10-Q 1 zonzia_10q-033116.htm 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the Quarterly Period Ended March 31, 2016

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

For the transition period from ______________ to ______________

Zonzia Media, Inc.

(Name of small business issuer in its charter)

NEVADA		84-0871427
(State of or other jurisdiction of incorporation or organization)		(IRS Employer I.D. No.)

2580 Anthem Village Drive, Suite B-7

Henderson, Nevada 89052

(Address of Principal Executive Office)

(702) 707-3974

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer o

Non-accelerated filer o Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

The number of shares of Common Stock, $0.001 par value, of the registrant outstanding at May 23, 2016 was 261,940,133.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.			3
Condensed Balance Sheets as of March 31, 2016 (unaudited) and December 31, 2015			3
Condensed Statements of Operations for the three months ended March 31, 2016 and 2015			4
Condensed Statement of Cash Flows for the three months ended March 31, 2016 and 2015			5
Notes to the condensed financial statements			6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.			14
Item 3. Quantitative and Qualitative Disclosures About Market Risk.			18
Item 4. Controls and Procedures.			18

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.			19
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.			19
Item 3. Defaults Upon Senior Securities.			20
Item 4. Mine Safety Disclosures.			20
Item 5. Other Information.			20
Item 6. Exhibits.			20
Signatures			21
Exhibit Index			22

Special Note Regarding Forward Looking Statements

This report contains forward-looking statements. The forward-looking statements are contained principally in the section entitled “Management's Discussion and Analysis of Financial Condition and Results of Operations.” These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “would” and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

Also, forward-looking statements represent our estimates and assumptions only as of the date of this report. You should read this report and the documents that we reference and filed as exhibits to this report completely and with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

ZONZIA MEDIA, INC.

(formerly HDIMAX Max, Inc. and Indigo-Energy, Inc.)

CONDENSED BALANCE SHEETS

	March 31, 2016			December 31, 2015
ASSETS	(unaudited)
Current Assets
Cash	$	9,005		$	6
Accounts receivable		4,480			–
Prepaids		10,000			–
Licensed content		443,077			443,077

Total current assets		466,562			443,083

Other Assets
Other assets		1,271			6,000

Total assets	$	467,833		$	449,083

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current Liabilities
Accounts payable	$	1,649,299		$	1,625,535
Accrued expenses		470,000			480,000
Accrued compensation		891,688			858,796
Accrued interest		17,019			9,601
Convertible promissory notes payable, net of discounts		370,093			378,705
Promissory notes payable		285,015			35,000
Derivative liability		370,041			664,426

Total current liabilities		4,053,155			4,052,063

Stockholders' Equity (Deficit)
Preferred stock, $0.001 par value, 200,000,000 shares authorized and none issued and outstanding at March 31, 2016 and December 31, 2015, respectively		–			–
Common stock, $0.001 par value, 2,000,000,000 shares authorized and 248,717,544 and 234,343,197 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively		248,716			234,344
Additional paid-in capital		108,079,105			104,430,107
Accumulated deficit		(111,913,143	)		(108,267,431	)

Total stockholders' equity (deficit)		(3,585,322	)		(3,602,980	)

Total liabilities and stockholders' equity (deficit)	$	467,833		$	449,083

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

ZONZIA MEDIA, INC.

(formerly HDIMAX Media, Inc. and Indigo-Energy, Inc.)

CONDENSED STATEMENTS OF OPERATIONS

(unaudited)

	For the Three Months Ended			For the Three Months Ended
	March 31, 2016			March 31, 2015
Revenue

Net revenue	$	4,480		$	–

Expenses
General and administrative		118,562			322,441
Sales and marketing		276,923			(297,928	)
Officer compensation		3,345,145			65,675,677
Professional fees		91,465			819,599

Total operating expenses		3,832,095			66,519,789

Loss from operations		(3,827,615	)		(66,519,789	)

Other income (expense)
Gain on change in fair value of derivatives		294,385			–
Interest expense		(112,482	)		–

Total other income (expense)		181,903			–

Net loss	$	(3,645,712	)	$	(66,519,789	)

Net loss per share - basic and diluted	$	(0.02	)	$	(0.20	)

Weighted average shares outstanding		241,419,845			326,733,511

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

ZONZIA MEDIA, INC.

(formerly HDIMAX Media, Inc. and Indigo-Energy, Inc.)

CONDENSED STATEMENTS OF CASH FLOWS

(unaudited)

	For the Three Months Ended			For the Three Months Ended
	March 31, 2016			March 31, 2015
Cash Flows from Operating Activities
Net loss	$	(3,645,712	)	$	(66,519,789	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		3,198,043			66,834,609
Common stock issued in lieu of interest		19,033			–
Gain on change in fair value of derivatives		(294,385	)		–
Loss in Settlement Agreement		82,143			–
Debt discount accretion		88,061			–
Stock issued for services		92,476			–
Gain on non-cash settlement of accrued expenses		–			(809,714	)
Changes in assets and liabilities
Accounts receivable		(4,480	)		–
Prepaids		(10,000	)		(2,420	)
Other assets		4,730			–
Accounts payable		23,765			163,757
Accrued expenses		(10,000	)		–
Accrued compensation		32,892			241,435
Accrued interest		7,418			–

Net cash used in operating activities		(416,016	)		(92,122	)

