets			2,582				22,992
OTHER ASSETS:
Property & equipment, net			1,296				1,619
TOTAL ASSETS		$	3,878			$	24,611
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES:
Accounts Payable and Accrued Expenses		$	289,742			$	180,380
Notes payable			6,604				6,604
Loan from related parties			4,527				597
Total current liabilities			300,873				187,581
Total liabilities			300,873				187,581
Commitments and Contingencies			-				-
STOCKHOLDERS’ DEFICIT
Series A Preferred Stock, 3,000,000 shares authorized at $0.0001 per share
1,000,000 shares issued and outstanding			100				100
Preferred Stock, 17,000,000 shares authorized at $0.0001 per share: 0 shares issued and outstanding			-				-
Common stock, par value $0.0001 per share; 100,000,000 shares authorized; 14,349,737 and 13,848,881 shares issued and outstanding, respectively			1,434				1,384
Additional paid in capital			3,076,753				2,755,381
Accumulated deficit			(3,375,282	)			(2,919,835	)
Total stockholders’ deficit			(296,995	)			(162,970	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT		$	3,878			$	24,611

 

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

 

 

YAPPA WORLD INCORPORATED

STATEMENTS OF OPERATIONS

(Unaudited)

 

		For the three months ended								For the six months ended
		June 30,								June 30,
		2018				2017				2018				2017
Revenues		$	–			$	–			$	–			$	–
Operating expenses
Research & development			3,160				8,070				27,449				26,976
General and administrative			222,801				1,183,669				427,597				1,293,009
Total operating expense			225,961				1,191,740				455,046				1,319,986
Loss from operations			(225,961	)			(1,191,740	)			(455,046	)			(1,319,986	)
Other income (expense):
Interest expense			-				6,807				-				17,833
Foreign exchange (gain) loss			334				270				401				257
Total other income (expense)			(334	)			(7,064	)			(401	)			(18,090	)
Net loss		$	(226,295	)		$	(1,198,804	)		$	(455,447	)		$	(1,338,076	)
Net loss per common share – basic and diluted		$	(0.02	)		$	(0.10	)		$	(0.03	)		$	(0.11	)
Weighted average common shares outstanding – basic and diluted			14,285,704				12,606,097				14,108,544				12,047,325

 

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

 

 

YAPPA WORLD INCORPORATED

STATEMENTS OF CASH FLOWS

(Unaudited)

 

		For the six months ended June 30,
		2018				2017
OPERATING ACTIVITIES:
Net loss		$	(455,447	)		$	(1,338,076	)
Adjustments to reconcile net loss to net cash (used in) operating activities:
Depreciation			323				322
Shares issued for services			191,250				1,125,000
Amortization of deferred financing fees			-				13,595
Changes in net assets and liabilities -
Accrued interest			-				4,238
Accrued expense			109,362				-
Accounts payable - trade			-				(2,050	)
NET CASH USED IN OPERATING ACTIVITIES			(154,512	)			(196,971	)
FINANCING ACTIVITIES:
Proceeds from the issuance of common stock			130,172				194,008
Proceeds from Convertible notes			-				38,952
Proceeds from Related Party Debt			3,930				52
Payments on Related Party Debt			-				(26,935	)
Payment on loan payable			-				(2,544	)
NET CASH PROVIDED BY FINANCING ACTIVITIES			134,102				203,529
NET (DECREASE) INCREASE IN CASH			(20,410	)			6,558
CASH – BEGINNING OF PERIOD			22,992				2,459
CASH – END OF PERIOD		$	2,582			$	9,017

 

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

 

 

YAPPA WORLD INCORPORATED, INC.

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2018 (Unaudited) and December 31, 2017

 

Note 1 – Organization and basis of accounting

 

Yappa World Incorporated (the “Company”) is a Delaware corporation. The Company is a development-stage Company that offers audio and video commenting services for Internet websites. We offer multimedia commenting tools, as part of a comprehensive strategy designed to maximize a website’s content/audience participation. The Company was incorporated under the laws of the State of Delaware on January 21, 2015. On that date, the Company was authorized to issue 10,000,000 shares of common stock at $0.001 par value.

 

On August 14, 2015 the Company filed an Amended and Restated Certificate of Incorporation whereby it is authorized to issue 100,000,000 shares of common stock having a par value of $0.0001 per share and 20,000,000 shares of preferred stock, having a par value of $0.0001 per share.

