10-Q

U. S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

(Mark One)

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

For the quarterly period ended May 31, 2016

Commission File Number: 000-55140

STREAMTRACK, INC.

(Exact name of registrant as specified in its charter)

Wyoming	26-2589503
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

347 Chapala Street

Santa Barbara, California 93101

(Address of principal executive offices)

(805) 308-9151

(Registrant's telephone number, including area code)

 ____________________________________________________________

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer,""accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

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

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

At July 12, 2016, there were 4,190,265,983 shares of the Company's common stock outstanding.

TABLE OF CONTENTS

		Page
PART I
Item 1.	Financial Statements (unaudited)		3
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operation		16
Item 3.	Quantitative and Qualitative Disclosure About Market Risk		22
Item 4.	Controls and Procedures		22
PART II
Item 1.	Legal Proceedings		23
Item 1A.	Risk Factors		23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		23
Item 3.	Defaults Upon Senior Securities		23
Item 4.	Mine Safety Disclosures		23
Item 5.	Other Information		23
Item 6.	Exhibits		24

2

PART I

Item 1. Financial Statements (unaudited)

StreamTrack, Inc.

Condensed Consolidated Balance Sheets

 (unaudited)

	As of May 31, 2016			As of August 31, 2015
Assets:
Current assets
Cash	$	13,867		$	7,909
Accounts receivable, net of allowances of $6,000 and $6,000, respectively		92,987			114,253
Prepaid expenses		2,995			2,196
Total current assets		109,849			124,358
Property and equipment, net		403,856			660,973
Other assets
Other assets		34,722			56,613
Total other assets		34,722			56,613
Total assets	$	548,427		$	841,944
Liabilities and Stockholders' Deficit
Current liabilities
Account payable and accrued expenses	$	1,153,259		$	1,147,249
Line of credit		933,926			610,950
Derivative liabilities embedded within convertible notes payable		460,789			898,856
Capital lease payable - in default		54,704			54,704
Related party payables		228,120			159,660
Convertible notes payable, net of discount of $39,004 and $19,794, respectively		921,519			739,798
Related party convertible notes payable, net of discount of $161,451 and $0, respectively		777,013			197,850
Total current liabilities		4,529,330			3,809,067
Long term liabilities
Convertible notes payable, net of discount of $46,869 and $155,249, respectively		28,131			115,907
Related party convertible notes payable, net of discount of $0 and $442,744, respectively		215,500			428,370
Total long term liabilities		243,631			544,277
Total liabilities		4,772,961			4,353,344
Series C preferred stock; $0.0001 par value; 20,000 shares authorized; 11,270 and 11,800 shares issued and outstanding as of May 31, 2016 and August 31, 2015		1,690,500			1,770,000
Commitments and contingencies (Note 5)
Stockholders' Deficit:
Series A preferred stock; $0.0001 par value; 100 shares authorized; 0 shares issued and outstanding as of May 31, 2016 and August 31, 2015		-			-
Series B preferred stock; $0.0001 par value; 200,000 shares authorized; 200,000 shares issued and outstanding as of May 31, 2016 and August 31, 2015		20			20
Common stock, $0.0001 par value; Unlimited shares authorized at May 31, 2016 and August 31, 2015; 4,198,519,796 shares issued and outstanding at May 31, 2016; 3,403,519,796 shares issued and outstanding as of August 31, 2015		419,852			340,352
Additional paid-in capital		3,341,837			3,341,837
Common stock to be issued		87,500			75,000
Accumulated deficit		(9,764,243	)		(9,038,609	)
Total stockholders' deficit		(5,915,034	)		(5,281,400	)
Total liabilities and stockholders' deficit	$	548,427		$	841,944

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

3

 StreamTrack, Inc.

Condensed Consolidated Statements of Operations

 (unaudited)

	For the Three Months Ended May 31, 2016			For the Three Months Ended May 31, 2015			For the Nine Months Ended May 31, 2016			For the Nine Months Ended May 31, 2015
Revenues:
Advertising	$	120,041		$	203,189		$	455,372		$	721,583
Services		-			8,250			16,838			27,500
Total revenues		120,041			211,439			472,210			749,083
Costs of revenues:
Media network		73,008			89,008			230,561			280,591
Depreciation and amortization		-			-			-			77,986
Colocation services		6,847			39,669			20,547			116,337
Broadcaster commissions		12,289			22,667			39,851			89,602
Other costs		99			(191	)		1,224			3,191
Total costs of revenues		92,243			151,153			292,183			567,707
Gross profit		27,798			60,286			180,027			181,376
Operating expenses:
Product development		-			3,445			210			17,694
Officer compensation		25,000			7,825			75,000			66,324
Sales and marketing		6,177			11,771			18,975			88,749
Other expenses		270,193			241,786			805,857			680,295
Total operating expenses		301,370			264,827			900,042			853,062
Loss from operations		(273,572	)		(204,541	)		(720,015	)		(671,686	)
Other income (expense):
Other income (expense)		-			(444	)		-			(57,126	)
Interest expense (including accretion of debt discount of $123,487, $308,135, $370,463 and $639,895, respectively)		(195,864	)		(409,812	)		(619,678	)		(905,117	)
Gain on sale of co-location and domain		-			-			175,992			-
Loss on extinguishment		-			(35,025	)		-			(101,562	)
Loss on settlements		-			(1,574,848	)		-			(1,574,848	)
Change in fair value of derivatives		65,990			47,757			438,067			321,961
Total other income (expense)		(129,874	)		(1,972,372	)		(5,619	)		(2,316,692	)
Loss before provision for income taxes		(403,446	)		(2,176,913	)		(725,634	)		(2,988,378	)
Provision for income taxes		-			-			-
Net loss	$	(403,446	)	$	(2,176,913	)	$	(725,634	)	$	(2,988,378	)
Basic net income (loss) per common share attributable to common stockholders	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)
Diluted net income (loss) per common share attributable to common stockholders	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)
Weighted-average number of shares used in computing basic per share amounts		4,198,519,796			2,049,228,223			4,109,920,895			1,035,812,512
Weighted-average number of shares used in computing dilutive per share amounts		4,198,519,796			2,049,228,223			4,109,920,895			1,035,812,512