Cash Flow from Financing Activities
Proceeds from issuance of promissory notes		250,015			–
Proceeds from issuance of convertible promissory notes		25,000			–
Proceeds from issuance of common stock		150,000			95,850

Net cash provided by financing activities		425,015			95,850

Net change in cash and cash equivalents		8,999			3,728

Cash and cash equivalents at beginning of the period		6			208

Cash and cash equivalents at end of the period	$	9,005		$	3,936

Supplemental Disclosure of Cash Flow Information
Cash paid for income taxes	$	–		$	–
Cash paid for interest	$	–		$	–

NON CASH INVESTING AND FINANCING ACTIVITIES:
Accounts payable settled with stock	$	59,000		$	–

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

ZONZIA MEDIA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2016

(Unaudited)

NOTE 1 – INTERIM FINANCIAL STATEMENTS

The accompanying interim unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2016, are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. For further information, refer to the financial statements and footnotes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015.

The accompanying condensed financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America which contemplate continuation of the Company as a going concern.

NOTE 2 – DESCRIPTION OF BUSINESS

Zonzia Media, Inc, initially organized as HDIMAX Media, Inc., and incorporated in the State of Delaware in May 2014, is a multi-platform entertainment company focused on delivering compelling content with the objective of generating both advertising and subscription revenue.

Reverse Merger with Indigo-Energy, Inc.

On November 21, 2014, through a wholly-owned subsidiary of a public shell Company then known as Indigo-Energy, Inc., HDIMAX Acquisition Corporation, a Nevada corporation, was merged with and into HDIMAX, Inc., a Delaware corporation (“HDIMAX”) (such merger, the “Merger”) pursuant to the Agreement and Plan of Merger, effective as of September 2, 2014, and as amended effective as of November 20, 2014, by and among Indigo-Energy, Inc. (our “company” or “we” or “us”), HDIMAX and HDIMAX Acquisition Corporation (the “Merger Agreement”). HDIMAX was the surviving corporation of the Merger and as such will continue as a wholly-owned subsidiary of our Company. Upon closing the merger, we changed our name to HDIMAX Media, Inc.

As a result of the Merger, all of HDIMAX’s common stock was converted into 712,121,205 shares of our Company’s common stock, which represents approximately 94% of the outstanding shares of our company’s common stock after giving effect to the Merger. The common stock issuance, representing 94% of the outstanding shares of the consolidated Company was accounted for as a reverse capitalization in accordance with accounting principles generally accepted in the United States (“US GAAP”) and the Rules and Regulations as promulgated by the United States Securities and Exchanges Commission (“SEC”).

On January 22, 2015, we entered into a Settlement Agreement in which we cancelled all of the 712,121,205 shares of restricted and unregistered common stock previously issued to effectuate the merger with Rajinder Brar, the previous sole owner of HDIMAX, Inc. In consideration for the shares being cancelled, Rajinder Brar received 3,000,000 shares of newly restricted common stock after the execution of the settlement agreement. We forfeited our rights to sell advertising and other products on websites previously controlled by Mr. Brar and related entities, with the exception of www.hdimax.com. An outline of the significant terms of the Settlement Agreement includes, but is not limited to, the following:

The 712,121,205 million shares of HDIMAX Media, Inc. (formerly Indigo-Energy) common stock issued to Rajinder Brar, the owner of 100% of the previously outstanding stock of HDIMAX, Inc. immediately preceding the reverse acquisition transaction, were cancelled.

Rajinder Brar, Aneliya Vasileva, and Myles Pressey III, previously appointed as the Company’s officers and Board of Directors immediately following the completion of the reverse acquisition, resigned and forfeited future compensation terms associated with any and all previously agreed upon employment agreements, inclusive of the compensation accrued as of December 31, 2014.

Mr. James C. Walter Sr. was reappointed to serve as a Director charged with appointing new officers. Mr. Walter Sr. served as the Sole Officer and Director of the Company immediately preceding the completion of the reverse acquisition transaction.

The Company’s option agreement to acquire Fashion Style Magazine, Inc., an entity wholly owned by Rajinder Brar, was cancelled.

The Omnibus Agreement and License dated November 21, 2014, by and between the Company and Fashion Style Magazine, Inc. was terminated. The brands and assets wholly owned by Rajinder Brar through Fashion Style Magazine, Inc. were intended to be a core portion of the consolidated Company’s business operations subsequent to the completion of the reverse acquisition.

The Company forfeited all rights to Frontlinewire.com, a brand and website acquired in the reverse acquisition.

The Company maintained all rights to hdimax.com, a brand and website acquired in the reverse acquisition, but agreed to assign those assets back to their original owners by May 1, 2015. We do not intend to further develop or publish content at www.hdimax.com.

For additional details, including a copy of the Settlement Agreement, please see our Current Report on Form 8-K filed on January 28, 2015.

On March 9, 2015 we changed our name to Zonzia Media, Inc. and we are developing a new multi-platform entertainment distribution channel with the goal of being a unique hybrid of a linear channel, a video-on-demand channel and an over-the-top channel. Our technology will allow our viewers instant access to our available content on most internet connected devices.

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and have been presented on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

Use of Estimates

In preparing financial statements in conformity with generally accepted accounting principles, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenditures during the reported periods. Actual results could differ materially from those estimates.

Cash and Cash Equivalents

We consider all highly liquid instruments with an original maturity of 90 days or less at the time of purchase to be cash equivalents.

Fair Value Measurements

The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk, including the party’s own credit risk.

Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

Income Taxes

Deferred taxes are provided on an asset and liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the difference between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Net Income/(Loss) Per Common Share

Income/ (loss) per share of common stock is calculated by dividing the net income/ (loss) by the weighted average number of shares of common stock outstanding during the period. The Company has no potentially dilutive securities for the three months ended March 31, 2016 and 2015. Accordingly, basic and dilutive income (loss) per common share are the same.

Advertising Costs

The Company expenses advertising costs when incurred. Advertising costs incurred amount to $0 and $0 for the three months ended March 31, 2016 and 2015, respectively.

Embedded Conversion Features and Other Equity-linked Instruments

The Company classifies all of its common stock purchase warrants and other derivative financial instruments as equity if the contracts (1) require physical settlement or net-share settlement or (2) give the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that (1) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the control of the Company), (2) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement), or (3) contracts that contain reset provisions. The Company assesses classification of its equity-linked instruments at each reporting date to determine whether a change in classification between equity and liabilities (assets) is required.

Recently Issued Accounting Pronouncements

In June 2009, the FASB established the Accounting Standards Codification (“Codification” or “ASC”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”). Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) issued under authority of federal securities laws are also sources of GAAP for SEC registrants. Existing GAAP was not intended to be changed as a result of the Codification, and accordingly the change did not impact our financial statements. The ASC does change the way the guidance is organized and presented.

We reviewed all other recently issued accounting pronouncements and determined that the updates below could have an effect on the Company’s financial statements:

FASB Account Standards Update, No. 2014-15, Going Concern, dated August 2014 says, in connection with preparing financial statements for each annual and interim reporting period, an entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable).

Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued (or at the date that the financial statements are available to be issued when applicable).

The amendments in this update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company has not chosen early adoption.

FASB Account Standards Update, No. 2014-09, Revenue from Contracts with Customers, dated May 2014 says, an entity should recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to entitled in exchange for those goods and services.

To achieve that core principle, an entity should apply the following steps:

Identify the contract(s) with a customer.

Identify the performance obligations in the contract.

Determine the transaction price.

Allocate the transaction price to the performance obligations in the contract.

Recognize revenue when (or as) the entity satisfies a performance obligation.

For a public entity, the amendments in this Update are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted.

Going Concern

Since our inception on May 24, 2014, we have generated immaterial revenues resulting in the incurrence of net losses through March 31, 2016. This has further led to negative working capital, all which results in substantial doubt about the Company’s ability to continue as a going concern.

Our management, Board, and Advisory Board has focused its efforts and our limited resources on raising additional capital through debt or equity offerings at terms not detrimental to our planned future operations. As of the date of this report we do not have any firm funding commitments.

NOTE 4 – RELATED PARTY TRANSACTIONS

During the year-ended December 31, 2015 we settled prior obligations due to a related party totaling $340,163 via the issuance of 7,500,000 shares of restricted and unregistered shares of common stock. The settled obligation also represents that balance outstanding as of December 31, 2014.

During the year-ended December 31, 2015 a total of four of our Officers agreed to waive all or portions of their base salaries or previously accrued bonuses earned during the year ended December 31, 2014 and through December 31, 2015 totaling $388,988. Since we consider our Officers related parties we have determined the bonus and salary forgiveness was in the nature of a capital contribution and no gain was recognized in the accompanying statements of operations.

We issued a Director 250,000 shares of restricted and unregistered shares of common stock for cash proceeds totaling $25,000 in January 2015.

As part of the Settlement Agreement we entered into on January 22, 2015 we cancelled restricted stock award grants to two of our former officers. Since we did not replace a cancelled award totaling 52,500,000 shares of restricted and unregistered shares of common stock, and effectively repurchased the award for no consideration as assumed by the application of accounting principles generally accepted in the United States, the unrecognized grant-date fair value of the award totaling $9,975,000 was recognized during the year-ended December 31, 2015. Additionally, we cancelled a restricted stock award granted to our current Chief Executive Officer totaling 67,500,000 shares and replaced the award with the grant of 125,000,000 shares of restricted and unregistered shares as part of a new employment agreement on January 29, 2015. The total compensation cost recognized during the year-ended December 31, 2015 associated with the cancellation and replacement of this restricted stock award was $47,500,000.

During the year-ended December 31, 2015 we issued 2,000,000 shares of unregistered and restricted common stock to an affiliate for consulting services valued at $680,000. A promissory note in the amount of $35,000 was issued to the same affiliate of the company, for cash proceeds of $35,000 in April 2015. As additional consideration on the promissory note, this same affiliate received 215,000 shares of unregistered and restricted common stock valued at $32,039. Upon renewal of this promissory note in May 2015 this affiliate received 100,000 shares of unregistered and restricted common stock valued at $17,260.

Employment Agreement Amendment

On May 15, 2015, we amended our Chairman and Chief Business Development Office, Mr. Myles Pressey III’s, employment agreement. Mr. Pressey III was originally going to be granted 25,000,000 shares of fully vested restricted and unregistered shares of common stock on January 29, 2016 whereas the amendment calls for Mr. Pressey III to receive up to 62,500,000 shares of restricted and unregistered common stock subject to the achievement of performance benchmarks set by the Board of Directors. The modification of Mr. Pressey III’s equity award resulted in the recognition of compensation totaling $10,262,819 during the year-ended December 31, 2015.