 

The accompanying financial statements are prepared on the basis of accounting principles generally accepted in the United States of America (“GAAP”). The accompanying unaudited interim financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission set forth in Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Unaudited interim results are not necessarily indicative of the results for the full fiscal year. These financial statements should be read in conjunction with the financial statements of the Company for the fiscal year ended December 31, 2017 and notes thereto contained in the Company’s Annual Report on Form 10-K.

 

Note 2- Going Concern

 

The accompanying financial statements have been prepared assuming the continuation of the Company as a going concern. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and is dependent on debt and equity financing to fund its operations. Management of the Company is making efforts to raise additional funding until a registration statement relating to an equity funding facility is in effect. While management of the Company believes that it will be successful in its capital formation and planned operating activities, there can be no assurance that the Company will be able to raise additional equity capital or be successful in the development and commercialization of the products it develops or initiates collaboration agreements thereon. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

 

Note 3 – Summary of significant accounting policies

 

Cash and Cash Equivalents

 

For purposes of reporting within the statements of cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents.

 

 

Revenue Recognition

 

The Company recognizes revenue when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable.

 

Furniture and Fixtures

 

Furniture and fixtures are recorded at cost and depreciated using the straight-line method at rates determined to estimate the useful lives of the assets. The annual rates used in calculating depreciation is as follows:

 

Furniture 5 years straight-line

 

Estimates

 

The financial statements are prepared on the basis of accounting principles generally accepted in the United States of America. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of June 30, 2018 and December 31, 2017, and expenses for the six months ended June 30, 2018 and the year ended December 31, 2017. Actual results could differ from those estimates made by management.

 

Subsequent Events

 

The Company evaluated subsequent events through the date when financial statements are issued for disclosure consideration.

 

Adoption of Recent Accounting Pronouncements

 

Adoption of ASU 2014-09

 

Initial Adoption —On January 1, 2018, the Company adopted the new revenue recognition accounting standard issued by the Financial Accounting Standards Board (“FASB”) and codified in the FASB Accounting Standards Codification (“ASC”) as topic 606 (“ASC 606”). The revenue recognition standard in ASC 606 outlines a single comprehensive model for recognizing revenue as performance obligations, defined in a contract with a customer as goods or services transferred to the customer in exchange for consideration, are satisfied. The standard also requires expanded disclosures regarding the Company’s revenue recognition policies and significant judgments employed in the determination of revenue.

 

The Company applied the modified retrospective approach to all contracts when adopting ASC 606. The adoption of ASC 606 did not have a material impact on the results of operations for the three and six months ended June 30, 2018, and the Company does not expect it to have a material impact on its results of operations for the remainder of 2018 and on a prospective basis.

 

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

 

Recent Accounting Pronouncements

 

In February 2016, the FASB issued an accounting standard update for leases. The ASU introduces a lessee model that brings most leases on the balance sheet. The new standard also aligns many of the underlying principles of the new lessor model with those in the current accounting guidance as well as the FASB’s new revenue recognition standard. However, the ASU eliminates the use of bright-line tests in determining lease classification as required in the current guidance. The ASU also requires additional qualitative disclosures along with specific quantitative disclosures to better enable users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The new guidance must be adopted using the modified retrospective approach and will be effective for the Company in the fiscal year beginning January 1, 2020. Early adoption is permitted. The Company is still evaluating the impact that the new accounting guidance will have on its financial statements and related disclosures and has not yet determined the method by which it will adopt the standard.

 

 

In March 2016, the FASB issued an accounting standard update that provides a new requirement to record all of the tax effects related to share-based payments at settlement (or expiration) through the income statement. All of the guidance will be effective for the Company in the fiscal year beginning January 1, 2018. Early adoption is permitted. The Company is still evaluating the impact that the new accounting guidance will have on its financial statements and related disclosures

 

In August 2016, the FASB issued an accounting standard update addressing the classification and presentation of eight specific cash flow issues that currently result in diverse practices. The amendments provide guidance in the presentation and classification of certain cash receipts and cash payments in the statement of cash flows including debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, and distributions received from equity method investees. This pronouncement is effective for annual reporting periods beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019, for nonpublic entities. The amendments in this ASU should be applied using a retrospective approach. The Company is still evaluating the impact that the new accounting guidance will have on its financial statements and related disclosures.