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

4

StreamTrack, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

	For the Nine Months Ended May 31, 2016			For the Nine Months Ended May 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(725,634	)	$	(2,988,378	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		288,916			267,871
Re-measurement of derivative liabilities		(438,067	)		(321,961	)
Accretion of debt discount		370,463			639,895
Stock issued for services and finance fees		-			10,134
Amortization of finance fees		-			12,844
Gain on sale of co-location and domain		(175,992	)		-
Loss on Settlements					1,574,848
Loss on extinguishment of debt		-			101,562
Changes in operating assets and liabilities:
Accounts receivable		21,266			155,157
Prepaid expenses		(799	)		10,558
Other current assets		-			(7,378	)
Accounts payable and accrued expenses		10,785			248,775
Related party accrued liabilities		68,460			125,460
Net cash used in operating activities		(580,602	)		(170,613	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase or development of property and equipment		(21,039	)		(357,967	)
Proceeds from sale of co-location and domain		179,980			-
Other assets		7,143			(5,500	)
Net cash provided by (used in) investing activities		166,084			(363,467	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of convertible promissory notes		-			181,459
Payments on related party notes payable		-			(89,284	)
Note receivable		-			(7,875	)
Proceeds from line of credit		322,976			36,129
Payments on capital lease		-			(9,000	)
Proceeds from issuance of convertible promissory notes - related parties		85,000			261,750
Fees paid to ASC under settlement		-			59,311
Proceeds from sale of common stock / common stock to be issued		12,500			75,000
Net cash provided by financing activities		420,476			507,490
Change in cash and cash equivalents		5,958			(26,590	)
Cash and cash equivalents, beginning of period		7,909			26,590
Cash and cash equivalents, end of period	$	13,867		$	-
Supplemental disclosures of cash flow information:
Cash paid for interest	$	5,728		$	-
Cash paid for income taxes	$	-		$	-
Non cash investing and financing activities:
Issuance of common stock for conversion of debt and accrued interest	$	-		$	304,778
Conversion of Series C preferred stock in common stock	$	79,500		$	-
Beneficial conversion feature recorded on convertible debt	$	-		$	938,614
Issuance of common stock for accounts payable	$	-		$	172,414
Increase in line of credit for facility fee	$	2,500		$	-
Assets acquired with Series C preferred stock	$	-		$	120,000

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

5

 StreamTrack, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1.    Nature of Business

StreamTrack, Inc. (the "Company") is a digital media and technology services company. The Company provides audio and video streaming and advertising services through its RadioLoyalty^TM Platform (the "Platform") to over 5,000 internet and terrestrial radio stations and other broadcast content providers. The Platform consists of a web-based and mobile player that manages streaming audio and video content, social media engagement, display and video ad serving within the web player and is also capable of replacing audio ads with video ads within the web player in a live or on-demand environment. The Company offers the Platform directly to its broadcasters and integrates or white labels its technologies with web-based internet radio guides and other web-based content providers. The Company is also continuing development of Amped Fantasy and SportsAlert™, a fantasy sports product. The Company was incorporated as a Wyoming corporation on May 6, 2008.

Basis of Presentation

The accompanying interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's Form 10-K for year ended August 31, 2015.  In the opinion of management, all adjustments necessary in order for the consolidated financial statements to be not misleading have been reflected herein.  The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year ended August 31, 2016. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, StreamTrack Media, Inc. and RadioLoyalty, Inc., California corporations. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company's management, the consolidated financial statements include all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company's financial position for the periods presented.

Going Concern

The Company's financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  For the nine months ended May 31, 2016, the Company recorded an operating loss of $720,015 and a net loss of $725,634. As of May 31, 2016, the Company had a working capital deficit of $3,958,692, which excluding the derivative liability was $460,789. The net loss and negative working capital indicate substantial doubt about the entity's ability to continue as a going concern.

Management is confident but cannot guarantee that the Company will be able to raise additional capital in order to repay debts and continue operations. As of August 31, 2015, during fiscal 2016, the Company is obligated to make payments on certain operating leases, convertible debts, and a capital lease, among others. The Company's normal operating costs are also significant and include consulting fees, professional fees, product development costs and marketing and sales costs associated with management's business plan. Since inception and through the date of these financial statements, the Company has successfully raised a significant amount of capital through debt and equity offerings. The Company anticipates launching several new product offerings and initiating certain new significant partnerships during the fiscal year ending August 31, 2016. The Company anticipates those products and partnerships to be profitable but notes that it will require an unknown amount of capital for product development and commercial deployment. The Company will attempt to have its potential partners pay for the some of these costs but management cannot be certain that it will succeed in entering into such arrangements. Management may potentially make a business decision to move forward, delay, or cancel certain partnerships because of the Company's overall capital needs. Nonetheless, the ability of the Company to continue as a going concern is dependent on the successful execution of the business plan and become profitable. If the Company is unable to become profitable and sustain positive cash flow from operations, the Company could be forced to modify its business operations or possibly cease operations entirely. Management cannot provide any assurances that the Company will be successful in its operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the financial statements, as well as the reported amounts of revenue and expenses during the periods presented. Estimates are used for determining the allowance for doubtful accounts, stock-based compensation, fair values of warrants to purchase common stock, derivative liabilities and income taxes. To the extent there are material differences between these estimates, judgments, or assumptions and actual results, the Company's financial statements could be affected. In many cases, the accounting treatment of a particular transaction is specifically dictated by U.S. GAAP and does not require management's judgment in its application. There are also areas in which management's judgment in selecting among available alternatives would not produce a materially different result.

