ITEM 1. BUSINESS.
Writ Media Group, Inc. (“we”, “us”, “our”, “WRIT”, or the “Company”) was incorporated in Delaware on March 9, 2007 to produce films, television programs and similar entertainment programs for various media formats.
Front Row Networks (“FRN”) was incorporated on July 27, 2010 in the State of Nevada. The Company is a content creation company which was launched to produce, acquire, license, and distribute music-related content in 3D and ultra-high definition (4K) for initial worldwide digital broadcast into digitally-enabled movie theaters. Through the distribution of music-related “alternative content,” the Company intends to present live concerts, music documentaries, and other music-related content at affordable prices, to a massive fan base worldwide in a cost-effective manner. The Company intends to shift its focus from 3D to developing ultra-high definition (4K) content for distribution in the Americas and Asia. In some cases, Front Row Networks will also sell merchandising and other products, bolstered by both in-theater and in-App advertising, tailored around each Artist and/or event, to maximize potential merchandising and sponsorship revenues.
In February 2011, FRN completed a reverse acquisition transaction through a share exchange with WRIT, whereby WRIT acquired 100% of the issued and outstanding capital stock of FRN in exchange for 100,000 shares of the Common Stock of WRIT. As a result of the reverse acquisition, FRN became WRIT’s wholly-owned subsidiary and the former FRN’s shareholders became controlling stockholders of WRIT. The share exchange transaction with WRIT was treated as a reverse acquisition, with FRN as the accounting acquirer and WRIT as the acquired party.
Consequently, the assets and liabilities and the historical operations were reflected in the consolidated financial statements for periods prior to the Share Exchange Agreement were those of FRN and will be recorded at the historical cost basis. After the completion of the Share Exchange Agreement, the Company’s consolidated financial statements included the assets and liabilities of both FRN and WRIT, the historical operations of FRN and the operations of WRIT from the closing date of the Share Exchange Agreement.
On July 7, 2011, we modified our February 2011 Share Exchange Agreement and agreed to assume $100,000 in new debt which is shown as a reduction of our Paid-In Capital.
While the core business of Front Row Networks remains the licensing, production, acquisition and distribution of music-related content and programming, the core business is dependent upon negotiating and financing projects with schedules that are solely determined by third parties, such as Artists and rights owners. In order to secure less cyclical entertainment product, the Company sought to license or purchase entertainment content that could be easily secured and distributed through the multiple distribution arrangements already established by the Company and via the rapidly growing marketplace represented by consumers of mobile, internet, and TV set-top devices. To reach this goal during the fiscal year, the Company set out to acquire exclusive branded content and entertainment programming, and achieved this goal through the acquisition of Amiga Games Inc.
On August 19, 2013, the Company completed an acquisition transaction through a share exchange with Amiga Games Inc., whereby WRIT acquired 100% of the issued and outstanding capital stock, assets, and trademarks of Amiga Games Inc. in exchange for 500,000 shares of the Common Stock of WRIT. As a result of the acquisition, Amiga Games Inc. became WRIT’s wholly-owned subsidiary.
Amiga Games Inc. licenses classic pre-Windows computer game libraries and adapts and republishes the most popular titles for smartphones, modern game consoles, PCs, tablets, and other television streaming devices. WRIT also established a new company, Retro Infinity Inc., to publish and brand games that were not originally released for Amiga brand computers. The two companies tap into the growing “retro gaming” marketplace, building on the "Amiga", “Atari”, and “MS-DOS” brands, delivering retro-gaming titles adapted for modern devices as well as merchandise featuring brands and characters from the games.
During the 2014 fiscal year, Amiga Games Inc. and Retro Infinity Inc. entered several marketing and distribution agreements, including those with Microsoft Corporation and Roku Inc. Both agreements include minimum guarantees, defined as advances against future sales. Additionally, the Retro Infinity Inc. licensed dozens of classic games for distribution via the Windows 8, Roku player, iOS (Apple), and Android platforms. Although it was the Company’s strategic goal to distribute a broad range of video game titles on the Windows 8 and iOS platforms in the 4th quarter of 2014, lack of operating capital caused the Company to temporarily halt software development funding, which delayed the Company’s overall gaming product release schedule. This temporary reduction in operating capital was due to mainly to regulatory delays encountered in structuring WRIT’s equity-line financing, and the Company’s difficulty in raising alternative investment capital, due to its sub-penny share price at the time.
On January 22, 2014, the Company changed the name of the corporation to WRIT Media Group, Inc., and authorized a 1 for 1,000 reverse split of the Company’s issued and outstanding shares of Common Stock. The name change was authorized to encompass the Company's broadened activities, including additional business plans and models, and the acquisition and formation of new subsidiaries. The equity restructuring was authorized to achieve the following: (a) price per share -- the rollback will increase the price per share to above $0.01, sub-penny markets are getting harder to trade and next to impossible to finance; (b) funding -- with a sub penny share price the Company was unable to fund because of dilution, post rollback the share price should be well above $0.01 and allow management to close on numerous funding opportunities that have been presented; (c) larger potential audience -- with a higher share price the Company will have access to investors who do not trade sub penny stocks such as institutions and Europeans; (d) listing in Europe -- the Company will now be able to list its common shares for trading on a European Stock Exchange, as co-listings in Europe are not accepted with a sub penny share price; and (e) acquisitions -- the Company will be able to use common shares to acquire larger assets and other industry related companies.
On January 16, 2014 the Company’s Equity Line Financing (“ELF”) agreement with Dutchess Opportunity Fund II, and its corresponding S1 registration statement, was declared effective by the SEC. The ELF agreement, executed in September 2013, allows but does not require WRIT to sell up to US$10,000,000 of common stock to Dutchess at a 5% discount to market price, during the 36 month term. Compared to the Company’s convertible debt financing, ELFs provide a lower discount to market that minimize dilution while increasing operating capital. This additional financing source allowed the company to reduce debt and reduce the balance of the more expensive convertible notes that were outstanding during the last quarter of the fiscal year. On January 17, 2017 the term of the Company’s ELF agreement with Dutchess Opportunity Fund II expired. As of March 31, 2017, 271,670 common shares were sold through the ELF agreement, generating a net amount to the company of $42,804.
On February 4, 2014 the Company completed its administrative and legal work with the Depository Trust & Clearing Corporation ("DTCC") and the DTCC's long-standing "Administrative Chill" on clearing WRIT stock certificates was removed. DTCC resumed accepting deposits of the Company's common stock for book entry transfer services. As a result, shareholders with online brokerage accounts at firms such as Scottrade, ETRADE, TD Ameritrade and other full service brokerage firms are allowed to deposit new shares of WRIT's common stock in the electronic system that controls clearance and settlement. The reinstatement of the DTC depository services is an instrumental and enormous accomplishment for WRIT, which greatly reduced the costs and expenses associated with private equity investments in the Company.
In September 2014 the Company launched two online point of sale platforms; www.RetroInfinity.com and www.AmigaGamesInc.com to market its “retro” gaming titles directly to consumers. Both sales platforms initially offer only downloads for windows based computers. The online store launch was completed in conjunction with an initial marketing program which featured NASCAR, the RWR Retro Infinity NASCAR race team, and the “Drive to Championship Weekend” branding program. In December 2014 the Company intended to launch additional titles on additional mobile platforms, such as Windows phone, iOS, and Android platforms, so that the video game titles can be downloaded as Apps on various mobile devices, the Company experienced additional financing delays which interrupted software development and caused the Company to reschedule the anticipated release on mobile platforms into 2015. The online store launch generated an increase in consumer traffic to the Company’s websites and created awareness in the Company’s product, but generated minimal sales, most consumers were interested only in the mobile versions of the gaming titles, which were not yet available and still in development.
The websites are currently being modified to accept payment for crowdfunding transactions, and we launched the Retro Infinity/Amiga Games crowdfunding platform, supported by a social marketing campaign, in the 3rd quarter of 2015. The initial crowdfunding campaign was not successful, so the Company is seeking additional financing from strategic partners that will allow the Company to resume and complete software development, and commence product marketing activities, or is seeking to divest the assets to a strategic partner.
On June 25, 2015, the Company authorized a 1 for 200 reverse split of the Company’s issued and outstanding shares of Common Stock. The equity restructuring was authorized to achieve the following: (a) price per share -- the rollback will increase the price per share to above $0.01, sub-penny markets are getting harder to trade and next to impossible to finance; (b) funding -- with a sub penny share price the Company was unable to fund because of dilution, post rollback the share price should be well above $0.01 and allow management to close on numerous funding opportunities that have been presented; (c) larger potential audience -- with a higher share price the Company will have access to investors who do not trade sub penny stocks such as institutions and Europeans; (d) listing in Europe -- the Company will now be able to list its common shares for trading on a European Stock Exchange, as co-listings in Europe are not accepted with a sub penny share price; and (e) acquisitions -- the Company will be able to use common shares to acquire larger assets and other industry related companies.
On June 20, 2016, the Company issued 14,000,000 common shares to acquire 100% ownership interest in Pandora Venture Capital Corp. The transaction was accounted for as an asset acquisition. Pandora has developed business solutions for digital currency, blockchain technology, and digital currency trading. The assets include Pelecoin, a digital currency is a product which utilizes unique “value event” emission protocol and can be utilized with trade exchanges, loyalty rewards and a payment support platform, CrypFXPro, an online platform which allows investors to trade digital currencies similar to a stock exchange, and Pelecoin’s enterprise blockchain platform that enables institutions to design, deploy, and operate financial networks that can power assets in various markets. The 14,000,000 shares were valued using the $0.34 per share closing price on the acquisition date for total purchase price consideration of $4,760,000.
We believe WRIT is well positioned to benefit from the developing market and growth in digital currency trading platforms and products, and block chain technology applications, and intend to continue to look for opportunities to explore business relationships with entities that have the resources to offer financing, licensing, distribution and marketing of WRIT’s product.
ITEM 1A.
ITEM 1A. RISK FACTORS.
1. Our auditor has expressed substantial doubt regarding our ability to continue as a going concern.
We continue to incur losses in our operations. While we expect to generate revenues within the next fiscal year, there is no assurance that we will be successful.
2. The creation of content for the entertainment and gaming industries is highly competitive and we will be competing with companies with much greater resources than we have.
The business in which we engage is significantly competitive. Each of our primary business operations is subject to competition from companies which, in some instances, have greater development, production, and distribution and capital resources than us. We compete for relationships with a limited supply of facilities and talented creative personnel to produce our films. We will compete with major entertainment companies, such as Sony, Warner Brothers, Disney, AEG, Live Nation, Electronic Arts, Ubisoft, Zynga and others for content. We also anticipate that we will compete with a large number of United States-based and international distributors and sub-distributors of alternative content including divisions of Sony/MGM, Cinedigm Digital Cinema Corp., NCM Fathom, and Screenvision in the production of music-related and event content that may be expected to appeal to national and international audiences. Additionally, our video games will compete with thousands of other “Apps” which are available in the App stores of Apple, Samsung, Microsoft and other mobile stores. More generally, we anticipate we will compete with various other leisure-time activities, such as home videos, movie theaters, personal computers and other alternative sources of entertainment.
The production and distribution of music-content and mobile Apps are significantly competitive businesses, as they compete with each other, in addition to other forms of entertainment and leisure activities. There will be a proliferation of free TV broadcasters, cable and emerging HD cable channels, and mobile streaming providers looking to acquire content, which may not include music-related content or video games.
There is also active competition among all companies in the entertainment and related industries for services of software developers, producers, directors, musicians and other Artists, and for the acquisition of entertainment properties. The increased number of entertainment offerings in the United States and abroad has resulted in increased competition for audience attention and may have an effect on the Company’s ability to acquire and produce product. Revenues for any entertainment products depend in part on general economic conditions, but the competitive situation of an entertainment product offering is still greatly affected by the quality of, and public response to, the entertainment product that the artist makes available to the marketplace.
There is strong competition throughout the converging mobile device and television industries, from cable providers, handset and tablet manufactures, major motion picture studios, video game publishers, and other independent technology companies, as well as from new entertainment content and viewing opportunities that have not yet reached the market.
3. Audience acceptance of our content will determine our success, and the prediction of such acceptance is inherently risky.
We believe that our live concert theatrical success will be dependent upon general public acceptance, marketing, advertising and the quality of the production. The Company's production will compete with numerous independent and foreign productions, in addition to productions produced and distributed by a number of major domestic companies, many of which are divisions of conglomerate corporations with assets and resources substantially greater than that of ours. Our management believes that in recent years with the current promotion of 3D and 4K movies and equipment, and with the rapid growth rate in available mobile apps, that there has been an increase in competition in virtually all facets of our business. The growth of mobile content, pay-per-view television, and home video streaming products may have an effect upon theater attendance and non-theatrical motion picture distribution. As we may distribute productions to all of these markets, it is not possible to determine how our business will be affected by the developments, and accordingly, the resultant impact on our financial statements. Moreover, audience acceptance can be affected by any number of things over which we cannot exercise control, such as a shift in leisure time activities or audience acceptance of a particular style of music or artist.