 

Note 4 – Related parties transactions

 

As of June 30, 2018, and December 31, 2017, the Company had a loan payable of $337 to Kiaran Sim, Chief Operating Officer. This loan is unsecured, non-interest bearing, and has no specific terms for repayment.

 

As of June 30, 2018 and December 31, 2017, the Company had a loan payable of $2,993 and $0, respectively, to Jennifer Dyer, Chief Executive Officer. This loan is unsecured, non-interest bearing, and has no specific terms for repayment.

 

As of June 30, 2018, and December 31, 2017, the Company had a loan payable of $246 to Dylan Cohen, former Senior VP of Strategy and $950 to an individual. These loans are unsecured, non-interest bearing, and have no specific terms for repayment.

 

Jennifer Dyer (CEO, President and Director) is currently providing offices, internet access and phones to the Company at her residence complex at a monthly rent of $2,000. The term is month to month.

 

Note 5 – Notes payable

 

On January 15, 2016, the Company entered a Payment Rights Purchase and Sale Agreement with EBF Partners LLC (“EBF”). EBF purchased $30,800 of the merchant sales for $22,000. In exchange for the purchased amount, the Company agreed to enter into an ACH debit authorization allowing EBF to deduct daily payment amounts of $308 until EBF has received the purchase amount of $30,800. The loan is under personal guarantee by our Co-Founder and CEO, Jennifer Dyer. The Company has recorded debt discount of $8,800, and loan issuance cost of $660 for the loan origination fees paid at inception date. The total debt discount and loan issuance cost of $9,460 was amortized over the term of the loan. As of June 30, 2018 and December 31, 2017, $1,608 of this loan remains outstanding.

 

 

On February 11, 2016, the Company entered a Payment Rights Purchase and Sale Agreement with Good Loans, LLC (“Good Loans”). Good Loans purchased $14,200 of the merchant sales for $9,000. In exchange for the purchased amount, the Company agreed to enter into an ACH debit authorization allowing Good Loans to deduct daily payment amounts of $250 until Good Loans has received the purchase amount of $14,200. The loan is under personal guarantee by our Co-Founder and CEO, Jennifer Dyer and our Co-founder and Chief Operating Officer, Kiaran Sim. The Company has recorded debt discount of $4,200, and loan issuance cost of $300 for the loan origination fees paid at inception date. The total debt discount and loan issuance cost of $4,500 was amortized over the term of the loan. As of June 30, 2018, and December 31, 2017, $2,848 of this loan remains outstanding.

 

On February 18, 2016, the Company entered a Loan Agreement with Yellowstone Capital West, LLC (“Yellowstone”). Yellowstone loaned $11,920 and the company received a cash payment in the amount of $6,805. The Company agreed to enter into an ACH debit authorization allowing Yellowstone to deduct daily payment amounts of $146 until Yellowstone has received the purchase amount of $11,920. The loan is under personal guarantee by our Co-Founder and CEO, Jennifer Dyer. The Company has recorded debt discount of $3,920, and loan issuance cost of $1,195 for the loan origination fees paid at inception date. The total debt discount and loan issuance cost of $5,115 was amortized over the term of the loan. As of June 30, 2018, and December 31, 2017, $2,148 of this loan remains outstanding.

 

Note 6 – Stockholders’ Equity

 

Common Stock

 

The Company is authorized to issue 100,000,000 shares of $.0001 par value common stock.

 

During the six months ended June 30, 2018, the Company issued 202,779 shares of common stock with a par value of $0.001 at issuance prices of between $0.60 - $0.75 per share, for a total investment of $130,172 as detailed below.

 

Dates		$/Share				Shares				Amount
January-June		$	0.60				55,832			$	33,500
January		$	0.75				11,562				8,672
March-June		$	0.65				135,385				88,000
Total							202,779			$	130,172

 

During the six months ended June 30, 2018, the Company issued 298,077 shares of common stock with par value of $0.0001, for services valued at $191,250.

 

As of June 30, 2018, and December 31, 2017, a total of 14,349,737 and 13,848,881, respectively, of shares of common stock is issued and outstanding.

 

Preferred Stock

 

The Company is authorized to issue 20,000,000 shares of $.0001 par value preferred shares. On June 06, 2017 the Company created 3,000,000 shares of Series A Preferred Stock, out of the 20,000,000 shares that were already authorized. On that same date, the Company issued 600,000 shares of series A preferred stock with a par value of $0.0001 to Jennifer Dyer, President, Chief Executive Officer, and 400,000 shares of the Series A preferred stock to Kiaran Sim, Chief Operating Officer.