6

Net Loss Per Share

Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period.

Diluted net loss per share is computed by giving effect to all potential shares of common stock, including convertible debt instruments, preferred stock, restricted stock unit grants and detachable stock warrants. Basic and diluted net loss per share was the same for the nine months ended May 31, 2016 and 2015 presented as the inclusion of all potential common shares outstanding would have been anti-dilutive.

Recent Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, "Revenue from Contracts with Customers", which supersedes most of the current revenue recognition requirements. The core principle of the new guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for these goods or services. New disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers are also required. This guidance is effective for the Company in the first quarter of fiscal year 2018 and early application is not permitted. Entities must adopt the new guidance using one of two retrospective application methods. The Company is currently evaluating the standard but does not expect it to have a material impact on our financial position, results of operations or cash flows.

In August 2014, the FASB issued ASU 2014-15, which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date the financial statements are issued.2 An entity must provide certain disclosures if "conditions or events raise substantial doubt about the entity's ability to continue as a going concern." The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted.

The Financial Accounting Standards Board issues Accounting Standard Updates ("ASUs") to amend the authoritative literature in Accounting Standards Codification ("ASC"). There have been a number of ASUs to date that amend the original text of ASC. The Company believes those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to the Company or (iv) are not expected to have a significant impact on the Company.

2. Composition of Certain Financial Statement Captions

Property and Equipment

Property and equipment consisted of the following:

	May 31, 2016			August 31, 2015
Software	$	1,807,019		$	1,775,220
Servers, computers, and other related equipment		153,824			198,924
Leasehold improvements		1,675			1,675
		1,962,518			1,975,819
Less accumulated depreciation and amortization		(1,558,662	)		(1,314,846	)
Property and equipment, net	$	403,856		$	660,973

Depreciation expense totaled $288,916 and $267,871 for the nine months ended May 31, 2016 and 2015, respectively.  There have been no write-offs or impairments of property and equipment since the Company's inception on November 30, 2011.

7

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following:

	May 31, 2016		August 31, 2015
Accounts payable	$	751,578	$	751,129
Accrued interest		269,817		184,007
Accrued broadcaster commissions		94,862		92,304
Credit card		37,002		120,049
Accounts payable and accrued expenses	$	1,153,259	$	1,147,489

3. Fair Value

Fair value is an exit price, representing the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. Fair value measurements are required to be disclosed by level within the following fair value hierarchy:

Level 1– Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

Level 2 – Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument's anticipated life.

Level 3 – Inputs lack observable market data to corroborate management's estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

When determining fair value, whenever possible the Company uses observable market data, and relies on unobservable inputs only when observable market data is not available. Fair-value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of May 31, 2016 and August 31, 2015. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, accounts receivable, prepaids, accounts payable, accrued liabilities, notes payable, and convertible notes payable. Fair values for these items were assumed to approximate carrying values because of their short term in nature or they are payable on demand.

The fair value of these financial assets and liabilities was determined using the following inputs:

	Fair Value Measurement Using
	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Fair values as of May 31, 2016
Liabilities:
Derivative liabilities	$	-	$	460,789		-	$	460,789
Total liabilities measured at fair value	$	-	$	460,789		-	$	460,789
Fair values as of August 31, 2015
Liabilities:
Derivative liabilities		-	$	898,856		-	$	898,856
Total liabilities measured at fair value	$	-	$	898,856		-	$	898,856

The Company's derivative liabilities were classified as Level 2 within the fair value hierarchy because they were valued using significant other observable inputs. At each reporting period, the Company calculates the derivative liability using the Black-Scholes pricing model taking into account variables such as expected life, risk free interest rate, expected volatility, the fair market value of the Company's common stock and the conversion price.

8

4. Asset Acquisition / Disposition

Asset Acquisitions

On April 24, 2015, the Company, entered into an Asset Purchase Agreement with Lux Digital Pictures GmbH Partners ("Lux") pursuant to which, the Company issued 800 shares of Series C Convertible Preferred Stock for the rights to various domains, source codes, etc related to Lux's Sports Alert and Amped Fantasy Sports products. The Company determined the price of the Series C issued to be $120,000 based upon the conversion value of $150 worth of common stock for each share of Series C. The Company recorded the value of the asset as software within property and equipment on the accompanying consolidated balance sheets. The Company capitalized the value of the Series C as the products received were near completion and need limited modification prior to the Company placing into production. The expected life of the asset acquired was estimated to be 36 months.

Asset Disposition

On February 19, 2016, the Company, entered into and closed an Asset Purchase Agreement with Electric Lightwave, LLC ("Electric Lightwave"), a wholly owned subsidiary of Integra Telecom Holdings, Inc. pursuant to which, Electric Lightwave purchased from the Company certain assets related to the Company's data center located in Santa Barbara, including equipment and inventory, for a purchase price of $150,000. As of the date of the sale all the assets were fully depreciated. In connection with the transaction, the Company recorded a gain of $146,012, as rent deposit of $3,988 was transferred as part of the sale, which is recorded within gain on sale of co-location and domain on the accompanying statement of operations.