4. The competition for distribution channels may have an adverse effect on revenues.
In the distribution of motion pictures and video games, there is very active competition to obtain distribution channels such as theaters, television networks, and other distribution channels throughout the world. A number of major global conglomerates have acquired motion picture theaters, television networks, and content streaming services. Such acquisitions may have an adverse effect on our distribution endeavors and our ability to book certain distribution outlets which, due to their prestige, size and quality of facilities, are deemed to be especially desirable for content distribution.
5. The competition for securing premier placement of mobile apps may have an adverse effect on video gaming revenues.
In the distribution of mobile apps, including the Company’s video games, there is very active competition to obtain premiere placement and advertising dollars from mobile manufacturers and service providers throughout the world. A number of major software publishers have acquired such relationships and opportunities with the major carriers and handset manufacturers. Such agreements may have an adverse effect on our sales, marketing and distribution endeavors, and our ability to obtain premier App store placement, due to the prestige, size and quality of the established companies’ product lines.
6. We have limited financial resources and there are risks we may be unable to acquire financing when needed.
To achieve and maintain competitiveness, we may be required to raise substantial funds. Our forecast for the period for which our financial resources will be adequate to support our operations involves risks and uncertainties and actual results could fail as a result of a number of factors. We anticipate that we may need to raise additional capital to develop, promote and distribute our product and to acquire property rights of the artists or publishers. Such additional capital may be raised through public or private financing as well as borrowings and other sources. Public or private offerings may dilute the ownership interests of our stockholders. Additional funding may not be available under favorable terms, if at all. If adequate funds are not available, we may be required to limit our operations significantly or to obtain funds through entering into arrangements with collaborative partners or others that may require us to relinquish rights to certain products and services that we would not otherwise relinquish and thereby reduce revenues to the company.
7. We are at the risk of mobile telephone and internet competition which may develop and the effects of which we cannot predict.
The mobile phone application and internet market is new, rapidly evolving and intensely competitive. We believe that the principal competitive factors in maintaining a mobile telephone application and an internet business are selection, convenience of download and other features, price, speed and accessibility, customer service, quality of image and site content, and reliability and speed of fulfillment. Although we intend to be able to compete in this market, when new technology is further developed, many potential competitors have longer operating histories, more customers, greater brand recognition, and significantly greater financial, marketing and other resources. In addition, larger, well-established and well-financed entities may acquire, invest in, or form joint ventures as the Internet, and e-commerce in general, continue to become more widely accepted.
In addition, we will face competition on any sale of merchandise that is tailored to an artist, video game publisher, or sponsor. Many of our existing competitors, in addition to a number of potential new competitors, have significantly greater financial, technical and marketing resources than we do.
8. We are at risk of technological changes to which we may be unable to adapt as swiftly as our competition.
We believe that our future success will be partially affected by continued growth in the use of digital, 3D, and ultra-HD (4K) broadcasting. The production, acquisition and distribution of music-related content to movie theaters and by home video retailers, free TV broadcasters, cable, 3D and ultra-HD cable channels, and mobile streaming providers are still relatively new, and predicting the extent of further growth, if any, is difficult. The market for this content is characterized by rapid technological developments, evolving industry standards and customer demands, and frequent new product introductions and enhancements. Our failure to adapt to any technological developments effectively could adversely affect our business, operating results, and financial condition.
9. The distribution of entertainment content and related materials is at a high risk for piracy which may affect our earnings.
The entertainment content distribution industry, including us, may continue to lose an indeterminate amount of revenue as a result of piracy due to unauthorized copying of our product at post production houses, copies of prints in circulation to theaters, unauthorized videotaping at theaters and other illegal means of acquiring our copyrighted material.
10. Holding, trading, or engaging in transactions in digital currency is highly speculative and uncertain in nature, which may have an adverse effect on revenues.
The market for digital currency is still new and uncertain, and investors trading in digital currency, or that have funds invested in digital currency, may lose their entire investment. Whether the market for one or more digital currencies will move up or down, or whether a particular digital currency will lose all or substantially all of its value, is unknown. Such consumer risk may have an adverse effect on our sales, marketing and distribution endeavors, and our ability to establish trading revenues.
11. Markets for digital currency have varying degrees of liquidity.
Thin markets can amplify volatility and reduce the probability that there will be an active market for one to sell, buy, or trade digital currency or products derived from or ancillary to them. In addition to liquidity risks, values in any digital currency marketplace are volatile and can shift quickly. Participants in any digital currency market are warned that they should pay close attention to their position and holdings, and how they may be impacted by sudden and adverse shifts in trading and other market activities. Our failure to create liquidity or adapt to any technological developments effectively could adversely affect our business, operating results, and financial condition.
12. The legal status of certain digital currencies may be uncertain.
The legality of holding or trading digital currencies is not always clear. Whether and how one or more digital currencies constitute property, or assets, or rights of any kind may also seem unclear. Participants are responsible for knowing and understanding how digital currencies will be addressed, regulated, and taxed under applicable law. Such legal risk may have an adverse effect on our sales, marketing and distribution endeavors, and our ability to establish trading revenues.
13. Accepting digital currencies on deposit or with any third party in a custodial relationship has attendant security risks.
Loss or theft of digital currency can occur through a security breach, user error, or a technological failure at a virtual currency wallet or exchange. Risks include security breaches, risk of contractual breach, and risk of loss. Virtual currency can be spent by anyone in possession of the associated ownership credentials. Transactions in most currencies are not reversible, even if the result of fraud or unauthorized use. In the event that a payment is misdirected, an incorrect amount is transferred, or a transaction is not completed in a timely manner due to an error by a virtual currency wallet, exchange, or processor, in most currencies the transaction is not reversible, the error is not correctible, and the consumer has no recourse against the wallet, exchange, or processor. Our failure to create secure transaction processing, or adapt to new security features or developments, could adversely affect our business, operating results, and financial condition.
14. Disclosure and financing risks associated with digital currency trading activities.
Wallets and exchange operators have no obligation to provide disclosures to consumers related to service fees or charges associated with virtual currency transactions, the volatility and unregulated nature of the virtual currency ecosystem, or any of the other risks associated with such transaction. Financing a purchase or sale of digital currencies on a peer-to-peer basis creates the risk of losing your provided financing. Similarly, when accepting financing to enter a trading agreement, you accept the risk of not being able to repay that financing (e.g., if the market price of the digital currency you purchased with the financing falls). The Company must know all of the terms of any contracts entered into and how their trading strategies and other market risk factors can affect its financing obligations. Our failure to create a transparent transaction processing systems, trading risk management systems, or adapt to new security features or developments, could adversely affect our business, operating results, and financial condition.
ITEM 1B.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
We have no unresolved comments from the Securities and Exchange Commission.
ITEM 2.
ITEM 2. PROPERTIES.
We utilize an executive office at 8200 Wilshire Boulevard, Suite 200, Beverly Hills, California 90211. This space is located near the major production studios in Los Angeles County. Our rent consists of 200 square feet at $199.00 per month pursuant to a lease for one year.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS.
On July 21, 2016, Magna Equities II, LLC and Hanover Holdings I, LLC (collectively as “Magna”) filed a Summons with Notice of Appearance against the Company, and its former and current transfer agents (collectively as the “Parties”), in the Supreme Court of the State of New York, County of New York. The litigation is in its preliminary stages, the Company has not yet been served, and discovery has not yet commenced. Magna’s allegations against the Parties, which are briefly outlined in the summons, are to recover monetary damages related to Magna’s loan to the Company which has a principal balance equal to $85,750. Magna alleges breach of contract, breach of implied covenant of good faith and fair dealing, conversion and negligence against the Parties and seeks relief in excess of $1,500,000. Although the company has reason to believe that it will prevail on the merits of a summary judgment, the litigation could have a lengthy duration, and the ultimate outcome cannot be predicted at this time.
On July 27, 2016, Mr. George Sharp filed suit against the Company in the Superior Court of California, County of San Diego. Sharp had previously filed a similar lawsuit in 2011 which was dismissed on February 16, 2012, and included a settlement agreement signed by Sharp which was filed with the Superior Court of California, County of Los Angeles (Case Number: BC461550) Sharp alleges misrepresentation and violation of the Unfair Business Practices Act, and seeks unspecified damages. On February 28, 2017, the Company’s offer to compromise was accepted by Mr. Sharp and the litigation was settled in the amount of $20,000, of which $10,000 will be paid by the Company, and $10,000 will be paid by Eric Mitchell, CEO of the Company. Additionally, the Company needs to indemnify officers for any loss in lawsuits, therefore, the Company assumed $20,000 liability. As of March 31, 2017, $2,500 have been paid and the settlement obligation of $17,500 is recorded on book as liability.
On August 17, 2016, KBM Worldwide Inc. (“KBM”) filed a Summons in a Civil Action against the Company in the United States District Court for the Eastern District of New York. The litigation is in its preliminary stages, the Company has filed an answer to the complaint and a first counterclaim against the plaintiffs on November 1, 2016. KBM’s allegations which are briefly outlined in the summons, are to recover monetary damages related to KBM’s loans to the Company which have a principal balance equal to $142,765. KBM seeks equitable and injunctive relief against the Parties in excess of $142,765. Although the company has reason to believe that it will prevail on the merits of its case against the plaintiff, the litigation could have a lengthy duration, and the ultimate outcome cannot be predicted at this time.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
(a) Market Price.
The Company's common stock is publicly traded in the over-the-counter market in the OTC Markets Group Inc. System under the ticker symbol WRIT. The following table sets forth the reported high and low prices of our common stock for each quarter during the fiscal year ended March 31, 2017 and 2016. The prices reflect inter-dealer prices without mark-ups mark-downs, or commissions, and may not necessarily reflect actual transactions.
Fiscal Year Ended March 31, 2017
Fiscal Year Ended March 31, 2016
The Securities and Exchange Commission adopted Rule 15g-9, which established the definition of a "penny stock" for purposes relevant to the Company, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (i) that a broker or dealer approve a person's account for transactions in penny stocks; and (ii) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person's account for transactions in penny stocks, the broker or dealer must (i) obtain financial information and investment experience and objectives of the person; and (ii) make a reasonable determination that the transactions in penny stocks are suitable for that person and that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the Commission relating to the penny stock market, which, in highlight form, (i) sets forth the basis on which the broker or dealer made the suitability determination; and (ii) that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Disclosure also has to be made about the risks of investing in penny stock in both public offering and in secondary trading, and about commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
(b) Holders.
There are 6,193 holders of record of the Company's Common Stock, of which 121 are active holders.
Currently, a certain number of our issued and outstanding shares of Common Stock held by non-affiliates are eligible for sale under Rule 144 promulgated under the Securities Act of 1933, as amended, subject to certain limitations included in said Rule. In general, under Rule 144, a person (or persons whose shares are aggregated), who has satisfied a six month holding period, under certain circumstances, has unlimited public resale under said Rule if the seller complies with said Rule
In summary, Rule 144 applies to affiliates (that is, control persons) and non-affiliates when they resell restricted securities (those purchased from the issuer or an affiliate of the issuer in nonpublic transactions) issued by a shell company. Non-affiliates reselling restricted securities, as well as affiliates selling restricted or non-restricted securities, are not considered to be engaged in a distribution and, therefore, are not deemed to be underwriters as defined in Section 2(11) if the seller complies with said Rule.
(c) Dividends.
We have declared no stock or cash dividends and we do not intend to declare or pay any dividends in the future.
(d) Application of California law.
Section 2115 of the California General Corporation law provides that a corporation incorporated under the laws of a jurisdiction other than California, but which has more than one-half of its "outstanding voting securities" and which has a majority of its property, payroll and sales in California, based on the factors used in determining its income allocable to California on its franchise tax returns, may be required to provide cumulative voting until such time as the Company has its shares listed on certain national securities exchanges, or designated as a national market security on NASDAQ (subject to certain limitations). Accordingly, holders of our Common Stock may be entitled to one vote for each share of Common Stock held and may have cumulative voting rights in the election of directors. This means that holders are entitled to one vote for each share of Common Stock held, multiplied by the number of directors to be elected, and the holder may cast all such votes for a single director, or may distribute them among any number of all of the directors to be elected.
(e) Purchases of Equity Securities.
We (and affiliated purchasers) have made no purchases or repurchases of any securities of the Company or any other issuer.
(f) Securities Authorized for Issuance under an Equity Compensation Plan.
We have not authorized the issuance of any of our securities in connection with any form of equity compensation plan.
(g) Recent Sale of Unregistered Securities
During the year ended March 31, 2017, the Company issued 2,849,466 shares for cash totaling $140,918 and issued 710,000 shares of common stock to employees and third party consultants as compensation, with the fair value of the shares determined to be $74,105. The sale and issuance of the shares was exempt from registration under the Securities Act of 1933, as amended, by virtue of section 4(2) as a transaction not involving a public offering. Each shareholder had acquired the shares for investment and not with a view to distribution to the public. All of these shares had been issued for investment purposes in a "private transaction" and were "restricted" shares as defined in Rule 144 under the Securities Act of 1933, as amended.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA.
Not applicable to smaller reporting companies.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION and RESULTS OF OPERATIONS.