 

As of June 30, 2018, and December 31, 2017 a total of 1,000,000 shares of Series A Preferred Stock are issued and outstanding.

 

Note 7 – Subsequent Events

 

During the months of July and August of 2018, the Company issued 58,769 shares of common stock with a par value of $0.0001 at an issuance price of $0.65 per share, for a total investment of $38,200, as detailed below:

 

Dates		$/Share				Shares				Amount
July		$	0.65				58,769			$	38,200
Total							58,769			$	38,200

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

This discussion summarizes the significant factors affecting the operating results, financial condition, liquidity and cash flows of the Company for the six ended June 30, 2018. The discussion and analysis that follows should be read together with our financial statements and the notes to the financial statements included elsewhere in this Quarterly Report on Form 10-Q. Except for historical information, the matters discussed in this section are forward looking statements that involve risks and uncertainties and are based upon judgments concerning various factors that are beyond the Company’s control. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report.

 

Overview

 

We are a development stage company. We have not yet generated or realized any revenues from business operations. Over the next twelve months, the Company intends to focus on converting the initiatives and ideas described above into revenue. The strategy and timeline for each initiative may vary, but for each initiative, we will focus on:

 

1) Partners. We will attempt to leverage relationships to acquire new and strategic partners to utilize the potential of the Yappa tool and maximize growth potential and scalability.

 

2) Sales and Marketing. Our planned go-to-market strategy is two-pronged, focusing on creating rapid growth, while attempting to utilize minimal in-house resources. On board key websites, radio stations, and podcast platforms that have built large communities of commentators to install the Yappa tool. Management will attempt to build relationships with radio stations, bloggers, podcasts, website publishers and larger active forums.

 

4) General Administration. Our management is keeping our expenses extremely low to minimize the additional cash required to sustain the Company through the next twelve months. We will rely on our officers to provide all general administration.

 

We plan to use outside consultants and service companies from time to time for various tasks in the sales, development and manufacturing of our products and product launch and distribution, under provider contracts, to the extent that we are not able to perform the required functions. Using such outside vendors may make a particular task more expensive, but we believe that using such experts should improve the outcome or speed up the timing of product development and time to market. There is no assurance that we will be able to control the costs and deliveries of such activities in the same manner as if we were performing the tasks ourselves, and therefore we are subject to the usual risks of using outside providers.

 

Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an ongoing business for the next twelve months unless we obtain additional capital. Our revenues have been minimal to date, and we must raise cash from sources other than through our product offering. The Company currently has no arrangements in place for additional financing. Our success or failure will be initially determined by the availability of additional financing and, thereafter by our success in implementing our business plan.

 

 

If, in the discretion of our management, it appears that the prospect of implementing any component of our business plan is promising, we will attempt to raise additional money through a private placement, public offering or through loans. If we are unable to raise additional cash, we will either have to suspend activities until we do raise the cash, or cease activities entirely.

 

Results of Operations

 

Comparison of the three-month periods ended June 30, 2018 and 2017

 

Revenue

 

We did not generate any revenue for the three months ended June 30, 2018 nor any for the three months ended June 30, 2017.

 

General and Administrative Expense

 

General and administration expenses for the three months ended June 30, 2018, amounted to $222,801 compared to $1,183,669 during the three months ended June 30, 2017. The decrease is primarily attributable to due to the valuation of preferred stock issued to the CEO and COO during 2017.

 

Research and Development Expenses

 

Research and Development expense for the three months ended June 30, 2018, amounted to $3,160 compared with $8,070 for the three months ended June 30, 2017. This decrease is because of a reduction in funding during the three months ended June 30, 2018.

 

Exchange Loss

 

For the three months ended June 30, 2018 the Company incurred an exchange gain of $334, compared to $270 for the three months ended June 30, 2017. This exchange rate gain was incurred as a result of a common stock subscription received by an overseas investor.

 

Net Loss

 

For the three months ended June 30, 2018, we incurred a net loss of $226,295, compared to a net loss of $1,198,804 for the three months ended June 30, 2017. The decrease is primarily attributable to the valuation associated with the issuance of preferred stock to the Company CEO and COO during 2017.