NOTE 5 – STOCKHOLDERS’ EQUITY

The following provides information for the shares of restricted and unregistered shares of common stock that we issued (or cancelled) from January 1, 2016 through the date of this report:

In January 2016 we issued 500,000 shares of restricted and unregistered shares of common stock for cash proceed of $15,000.

In January 2016 we issued a total of 2,500,000 shares of restricted and unregistered shares of common stock as compensation to our officers, valued at $142,250.

In February 2016, a convertible note holder converted $4,275 of principal for 250,000 shares of the Company’s common stock.

In February 2016, a convertible note holder converted $58,482, total principal and interest for 3,744,015 of the Company’s common stock.

In February 2016 we issued 75,000 shares of restricted and unregistered shares of common stock to a Director for services totaling $7,410.

In February 2016 we entered in a $50,000 web development services agreement that included the issuance of 603,449 shares of restricted and unregistered shares of common stock for website development services totaling $34,879.

In February 2016 we issued 100,000 shares of restricted and unregistered shares of common stock for consulting services totaling $5,690.

In February 2016 we issued 150,000 shares of restricted and unregistered shares of common stock for consulting services totaling $8,535.

In February 2016 we issued 35,000 shares of restricted and unregistered shares of common stock for consulting services totaling $1,992.

In February 2016 we issued 2,898,551 shares of restricted and unregistered shares of common stock for cash totaling $100,000.

In February 2016 we obtained a $250,000 promissory note with a 15% interest rate due on June 2016 and this transaction also included issuance of 100,000 shares of restricted and unregistered shares of common stock as in incentive totaling $9,880.

In February 2016 we issued 1,428,575 shares of restricted and unregistered shares of common stock as a $59,000 payment for a $209,000 balance owed to one of our service providers.

In February 2016 we issued 340,136 shares of restricted and unregistered shares of common stock for cash totaling $25,000.

In February 2016 we issued 136,054 shares of restricted and unregistered shares of common stock for cash totaling $10,000.

In March 2016, a convertible note holder converted $5,000 of principal and $202 of interest for 193,010 of the Company’s common stock.

In March 2016, a convertible note holder converted $9,000 of principal and $414 of interest for 570,560 shares of the Company’s common stock.

In March 2016, a convertible note holder converted $5,400 of principal for 300,000 shares of the Company’s common stock.

In March 2016, we issued 450,000 shares of restricted and unregistered common stock to 3 directors for services rendered totaling $36,000.

Warrants

During the period ended March 31, 2016 we issued warrants to certain investors as part of the private placements of our restricted and unregistered common stock.

The following table presents a summary of our warrant activity:

As of March 31, 2016

Weighted Average
Exercise
Price

Weighted
Average
Remaining
Term
(years)

Aggregate
Intrinsic
Value

Outstanding, December 31, 2015

3,871,591

0.37

2.52

–

Warrants granted

–

Warrants exercised

–

Warrants expired, cancelled, forfeited

–

Outstanding and exercisable at March 31, 2016

3,871,591

0.37

2.52

–

As of March 31, 2016 and December 31, 2015 all outstanding warrants were fully vested. Of the outstanding warrants, 862,500 are contingently exercisable only in the event that other equity-linked instruments are exercised.

Options

In August 2015, outstanding options and warrants with an aggregate fair value of $493,161 were reclassified from equity to derivative liability.

As of March 31, 2016 and 2015 the Company had 568,162 stock options outstanding. During the periods presented there were no options granted, exercised, cancelled, or forfeited, correspondingly, no additional compensation expense was recognized for the periods presented. All options outstanding are exercisable and do not have any intrinsic value as of March 31, 2016 and 2015 and are set to expire in October of 2017. At March 31, 2016 the weighted average exercise price of the outstanding options was $6.60 with a weighted average remaining term of 1.59 years.

NOTE 6 – CONVERTIBLE NOTES PAYABLE

The Company has entered into various convertible debt financing transactions with third party investors (“Investors”). As of March 31, 2016 the Company issued convertible notes to Investors in the aggregate principal amount of $258,850. The notes are unsecured, and provide for the conversion of all principal and interest outstanding under the notes into shares of the Company’s common stock beginning six months after the issuance date of the respective notes (“conversion date”) at conversion rates of 55%-60% of the lowest listed market price of the Company’s common stock for the previous twenty to twenty-five trading days immediately prior to the conversion date.

The conversion price of the notes are subject to adjustment in the event of stock splits, dividends, distributions and similar adjustments to our capital stock. The number of shares of common stock subject to the Notes may be adjusted in the event of mergers, distributions, a sale of substantially all of the Company’s assets, tender offers and dilutive issuances.

The Company has determined the resetting terms of the conversion rates are separable into two elements: i) Fixed Conversion Rate element – since a fixed minimum discount to the listed market price ranging from forty to forty-five percent of any listed market price has been determined to be a predominant element of the conversion feature, we determined the fixed conversion element results in a fixed value of common stock to the Investor at any conversion date; and ii) Variable Conversion Rate element – the volatility in our listed market prices and wide ranging bid and ask spreads on a daily basis results in an additional variable amount of common stock value being received by the Investors upon conversion. The fixed conversion element, resulting in the determination of stock settled debt, is recognized as a debt discount at intrinsic value on the issuance date and is not re-valued in the subsequent periods. The variable conversion element is classified as a derivative liability and is revalued on an on-going basis.