5. Commitments and Contingencies

 On October 23, 2013, the Superior Court in the Judicial District of Danbury, Connecticut entered an order approving the stipulation of the parties (the "Stipulation") in the matter of ASC Recap LLC ("ASC") v. StreamTrack, Inc. Under the Stipulation, the Company agreed to issue, as settlement of liabilities owed by the Company to ASC in the aggregate amount of $766,288 (the "Claim Amount"), shares of common stock (the "Settlement Shares") as follows:

(a) In one or more tranches as necessary, 3,740,000 shares of common stock (the "Initial Issuance") and an additional 200,000 shares of common stock as a settlement fee.

(b) Through the Initial Issuance and any required additional issuances, that number of shares of common stock with an aggregate value equal to (A) the sum of  (i) the Claim Amount and (ii) reasonable attorney fees and trade execution fees in the amount of $75,000, divided by (B) the Purchase Price (defined under the Stipulation as the market price (defined as the lowest closing bid price of the Company's common stock during the valuation period set forth in the Stipulation) less the product of the Discount (equal to 25%) and the market price. The parties reasonably estimated that the fair market value of the Settlement Shares and all other amounts to be received by ASC is equal to approximately $1,100,000.

(c) If at any time during the valuation period the closing bid price of the Company's common stock is below 90% of the closing bid price on the day before an issuance date, the Company will immediately cause to be issued to ASC such additional shares as may be required to effect the purposes of the Stipulation.

(d) Notwithstanding anything to the contrary in the Stipulation, the number of shares beneficially owned by ASC will not exceed 9.99% of the Company's outstanding common stock.

In connection with the Settlement Shares, the Company relied on the exemption from registration provided by Section 3(a)(10) under the Securities Act.

In connection with the settlement, during the nine months ended May 31, 2015 the Company issued 336,993,000 shares of common stock to ASC in which gross proceeds of $231,725 were generated from the sale of the common shares. In connection with the transaction, ASC received fees of $59,311 and provided payments of $172,414 to settle outstanding vendor payables. There were no shares issued to ASC during the nine months ended May 31, 2016. The remaining amount on the settlement of liabilities owed by the Company to ASC is in the aggregate amount of $151,290 as of May 31, 2016. The Company cannot reasonably estimate the amount of proceeds ASC expects to receive from the sale of these shares which will be used to satisfy the liabilities. Thus, the Company accounts for the transaction as the shares are sold and the liabilities are settled. All amounts are included within accounts payable. Shares which are held by ASC at each reporting period are accounted for as issued but not outstanding.

Legal Proceedings

The Company is potentially subject to various legal proceedings and claims arising in the ordinary course of its business. There are no pending legal proceedings against the Company as of the date of these financial statements.

9

6. Capital Lease

On March 22, 2013, the Company reached a settlement and release agreement with IBM Credit, LLC, ("IBM") the lessor associated with the Company's computer servers and software classified under capital lease. The balance owed to IBM as of March 22, 2013 was agreed to be $108,704. The Company agreed to make payments of $9,000 per month, with a final payment of $9,704 on March 1, 2014, in order to satisfy this balance. As of May 31, 2016 and August 31, 2015, the Company was in default of this agreement and the amount outstanding of $54,704 is reflected as a current liability on the accompanying consolidated balance sheets. 

7. Related Party Transactions

The Company has only been operating since November 30, 2011. As a result, the Company has an extremely limited credit history. The Company's Chief Executive Officer, and the Chief Executive Officer of StreamTrack Media, Inc. (the "Executives") use their personal credit cards to fund operations on a frequent basis. If the Company did not have access to these credit cards, the Company would have to rely exclusively on external sources of capital. The Company's external sources of capital are not always readily available. As a result, in time-constrained circumstances, the use of personal credit cards is necessary until such time as the Company is able to build up its own credit-worthiness and access more readily available and significant credit.

The related party payable as of May 31, 2016 and August 31, 2015 consists of unpaid compensation and non-interest bearing cash advances and charges on personal credit lines made on behalf of the Company by the Executives. The balances owed to the Executives are not secured and are due on demand. Interest will be charged on these balances based upon effective credit card rates. During the nine months ended May 31, 2015, the Executives converted a significant portion of amounts due to them for unpaid compensation and other advances to long-term convertible notes payable, see Note 8 for additional information. In addition, the Executives agreed to a temporary reduction in their annual salary from $240,000 to $50,000 per annum for the period from December 1, 2014 to December 1, 2015. As of May 31, 2016 and August 31, 2015, amounts due to these Executive related to accrued compensation and advances were $227,668 and $159,660, respectively.

See Notes 8 and 10 for additional related party transactions.

8. Debt Instruments

Asset-Based Debt Financing

On April 11, 2013, the Company executed a non-dilutive asset-based debt financing (the "Lender Financing") with a third party (the "Lender"). The Lender Financing for a line of credit, secured by all of the Company's assets. The Company's management also executed limited recourse guarantees with the Lender. Interest is payable monthly based on a floating interest rate determined based on a formula outlined in detail within the financing agreement. The Company anticipates the effective monthly interest rate charged on the outstanding balance owed to the third party will be between 3.2% and 1.1%.

On January 22, 2016, the Company executed an addendum to the Lender Financing agreement whereby the maturity date has been extended to December 15, 2016 with interest calculated at Prime plus 15.25% per annum. In the event the facility is below $750,000 prior to March 15, 2016 the interest rate shall be Prime plus 12.5%; below $500,000 prior to June 15, 2016 the interest rate shall be Prime plus 10%.