Special Note Regarding Forward Looking Statements
In addition to historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We use words such as “believe,” “expect,” “anticipate,” “project,” “target,” “plan,” “optimistic,” “intend,” “aim,” “will” or similar expressions which are intended to identify forward-looking statements. Such statements include, among others, those concerning market and industry segment growth and demand and acceptance of new and existing products; any projections of sales, earnings, revenue, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements regarding future economic conditions or performance; as well as all assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those identified in Item 1A “Risk Factors” in our annual report on Form 10-K for fiscal year ended March 31, 2017, as well as assumptions, which, if they were to ever materialize or prove incorrect, could cause the results of the Company to differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements made by penny stock issuers are excluded from the safe harbors in Section 27A of the Securities Act of 1933 and in Section 21E of the Securities Exchange Act of 1934.
Readers are urged to carefully review and consider the various disclosures made by us in this report and our other filings with the Security and Exchange Commission (“SEC”). These reports attempt to advise interested parties of the risks and factors that may affect our business, financial condition and results of operations and prospects. The forward-looking statements made in this report speak only as of the date hereof and we disclaim any obligation, except as required by law, to provide updates, revisions or amendments to any forward-looking statements to reflect changes in our expectations or future events.
Overview
WRIT Media Group, Inc. (“we”, “us”, “our”, “WRIT”, or the “Company”) was incorporated as Writers’ Group Film Corp. in Delaware on March 9, 2007 to produce films, television programs and similar entertainment programs for various media formats.
Front Row Networks (“FRN”) was incorporated on July 27, 2010 in the State of Nevada. The Company is a content creation company which was launched to produce, acquire, license, and distribute music-related content in 3D and ultra-high definition (4K) for initial worldwide digital broadcast into digitally-enabled movie theaters. Through the distribution of music-related “alternative content,” the Company intends to present live concerts, music documentaries, and other music-related content at affordable prices, to a massive fan base worldwide in a cost-effective manner. The Company intends to shift its focus from 3D to developing ultra-high definition (4K) content for distribution in the Americas and Asia. In some cases, Front Row Networks will also sell merchandising and other products, bolstered by both in-theater and in-App advertising, tailored around each Artist and/or event, to maximize potential merchandising and sponsorship revenues.
In February 2011, FRN completed a reverse acquisition transaction through a share exchange with WRIT, whereby WRIT acquired 100% of the issued and outstanding capital stock of FRN in exchange for 100,000 shares of the Common Stock of WRIT. As a result of the reverse acquisition, FRN became WRIT’s wholly-owned subsidiary and the former FRN’s shareholders became controlling stockholders of WRIT. The share exchange transaction with WRIT was treated as a reverse acquisition, with FRN as the accounting acquirer and WRIT as the acquired party.
Consequently, the assets and liabilities and the historical operations were reflected in the consolidated financial statements for periods prior to the Share Exchange Agreement were those of FRN and will be recorded at the historical cost basis. After the completion of the Share Exchange Agreement, the Company’s consolidated financial statements included the assets and liabilities of both FRN and WRIT, the historical operations of FRN and the operations of WRIT from the closing date of the Share Exchange Agreement.
On July 7, 2011, we modified our February 2011 Share Exchange Agreement and agreed to assume $100,000 in new debt which is shown as a reduction of our Paid-In Capital.
While the core business of Front Row Networks remains the licensing, production, acquisition and distribution of music-related content and programming, the core business is dependent upon negotiating and financing projects with schedules that are solely determined by third parties, such as Artists and rights owners. In order to secure less cyclical entertainment product, the Company sought to license or purchase entertainment content that could be easily secured and distributed through the multiple distribution arrangements already established by the Company and via the rapidly growing marketplace represented by consumers of mobile, internet, and TV set-top devices. To reach this goal during the fiscal year, the Company set out to acquire exclusive branded content and entertainment programming, and achieved this goal through the acquisition of Amiga Games Inc.
On August 19, 2013, the Company completed an acquisition transaction through a share exchange with Amiga Games Inc., whereby WRIT acquired 100% of the issued and outstanding capital stock, assets, and trademarks of Amiga Games Inc. in exchange for 500,000 shares of the Common Stock of WRIT. As a result of the acquisition, Amiga Games Inc. became WRIT’s wholly-owned subsidiary.
Amiga Games Inc. licenses classic pre-Windows computer game libraries and adapts and republishes the most popular titles for smartphones, modern game consoles, PCs, tablets, and other television streaming devices. WRIT also established a new company, Retro Infinity Inc., to publish and brand games that were not originally released for Amiga brand computers. The two companies tap into the growing “retro gaming” marketplace, building on the "Amiga", “Atari”, and “MS-DOS” brands, delivering retro-gaming titles adapted for modern devices as well as merchandise featuring brands and characters from the games.
During the fiscal year, Amiga Games Inc. and Retro Infinity Inc. entered several marketing and distribution agreements, including those with Microsoft Corporation and Roku Inc. Both agreements include minimum guarantees, defined as advances against future sales. Additionally, the Retro Infinity Inc. licensed dozens of classic games for distribution via the Windows 8, Roku player, iOS (Apple), and Android platforms. Although it was the Company’s strategic goal to distribute a broad range of video game titles on the Windows 8 and iOS platforms during the 4th quarter of 2014, lack of operating capital caused the Company to temporarily halt software development funding, which delayed the Company’s overall gaming product release schedule. This temporary reduction in operating capital was due to mainly to regulatory delays encountered in structuring WRIT’s equity-line financing, and the Company’s difficulty in raising alternative investment capital, due to its sub-penny share price at the time.
On January 22, 2014, the Company changed the name of the corporation to WRIT Media Group, Inc., and authorized a 1 for 1,000 reverse split of the Company’s issued and outstanding shares of Common Stock. The name change was authorized to encompass the Company's broadened activities, including additional business plans and models, and the acquisition and formation of new subsidiaries. The equity restructuring was authorized to achieve the following: (a) price per share -- the rollback will increase the price per share to above $0.01, sub-penny markets are getting harder to trade and next to impossible to finance; (b) funding -- with a sub penny share price the Company was unable to fund because of dilution, post rollback the share price should be well above $0.01 and allow management to close on numerous funding opportunities that have been presented; (c) larger potential audience -- with a higher share price the Company will have access to investors who do not trade sub penny stocks such as institutions and Europeans; (d) listing in Europe -- the Company will now be able to list its common shares for trading on a European Stock Exchange, as co-listings in Europe are not accepted with a sub penny share price; and (e) acquisitions -- the Company will be able to use common shares to acquire larger assets and other industry related companies.
On January 16, 2014 WRIT’s Equity Line Financing (“ELF”) agreement with Dutchess Opportunity Fund II, and its corresponding S1 registration statement, was declared effective by the SEC. The ELF agreement, executed in September 2013, allows but does not require WRIT to sell up to US$10,000,000 of common stock to Dutchess at a 5% discount to market price, during the 36 month term. Compared to the Company’s convertible debt financing, ELFs provide a lower discount to market that minimize dilution while increasing operating capital. This additional financing source allowed the company to reduce debt and reduce the balance of the more expensive convertible notes that were outstanding during the last quarter of the fiscal year.
On February 4, 2014 the Company completed its administrative and legal work with the Depository Trust & Clearing Corporation ("DTCC") and the DTCC's long-standing "Administrative Chill" on clearing WRIT stock certificates was removed. DTCC resumed accepting deposits of the Company's common stock for book entry transfer services. As a result, shareholders with online brokerage accounts at firms such as Scottrade, ETRADE, TD Ameritrade and other full service brokerage firms are allowed to deposit new shares of WRIT's common stock in the electronic system that controls clearance and settlement. The reinstatement of the DTC depository services is an instrumental and enormous accomplishment for WRIT, which greatly reduced the costs and expenses associated with private equity investments in the Company.
In September 2014 the Company launched two online point of sale platforms; www.RetroInfinity.com and www.AmigaGamesInc.com to market its “retro” gaming titles directly to consumers. Both sales platforms initially offer only downloads for windows based computers. The online store launch was completed in conjunction with an initial marketing program which featured NASCAR, the RWR Retro Infinity NASCAR race team, and the “Drive to Championship Weekend” branding program. In December 2014 the Company intended to launch additional titles on additional mobile platforms, such as Windows phone, iOS, and Android platforms, so that the video game titles can be downloaded as Apps on various mobile devices, the Company experienced additional financing delays which interrupted software development and caused the Company to reschedule the anticipated release on mobile platforms into 2015. The online store launch generated an increase in consumer traffic to the Company’s websites and created awareness in the Company’s product, but generated minimal sales, most consumers were interested only in the mobile versions of the gaming titles, which were not yet available.
The video gaming websites were modified to accept payment for crowdfunding transactions, and the Retro Infinity/Amiga Games crowdfunding platform, supported by a social marketing campaign, was launched in the 3rd quarter of 2015. The initial crowdfunding campaign was not successful, so the Company is seeking additional financing from strategic partners that will allow the Company to resume and complete software development for the mobile gaming application, or a strategic buyer who can finish the development of the platform.
On June 25, 2015, the Company authorized a 1 for 200 reverse split of the Company’s issued and outstanding shares of Common Stock. The equity restructuring was authorized to achieve the following: (a) price per share -- the rollback will increase the price per share to above $0.01, sub-penny markets are getting harder to trade and next to impossible to finance; (b) funding -- with a sub penny share price the Company was unable to fund because of dilution, post rollback the share price should be well above $0.01 and allow management to close on numerous funding opportunities that have been presented; (c) larger potential audience -- with a higher share price the Company will have access to investors who do not trade sub penny stocks such as institutions and Europeans; (d) listing in Europe -- the Company will now be able to list its common shares for trading on a European Stock Exchange, as co-listings in Europe are not accepted with a sub penny share price; and (e) acquisitions -- the Company will be able to use common shares to acquire larger assets and other industry related companies.
On June 20, 2016, the Company issued 14,000,000 common shares to acquire a 100% ownership interest in Pandora Venture Capital Corp. Pandora has developed business solutions for digital currency, blockchain technology, and digital currency trading. Pandora’s Pelecoin digital currency is a product which utilizes unique “value event” emission protocol and can be utilized with trade exchanges, loyalty rewards and a payment support platform. Pandora’s CrypFXPro is an online platform which allows investors to trade digital currencies similar to a stock exchange. Underlying the digital currency and trading software platforms is an enterprise blockchain platform that enables institutions to design, deploy, and operate financial networks that can power assets in various markets. The 14,000,000 shares were valued using the $0.34 per share closing price on the acquisition date for total purchase price consideration of $4,760,000.
On June 5, 2017 the Company announced the successful completion of Beta testing for its new digital currency Pelecoin. Pelecoin is a proprietary, structured digital currency, based on an optimized basket of the top crypto-currencies. Pelecoin’s proprietary algorithm optimizes currency “mining” profitability, while providing the added benefit of liquidity through the leading exchanges of digital currency. Beta testing is a part of user acceptance testing, and is performed by the intended audience in order to receive user feedback for the product, and check if the product meets the objectives set by management. Pelecoin’s Beta version was released to fifty test-users outside of the development team, using basic PC mining setups, to ensure that the product has few faults and bugs. During the limited three month Beta test, the Pelecoin platform generated over $11,000 in revenue to WRIT Media Group.
We believe that the Company is well positioned to benefit from the developing market and growth rate in digital currency trading platforms and products, and block chain technology applications, and intend to continue to look for opportunities to explore business relationships with entities that have the resources to offer financing, licensing, distribution and marketing of WRIT’s product.
Financial Performance Highlights
The following summarizes certain key financial information for the fiscal year ended March 31, 2017 and for the fiscal year ended March 31, 2016:
·
Revenues: Our revenues were $11,375 and $0 for the fiscal years ended March 31, 2017 and 2016.
·
Net loss: Net loss was $691,739 and $1,402,141 for the fiscal years ended March 31, 2017 and 2016.
Results of Operations
The following table sets forth key components of our results of operations for the fiscal years ended March 31, 2017 and 2016.
Fiscal Year Ended March 31, 2017 Compared to Fiscal Year Ended March 31, 2016
Revenues. Revenues increased 100% to $11,375 for the fiscal year ended March 31, 2017, from $0 for the fiscal year ended March 31, 2016, the results are due to the Company’s completion of its digital currency software development, and system revenue generated from digital currency software system delivered to customers.
Wages and benefits. Wages and benefits expenses increased 20% to $360,000 for the fiscal year ended March 31, 2017 from $300,000 for the fiscal year ended March 31, 2016. The increase is mainly due to an increase in personnel costs during the year. The wages and benefits expenses for the fiscal year ended March 31, 2017 and 2016 include employee stock compensation in the amount of $0 and $147,623, respectively.
Audit and accounting. Audit and accounting expenses decreased 32% to $33,000 for the fiscal year ended March 31, 2017, from $49,000 for the fiscal year ended March 31, 2016. The decrease in the audit and accounting expense is mainly related to financing, timing of invoices, and timing of other transactions for the Company.
Legal fees. Legal Fees increased 40% to $44,159 for the fiscal year ended March 31, 2017 from $31,520 for the fiscal year ended March 31, 2016. The increase in legal fees was related to an increase in legal expenses related to litigation, financing and other transactions for the Company.
Other general and administrative expenses. Other general and administrative expenses decreased to $208,657 for the fiscal year ended March 31, 2017 from $328,759 for the fiscal year ended March 31, 2016. Those expenses consist primarily of company’s decrease in business development, consulting fees and other expenses incurred in connection with general operations.