Convertible notes payable consist of the following:

	As of March 31, 2016
	Face Value of Note		Intrinsic Value of Fixed Conversion Element		Unamortized Discount			Net Balance
JMJ Financial: 12% Convertible note due August 24, 2017	$	47,100	$	37,500	$	(31,137	)	$	53,463
LG Capital Funding, LLC; 8% Convertible note due August 21, 2016		13,500		22,091		(10,194	)		25,397
St George Investment, LLC; 8% Convertible note due September 9, 2016		32,000		26,182		(13,539	)		44,643
Carebourn Capital, LP; 12% Convertible note due July 5, 2016		87,500		87,500		(37,763	)		137,237
LG Capital Funding, LLC; 8% Convertible note due October 9, 2016		78,750		78,750		(48,147	)		109,353
Total Convertible Notes	$	258,850	$	252,023	$	(140,780	)	$	370,093

During the three months ended March 31, 2016 the Company recognized discount accretion totaling $88,061 included in interest expense in the accompanying results of operations. Since the Company has determined the convertible notes will be stock settled, beginning six months after the date of each issuance, all of the convertible notes payable have been classified as current in the accompanying balance sheet.

NOTE 7 – EMBEDDED DEBT CONVERSION FEATURES AND OTHER EQUITY-LINKED INSTRUMENTS

The Company accounts for variable conversion elements embedded in its convertible instruments that meet the definition of a derivative as liabilities. The variable conversion elements are re-measured at fair value with the changes in the value reported as a component of other income (expense) in the accompanying results of operations. The Company estimates the fair value of the variable conversion element using a Black-Scholes Merton Pricing model based on the variable number of additional shares of common stock the Company is required to issue upon conversion.

The Company periodically, or when specific transactions occur that may have material impacts on the presentation of the financial statements, reviews it outstanding equity and equity-linked instruments to determine the appropriate classification in the accompanying balance sheet, equity or liability (asset). During the year ended December 31, 2015 the company reclassified all of its previously outstanding options and warrants from equity to liability. The determination to reclassify the previously outstanding options and warrants resulted from the issuance of convertible notes payable that are potentially convertible into an unlimited number shares of common stock.

The Company measures and re-measures the fair value of the instruments not classified as permanent equity using a Black Scholes Merton pricing model. The following assumptions were used to estimate the fair value of the Company’s derivative liabilities:

Expected volatility	302.83%
Expected term (years)	.15 to 2.25
Dividend yield	0.0%
Discount Rate	0.21%

During the period-ended March 31, 2016 the Company recognized a derivative liability, and corresponding finance fee, with an initial fair value totaling $148,755 associated with the variable conversion element embedded in the convertible notes payable. Finance fees are included as a component of interest expense in the accompanying results of operations.

In August 2015, outstanding options and warrants with an aggregate fair value of $135,197 were reclassified from equity to derivative liability.

As of March 31, 2016 the Company had derivative liability obligations with an aggregate fair value totaling $370,041. During the three months-ended March 31, 2016 the Company recognized a gain on the change in the fair value of derivative liabilities totaling $294,385 included as a component of other income (expense) in the accompanying statements of operations.

Financial liabilities measured at fair value on a recurring basis are summarized below:

Fair value measurements

March 31, 2016

Quoted prices in
active markets for
unobservable
identical assets
(Level 1)

Significant
other
inputs
(Level 2)

Significant
observable inputs
(Level 3)

Derivative liability

370,041

–

370,041

The derivative liabilities are measured at fair value using a Black Sholes Merton Pricing Model. The model is based on assumptions including quoted market prices and estimated volatility factors based on historical quoted market prices for the Company’s common stock, and are classified within Level 3 of the valuation hierarchy.

The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial liabilities that are measured at fair value on a recurring basis:

	March 31, 2016			December 31, 2015
Beginning Balance	$	664,426		$	–
Aggregate fair value of derivative issued		–			148,755
Liability reclassification for other equity linked instruments		–			493,161
Change in fair value of derivative included in results of operations (gain) loss		(294,385	)		22,510

Ending Balance	$	370,041		$	664,426

NOTE 8 – ACCRUED EXPENSES

During the period-ended December 31, 2015 our management, with the assistance of our defense attorney, analyzed the merit and likelihood of an unfavorable outcome in the matter of Congoo, LLC v. HDIMAX Max Media, Inc. Civ. Action No. 3:15-cv-01423. Based on the facts and circumstances, we determined the likelihood of an unfavorable outcome to be remote. Correspondingly, we reversed the previously accrued obligation of $422,448, as presented in sales and marketing expense, in the accompanying statement of operations.

NOTE 9 – LICENSED CONTENT

The Company entered into a content licensing and distribution agreement with an entertainment company in which we will distribute, on our available platforms, the following:

	i.	Fifty-two (52) twenty three minute (0:23) episodes of a series known as “Behind the Velvet Rope”
	ii.	Ancillary content including a minimum of ten to twenty event compilations approximately five to seven minutes in length each; and
	iii.	Thirty to forty individual interviews approximately one to three minutes in length each.

The agreement calls for us to advance $480,000 to the entertainment company to be used for production of the series. After paying the advance, we are entitled to recoup the advanced amount plus an additional $10,000 (a total of $490,000) after which time the gross revenue generated under the agreement will be split on a 50/50 basis. The non-refundable advance obligation and capitalized licensed content are presented in accounts payable and current assets, respectively, in the accompanying balance sheet.