Vendor Convertible Note

On November 1, 2012, the Company issued a convertible note for $140,000 (the "Vendor Note") to a former Vendor ("Vendor"). The Vendor Note was executed on November 1, 2012 and was immediately convertible into the Company's common stock at a 50% discount to the lowest bid price for the five days prior to the conversion date. As of August 31, 2015, the note was fully converted. 

Creditor #2 Convertible Promissory Notes

In April 2014, the Creditor entered into an exchange agreement with another lender (the "Creditor #2") whereby the Creditor transferred the Creditor's notes and accrued interest to Creditor #2. In April, the Company entered into i) a note agreement for $284,560 representing amounts transferred from the Creditor; ii) two $125,000 notes in which the proceeds were received on the same date (collectively referred to as the "Creditor #2 Notes") with Creditor #2. The Creditor #2 Notes bear interest per annum at 10.0%, payable six months after the issuance date and are convertible on the date of issuance based upon based upon a 45% discount to lowest trading price, for the 15 trading days prior to conversion. As a result, the lower the stock price at the time the Creditor #2 converts the Creditor #2 Notes, the more common shares the Creditor #2 will receive. There were no conversions during the nine months ended May 31, 2016 and thus the remaining principal balance was $391,242 as of May 31, 2016 and August 31, 2015.

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To the extent the Creditor #2 converts the Creditor #2 Notes and then sells its common stock, the market price of the common stock may decrease due to the additional shares in the market. This could allow the Creditor #2 to receive greater amounts of common stock upon conversion. The sale of each share of common stock could further depress the stock price. Due to the floating conversion price of the notes, the Company does not know the exact number of shares that the Creditor #2 would be issued upon conversion. The shares issuable upon conversion of the Creditor #2 Notes may result in substantial dilution to the interests of the Company's other shareholders. In this regard, even though the investor may not hold shares amounting to more than 9.99% of the outstanding shares at one time, this restriction does not prevent the investor from selling some of its holdings and then receiving additional shares. In this way, the investor could sell more than the 9.99% limit while never holding more than the limit.

During the nine months ended February 28, 2015, the Company amortized a discount of $62,500 to interest expense. As of August 31, 2015, the discount was fully amortized.

Creditor #3 Convertible Promissory Note

In December 2014, a convertible promissory note holder ("Holder") entered into an exchange agreement with another lender (the "Creditor #3") whereby the Holder transferred the Holder's notes and accrued interest to Creditor #3. In December 2014, the Company entered into i) a note agreement for $150,000 representing the principal amount transferred from the Holder. The Creditor #3 Note bears interest per annum at 10.0%, due on August 22, 2015 and is convertible on the date of issuance based upon based upon a 25% discount to lowest trading price, for the 5 trading days prior to conversion. As a result, the lower the stock price at the time the Creditor #3 converts the Creditor #3 Notes, the more common shares the Creditor #3 will receive. There were no conversions during the nine months ended May 31, 2016 and thus the remaining principal balance was $93,350 as of May 31, 2016 and August 31, 2015.

To the extent the Creditor #3 converts the Creditor #3 Note and then sells its common stock, the market price of the common stock may decrease due to the additional shares in the market. This could allow the Creditor #3 to receive greater amounts of common stock upon conversion. The sale of each share of common stock could further depress the stock price. Due to the floating conversion price of the notes, the Company does not know the exact number of shares that the Creditor #3 would be issued upon conversion. The shares issuable upon conversion of the Creditor #3 Note may result in substantial dilution to the interests of the Company's other shareholders. In this regard, even though the investor may not hold shares amounting to more than 4.99% of the outstanding shares at one time, this restriction does not prevent the investor from selling some of its holdings and then receiving additional shares. In this way, the investor could sell more than the 4.99% limit while never holding more than the limit.

Upon issuance, the Company recorded a discount of $150,000 due to the derivative liability, as discussed below in Note 9, having a fair market value in excess of the principal amount of the convertible note. As of August 31, 2015, the discount was fully amortized.

Convertible Promissory Notes

As of May 31, 2016 and August 31, 2015, the Company has outstanding 38 and 33 convertible promissory notes respectively issued between December 2011 and September 2015. The convertible promissory notes bear interest at either 4% or 8% per year and are due in full, including principal and interest, two-three years from the issuance date ranging from August 2014 to February 2018. The convertible promissory notes also include a conversion option whereby the holders may elect at any time to convert any portion or the entire balance into the Company's common stock at conversion prices ranging from $0.0001 to $1.25. There were no transactions in which impacted the convertible notes payable during the nine months ended May 31, 2016, other than the accrual of interest. As of May 31, 2016 and August 31, 2015, the balance of convertible notes payable was $1,702,120 and $1,615,120 respectively.

As of May 31, 2016 and August 31, 2015, convertible promissory notes outstanding of $1,153,964 and $1,068,964 respectively, are held by related parties. These related parties consist of the Company's officers, former officers, significant shareholders or entities controlled by these individuals. As of May 31, 2016 and August 31, 2015, $938,464 and $197,850, respectively, of these notes were included within the current portion of convertible promissory notes on the accompanying balance sheet as the note was due within one year of the balance sheet.

For some of the convertible promissory notes, the conversion feature associated with the convertible promissory notes provide for a rate of conversion that is below market value. This conversion feature is accounted for as a beneficial conversion feature. A beneficial conversion feature was recorded and classified as a debt discount on the balance sheet at the time of issuance of each convertible promissory note with a corresponding credit to additional paid-in capital.

In addition, six of the convertible promissory note purchasers were issued warrants to purchase shares of the Company's common stock. The valuation of the stock warrants and the beneficial conversion feature associated with the issuance of convertible promissory notes utilized valuation inputs and related figures provided by a professional and independent valuation firm. The Company allocated a portion of the proceeds received from the convertible promissory notes to the warrants using the relative fair value resulting in a debt discount to each convertible promissory note.