Loss from operations. Our loss from operations was $634,441 for the fiscal year ended March 31, 2016 and $709,279 for the fiscal year ended March 31, 2016.
Interest expense. We incurred $57,298 in interest expense for the fiscal year ended March 31, 2017, and $692,862 in interest expense for the fiscal year ended March 31, 2016. The decrease in interest expense is mainly due to a decrease in additional borrowings, extinguished debt, and debt discount amortization.
Net loss. As a result of the foregoing factors, we generated a net loss of $691,739 and a net loss of $1,402,141 for the fiscal years ended March 31, 2017 and 2016, respectively.
Liquidity and Capital Resources
As reflected in the accompanying consolidated financial statements, the Company has accumulated deficits of $3,877,433 at March 31, 2017 that includes losses of $691,739 for the fiscal year ended March 31, 2017, and had accumulated deficits of $3,185,694 at March 31, 2016 that includes losses of $1,402,141 for the fiscal year ended March 31, 2016. The Company also had a working capital deficiency of $1,081,558 as of March 31, 2017 and $619,696 as of March 31, 2016. These factors raise substantial doubt about the ability of the Company to continue as a going concern. Although management is currently attempting to implement its business plan, and is seeking additional sources of equity or debt financing, there is no assurance these activities will be successful.
As of March 31, 2017 and March 31, 2016, we have $8,112 and $264 respectively in cash and cash equivalents. The following table provides detailed information about our net cash flow for all financial statement periods presented in this report. To date, we have financed our operations primarily through cash flows from operations, sale of restricted stock through private placements, and borrowings from third and related parties.
Operating activities
Cash used in operating activities of $143,700 for the fiscal year ended March 31, 2017 which reflected our net loss of $691,739, adjusted for $74,105 of stock based compensation to employees, consultants and other services, $4,475 of amortization of debt discount, $560 of depreciation, a decrease in accounts payable of $58,339, and an increase in accrued expenses of $410,560
Cash used in operating activities of $45,433 for the fiscal year ended March 31, 2016 which reflected our net loss of $1,402,141, adjusted for $447,623 of stock based compensation to employees, consultants and other services, $484,511 of amortization of debt discount, $552 of depreciation, an increase in accounts payable of $110,365, and an increase in accrued expenses of $313,802. Additional uses of cash include an increase in prepaid expenses and other assets of $145.
Investing activities
The net cash used in investing activities is for the fiscal year ended March 31, 2017 was $0 and is primarily due to discontinuation of software development costs. During the fiscal year ended March 31, 2016 there was $0 net cash used by our investing activities, primarily due to discontinuation of software development costs.
Financing activities
Net cash provided by financing activities of $151,548 and $45,442 for the fiscal years ended March 31, 2017 and March 31, 2016, respectively. During the fiscal year ended March 31, 2017 there were advances from related party of $81,035, repayment of advances from related party of $31,487, and proceeds from shares issued for cash of $102,000. During the fiscal year ended March 31, 2016 there were funds borrowed on short term notes payable of $3,000, proceeds from shares issued for cash of $26,500, and borrowing from related parties of $15,942.
Loan Commitments
Borrowings from Related Parties
EAM Delaware LLC - related party
During the year ended March 31, 2017, $81,035 was advanced to the Company by EAM Delaware LLC and the advance is due on demand with 0% interest. On September 30, 2016 the Company converted related party advances by EAM Delaware LLC of $75,000 into a note payable. The note payable includes a prior year advance amount of $25,452. The maturity date of this note is October 1, 2017 and this loan bears an interest rate of 12% per annum from the issuance date. The note is still outstanding as of March 31, 2017.
As of March 31, 2017, a total of $31,487 of advances was paid by the Company to EAM Delaware LLC. $0 in advances were owed to EAM Delaware LLC as of March 31, 2017.
On August 4, 2016, the Company borrowed $50,000 from related party EAM Delaware LLC. The maturity date of this note is August 5, 2017 and this loan bears an interest rate of 12% per annum from the issuance date. The note is still outstanding as of March 31, 2017.
Borrowings from Third Parties
Falmouth Street Holdings, LLC
On March 2, 2015, the Company borrowed $7,500 from Falmouth Street Holdings, LLC. The maturity date of this note is August 29, 2015 and this loan bears an interest rate of 12% per annum from the issuance date. The note is still outstanding as of March 31, 2017. As of today the debt is still outstanding and therefore is in default.
KBM Worldwide Inc.
On June 3, 2014, the Company borrowed $53,000 from KBM Worldwide Inc. The maturity date of this note is March 5, 2015. This loan bears an interest rate of 8% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. After 180 days following the date of the note, KBM Worldwide Inc. has the right to convert all or a portion of the remaining outstanding principal amount of this note into shares of the Company’s Common Stock. The conversion price will be 55% multiplied by the lowest three trading prices for the Common Stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2017, KBM Worldwide Inc. converted debt principal of $5,735 into 8,193 common shares, bringing the note balance to $47,265. As of today the debt is still outstanding and therefore is in default.
On July 29, 2014, the Company borrowed a convertible promissory note of $32,500 from KBM Worldwide, Inc. The maturity date of this note is May 1, 2015. This loan bears an interest rate of 8% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. After 180 days following the date of the note, KBM Worldwide Inc. has the right to convert all or a portion of the remaining outstanding principal amount of this note into shares of the Company’s Common Stock. The conversion price is 55% multiplied by the average of the lowest 3 trading day prices for the Common Stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date. On July 30, 2014, an amendment to the note defined a floor to the conversion price to be $.008 per share. As of March 31, 2017, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.
On September 15, 2014, the Company borrowed a convertible promissory note of $63,000 from KBM Worldwide, Inc. The maturity date of this note is June 17, 2015. This loan bears an interest rate of 8% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. After 180 days following the date of the note, KBM Worldwide Inc. has the right to convert all or a portion of the remaining outstanding principal amount of this note into shares of the Company’s Common Stock. The conversion price is 55% multiplied by the average of the lowest 3 trading day prices for the Common Stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2017, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.
Magna Group LLC
On July 10, 2014, the Company borrowed a convertible promissory note of $22,000 from Hanover Holdings I, LLC. The maturity date of this note is July 10, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. An amount equal to $2,500 of the principal balance of the note was converted into 4,545 common shares on February 4, 2015. An amount equal to $3,000 of the principal balance of the note was converted into 8,021 common shares on April 1, 2015. An amount equal to $2,750 of the principal balance of the note was converted into 17,857 common shares on April 27, 2015, leaving a principal balance of $13,750 as of March 31, 2017. As of today the debt is still outstanding and therefore is in default.
On September 10, 2014, the Company borrowed a convertible promissory note of $33,000 from Magna Equities II, LLC. The maturity date of this note is September 10, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2017, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.
On October 28, 2014, the Company borrowed a convertible promissory note of $25,000 from Magna Equities II, LLC. The maturity date of this note is October 28, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2017, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.
On December 17, 2014, the Company borrowed a convertible promissory note of $14,000 from Magna Equities II, LLC. The maturity date of this note is December 17, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2017, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.
S. Karban
On June 9, 2015, the Company borrowed $3,300 from S.Karban and $3,000 was received with the remaining $300 recorded as debt discount. The maturity date of this note is June 22, 2015, and this loan bears an interest rate of 10% per annum from the issuance date. As of March 31, 2016, the note was still outstanding and therefore in default. On April 4, 2016 the Company entered into a debt modification agreement with debt holder S Karban. The modified note is convertible into common stock at a price of $0.10, bears an extend maturity date of October 14, 2016, and an interest rate of 8% per annum. The principal amount of the modified note is $4,475 which includes the original principal balance of $3,300 plus accrued interest of $1,175. On April 5, 2016, this note was converted in its entirety and has been surrendered to the Company.
JL Shaw
On June 22, 2016, the Company borrowed $5,000 from JL Shaw. The maturity date of this note is June 22, 2017 and this loan bears an interest rate of 8% per annum from the issuance date. On February 10, 2017 the Company entered into a debt modification agreement with debt holder JL Shaw. The modified note is convertible into common stock at a price of $0.04, bears an extend maturity date of June 22, 2017, and an interest rate of 8% per annum. The principal amount of the modified note is $5,345 which includes the original principal balance of $5,000 plus accrued interest of $345. On February 10, 2017, this note was converted in its entirety and has been surrendered to the Company.
Other Notes
Convertible debts were issued September 2009, bearing interest at a rate of 8% per annum, due in one year, and are convertible at $2.00 per share, and the total balance outstanding as of March 31, 2014 was $3,130. The note is in default. During the year ended March 31, 2015, debt principal of $2,470 and interest of $104 reclassified into note principal were converted into 6,427 common shares. As of March 31, 2017 and 2016, other convertible notes have a principal balance of $660.
Obligations under Material Contracts
Except with respect to the loan obligations disclosed above, we have no obligations to pay cash or deliver cash to any other party.
Inflation
Inflation and changing prices have not had a material effect on our business and we do not expect that inflation or changing prices will materially affect our business in the foreseeable future. However, our management will closely monitor price changes in our industry and continually maintain effective cost controls in operations.
Off Balance Sheet Arrangements
We do not have any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity or capital expenditures or capital resources that is material to an investor in our securities.
Seasonality
Our operating results and operating cash flows historically have not been subject to seasonal variations. This pattern may change, however, as a result of new market opportunities or new product introduction.
Critical Accounting Policies
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial conditions and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements:
·
Accounts Receivable: Accounts receivable are recorded at the net invoice value and are not interest bearing. We consider receivables past due based on the contractual payment terms. We perform ongoing credit evaluations of our customers, and generally we do not require collateral on our accounts receivable. We estimate the need for allowances for potential credit losses based on historical collection activity and the facts and circumstances relevant to specific customers and we record a provision for uncollectible accounts when collection is uncertain. To date, we have not experienced significant credit related losses.
·
Revenue Recognition:
The Company follows the guidance of the Securities and Exchange Commission’s Staff Accounting Bulletin (“SAB”) 104 for revenue recognition and Accounting Standards Codification (“ASC”) Topic 605, “Revenue Recognition.” Accordingly, the Company records revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the selling price to the customer is fixed or determinable and collectability of the revenue is reasonably assured.
Sale of Technology Gaming
Revenue from sale of technology gaming applications is recognized when the following conditions are satisfied:
· Persuasive evidence of an arrangement exists
· Delivery has occurred or services have been rendered
· The seller’s price to the buyer is fixed or determinable
· Collectability is reasonably assured
Transaction Verification Services
Revenue earned from Pelecoin processing activities (“Transaction Verification Services”), commonly termed ‘mining’ activities, is recognized at the fair value of the Pelecoins received as consideration on the date of actual receipt. The Company generates revenue by performing computer processing activities for Pelecoin generation. In the digital-currency industry such activity is generally referred to as Transaction Verification Services or Pelecoin mining. The Company receives consideration for performing such transaction verification activities in the form of Pelecoins. Revenue is recorded upon the actual receipt of Pelecoins.
Expenses consist of utilities paid to cover our electric costs, rent for our facility and personnel to run our facility. The expenses related to our Transaction Verification Services activities are affected by the level of activities and not the ultimate generation of Pelecoins. The Company expenses these costs as they are incurred.
Revenues earned during the year ended March 31, 2017 resulted from beta testing of our proprietary Pelecoin cryptocurrency software.
Recent Accounting Pronouncements
See Note 1. “Organization, Business Operations and Significant Accounting Policies” to our audited consolidated financial statements included elsewhere in this report.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable to smaller reporting companies.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To The Board of Directors and Shareholders
WRIT Media Group, Inc.
Beverly Hills, California
We have audited the accompanying consolidated balance sheets of WRIT Media Group, Inc. and its wholly owned subsidiaries (collectively, the “Company”) as of March 31, 2017 and 2016, the related consolidated statements of operations, changes in shareholders’ deficit and cash flows for the years then ended. These consolidated financial statements are the responsibility of Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatements. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of WRIT Media Group, Inc. and its wholly owned subsidiaries as of March 31, 2017 and 2016, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has suffered losses from operations, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
MaloneBailey, LLP
www.malonebailey.com
Houston, Texas
July 14, 2017
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
WRIT MEDIA GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION, BUSINESS OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
Organization and Business Operations
WRIT Media Group, Inc. (“we”, “our”, “WRIT” or the “Company”) was incorporated in Delaware on March 9, 2007 to produce films, television programs and similar entertainment programs for various media formats. The Company has four wholly owned subsidiaries: Front Row Networks, Inc., Amiga Games, Inc., Retro Infinity, Inc. and Pandora Venture Capital Corp.
Front Row Networks, Inc. is a content creation company which produces, acquires and distributes live concerts in 3D for initial worldwide digital broadcast into digitally-enabled movie theaters, TV and mobile streaming providers.
On August 19, 2013, the Company acquired certain software through the purchase of 100% of Amiga Games Inc. in exchange for 500,000 shares. Amiga Games Inc. became WRIT’s wholly-owned subsidiary.
Amiga Games Inc. licenses classic pre-Windows computer game libraries and adapts and republishes the most popular titles for smartphones, modern game consoles, PCs, tablets, and other television streaming devices.