NOTE 10 – COMMITMENTS, CONTINGENCIES AND UNCERTAINTIES

Operating Lease

The Company is currently obligated under an operating lease for office space and associated building expenses. The lease expires in January 2017. As of March 31, 2016, future minimum payments for all lease obligations are as follows:

Year			Amount
2016			3,600
2017			450

NOTE 11 – LEGAL

The Company is currently under negotiations to pay a vendor claim. The possible exposure of the claim ranges from $95,000 to $150,000, the company has accrued $129,187, as of March 31, 2016.

NOTE 12 – SUBSEQUENT EVENTS

ASC 855-16-50-4 establishes accounting and disclosure requirements for subsequent events. ASC 855 details the period after the balance sheet date during which we should evaluate events or transactions that occur for potential recognition or disclosure in the financial statements, the circumstances under which we should recognize events or transactions occurring after the balance sheet date in its financial statements and the required disclosures for such events. We have evaluated all subsequent events through the date these consolidated financial statements were issued, and determined the following are material to disclose:

In April 2016, the Company signed a subscription agreement with an individual for 588,235 shares of common stock in exchange for $10,000 cash.

In April 2016, the Company signed a subscription agreement with an individual for 294,118 shares of common stock in exchange for $5,000 cash.

In April 2016, the Company’s Board of Directors authorized the issuance of 763,258 shares of common stock to a Board Member.

In April 2016, the Company settled a liability and received a release of any future liability for 150,000 share of its common stock.

In April 2016, the Company issued 100,000 shares of its common stock in conversion of a promissory note.

In April 2016, the Company issued a 6 month convertible note, with a face value of $60,500, 12% interest.

In April 2016, the Company amended its equity purchase agreement with Kodiak Capital Group. The amendment was to update language to support shares issued and outstanding at December 31, 2015.

In May 2016, the Company issued 2,699,357 of its common stock in a conversion of debt.

In May 2016, the Company issued 1,700,000 shares of its common stock in a conversion of debt.

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

The following discussion provides information that we believe is relevant to an assessment and understanding of the results of operations and financial condition of the Company as of and for the three months ended March 31, 2016, as well as our future results. It should be read in conjunction with the condensed financial statements and accompanying notes also included in this 10-Q and our Annual Report on Form 10-K as of and for the period ended December 31, 2015.

Overview

Zonzia Media, Inc. is a multi-platform entertainment company focused on delivering compelling content with the objective of generating both advertising and subscription revenue. Zonzia is currently distributing content in cable television households across the US. In addition to our cable distribution, Zonzia also plans to distribute its content on most internet connected devices through its zonzia.com Over-The-Top (OTT) platform.

Once completed, Zonzia’s OTT software technology will allow instant access to our available content from internet connected devices including desktop computers, laptops, tablets, smart phones, internet connected game consoles and other internet connected devices. We anticipate delivering a variety of content on all of our platforms including:

	§	Original Programming – featuring TV series, mini-series and documentaries.
	§	Feature Films – full-length feature films from major Hollywood studios and independent production companies.
	§	Television Shows – TV series from major networks and independent production companies.
	§	Concerts, Sports and Live Events – streaming live music concerts, live sports events and other live events.

We are currently distributing licensed content through our cable television distribution platforms.

Zonzia Over-The-Top (OTT) Platform

We plan to make our content readily available on computers, tablets, mobile devices, and other internet connected devices. Our content will be posted on the zonzia.com OTT platform. Over-The-Top (OTT) refers to any content not delivered as specifically programmed linear channels from a pay TV operator, which may encompass even on-demand content provided as TV Everywhere by a pay TV operator. Further, OTT has the component of running on the "open internet" or an unmanaged network.

Video on Demand (VOD) / Subscription Video on Demand (SVOD)

We anticipate that our Video on Demand (VOD) and Subscription Video on Demand (SVOD) offerings will include full length feature films, TV series, documentaries, live events and general programming. We are cross-soliciting film, TV and live event promoters, offering them a number of favorable deal options which will allow them to have direct access to our targeted demographics including entering into revenue sharing deals. By matching video and live event producers and promoters with our advertising customers, advertisers will have the ability to produce and embed user-targeted ads in our VOD and SVOD offerings. Our intention is that by providing entertaining content to an expanding end user base, our brand awareness will increase, enabling us to develop strong relationships and retention rates with our advertisers, ecommerce and other brand partners.

In addition to being able to deliver innovative and entertaining content across all of our delivery platforms, our overall success is heavily dependent on our ability to develop nationwide brand recognition which is intended to result in a significant viewer and ultimately consumer base. Our brand recognition and viewer base is expected to drive rapid expansion of individual consumer impressions that are essential in the development and effectiveness of our advertising program offerings. Since we generate advertising revenue from the number of user impressions we achieve, our content and other product offerings must be attractive to our individual users.

Viewer Subscriptions

As we launch our OTT delivery platforms, including our website and mobile applications, our subscription content and accompanying interactive services may be initially available for free for limited periods in order to aggressively increase our brand awareness and consumer base.

As our brand awareness and consumer base gains momentum, we will launch a targeted subscription campaign drive which we anticipate will begin in the latter part Q2 2016. Subsequent to the initial launch and trial period, we expect to begin charging subscribers a monthly fee of $4.99 per month.