The discounts are amortized over the term of the convertible promissory note using the straight line method. The amortized value for each period is recorded as an offset against the debt discount on the balance sheet, classified as interest expense. During the nine months ended May 31, 2016 and 2015, $370,463 and $427,390 of the discounts were amortized to interest expense, respectively. As of May 31, 2016, $247,324 discounts remained which will be expensed in fiscal 2016 through 2018.

Future Maturities

As of August 31, 2015, future maturities of notes payable is as follows for the years ending August 31; $957,442 current; $1,067,270 2017; and $75,000 2018. Included within those amounts due to related parties are: $197,820 current and $871,114 for 2017.

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9. Derivatives

Creditor #2 Note

The Creditor #2 Notes were executed on April 15, 2014 and were immediately convertible into the Company's common stock at a 45% discount to the lowest trading price for the 15 days prior to the conversion date. As a result of the fact that the number of shares the Creditor #2 Notes was convertible into was indeterminable, the Company determined a derivative liability was embedded within the Creditor #2 Notes. The Company measured the derivative liability using the input attributes disclosed below and recorded a derivative liability of $3,158,190 as of April 15, 2014 of which $1,219,891 was included within "change in fair value of derivatives" due to a portion of the derivative liability being in excess of the $250,000 in proceeds received and $1,481,723, which included offset of $206,576 from relief of the derivative liability related to the Creditor Notes, within "Loss on extinguishment" due to extinguishment accounting on the Creditor Note transferred to Creditor #2.

On May 31, 2016, the Company re-measured the derivative liability using the input attributes below and determined the value to be $330,777 of which $275,921 was classified as income within "change in fair value of derivatives" and was recorded for the nine months ended May 31, 2016 in the statement of operations.

	May 31,			August 31,
	2016			2015
Expected life (in years)		0.50			0.50
Balance of note outstanding	$	391,242		$	391,242
Stock price	$	0.0001		$	0.0001
Effective conversion price	$	0.00005		$	0.00005
Shares issuable upon conversion		7,113,490,909			7,113,490,909
Risk-free interest rate		0.49	%		0.50	%
Expected volatility		63.47	%		361.00	%
Expected dividend yield		-			-

Creditor #3 Note

The Creditor #3 Note was immediately convertible into the Company's common stock at a 25% discount to the lowest traded price for the five days prior to the conversion date. As a result of the fact that the number of shares the Creditor #3 is convertible into is indeterminable, the Company determined a derivative liability was embedded within the Creditor #3. The Company measured the derivative liability using the input attributes disclosed below and recorded a derivative liability of $50,000 as of December 24, 2014. As a result of the valuation of the derivative liability being in excess of the value of the carrying value of Creditor #3 by $50,000, a loss on derivative liability of $50,000 was recorded by the Company.

On May 31, 2016, the Company re-measured the derivative liability using the input attributes below and determined the value to be $38,709 of which $64,100 was classified as income within "change in fair value of derivatives" and was recorded for the nine months ended May 31, 2016 in the statement of operations.

	May 31,			August 31,
	2016			2015
Expected life (in years)		0.50			0.50
Balance of note outstanding	$	93,350		$	93,350
Stock price	$	0.0001		$	0.0001
Effective conversion price	$	0.000075		$	0.000075
Shares issuable upon conversion		1,244,666,667			1,244,666,667
Risk-free interest rate		0.49	%		0.50	%
Expected volatility		63.47	%		361.00	%
Expected dividend yield		-			-

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 Other Notes with Adjustable Conversion Features

As discussed in Note 8, on December 24, 2014 the Company issued a $72,890 promissory note to a third party. The convertible promissory note was immediately convertible into the Company's common stock at a 10% discount to the lowest traded price for the five days prior to the conversion date. As a result of the fact that the number of shares the promissory note is convertible into is indeterminable, the Company determined a derivative liability was embedded within the promissory note. The Company measured the derivative liability using the input attributes disclosed below and recorded a derivative liability of $94,487 as of December 24, 2014. As a result of the valuation of the derivative liability being in excess of the value of the carrying value of convertible promissory note by $21,597, a loss on derivative liability of $21,597 was recorded by the Company. In addition, on March 17, 2015 the Company received an additional $41,459 in proceeds under the promissory note. On March 17, 2015, the Company recorded an additional derivative liability of $69,098, resulting in a loss on derivative liability of $27,639.

On May 31, 2016, the Company re-measured the derivative liability using the input attributes below and determined the value to be $56,286 of which $67,281 was classified as income within "change in fair value of derivatives" and was recorded for the nine months ended May 31, 2016 in the statement of operations.

	May 31,			August 31,
	2016			2015
Expected life (in years)		0.65			1.40
Balance of note outstanding	$	114,350		$	114,350
Stock price	$	0.0001		$	0.0001
Effective conversion price	$	0.00009		$	0.00009
Shares issuable upon conversion		1,270,555,556			1,270,555,556
Risk-free interest rate		0.62	%		0.50	%
Expected volatility		134.29	%		369.00	%
Expected dividend yield					-

 

As discussed in Note 8, on April 28, 2015 the Company issued a $56,806 promissory note to a third party. The convertible promissory note was immediately convertible into the Company's common stock at a 15% discount to the lowest traded price for the five days prior to the conversion date. As a result of the fact that the number of shares the promissory note is convertible into is indeterminable, the Company determined a derivative liability was embedded within the promissory note. The Company measured the derivative liability using the input attributes disclosed below and recorded a derivative liability of $66,831 as of April 28, 2015.