WRIT also established a new company, Retro Infinity Inc., to publish and brand games that were not originally released for Amiga brand computers. The two companies tap into the growing “retro gaming” marketplace, building on the "Amiga", “Atari”, and “MS-DOS” brands, delivering retro-gaming titles adapted for modern devices as well as merchandise featuring brands and characters from the games.
On January 22, 2014, the Company changed the name of the corporation to WRIT Media Group, Inc.
On June 20, 2016, WRIT Media Group, Inc. acquired Pandora Venture Capital Corp, a Florida based company that develops digital currency, Blockchain technology, and digital currency trading software. The Company acquired Pandora Venture Capital Corp through the issuance of 14,000,000 restricted shares of its common stock to the shareholders of Pandora, in exchange for all issued and outstanding shares of Pandora, making Pandora a wholly-owned subsidiary of WRIT Media Group, Inc.
Basis of Presentation and Consolidation
These consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America. The consolidated financial statements include the accounts of the Company and its subsidiaries, Front Row Networks, Inc., Amiga Games, Inc., Retro Infinity Inc., and Pandora Venture Capital Corp. All significant intercompany balances and transactions have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the amount of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made. However, actual results could differ materially from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, demand deposits with banks and liquid investments with an original maturity of three months or less.
Long Lived Assets
In accordance with ASC 360 "Property Plant and Equipment," the Company reviews the carrying value of intangibles subject to amortization and long-lived assets for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Recoverability of long-lived assets is measured by comparison of its carrying amount to the undiscounted cash flows that the asset or asset group is expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the property, if any, exceeds its fair market value.
Revenue Recognition
The Company follows the guidance of the Securities and Exchange Commission’s Staff Accounting Bulletin (“SAB”) 104 for revenue recognition and Accounting Standards Codification (“ASC”) Topic 605, “Revenue Recognition.” Accordingly, the Company records revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the selling price to the customer is fixed or determinable and collectability of the revenue is reasonably assured.
Sale of Technology Gaming
Revenue from sale of technology gaming applications is recognized when the following conditions are satisfied:
· Persuasive evidence of an arrangement exists
· Delivery has occurred or services have been rendered
· The seller’s price to the buyer is fixed or determinable
· Collectability is reasonably assured
During the year ended March 31, 2017 and 2016, there was no revenue recognized. A development fee from Roku Inc. was recognized as a cash advance of $55,395 was recorded as deferred revenue as of March 31, 2017 and 2016.
Transaction Verification Services Digital Currency Sales
Revenue earned from Pelecoin processing activities (“Transaction Verification Services”), commonly termed ‘mining’ activities, is recognized at the fair value of the Pelecoins received as consideration on the date of actual receipt. The Company generates revenue by performing computer processing activities for Pelecoin generation. In the digital-currency industry such activity is generally referred to as Transaction Verification Services or Pelecoin mining. The Company receives consideration for performing such transaction verification activities in the form of Pelecoins. Revenue is recorded upon the actual receipt of Pelecoins.
Expenses consist of utilities paid to cover our electric costs, rent for our facility and personnel to run our facility. The expenses related to our Transaction Verification Services activities are affected by the level of activities and not the ultimate generation of Pelecoins. The Company expenses these costs as they are incurred.
Revenue of $11,000 was recognized during the year ended March 31, 2017, and resulted from beta testing of our proprietary Pelecoin cryptocurrency software.
Income Taxes
The Company accounts for income taxes in accordance with ASC 740, which requires an asset and liability approach for financial accounting and reporting for income taxes and allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain.
Stock-based Compensation
Accounting Standards Codification (“ASC”) 718, “Accounting for Stock-Based Compensation" established financial accounting and reporting standards for stock-based compensation plans. It defines a fair value based method of accounting for an employee stock option or similar equity instrument. Accordingly, employee share-based payment compensation is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the requisite service period. The Company accounts for compensation cost for stock option plans and for share based payments to non-employees in accordance with ASC 505, “Accounting for Equity Instruments Issued to Non-Employees for Acquiring, or in Conjunction with Selling, Goods or Services”. Additionally, share-based awards to non-employees are expensed over the period in which the related services are rendered at their fair value. The Company accounts for share based payments to non-employees in accordance with ASC 505-50 “Accounting for Equity Instruments Issued to Non-Employees for Acquiring, or in Conjunction with Selling, Goods or Services”.
Embedded Conversion Feature
The Company has issued convertible instruments which contain embedded conversion features. The Company evaluates the embedded conversion feature within its convertible debt instruments under ASC 815-15 and ASC 815-40 to determine if the conversion feature meets the definition of a liability and therefore need to bifurcate the conversion feature and account for it as a separate derivative liability.
If the embedded conversion feature does not meet the definition of a liability, the Company evaluated the conversion feature under ASC 815-40 for a beneficial conversion feature at inception. The effective conversion price was then computed based on the allocation of the proceeds to the convertible debt to determine if a beneficial conversion feature exists. The effective conversion price was compared to the market price on the date of the original note and was deemed to be less than the market value of the Company’s stock at the inception of the note. A beneficial conversion feature was recognized and gave rise to a debt discount that is amortized over the stated maturity of the convertible debt instrument or the earliest potential conversion date.
If the embedded conversion feature meets the definition of a liability, it requires a bifurcation of the conversion feature from the debt and accounting for the conversion feature as a derivative contract liability with changes in fair value recorded in the Consolidated Statements of Operations.
Beneficial Conversion Features
The intrinsic value of a beneficial conversion feature inherent to a convertible note payable, which is not bifurcated and accounted for separately from the convertible note payable and may not be settled in cash upon conversion, is treated as a discount to the convertible note payable. This discount is amortized over the period from the date of issuance to the date the note is due using the effective interest method. If the note payable is retired prior to the end of its contractual term, the unamortized discount is expensed in the period of retirement to interest expense. In general, the beneficial conversion feature is measured by comparing the effective conversion price, after considering the relative fair value of detachable instruments included in the financing transaction, if any, to the fair value of the common shares at the commitment date to be received upon conversion.
Net Loss per Share
In accordance with ASC 260 “Earnings per Share,” basic net loss per common share is computed by dividing net loss for the period by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss for the period by the weighted average number of common and common equivalent shares, such as stock options and warrants, outstanding during the period. Such common equivalent shares have not been included in the computation of net loss per share as their effect would be anti-dilutive.
Fair Value Measurements
As defined in ASC 820 “Fair Value Measurements”, fair value is 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 (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).
The three levels of the fair value hierarchy defined by ASC 820 are as follows:
Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.
Level 2 - Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars.
Level 3 - Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.
The Company has no financial instruments at March 31, 2017 and 2016 that are required to be fair valued on a recurring basis.
The Company considers the carrying values of cash and cash equivalents, prepaid expenses and other assets, and accounts payable and accrued liability to approximate the fair value of these accounts because of the short period of time since origination or the short period of time between origination of the instruments and their expected realization.
Related Parties
A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.
Reclassifications
Certain prior year amounts have been combined and reclassified to conform to the current year presentation.
Recent Accounting Pronouncements
We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.
NOTE 2 - GOING CONCERN
As reflected in the accompanying consolidated financial statements, the Company has accumulated deficits of $3,877,433 at March 31, 2017 that includes losses of $691,739 for the fiscal year ended March 31, 2017 and a working capital deficiency of $1,081,558. At March 31, 2016 the Company had accumulated deficits of $3,185,694 at March 31, 2016 that includes losses of $1,402,141 for the fiscal year ended March 31, 2016 and a working capital deficiency of $619,696. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The consolidated financial statements have been prepared on a going concern basis and do not include any adjustments that might result from outcome of this uncertainty.
Although management is currently attempting to implement its business plan, and is seeking additional sources of equity or debt financing, there is no assurance these activities will be successful.
NOTE 3 - NOTES PAYABLE
Note payable consists of the following:
FOR THE YEAR ENDED MARCH 31, 2017
EAM Delaware LLC - related party
On August 4, 2016, the Company borrowed $50,000 from related party EAM Delaware LLC, for expenses paid directly to third party on behalf of Company. The maturity date of this note is August 5, 2017 and this loan bears an interest rate of 12% per annum from the issuance date. The note is still outstanding as of March 31, 2017.
On September 30, 2016 the Company converted related party advances by EAM Delaware LLC of $75,000 into a note payable. The maturity date of this note is October 1, 2017 and this loan bears an interest rate of 12% per annum from the issuance date. The note is still outstanding as of March 31, 2017.
Falmouth Street Holdings, LLC
On March 2, 2015, the Company borrowed $7,500 from Falmouth Street Holdings, LLC. The maturity date of this note is August 29, 2015 and this loan bears an interest rate of 12% per annum from the issuance date. The note is still outstanding as of March 31, 2017. As of today the debt is still outstanding and therefore is in default.
JL Shaw
On June 22, 2016, the Company borrowed $5,000 from JL Shaw. The maturity date of this note is June 22, 2017 and this loan bears an interest rate of 8% per annum from the issuance date. On February 10, 2017 the Company entered into a debt modification agreement with debt holder JL Shaw. The modified note is convertible into common stock at a price of $0.04, bears a maturity date of June 22, 2017, and an interest rate of 8% per annum. The principal amount of the modified note is $5,345 which includes the original principal balance of $5,000 plus accrued interest of $345. The Company evaluated the application of ASC 470-50 and ASC 470-60 and concluded that the addition of a conversion feature constituted a debt extinguishment rather than a trouble debt restructuring. No gain or loss was resulted from the debt extinguishment since the fair value the new debt was the same as the old debt. See more discussion about the new debt in Note 4. On February 10, 2017, this note was converted in its entirety and has been surrendered to the Company.
S. Karban
On June 9, 2015, the Company borrowed $3,300 from S.Karban and $3,000 was received with the remaining $300 recorded as debt discount. The maturity date of this note is June 22, 2015, and this loan bears an interest rate of 10% per annum from the issuance date. On April 4, 2016 the Company entered into a debt modification agreement with debt holder S Karban. The modified note is convertible into common stock at a price of $0.10, bears an extend maturity date of October 14, 2016, and an interest rate of 8% per annum. The principal amount of the modified note is $4,475 which includes the original principal balance of $3,300 plus accrued interest of $1,175. The Company evaluated the application of ASC 470-50 and ASC 470-60 and concluded that the addition of a conversion feature constituted a debt extinguishment rather than a trouble debt restructuring. No gain or loss was resulted from the debt extinguishment since the fair value the new debt was the same as the old debt. See more discussion about the new debt in Note 4. On April 5, 2016, this note was converted in its entirety and has been surrendered to the Company.
FOR THE YEAR ENDED MARCH 31, 2016
Burnside Digital LLC
On July 22, 2015, the Company converted software development cost incurred on account of $67,024 from Burnside Digital LLC into a Note Payable. The maturity date of this note is December 22, 2015. This loan bears an interest rate of 18% per annum from the date of July 22, 2014. On December 22, 2015, the note was still outstanding and therefore in default. On February 22, 2016, Burnside Digital LLC assigned the note to DK International Investments Corp along with accrued default interest of $34,622 (see Note 4). The maturity date of this amended note is November 4, 2016. This loan bears an interest rate of 8% per annum. The note is convertible into common stock at a price of 45% multiplied by the lowest bid price for the Common Stock during the nine month trading day period ending on the latest complete trading day prior to the conversion date. Additionally, in no event shall the conversion price be less than $0.01. The Company evaluated the application of ASC 470-50 and ASC 470-60 and concluded the addition of a conversion feature constituted a debt extinguishment rather than a troubled debt restructuring. See more discussion about the new debt in Note 4. On February 22, 2016, the principal balance of the note plus interest was paid in its entirety and the note has been surrendered to the Company.
On August 24, 2015, the Company converted software development cost incurred on account of $75,520 from Burnside Digital LLC into a Note Payable. The maturity date of this note is December 24, 2015. This loan bears an interest rate of 18% per annum from the date of August 24, 2014. On December 24, 2015, the note was still outstanding and therefore in default. On February 19, 2016, Burnside Digital LLC assigned the note to DK International Investments Corp along with accrued default interest of $40,109 (see Note 4). The maturity date of this amended note is November 19, 2016. This loan bears an interest rate of 8% per annum. The note is convertible into common stock at a price of 45% multiplied by the lowest bid price for the Common Stock during the three month trading day period ending on the latest complete trading day prior to the conversion date. Additionally, in no event shall the conversion price be less than $0.01. The Company evaluated the application of ASC 470-50 and ASC 470-60 and concluded the addition of a conversion feature constituted a debt extinguishment rather than a troubled debt restructuring. See more discussion about the new debt in Note 4. On February 22, 2016, the principal balance of the note plus interest was paid in its entirety and the note has been surrendered to the Company.