Results of Operations

The following discussion of the financial condition and results of operations should be read together with our condensed financial statements for the three months ended March 31, 2016 and 2015.

Revenue

The Company generated $4,480 and $0 in revenue during the three months ended March 31, 2016 and 2015, respectively. This revenue was advertising from our hotel channel, which has since been turned off.

Sales and Marketing

For the three months ended March 31, 2016 we incurred sales and marketing expenses totaling approximately $276,923 and negative ($297,928) (net of the non-cash reversal of a non-recurring accrued obligations of approximately $422,000), respectively. The increases during the period ended March 31, 2016 were the result of monthly content expense of $137,794, technology development of $33,000 and website imaging of $106,129. As we continue to build our brand awareness and video and other content libraries, along with our infrastructure, we expect our sales and marketing expenses to increase throughout the next twelve months and beyond.

Officer and Director Compensation

Officer compensation for the three months ended March 31, 2016 and 2015 of approximately $3,345,145 and $65,675,677 is primarily the result of non-recurring stock awards to our officers and directors, inclusive of the modification of previously issued awards.

We believe a significant portion of the stock awards granted during 2015 and the three month ended March 31, 2016, were necessary to attract and retain individuals to serve in officer, director, and other consulting roles. In this regard, we issued a total of 157,447,500 shares of fully vested, restricted and unregistered shares of common stock to these individuals. Throughout the remainder of the fiscal year it is not anticipated that officers will accrue compensation in excess of monthly salaries.

Professional Fees

The Company incurred approximately $91,465 and $819,599 of professional fees during the three month period ended March 31, 2016 and 2015, respectively. The majority of these fees were incurred for consulting of $59,627, accounting and auditing $11,350, investor relations $7,000 and legal $11,940. We expect our professional fees to steadily decline as we approach the launch date of our principal business activities.

General & Administrative

Our general and administrative expenses totaling approximately $118,562 and $322,441 for the three months ended March 31, 2016 and 2015, respectively, were primarily associated with our on-going capital raising efforts and other administrative costs. Our general and administrative costs are expected to significantly fluctuate until we fully commence our planned principal business operations expected to occur in the second half of 2016.

Liquidity and Capital Resources

Working Capital

At March 31, 2016, we had a working capital deficit of approximately $3,600,000, primarily due to professional service providers, officers and directors, and other related parties. The working capital deficit includes convertible notes that are currently being settled via the issuance of shares of common stock. Our working capital is not sufficient to meet our operations. Additionally, our ability to execute our content strategy and meet our day to day liquidity needs through the remainder of the year requires us to raise additional capital.

Our plans presented in this Report, particularly under “Plan of Operations” below, are dependent upon our ability to raise significant capital in the near term. If we are unsuccessful in generating sufficient cash through operations or raising additional capital through means such as debt issuances, equity offerings or short-term advances from related parties, we will be required to significantly reduce our operational efforts and curtail our rapid growth strategy. Further, as of the date of this Report we do not have any firm funding commitment.

Cash Flow

Cash Used in Operating Activities

Our cash used in operations, was $416,016, primarily consisted of payments to service providers to prepare and execute our Settlement Agreement with our former officers and directors. Our operational cash used significantly declined from the period ended December 31, 2015 as a result of significant, non-recurring, stock based compensation of approximately $3,198,043. For the near term, and under informal agreements, many of our services providers and related parties have agreed to defer payment until we increase our liquidity, which resulted in off-sets to our net loss and cash used in operations totaling approximately $700,000. As noted above, we will require additional capital in order to monetize our content strategy and overall plan of operations.

Cash Provided by Financing Activities

Cash for the three months ended March 31, 2016 was provided by the issuance of 3,974,741 shares of restricted and unregistered shares of common stock totaling $484,015, the issuance of promissory notes in the amount of $250,015, and the issuance of stock subscription agreements for gross proceeds of $150,000.

Our ability to continue as a going concern for at least the next 12 months will depend on our ability to raise the money we require through equity or debt financing. There is no assurance that we will be able to obtain further funds required for our continued operations or that additional financing will be available to us when needed or, if available, that it can be obtained on reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will not be able to meet our other obligations as they become due, and we will be forced to scale down or perhaps even cease our operations. As of the date of this Report we do not have any firm funding commitment.

Plan of Operations

Much of the three months ended March 31, 2016 was spent modifying our business model and dissolving our business relationship with our former Chairman and Chief Executive Officer which initially culminated in the entry into a Settlement Agreement on January 22, 2015. Subsequent to the Settlement Agreement, we spent significant amounts of time and effort on administrative tasks such as changing our Company name, assessing our on-going liabilities and operational plans, and maintaining our regulatory compliance. An integral part of these activities was to attract and retain highly experienced individuals to form our management team, Board of Directors, and Advisory Board. We believe that we have successfully attracted and retained these individuals. Once in place, our team began the process of rebranding the Company into Zonzia Media and assessing the value of various content delivery platforms and developing the corresponding relationships with applicable service providers.

Capital Raising

Since late in 2014 through the date of this report, our Officers, Directors and other consultants and Advisory Board Members have devoted significant time and effort to raising the capital necessary to fully implement our principal business plans including securing content and building the required content delivery infrastructure. While we have received positive feedback from these efforts, we do not have any firm funding commitments as of the date of this report sufficient to fully implement our business strategies in the near term.