 

For the six months ended June 30, 2018 compared to the six months ended June 30, 2017

 

Revenue

 

We did not generate any revenue for the six months ended June 30, 2018 nor any for the six months ended June 30, 2017 and we sustained net losses of $455,447 and $1,338,076, respectively, for those two quarterly periods. This decrease in net losses is primarily attributable to the valuation of preferred stock issued to the CEO and COO during 2017.

 

 

General and Administration Expense

 

General and Administration expense decreased to $427,597 for the six months ended June 30, 2018 as compared with $1,293,009 for the six months ended June 30, 2017. This decrease is due to the valuation of preferred stock issued to the CEO and COO during 2017.

 

Research and Development Expenses

 

Research and Development expense increased to $27,449 for the six months ended June 30, 2018 as compared with $26,976 for the six months ended June 30, 2017. This slight increase is attributable to the Company’s not having to allocate their cash resources toward professional fees to facilitate registering the Company on the Over the Counter exchange in 2018 as it did in 2017.

 

Interest Expense/Income

 

For the six months ended June 30, 2018 interest expense was $0 compared to $17,833 for the six months ended June 30, 2017. This decrease in interest expense occurred because of the absence of convertible notes held by the Company, which converted in April 2017.

 

Liquidity and Capital Resources

 

As of June 30, 2018, we have $2,582 in current assets and $300,873 in current liabilities. Our total assets were $3,878 and our total liabilities were $300,873. We had $2,582 in cash and our working capital deficit was $298,291.

 

Cash Flows:

 

		For the six months ended
		June 30,
		2018				2017
Cash Flows Used in Operating Activities		$	(154,512	)		$	(196,971	)
Cash Flows Provided by Financing Activities			134,102				203,529
Effects of Currency Translations			-				-
Net (decrease) increase in cash		$	(20,410	)		$	6,558

 

Cash flows provided by financing activities for the six months ended June 30, 2018 was $134,102 compared to $203,529 for the same period in 2017. The decrease is due to a decrease in funding during the six months ended June 30, 2018.

 

Net cash used in operations was $154,512 for the six months ended June 30, 2018 compared to $196,971 for the same period in 2017. This decrease was primarily attributable to a decrease in the Company’s cash resources as a result of decreased funding during the six-month period ending June 30, 2018.

 

We have substantial capital resource requirements and have incurred significant losses since inception. As of June 30, 2018, we had $2,582 in cash. Based upon our current business plans, we will need considerable cash investments to be successful. Such capital requirements are in excess of what we have in available cash and what we currently have commitment for. Therefore, we do not have enough available cash to meet our obligations over the next 12 months.

 

Currently the Company is unable to pay the salaries to Ms. Dyer and Mr. Sim (as set forth below) pursuant to their respective employment agreements. Ms. Dyer and Mr. Sim have agreed to defer salary until such time as they deem the Company is able to pay such sums, but such deferral is at their discretion and can make a demand for such payments at any time. We intend to fund these commitments through the development of our business, generating revenues and raising capital.

 

 

Our current cash requirements are significant due to planned development and marketing of our current product, and we anticipate generating losses. We anticipate that the minimum funding required to remain in business for at last least the next 12 months will be $300,000.

 

In order to execute on our plan of operations over the next 12 months, we will need to raise additional amounts of working capital through debt or equity offerings. There are no assurances that we will be able to raise the required working capital on terms favorable, or that such working capital will be available on any terms when needed. Any failure to secure additional financing may force us to modify or delay our business plan.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements.

 

Critical Accounting Policies and Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles of the United States (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 year. The more significant areas requiring the use of estimates include asset impairment, stock-based compensation, and future income tax amounts. Management bases its estimates on historical experience and on other assumptions considered to be reasonable under the circumstances. However, actual results may differ from the estimates.

 

We believe the following is among the most critical accounting policies that impact are financial statement. We suggest that our significant accounting policies, as described in our financial statements in the Summary of Significant Accounting Policies, be read in conjunction with this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

Revenue Recognition

 

Adoption of ASU 2014-09

 

Initial Adoption —On January 1, 2018, the Company adopted the new revenue recognition accounting standard issued by the Financial Accounting Standards Board (“FASB”) and codified in the FASB Accounting Standards Codification (“ASC”) as topic 606 (“ASC 606”). The revenue recognition standard in ASC 606 outlines a single comprehensive model for recognizing revenue as performance obligations, defined in a contract with a customer as goods or services transferred to the customer in exchange for consideration, are satisfied. The standard also requires expanded disclosures regarding the Company’s revenue recognition policies and significant judgments employed in the determination of revenue.