On May 31, 2016, the Company re-measured the derivative liability using the input attributes below and determined the value to be $35,019 of which $30,764 was classified as income within "change in fair value of derivatives" and was recorded for the nine months ended May 31, 2016 in the statement of operations.

	May 31,			August 31,
	2016			2015
Expected life (in years)		.92			1.40
Balance of note outstanding	$	56,806		$	56,806
Stock price	$	0.0001		$	0.0001
Effective conversion price	$	0.000085		$	0.000085
Shares issuable upon conversion		668,305,882			668,305,882
Risk-free interest rate		0.62	%		0.50	%
Expected volatility		134.29	%		369.00	%
Expected dividend yield		-			-

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10. Stockholders' Equity

Series A Preferred Stock

Each share of Series A Preferred Stock has voting rights equal to the voting equivalent of the common stock into which it is convertible at the time of the vote. The holders of the Series A Preferred Stock are not entitled to dividends.  The Series A Preferred Stock has no preferential rights to the Company's common stock and will share in any liquidation proceeds with the common stock on an as converted basis. No shares of Series A Preferred Stock are outstanding as of May 31, 2016.

Series B Preferred Stock

On October 25, 2013, the Company filed a Certificate of Designation of Series B Preferred Stock (the "Series B Certificate of Designation") with the Secretary of State of Wyoming. Pursuant to the Series B Certificate of Designation, the Company designated 200,000 shares of its blank check preferred stock as Series B Preferred Stock. The Series B Preferred Stock will rank senior to the common stock, Series A Preferred Stock and any subsequently created series of preferred stock that does not expressly rank pari passu with or senior to the Series B Preferred Stock (the "Junior Stock"). The Series B Preferred Stock will not be entitled to dividends. In the event of a liquidation, the Series B Preferred Stock will be entitled to a payment of the Stated Value of $1.00 per share prior to any payments being made in respect of the Junior Stock. Each share of Series B Preferred Stock will entitle the holder to vote on all matters voted on by holders of common stock as a single class. With respect to any such vote, each share of Series B Preferred Stock will entitle the holder to cast such number of votes equal to 0.000255% of the total number of votes entitled to be cast. Effective upon the closing of a Qualified Financing, all issued and outstanding shares of Series B Preferred Stock will automatically convert into common stock in an amount determined by dividing the product of the number of shares being converted and the Stated Value by the Conversion Price. The Conversion Price will be equal to the price per share of the common stock sold under the Qualified Financing (or, if the Qualified Financing involves the sale of securities convertible into common stock, by the conversion price of such convertible securities). A "Qualified Financing" is defined as the sale by the Company in a single offering of common stock or securities convertible into common stock for gross proceeds of at least $5,000,000.

On October 31, 2013, the Company entered into amendment, waiver and exchange agreements (the "Exchange Agreements") with Michael Hill (the Company's chief executive officer and director) and Aaron Gravitz (the Company's director). Under each Exchange Agreement, the Company issued to each of Mr. Hill and Mr. Gravitz 100,000 shares of Series B Preferred Stock in exchange for $100,000 in unpaid compensation.

Series C Preferred Stock

Effective December 29, 2014, the Company filed a Certificate of Designation of Series C Convertible Preferred Stock (the "Series C") with the Secretary of State of Wyoming. Pursuant to the Series C, the Company designated 20,000 shares of its blank check preferred stock as Series C Preferred Stock. Each share of Series C is convertible into $150 in fair market value of the Company's common stock, which fair market value will be equal to the average closing price of the common stock on the over-the-counter market during the 10 trading days immediately prior to the delivery to the Company of a conversion notice. The Series C will share in any liquidation proceeds with the common stock on an as-converted basis, will not have voting rights prior to being converted to common stock, and in the event of any payment of dividends by the Company, will be entitled to dividends on an as-converted basis with the common stock. The Company has presented the Series C outside of stockholders' equity due to the variable conversion price.

On April 24, 2015, the Company entered into an Exchange Agreement with Lux pursuant to which the Company issued 10,000 shares of its Series C in exchange for 1,495,313 shares of Company common stock tendered by Lux to the Company for cancellation.  The Lux common stock was originally issued to Lux by the Company on March 12, 2013. In connection with the transaction, the Company recorded a loss on settlement of $1,499,850, which represented the difference in the fair market value of the Series C issued of $1.5 million and the common stock received of $150. See Note 4 for additional transaction with Lux.

On April 24, 2015, the Company entered into an Exchange Agreement with Mark J. Richardson ("MJR") pursuant to which the Company issued 500 shares of its Series C in exchange for 15,140 shares of Company common stock tendered by MJR to the Company for cancellation.  The MJR common stock was originally issued to MJR by the Company on March 13, 2013. In connection with the transaction, the Company recorded a loss on settlement of $74,998, which represented the difference in the fair market value of the Series C issued of $75,000 and the common stock received of $2.

See below and Note 4 for discussion related to additional issuances of Series C.

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Common Stock

Each share of common stock has the right to one vote per share. The holders of common stock are also entitled to receive dividends as and when declared by the board of directors of the Company, whenever funds are legally available, subject to the rights under any outstanding preferred stock.

Effective February 17, 2015, the Company filed Articles of Amendment to the Company's Articles of Incorporation with the Secretary of State of Wyoming to (i) increase the Company's authorized shares of common stock from 1,000,000,000 to an unlimited number; and (ii) allow for shareholders to take actions by the written consent of the holders of outstanding shares having not less than the minimum number of votes that would be required to authorize or take the action at a meeting at which all shares entitled to vote on the action were present and voted.