DEVCAP Partners LLC
On August 4, 2015, the Company converted accounts payable of $112,500 from DEVCAP Partners LLC into a Note Payable. The maturity date of this note is December 20, 2015. This loan bears an interest rate of 12% per annum from the date of October 24, 2014 before default. Interest on overdue principal after default accrues at an annual rate of 33%. On December 20, 2015, the note was still outstanding and therefore in default. On February 22, 2016, DEVCAP Partners LLC assigned the note to DK International Investments Corp along with accrued default interest of $86,845 (see Note 4). The maturity date of this amended note is November 22, 2016. This loan bears an interest rate of 8% per annum. The note is convertible into common stock at a price of 55% multiplied by the lowest bid price for the Common Stock during the three month trading day period ending on the latest complete trading day prior to the conversion date. Additionally, in no event shall the conversion price be less than $0.01. The Company evaluated the application of ASC 470-50 and ASC 470-60 and concluded the addition of a conversion feature constituted a debt extinguishment rather than a troubled debt restructuring. See more discussion about the new debt in Note 4. On March 11, 2016, the principal balance of the note plus interest was paid in its entirety and the note has been surrendered to the Company.
Falmouth Street Holdings, LLC
On March 2, 2015, the Company borrowed $7,500 from Falmouth Street Holdings, LLC. The maturity date of this note is August 29, 2015 and this loan bears an interest rate of 12% per annum from the issuance date. The note is still outstanding as of March 31, 2016. As of today the debt is still outstanding and therefore is in default.
S. Karban
On June 9, 2015, the Company borrowed $3,300 from S.Karban and $3,000 was received with the remaining $300 recorded as debt discount. The maturity date of this note is June 22, 2015, and this loan bears an interest rate of 10% per annum from the issuance date. The note is still outstanding as of March 31, 2016. As of today the debt is still outstanding and therefore is in default. During the year ended March 31, 2016, $300 was recorded as amortization of debt discount.
NOTE 4 - CONVERTIBLE DEBT
During the year ended March 31, 2017, $9,820 of convertible debts with accrued interest of $0 was converted into 178,375 shares of common stock.
During the year ended March 31, 2016, $422,370 of convertible debts with accrued interest of $2,829 was converted into 6,109,019 shares of common stock.
FOR THE YEAR ENDED MARCH 31, 2017
Magna Group LLC/Hanover Holdings
On July 10, 2014, the Company borrowed a convertible promissory note of $22,000 from Hanover Holdings I, LLC. The maturity date of this note is July 10, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. An amount equal to $2,500 of the principal balance of the note was converted into 4,545 common shares on February 4, 2015, leaving a principal balance of $19,500 as of March 31, 2015. An amount equal to $3,000 of the principal balance of the note was converted into 8,021 common shares on April 1, 2015. An amount equal to $2,750 of the principal balance of the note was converted into 17,857 common shares on April 27, 2015, leaving a principal balance of $13,750 as of March 31, 2016. As of today the debt is still outstanding and therefore is in default.
On September 10, 2014, the Company borrowed a convertible promissory note of $33,000 from Magna Equities II, LLC. The maturity date of this note is September 10, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2017, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.
On October 28, 2014, the Company borrowed a convertible promissory note of $25,000 from Magna Equities II, LLC. The maturity date of this note is October 28, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2017, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.
On December 17, 2014, the Company borrowed a convertible promissory note of $14,000 from Magna Equities II, LLC. The maturity date of this note is December 17, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2017, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.
The Company evaluated the embedded conversion feature within the above Magna convertible notes payable under ASC 815-15 and ASC 815 -40 and determined embedded conversion feature does not meet the definition of a liability. Then the Company evaluated the conversion feature for a beneficial conversion feature at inception. The Company accounted for the intrinsic value of a Beneficial Conversion Feature inherent to the convertible notes payable and a total debt discount of $126,010 was recorded on the Magna notes. The debt discount had been fully amortized as of March 31, 2016.
KBM Worldwide Inc.
On June 3, 2014, the Company borrowed $53,000 from KBM Worldwide Inc. The maturity date of this note is March 5, 2015. This loan bears an interest rate of 8% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. After 180 days following the date of the note, KBM Worldwide Inc. has the right to convert all or a portion of the remaining outstanding principal amount of this note into shares of the Company’s Common Stock. The conversion price will be 55% multiplied by the lowest three trading prices for the Common Stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2017, KBM Worldwide Inc. had converted debt principal of $5,735 into 8,193 common shares, bringing the note balance to $47,265. As of today the debt is still outstanding and therefore is in default.
On July 29, 2014, the Company borrowed a convertible promissory note of $32,500 from KBM Worldwide, Inc. The maturity date of this note is May 1, 2015. This loan bears an interest rate of 8% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. After 180 days following the date of the note, KBM Worldwide Inc. has the right to convert all or a portion of the remaining outstanding principal amount of this note into shares of the Company’s Common Stock. The conversion price is 55% multiplied by the average of the lowest 3 trading day prices for the Common Stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date. On July 30, 2014, an amendment to the note defined a floor to the conversion price to be $.008 per share. As of March 31, 2017, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.
On September 15, 2014, the Company borrowed a convertible promissory note of $63,000 from KBM Worldwide, Inc. The maturity date of this note is June 17, 2015. This loan bears an interest rate of 8% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. After 180 days following the date of the note, KBM Worldwide Inc. has the right to convert all or a portion of the remaining outstanding principal amount of this note into shares of the Company’s Common Stock. The conversion price is 55% multiplied by the average of the lowest 3 trading day prices for the Common Stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2017, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.
The Company evaluated the embedded conversion feature within the above KBM convertible notes payable under ASC 815-15 and ASC 815-40 and determined embedded conversion feature does not meet the definition of a liability. Then the Company evaluated the conversion feature for a beneficial conversion feature at inception. The Company accounted for the intrinsic value of a Beneficial Conversion Feature inherent to the convertible notes payable and a total debt discount of $148,500 was recorded on the KBM notes. The debt discount had been fully amortized as of March 31, 2016.
JL Shaw
On February 10, 2017 the Company entered into a debt modification agreement with debt holder JL Shaw (see Note 3). The modified note is convertible into common stock at a price of $0.04, bears an extended maturity date of June 22, 2017, and an interest rate of 8% per annum. The principal amount of the modified note is $5,345 which includes the original principal balance of $5,000 plus accrued interest of $345, and on February 10, 2017, it was converted into 133,625 common shares. This note has been converted in its entirety and has been surrendered to the Company.
The Company evaluated the application of ASC 470-50 and ASC 470-60 and concluded the addition of a conversion feature constituted a debt extinguishment rather than a troubled debt restructuring, with the old debt written off and the new debt initially recorded at fair value with a new effective interest rate. No gain or loss was resulted from the debt extinguishment since the fair value the new debt was the same as the old debt. The Company evaluated the embedded conversion feature within the JL Shaw convertible note payable under ASC 815-15 and ASC 815-40 and determined that the embedded conversion feature does not meet the definition of a liability. Then the Company evaluated the conversion feature for a beneficial conversion feature at inception noting none.
S. Karban
On April 4, 2016 the Company entered into a debt modification agreement with debt holder S Karban (see Note 3). The modified note is convertible into common stock at a price of $0.10, bears an extended maturity date of October 14, 2016, and an interest rate of 8% per annum. The principal amount of the modified note is $4,475 which includes the original principal balance of $3,300 plus accrued interest of $1,175, and on April 5, 2016, it was converted into 44,750 common shares. This note has been converted in its entirety and has been surrendered to the Company.
The Company evaluated the application of ASC 470-50 and ASC 470-60 and concluded the addition of a conversion feature constituted a debt extinguishment rather than a troubled debt restructuring, with the old debt written off and the new debt initially recorded at fair value with a new effective interest rate. No gain or loss was resulted from the debt extinguishment since the fair value the new debt was the same as the old debt. The Company evaluated the embedded conversion feature within the S. Karban convertible note payable under ASC 815-15 and ASC 815-40 and determined embedded conversion feature does not meet the definition of a liability. Then the Company evaluated the conversion feature for a beneficial conversion feature at inception. The Company accounted for the intrinsic value of a beneficial conversion feature inherent to the convertible note payable and a total debt discount of $4,475 was recorded on the S. Karban note. During the period ended March 31, 2017, debt discount of $4,475 was amortized, and the unamortized debt discount is $0 as of March 31, 2017.
Other Convertible Notes
Convertible debts were issued September 2009, bearing interest at a rate of 8% per annum, due in one year, and are convertible at $2.00 per share, and the total balance outstanding as of March 31, 2016 was $660. The note is in default. As of March 31, 2017, other convertible notes have a principal balance of $660.
FOR THE YEAR ENDED MARCH 31, 2016
Magna Group LLC/Hanover Holdings
On July 10, 2014, the Company borrowed a convertible promissory note of $22,000 from Hanover Holdings I, LLC. The maturity date of this note is July 10, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. An amount equal to $2,500 of the principal balance of the note was converted into 4,545 common shares on February 4, 2015, leaving a principal balance of $19,500 as of March 31, 2015. An amount equal to $3,000 of the principal balance of the note was converted into 8,021 common shares on April 1, 2015. An amount equal to $2,750 of the principal balance of the note was converted into 17,857 common shares on April 27, 2015, leaving a principal balance of $13,750 as of March 31, 2016. As of today the debt is still outstanding and therefore is in default.
On September 10, 2014, the Company borrowed a convertible promissory note of $33,000 from Magna Equities II, LLC. The maturity date of this note is September 10, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2016, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.
On October 28, 2014, the Company borrowed a convertible promissory note of $25,000 from Magna Equities II, LLC. The maturity date of this note is October 28, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2016, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.
On December 17, 2014, the Company borrowed a convertible promissory note of $14,000 from Magna Equities II, LLC. The maturity date of this note is December 17, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2016, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.
The Company evaluated the embedded conversion feature within the above Magna convertible notes payable under ASC 815-15 and ASC 81 -40 and determined embedded conversion feature does not meet the definition of a liability. Then the Company evaluated the conversion feature for a beneficial conversion feature at inception. The Company accounted for the intrinsic value of a Beneficial Conversion Feature inherent to the convertible notes payable and a total debt discount of $126,010 was recorded on the Magna notes. During the year ended March 31, 2016, debt discount of $41,615 was amortized, and the unamortized debt discount is $0 as of March 31, 2016.
KBM Worldwide Inc.
On June 3, 2014, the Company borrowed $53,000 from KBM Worldwide Inc. The maturity date of this note is March 5, 2015. This loan bears an interest rate of 8% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. After 180 days following the date of the note, KBM Worldwide Inc. has the right to convert all or a portion of the remaining outstanding principal amount of this note into shares of the Company’s Common Stock. The conversion price will be 55% multiplied by the lowest three trading prices for the Common Stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2016, KBM Worldwide Inc. had converted debt principal of $5,735 into 8,193 common shares, bringing the note balance to $47,265. As of today the debt is still outstanding and therefore is in default.
On July 29, 2014, the Company borrowed a convertible promissory note of $32,500 from KBM Worldwide, Inc. The maturity date of this note is May 1, 2015. This loan bears an interest rate of 8% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. After 180 days following the date of the note, KBM Worldwide Inc. has the right to convert all or a portion of the remaining outstanding principal amount of this note into shares of the Company’s Common Stock. The conversion price is 55% multiplied by the average of the lowest 3 trading day prices for the Common Stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date. On July 30, 2014, an amendment to the note defined a floor to the conversion price to be $.008 per share. As of March 31, 2016, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.
On September 15, 2014, the Company borrowed a convertible promissory note of $63,000 from KBM Worldwide, Inc. The maturity date of this note is June 17, 2015. This loan bears an interest rate of 8% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. After 180 days following the date of the note, KBM Worldwide Inc. has the right to convert all or a portion of the remaining outstanding principal amount of this note into shares of the Company’s Common Stock. The conversion price is 55% multiplied by the average of the lowest 3 trading day prices for the Common Stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2016, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default.
The Company evaluated the embedded conversion feature within the above KBM convertible notes payable under ASC 815-15 and ASC 81 -40 and determined embedded conversion feature does not meet the definition of a liability. Then the Company evaluated the conversion feature for a beneficial conversion feature at inception. The Company accounted for the intrinsic value of a Beneficial Conversion Feature inherent to the convertible notes payable and a total debt discount of $148,500 was recorded on the KBM notes. During the year ended March 31, 2016, debt discount of $62,221 was amortized, and the unamortized debt discount is $0 as of March 31, 2016.
DK International Investments Corp
On February 22, 2016, Burnside Digital LLC assigned the note to DK International Investments Corp along with accrued default interest of $34,622 (see Note 3). The maturity date of this amended note is November 4, 2016. This loan bears an interest rate of 8% per annum. The note is convertible into common stock at a price of 45% multiplied by the lowest bid price for the Common Stock during the nine month trading day period ending on the latest complete trading day prior to the conversion date. Additionally, in no event shall the conversion price be less than $0.01. On February 22, 2016, DK International Investments Corp. converted $101,646 of principal and $799 of interest into 1,138,278 common shares. This note has been converted in its entirety and has been surrendered to the Company.
On February 19, 2016, Burnside Digital LLC assigned the note to DK International Investments Corp along with accrued default interest of $40,109 (see Note 3). The maturity date of this amended note is November 19, 2016. This loan bears an interest rate of 8% per annum. The note is convertible into common stock at a price of 45% multiplied by the lowest bid price for the Common Stock during the three month trading day period ending on the latest complete trading day prior to the conversion date. Additionally, in no event shall the conversion price be less than $0.01. On February 22, 2016, DK International Investments Corp. converted $115,629 of principal and $179 of interest into 1,286,754 common shares. This note has been converted in its entirety and has been surrendered to the Company.