 

The Company applied the modified retrospective approach to all contracts when adopting ASC 606. the adoption of ASC 606 did not have a material impact on the results of operations for the three and six months ended June 30, 2018, and the Company does not expect it to have a material impact on its results of operations for the remainder of 2018 and on a prospective basis.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

Not applicable.

 

 

Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported, within the time period specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports filed under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer (our principal executive officer) and our Chief Financial Officer (our principal financial officer and principal accounting officer) to allow for timely decisions regarding required disclosure.

 

As of the six months ended June 30, 2018, we carried out an evaluation, under the supervision and with the participation of our principal executive officer and our principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were not effective as of the six months ended June 30, 2018 in ensuring that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s (the “SEC”) rules and forms. This conclusion is based on findings that constituted material weaknesses. 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 the Company’s interim financial statements will not be prevented or detected on a timely basis.

 

In performing the above-referenced assessment, our management identified the following material weaknesses:

 

	i)	We have insufficient quantity of dedicated resources and experienced personnel involved in reviewing and designing internal controls. As a result, a material misstatement of the interim and annual financial statements could occur and not be prevented or detected on a timely basis.
	ii)	We do not have an audit committee. While not being legally obligated to have an audit committee, it is the management’s view that to have an audit committee, comprised of independent board members, is an important entity-level control over our financial statements.
	iii)	We did not perform an entity level risk assessment to evaluate the implication of relevant risks on financial reporting, including the impact of potential fraud-related risks and the risks related to non-routine transactions, if any, on our internal control over financial reporting. Lack of an entity-level risk assessment constituted an internal control design deficiency which resulted in more than a remote likelihood that a material error would not have been prevented or detected, and constituted a material weakness.

 

Limitations on the Effectiveness of Controls

 

Our management, including our Chief Executive Officer, does not expect that our disclosure controls and internal controls 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 all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management or board override of the control.

 

The design of any system 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 Controls Over Financial Reporting

 

There were no changes in our internal controls over financial reporting that occurred during the six months ended June 30, 2018 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.

 

None.

 

Item 1A. Risk Factors.

 

As a smaller reporting company we are not required to provide the information required by this item.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

During the three months ended June 30, 2018, the Company issued 125,000 shares of common stock with a par value of $0.0001 at an issuance price $0.65 per share, for services valued at $81,250.   

 

Item 3. Defaults Upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures.

 

None.

 

Item 5. Other Information.

 

None.

 

 

Item 6. Exhibits.

 

Exhibit No.		Description
3.1		Certificate of Incorporation.*
3.2		Amended and Restated Certificate of Incorporation Yappa World Incorporated.*
3.3		Certificate of Designation of Rights and Preferences for Series A Convertible Preferred Stock.*
3.4		Certificate of Amendment of Certificate of Incorporation.*
3.5		Bylaws Yappa World Incorporated.*
10.1		Employment Agreement Dated January 1, 2017 between Yappa World Incorporated and Jennifer Dyer.*
10.2		Agreement Dated January 1, 2017 between Yappa World Incorporated and Kiaran Sim.*
10.3		Agreement Dated July 20, 2017 between Yappa World Incorporated and Mario Beckles.*
10.4		Form of subscription agreement.*
31.1**		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act.
31.2**		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act.
32.1 **		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS **		XBRL Instance Document.
101.SCH **		XBRL Taxonomy Extension Schema Documents.
101.CAL **		XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF **		XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB **		XBRL Taxonomy Extension Label Linkbase Document.
101.PRE **		XBRL Taxonomy Extension Presentation Linkbase Document.

 

* Previously filed.

** Filed herewith.

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	Yappa World Incorporated
	(Registrant)
Dated: August 20, 2018	By:	/s/ Jennifer Dyer
		Jennifer Dyer
		President, Chief Executive Officer
		(Principal Executive Officer)

 

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.

 

	Yappa World Incorporated
Dated: August 20, 2018	By:	/s/ Jennifer Dyer
		Jennifer Dyer
		President, Chief Executive Officer, and Director (Principal Executive Officer)
Dated: August 20, 2018	By:	/s/ Kiaran Sim
		Kiaran Sim
		Chief Operating Officer and Director (Principal Financial Officer)
Dated: August 20, 2018	By:	/s/ Mario Beckles
		Mario Beckles
		Chief Financial Officer (Principal Accounting Officer)