Advertising

In September of 2015 Zonzia engaged Trifecta Media to sell advertising for all of our cable distributed content. Trifecta Media specializes in advertiser sales across a diverse spectrum of media platforms including cable. Trifecta’s advertising is anticipated to begin airing and contributing revenue in 2016.

OTT Platform, Content Delivery and Storage

In September of 2015 Zonzia engaged Kaltura, the leading video technology company, to develop and power all of Zonzia’s OTT Video On Demand services.

Kaltura’s OTT software is one of the most advanced and comprehensive pay OTT solution on the market today. It includes advanced monetization, social and personalization features; innovative tools for improving user acquisition and retention; and multi-screen, multi-device support.

With Kaltura’s OTT monetization tools, Zonzia will be able to simultaneously deploy its unique mixture of advertising supported and subscriber based business models providing for maximum flexibility. These tools will support server-side and native ad insertion technology for Video On Demand and live content, in-app purchases, a range of payment options and even discounts for introducing friends. Kaltura’s Digital Rights Management (DRM) support will provide full content protection, while Kaltura’s monetization tools will be customized to Zonzia’s unique content distribution model and will be designed to deliver a seamless experience to our consumers across all devices.

By allowing each viewer in the household to set up an individual profile, Kaltura’s OTT software will deliver each viewer a personalized experience, which will increase Zonzia’s subscriber engagement. This will give us tremendous insight and understanding of our subscribers’ unique behavior allowing us to continually strengthen loyalty and maximize revenues.

Kaltura’s OTT software will provide a consistent cross-device experience which will allow our users to take their favorite Zonzia content wherever they go and intuitively interact between screens with TV control and synched second-screen metadata. The household “parent” account can decide which members of the household can access content on specific devices and can set VOD budgets per user.

Kaltura’s OTT software will give us the ability to boost viewer engagement, attract new subscribers and monetize content across multiple devices.

Content Development

In our cable households we are currently distributing content which we licensed from our partner simplyME Distribution. Zonzia’s objective is to provide licensed content, original content and live content over all of our platforms. Under the direct supervision of our Officers we have made significant contacts within the industry and have had preliminary meetings with various entertainers, producers, and other content developers to provide a significant volume of video and other live streaming events pending the financial ability to acquire and develop our intended content library.

We recently signed an agreement with M Squared Entertainment to distribute its celebrity based show Behind The Velvet Rope across all of Zonzia’s platforms. Behind The Velvet Rope is currently being distributed through Zonzia’s cable household distribution network. Behind The Velvet Rope, hosted by Arthur Kade, is the all-access entertainment destination which brings consumers up-close and personal with celebrities through red carpet and in-studio interviews. Each episode features prominent celebrities from the worlds of film, music, TV, fashion, sports, theater and publishing. Host Arthur Kade has interviewed some of the industry’s most revered and iconic names such as Meryl Streep, George Clooney and Leonardo DiCaprio.

Zonzia also recently signed an agreement with Ace Entertainment Inc. to distribute its jazz based series Studio Jams across all of Zonzia’s platforms. Studio Jams is an up-close and personal behind-the-scenes insider’s peek at the brilliant artistry encompassing the wondrous creation of jazz music. Each episode features a different group of esteemed jazz musicians gathered together in a recording studio to create new music, reminisce about old music and just have a great time. Many of these iconic artists are working together for the very first time. Studio Jams is also currently distributed worldwide on Voice of America, the official external radio and television broadcasting service of the U.S. federal government, reaching an estimated worldwide audience of 125 million people.

Critical Accounting Policies And Estimates

Embedded Conversion Features and Other Equity-linked Instruments

The Company classifies all of its common stock purchase warrants and options, embedded debt conversion features, and other derivative financial instruments as equity if the contracts (1) require physical settlement or net-share settlement or (2) give the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that (1) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the control of the Company), (2) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement), or (3) contracts that contain reset provisions. The Company assesses classification of its equity-linked instruments at each reporting date to determine whether a change in classification between equity and liabilities (assets) is required.

The derivative liabilities are measured at fair value using a Black Scholes Merton Pricing Model. The model is based on assumptions including quoted market prices and estimated volatility factors based on historical quoted market prices for the Company’s common stock, and are classified within Level 3 of the fair value hierarchy as established by US GAAP. Significant declines in the Company’s listed market exposes us to a requirement to issue significant numbers of shares of common stock that can be sold in the market which likely will result in further declines of the listed stock price and will likely have a detrimental impact on our ability to raise additional capital. Additionally, fluctuations in the volatility assumptions used in the Black Scholes model can result in material changes in the estimated fair value of our financial instruments.

There have not been any other material changes to the critical accounting policies and estimates previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2015.

Off- Balance Sheet Arrangements

None.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable for smaller reporting companies.

Item 4. Controls and Procedures.

A. Disclosure

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, management performed, with the participation of our Principal Executive Officer and our Principal Accounting Officer, an evaluation of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (“Exchange Act”). Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Exchange Act and SEC’s rules, and that such information is accumulated and communicated to our management, including our Principal Executive, to allow timely decisions regarding required disclosures. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Our Principal Executive and Accounting Officer concluded that, as of March 31, 2016, our disclosure controls and procedures were not effective.

B. Internal Control over Financial Reporting

No change in our internal control over financial reporting, as such term is defined in Exchange Act Rule 13(a)-15 occurred during the fiscal quarter ended March 31, 2016, that materially affected or is reasonably likely to materially affect our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

None

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