On February 22, 2016, DEVCAP Partners LLC assigned the note to DK International Investments Corp along with accrued default interest of $86,845 (see Note 3). The maturity date of this amended note is November 22, 2016. This loan bears an interest rate of 8% per annum. The note is convertible into common stock at a price of 55% multiplied by the lowest bid price for the Common Stock during the three month trading day period ending on the latest complete trading day prior to the conversion date. . On March 7, 2016, DK International Investments Corp. converted $75,000 of principal into 1,363,636 common shares. On March 9, 2016, DK International Investments Corp. converted $55,000 of principal into 1,000,000 common shares. On March 11, 2016, DK International Investments Corp. converted $69,345 of principal and $1,851 of interest into 1,294,473 common shares. This note has been converted in its entirety and has been surrendered to the Company.
The Company evaluated the application of ASC 470-50 and ASC 470-60 and concluded the addition of a conversion feature constituted a debt extinguishment rather than a troubled debt restructuring, with the old debt written off and the new debt initially recorded at fair value with a new effective interest rate. The Company evaluated the embedded conversion feature within the three modified DK International convertible notes payable under ASC 815-15 and ASC 815-40 and determined embedded conversion feature does not meet the definition of a liability. Then the Company evaluated the conversion feature for a beneficial conversion feature at inception. The Company accounted for the intrinsic value of a Beneficial Conversion Feature inherent to the convertible notes payable and a total debt discount of $380,375 was recorded on the DK International notes. During the year ended March 31, 2016, debt discount of $380,375 was amortized, and the unamortized debt discount is $0 as of March 31, 2016.
Other Convertible Notes
Convertible debts were issued September 2009, bearing interest at a rate of 8% per annum, due in one year, and are convertible at $2.00 per share, and the total balance outstanding as of March 31, 2015 was $660. The note is in default. As of March 31, 2016, other convertible notes have a principal balance of $660.
NOTE 5 - PREFERRED STOCK
Each share of Series A preferred stock is convertible at any time into the number of common shares equal to four times the sum of all outstanding common and Series B and Series C preferred shares at the time of conversion divided by the number of Series A preferred shares. Series A shareholders may receive dividends as declared by the Board. The Company has 2,400 and 2,500 Series A preferred shares outstanding at March 31, 2017 and 2016.
On June 15, 2015, EAM Delaware LLC, a Delaware Limited Liability company controlled by Eric Mitchell, the current President and Chairman of WRIT Media Group, Inc., converted 2,500 Preferred Series A shares into 1,133,030 common shares.
On January 25, 2016, EAM Delaware LLC, a Delaware limited Liability Company controlled by Eric Mitchell, the current President and Chairman of WRIT Media Group, Inc., converted 5,000 Preferred Series A shares into 7,663,667 common shares.
On December 16, 2016, EAM Delaware LLC, a Delaware Limited Liability company controlled by Eric Mitchell, the current President and Chairman of WRIT Media Group, Inc., converted 100 Preferred Series A shares into 5,308,434 common shares.
Each share of Series B preferred stock is convertible into the number of common shares equal to the designated $2 initial price of the Series B preferred stock divided by one hundred times the par value of the common stock subject to adjustments as may be determined by the Board of Directors from time to time. Series B shareholders may receive dividends as declared by the Board. The Company has no Series B shares outstanding at March 31, 2017 and 2016.
Each share of Series C preferred stock is convertible at any time into 500 common shares. Series C holders may receive dividends as declared by the Board. The Company has no Series C shares outstanding at March 31, 2017 and 2016.
The Company evaluated the application of ASC 815-15 and ASC 815-40 for the embedded conversion feature of preferred stock listed above and concluded the embedded conversion option should be classified as equity.
NOTE 6 - EQUITY
On June 25, 2015, shareholders approved of a 1 for 200 reverse split of the Company’s issued and outstanding common shares. The Company accounted for the reverse stock split retrospectively and is presented accordingly in the Company’s financial statements as of March 31, 2017, and 2016.
For the Year Ended March 31, 2017:
Shares issued for convertible notes:
During the year ended March 31, 2017, $9,820 of convertible debts with accrued interest of $0 was converted into 178,375 shares of common stock. See Note 4.
Common Shares issued for cash
During the year ended March 31, 2017, the Company issued 2,849,466 common shares for cash totaling $140,917, of which $38,917 was expenses paid directly on behalf of Company.
Common Shares issued for services
During the year ended March 31, 2017, the Company issued 710,000 shares to third party consultants as compensation at their fair value of $74,105.
Common Shares issued for acquisition of Pandora Venture Capital Corp.
During the year ended March 31, 2017, the Company issued 14,000,000 shares with a fair value of $4,760,000 to acquire a 100% ownership interest in Pandora Venture Capital Corp. See Note 7.
Common Shares issued for convertible Series A Preferred stock:
During the year ended March 31, 2017, EAM Delaware LLC, a Delaware limited Liability Company controlled by Eric Mitchell, the current President and Chairman of WRIT Media Group, Inc., converted 100 Preferred Series A shares into 5,308,434 common shares.
Warrants Issued
There are no warrants issued for the year ended March 31, 2017.
Under a subscription agreement dated April 21, 2014, the Company issued 16,667 restricted common shares to Irwin Zalcberg for cash totaling $200,000. Along with the subscription agreement, the Company issued warrants to purchase 20,833 shares of common stock at an exercise price of $50.00. The warrants do not entitle the holder to any voting rights or other rights as a shareholder of the Company. As of March 31, 2017, the warrants remain un-exercised and have expired.
The following table summarizes the Company’s warrant activity for the year ended March 31, 2017:
For the Year Ended March 31, 2016:
Shares issued for convertible notes:
During the year ended March 31, 2016, $422,370 of convertible debts with accrued interest of $2,829 was converted into 6,109,019 shares of common stock. See Note 4.
Common Shares issued for cash
During the year ended March 31, 2016, the Company issued 250,066 common shares for cash totaling $26,500.
Common Shares issued for services and accounts payable
During the year ended March 31, 2016, the Company issued 579,017 shares to Eric Mitchell, the Company CEO and CFO, as compensation at their fair value of $194,548.
During the year ended March 31, 2016, the Company issued 771,028 shares to third party consultants as compensation at their fair value of $292,695, out of which $39,620 was included in prior year accounts payable.
Common Shares issued for accrued compensation
During the year ended March 31, 2016, the Company issued 100,776 shares to Eric Mitchell, the Company CEO and CFO, to settle accrued compensation of $82,636. The fair value of the shares was determined to be $82,636, resulting in no loss on settlement.
Common Shares issued for convertible Series A Preferred stock:
During the year ended March 31, 2016, EAM Delaware LLC, a Delaware limited Liability Company controlled by Eric Mitchell, the current President and Chairman of WRIT Media Group, Inc., converted 7,500 Preferred Series A shares into 8,796,697 common shares.
Warrants Issued
Under a subscription agreement dated March 18, 2014, the Company issued 3,125 restricted common shares to Irwin Zalcberg for cash totaling $50,000. Along with the subscription agreement, the Company issued warrants to purchase 3,125 shares of common stock. The warrants expire 2 years after issuance and have an exercise price of $24.00. The warrants do not entitle the holder to any voting rights or other rights as a shareholder of the Company. As of March 31, 2016, the warrants remain un-exercised.
The following table summarizes the Company’s warrant activity for the year ended March 31, 2016:
NOTE 7 - ASSETS ACQUISITION AND INTANGIBLE ASSETS
Pandora Venture Capital Corp.
On June 20, 2016, the Company issued 14,000,000 common shares to acquire a 100% ownership interest in Pandora Venture Capital Corp. The Company evaluated the transaction under ASC 805 and determined that it should be accounted for as an asset acquisition. Pandora has developed business solutions for digital currency, blockchain technology, and digital currency trading. Pandora’s Pelecoin digital currency is a product which utilizes unique “value event” emission protocol and can be utilized with trade exchanges, loyalty rewards and a payment support platform. Pandora’s CrypFXPro is an online platform which allows investors to trade digital currencies similar to a stock exchange. Underlying the digital currency and trading software platforms is an enterprise blockchain platform that enables institutions to design, deploy, and operate financial networks that can power assets in various markets. The 14,000,000 shares were valued using the $0.34 per share closing price on the acquisition date for a total purchase price consideration of $4,760,000.
The following table summarizes the composition of intangible assets as of March 31, 2017.
Intangible assets subject to amortization should be reviewed for impairment in accordance with FASB ASC 360. The Company determined that the Intangible Assets are not subject to impairment due to ongoing software development of both the digital currency trading and blockchain software platforms, and $11,000 in revenue generated during beta test of the Pelecoin cryptocurrency software for the fiscal year ended March 31, 2017.
NOTE 8 - CONCENTRATION
For the fiscal years ended March 31, 2017 and 2016, 100% of the Company’s deferred revenue is generated from gaming applications development with two customers, Microsoft Corporation and Roku Inc.
NOTE 9 - RELATED PARTY BALANCES AND TRANSACTIONS
For the Year Ended March 31, 2017:
During the year ended March 31, 2017, the Company incurred $360,000 compensation expense for Eric Mitchell, the Company CEO and CFO. Out of the $360,000 compensation expense, $11,500 was paid in cash; $0 was paid by issuance of common stock while the remaining $348,500 was still not paid. As of March 31, 2017, the accrued compensation owed to Eric Mitchell, is $453,952, including prior year accrued compensation of $105,452 (presented as part of accrued liability balance on the accompanying consolidated balance sheets).
During the year ended March 31, 2017, $81,035 was advanced to the Company by EAM Delaware LLC and the advance is due on demand with 0% interest. On September 30, 2016 the Company converted related party advances by EAM Delaware LLC of $75,000 into a note payable. The note payable includes a prior year advance amount of $25,452. The maturity date of this note is October 1, 2017 and this loan bears an interest rate of 12% per annum from the issuance date. The note is still outstanding as of March 31, 2017.
As of March 31, 2017, a total of $31,487 of advances was repaid by the Company to EAM Delaware LLC. $0 in advances were owed to EAM Delaware LLC as of March 31, 2017.
For the Year Ended March 31, 2016:
During the year ended March 31, 2016, the Company incurred $300,000 compensation expense for Eric Mitchell, the Company CEO and CFO. Out of the $300,000 compensation expense, $0 was paid in cash; $194,548 was paid by issuance of common stock while the remaining $105,452 was still not paid. During the year ended March 31, 2016, the Company also issued 100,776 shares to Eric Mitchell, by the Company to settle accrued compensation of $82,636 from prior year. As of March 31, 2016, the accrued compensation owed to Eric Mitchell, is $105,452 (presented as part of accrued liability balance on the accompanying consolidated balance sheets).
During the year ended March 31, 2016, $15,942 was advanced to the Company by Eric Mitchell and the advance is due on demand with 0% interest. As of March 31, 2016 in total $25,452 in advances were owed to him.
During the year ended March 31, 2016, DEVCAP Partners owned less than 10% of the Company’s issued and outstanding common shares, and is no longer a related party.
NOTE 10 - INCOME TAXES
Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has a net loss of $697,084 as of March 31, 2017 and a net loss of $1,402,141 as of March 31, 2016. The following table shows the net deferred tax benefit:
The tax asset benefits for the net operating losses carried forward for future years are $2,232,519 and $1,619,000 respectively, for the years ended March 31, 2017 and March 31, 2016, respectively.
Pursuant to ASC 740, the Company is required to compute tax asset benefits for net operating losses carried forward. Potential benefit of net operating losses has not been recognized in these financial statements because the Company cannot be assured it is more likely-than-not it will utilize the net operating losses carried forward in future years which will start to expire in the year of 2031.
Tax returns for the years since 2014 are still open; the provision for unpaid federal income taxes reflected in the balance sheet is adequate to cover any additional assessments resulting from examinations already made or from those to be made by the Service.
NOTE 11 - COMMITMENTS AND CONTINGENCIES
On July 21, 2016, Magna Equities II, LLC and Hanover Holdings I, LLC (collectively as “Magna”) filed a Summons with Notice of Appearance against the Company, and its former and current transfer agents (collectively as the “Parties”), in the Supreme Court of the State of New York, County of New York. The litigation is in its preliminary stages, the Company has not yet been served, and discovery has not yet commenced. Magna’s allegations against the Parties, which are briefly outlined in the summons, are to recover monetary damages related to Magna’s loan to the Company which has a principal balance equal to $85,750. Magna alleges breach of contract, breach of implied covenant of good faith and fair dealing, conversion and negligence against the Parties and seeks relief in excess of $1,500,000. Although the company has reason to believe that it will prevail on the merits of a summary judgment, the litigation could have a lengthy duration, and the ultimate outcome cannot be predicted at this time.
On July 27, 2016, Mr. George Sharp filed suit against the Company in the Superior Court of California, County of San Diego. Sharp had previously filed a similar lawsuit in 2011 which was dismissed on February 16, 2012, and included a settlement agreement signed by Sharp which was filed with the Superior Court of California, County of Los Angeles (Case Number: BC461550) Sharp alleges misrepresentation and violation of the Unfair Business Practices Act, and seeks unspecified damages. On February 28, 2017, the Company’s offer to compromise was accepted by Mr. Sharp and the litigation was settled in the amount of $20,000, of which $10,000 will be paid by the Company, and $10,000 will be paid by Eric Mitchell, CEO of the Company. Additionally, the Company needs to indemnify officers for any loss in lawsuits, therefore, the Company assumed $20,000 liability. As of March 31, 2017, $2,500 have been paid and the settlement obligation of $17,500 is recorded on book as liability.
On August 17, 2016, KBM Worldwide Inc. (“KBM”) filed a Summons in a Civil Action against the Company in the United States District Court for the Eastern District of New York. The litigation is in its preliminary stages, the Company has filed an answer to the complaint and a first counterclaim against the plaintiffs on November 1, 2016. KBM’s allegations which are briefly outlined in the summons, are to recover monetary damages related to KBM’s loans to the Company which have a principal balance equal to $142,765. KBM seeks equitable and injunctive relief against the Parties in excess of $142,765. Although the company has reason to believe that it will prevail on the merits of its case against the plaintiff, the litigation could have a lengthy duration, and the ultimate outcome cannot be predicted at this time.
NOTE 12 - SUBSEQUENT EVENTS
On April 6, 2017, the Company issued 1,000,000 common shares for cash totaling $50,000.
On April 15, 2017, EAM Delaware LLC, a Delaware Limited Liability company controlled by Eric Mitchell, the current President and Chairman of WRIT Media Group, Inc., converted 110 Preferred Series A shares into 7,307,166 common shares.
On April 16, 2017, the Company borrowed $60,000 from Bluway Marketing LLC on a note payable with 0% interest rate and maturity date of April 17, 2019.
On April 16, 2017, along with the note payable to Bluway Marketing LLC, the Company issued warrants to purchase 1,650,000 shares of common stock. The warrants expire 2 years after issuance and have an exercise price of $0.05. The warrants do not entitle the holder to any voting rights or other rights as a shareholder of the Company.
On April 19, 2017, the Company issued 1,458,385 shares to Eric Mitchell, the Company CEO and CFO, as compensation at their fair value of $105,733.
On April 25, 2017, the Company issued 150,000 common shares for cash totaling $15,000.
On June 1, 2017, the Company issued 100,000 common shares for cash totaling $10,000.
On June 10, 2017, the Company issued 35,000 common shares for cash totaling $5,250.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 9A.
ITEM 9A. CONTROLS AND PROCEDURES.
(A) Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this Annual Report, we conducted an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based on this evaluation, the CEO and CFO concluded that, because of the material weaknesses in our internal control over financial reporting described below, our disclosure controls and procedures were not effective as of March 31, 2017. The Company has taken the steps described below to remediate such material weaknesses.
(B) Internal Control over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed 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 ("GAAP"). The Company’s internal controls over financial reporting include policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; (2) provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’ assets that could have a material effect on our financial statements. Under the supervision and with the participation of our management, including our CEO, we evaluated the effectiveness of our internal control over financial reporting as of March 31, 2017. In its evaluation, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on our assessment and the criteria described above, management has concluded that, as of March 31, 2017, our internal control over financial reporting was not effective. We have noted the following material weaknesses in our control environment:
1. Material weaknesses in Our Control Environment. Our control environment did not sufficiently promote effective internal control over financial reporting throughout the organization. This material weakness exists because of the aggregate effect of multiple deficiencies in internal control which affect our control environment, including: a) the lack of an effective risk assessment process for the identification of fraud risks; b) the lack of an internal audit function or other effective mechanism for ongoing monitoring of the effectiveness of internal controls; c) and insufficient documentation and communication of our accounting policies and procedures as of March 31, 2017.
2. Material weaknesses in the staffing of our financial accounting department. Management had engaged an outside consultant to assist in the financial reporting. However, the number of qualified accounting personnel with experience in public company SEC reporting and GAAP is limited. This weakness does not enable us to maintain adequate controls over our financial accounting and reporting processes regarding the accounting for non-routine and non-systematic transactions. There is a risk that a material misstatement of the financial statements could be caused, or at least not be detected in a timely manner, by this shortage of qualified resources.
3. Material weaknesses in Segregation of Duties. The limited number of qualified accounting personnel results in an inability to have independent review and approval of financial accounting entries. Furthermore, management and financial accounting personnel have wide-spread access to create and post entries in our financial accounting system. There is a risk that a material misstatement of the financial statements could be caused, or at least not be detected in a timely manner, due to insufficient segregation of duties. Because of its inherent limitation, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management is still determining additional measures to remediate deficiencies related to staffing.
Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process certain safeguards to reduce, though not eliminate, this risk. Management is responsible for establishing and maintaining adequate internal control over our financial reporting. This Annual Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this Annual Report.
Changes in Internal Controls
There have been no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
The Company is not an "accelerated filer" for the fiscal year ended March 31, 2017 because it is qualified as a "small business issuer". Hence, under current law, the internal controls certification and attestation requirements of Section 404 of the Sarbanes-Oxley act will not apply to the Company. This Annual report on Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management's report in this Annual Report on Form 10-K.
ITEM 9B.
ITEM 9B. OTHER INFORMATION.
We have no other information that we would have been required to disclose in a report on Form 8-K during a fourth quarter of the year covered by this Form 10-K.
PART III
ITEM 10.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE.
The members of our Board of Directors serve until the next annual meeting of the stockholders, or until their successors have been elected. The officers serve at the pleasure of the Board of Directors. Information as to the directors and executive officers of the Company is as follows:
Eric Mitchell, Chairman, Chief Executive Officer, President, Treasurer & Chief Financial Officer.
Eric Mitchell has over 20 years of financial, business development, and strategic planning experience in the motion picture industry. Mr. Mitchell started his career in 1990 as an executive with Sony Pictures Entertainment’s Tri-Star Pictures division. At Sony, Mr. Mitchell was responsible for overseeing strategic planning, financial planning, and business development within the motion picture group. His acquisition, business affairs, and financial talents helped Sony gain domestic and certain foreign film rights to blockbuster hits CLIFFHANGER, SNIPER, and WEEKEND AT BERNIES 2. Eric negotiated and secured theatrical & video rights to SWAN PRINCESS for Columbia TriStar Home Video, and this title became the highest grossing family title for CTHV and spawned three sequels. Mr. Mitchell also assisted Tri-Star’s Vice Chairman in acquiring multi-picture distribution rights with Carolco Pictures, which generated $250 million in profit, the most ever in Tri-Star history, generating such hits as LA STORY, UNIVERSAL SOLDIER, THE DOORS, TOTAL RECALL, BASIC INSTINCT, and TERMINATOR 2.
As an advisor to the Chairman, Mr. Mitchell helped newly-formed Crusader Entertainment raise over $300 million for overhead and motion picture financing from investor Philip Anschutz and Anschutz Entertainment Group (“AEG”). Crusader was owned by producers Howard and Karen Baldwin and AEG, and over a four year period produced eight motion pictures, including such memorable films as Oscar and Golden Globe award-winning RAY and action blockbuster SAHARA.
Ascendant Pictures and its partner, Germany-based VIP Mediafonds, employed Mitchell as an advisor where he participated in and structured the investment of over US$500 million in development and production capital into 21 feature films. Theatrical motion pictures financed and produced by Ascendant and the production fund included LORD OR WAR, LUCKY NUMBER SLEVIN, ASK THE DUST, EDISON, and THE JACKET.
In 2006 Mr. Mitchell was named the COO of Baldwin Entertainment Group Ltd., a motion picture production and sports management company founded by Howard Baldwin. Baldwin is a motion picture producer and founded the Hartford Whalers ice hockey franchise and also owned part of the Pittsburgh Penguins NHL franchise, which won the Stanley Cup in 1992. Mr. Mitchell was responsible for all aspects of operations and business development, including the development and sourcing of motion picture productions and sports-related projects, including the purchase of AHL hockey teams.
In 2009, Mr. Mitchell advised newly-formed Bl!nk Media Ireland Limited, an interactive video gaming Company formed by former executives of Electronic Arts and Marvel Entertainment. Eric provided advice regarding the potential structuring of a complex multi-party financing, including state job credits and production incentives.
Eric has produced several motion pictures including IN THIS CORNER, 100 KILOS, THE ANNIHILATION OF FISH, and DEATH SENTENCE starring Kevin Bacon, and has served as Executive Producer for Royal Street Entertainment LLC on its Lifetime and Hallmark TV movies CITIZEN JANE and SECRETS IN THE WALLS. Mr. Mitchell has also taught a film finance class “Producing the Independent Film” at the UCLA Extension Center. Eric is a graduate of Carnegie Mellon University and received his Master’s Degree in Management from the Massachusetts Institute of Technology’s Sloan School of Management.
Boris Nayflish, Director.
Mr. Boris Nayflish has been an independent Director of WRIT Media Group, Inc. since June 20, 2016. Mr. Nayflish has over 28 years of experience in Information Technology and Logistics coupled with a technical background in Telecommunications, Insurance, Shipping, Printing and Manufacturing Industries. His experience includes complex systems integration in SAP, Oracle, BAAN, and variety of MS SQL based ERP systems. Mr. Nayflish operational experience includes analyzing current requirements and designing solutions with the aim of optimizing operational efficiency, explaining complex concepts in non-technical terms, and understanding the customer's perspective to bridge the gap between sales and development.
Rebecca Bieker, Secretary.
Ms. Bieker has over 32 years of administrative experience with regards to business management in real estate, investor development and accounting. Rebecca received her education from Moraine Park Technical Institute in Wisconsin, in Real Estate, Accounting and Computers, with further education from real estate and business schools in Las Vegas, Nevada.
Our officers and directors may be deemed promoters of the Company as those terms are defined by the Securities Act of 1933, as amended. All directors hold office until the next annual stockholders' meeting or until their death, resignation, retirement, removal, disqualification, or until their successors have been elected and qualified. Our officers serve at the will of the Board of Directors.
There are no agreements or understandings for any officer or director of the Company to resign at the request of another person and none of the officers or directors is acting on behalf of or will act at the direction of any other person.
We have checked the box provided on the cover page of this Form to indicate that there is no disclosure in this form of reporting person delinquencies in response to Item 405 of Regulation S-K.
Audit Committee.
Our board of directors has not established an audit committee. In addition, we do not have any other compensation or executive or similar committees. We will not, in all likelihood, establish an audit committee until such time as the Company generates a positive cash flow of which there can be no assurance. We recognize that an audit committee, when established, will play a critical role in our financial reporting system by overseeing and monitoring management's and the independent auditors' participation in the financial reporting process. At such time as we establish an audit committee, its additional disclosures with our auditors and management may promote investor confidence in the integrity of the financial reporting process.
Until such time as an audit committee has been established, the full board of directors will undertake those tasks normally associated with an audit committee to include, but not by way of limitation, the (i) review and discussion of the audited financial statements with management, and (ii) discussions with the independent auditors the matters required to be discussed by the Statement On Auditing Standards No. 61 and No. 90, as may be modified or supplemented.
Code of Ethics.
We have adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer and persons performing similar functions. The code of ethics will be posted on the investor relations section of the Company's website. At such time as we have posted the code of ethics on our website, we intend to satisfy the disclosure requirements under Item 10 of Form 8-K regarding an amendment to, or waiver from, a provision of the code of ethics by posting such information on the website.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
DIRECTOR COMPENSATION
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
(a) Security Ownership of Certain Beneficial Owners.
(b) Security Ownership of Management.
The following table sets forth the security and beneficial ownership for each class of equity securities of the Company owned beneficially and of record by all directors and officers of the Company, and any holder of more than 5% of each class of stock.
(c) Ownership and Change in Control.
Each of the security ownership by the beneficial owners and by management is also the owner of record for the like number of shares.
There are currently no arrangements that would result in a change in our control.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
There were are related party transactions during the fiscal year discussed in Note 9.
ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Audit and Non-Audit Fees
Pre-Approval of Services by the Independent Auditor
The Board of Directors has established policies and procedures for the approval and pre-approval of audit services and permitted non-audit services. The Board has the responsibility to engage and terminate the Company's independent registered public accountants, to pre-approve their performance of audit services and permitted non-audit services and to review with the Company's independent registered public accountants their fees and plans for all auditing services. All services provided by and fees paid to MaloneBailey LLP were pre-approved by the Board of Directors.
ITEM 15.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
We are a reporting company pursuant to the requirements of the 1934 Act and we file quarterly, annual and other reports with the Securities and Exchange Commission. The reports and other information filed by us will be available for inspection and copying at the public reference facilities of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549.
Copies of such material may be obtained by mail from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. In addition, the Commission maintains a World Wide Web site on the Internet at http://www.sec.gov that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission.
The following documents are filed as part of this report, except for those documents designated by an asterisk (*), which have been previously filed with the Securities and Exchange Commission and, pursuant to Rule 17 C.F.R. 230.411, are incorporated by reference to the document referenced in brackets following the descriptions of such exhibits.
** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Company has duly caused this Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.
WRIT Media Group, Inc.
Date: July 14, 2017
By:
/s/ Eric Mitchell
Eric Mitchell
President and Director
By:
/s/ Eric Mitchell
Eric Mitchell
Chief Financial Officer and Chief Accounting Officer/Controller
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Date: July 14, 2017
By:
/s/ Eric Mitchell
Eric Mitchell
President and Sole Director