On October 26, 2015, the Company filed a Preliminary Schedule 14C Information Statement with the Securities and Exchange Commission in connection with approval by the Company's board of directors and majority stockholders of an amendment the Articles of Incorporation to: (i) change the Company's name from StreamTrack, Inc. to Total Sports Media, Inc., (ii) effect a 1-for 800 reverse split of the Company's common stock and (iii) decrease the authorized number of shares of common stock from an unlimited number to 40,000,000. The amendment will be effective upon filing with the Secretary of State of Wyoming, which the Company anticipates to occur approximately, but not less than, 20 days after the definitive information statement is mailed to stockholders.

During the nine months ended May 31, 2016, 530 shares of Series C with a value of $79,500 were converted into 795,000,000 shares of common stock.

Detachable Stock Warrants

On April 27, 2015, the Company entered into an Investment Agreement with RTV Media Corp. ("RTV") pursuant to which RTV initially invested $75,000 into the Company in consideration for $75,000 of worth of warrants at an exercise price of $0.0001 to purchase the common stock of the Company. Upon exercise, RTV has up to five years to exercise the warrants. In addition, RTV agreed to invest up to an additional $425,000 of capital into the Company in consideration for which additional warrants will be granted upon investment. The Company has accounted for the warrants as common stock to be issued as there are no provisions within the agreement in which will require the Company to return the capital provided.  

As of May 31, 2016, the Company has a total of 225,000 detachable stock warrants outstanding. The warrants have a three-year term and are exercisable into the Company's common stock at an exercise price of $0.41 per share.

11. Subsequent Events

In accordance with ASC 855-10, we have analyzed our operations subsequent to May 31, 2016 to the date these financial statements were issued, and have determined that we do not have any material subsequent events to disclose in these financial statements.

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

The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes included in this report and those in our Form 10-K for the fiscal year ended August 31, 2015 filed with the Securities and Exchange Commission December 15, 2015 and all subsequent filings.

Overview

StreamTrack, Inc. ("StreamTrack," or the "Company") is a digital media and technology services company. The Company provides audio and video streaming and advertising services through the RadioLoyalty^TM Platform (the "Platform") to a global group of over 5,000 internet and terrestrial radio stations and other broadcast content providers. We also developing Robot Fruit, which is intended to be a powerful marketing tool that combines a mobile app creation platform, customer loyalty program, and content management system into an instant and measurable marketing engine for businesses. The Company is also continuing development of StreamTrak, designed to enable fans, artists, bands, music publishers and record labels to distribute, discover, create and share content.In addition, the Company through ampedfantasy.com has entered the rapidly growing daily fantasy sports industry. The Amped Fantasy brand will offer diverse contests to attract fans of all kinds. The mobile and web offering which is under development will include, but not be limited to free and paid daily, weekly, pick'em, salary cap, flex or customized roster and guaranteed prize or payout contests. Fantify which is under development, is a fully customizable daily fantasy sports and private label fantasy sports technology platform. Once venues signup for Fantify and setup a contest, they invite new or existing customers, and award prizes. It will be free to play for customers to win prizes, compete against friends and others, feel closer to the real life game, and all with no season-long commitment. Through sportsalert.com the Company owns a subscriber based alert system for various sports with over 100,000 registered users. Users can choose whether they want score updates sent to their mobile phone or email, customizable by sport and events.

Our streaming business model is focused on the following core principles:

1.	We barter with audio content providers, namely internet and terrestrial radio stations, to obtain control and management of their desktop advertising opportunity ("Ad Inventory"). We also routinely purchase any Ad Inventory the content providers have not previously transferred to us by barter.
2.	In exchange for the Ad Inventory, we pay for all internet and mobile streaming costs associated with the broadcaster's content that is streamed through our platform. We barter in order to scale our business. The end result of the barter is that we aggregate Ad Inventory from broadcasters that management believes can reach substantial size while maintaining a primarily fixed cost structure for our hardware, content delivery, labor and other costs, respectively.
3.	We re-broadcast original audio broadcast content through the Platform in a streaming media format in desktop and mobile environments. By re-broadcasting we ensure that we do not pay any royalties. Royalties are the responsibility of our broadcasters. This is a substantial advantage for us as many of our competitors pay royalties of up to 70% of revenues generated from licensed broadcast content.
4.	We serve advertisements ("Ads") within the Platform in audio, display and video formats in a desktop environment and display ads in a mobile environment using our RadioLoyaltyTM Apps.
5.	Ads are served by our automated systems based on geography and demographics data, among others.
6.	The primary technology that makes our Platform unique in the industry is that we are able to re-broadcast audio content with geographically targeted Ads that replace Ads served within an original broadcast targeting a listener in a certain geography. By having this capability we can also choose to replace audio Ads that do not generate as high of Ad revenues with video-based Ads that generate much higher Ad revenues. In effect, we make the broadcaster's original broadcast capable of delivering Ads that are geographically targeted throughout a global broadcast marketplace while also utilizing video Ads and our proprietary video in-stream technology to increase advertising rates.
7.	All of our primary technology that supports the Platform is automated and capable of operating in a live environment. Audio content is streamed, Ads are targeted and served, audio Ads are replaced as needed and video Ads replace audio Ads, as desired and when possible.

Advertising revenue constitutes the majority of our total revenue, representing 96.4% of total revenue for the nine months ended May 31, 2016. We anticipate this trend will continue and our revenues will be generated primarily from advertising. Our advertising revenue for the nine months ended May 31, 2016 was almost entirely derived from advertising delivered on desktop devices.

We deliver content on mobile devices through our RadioLoyalty^TM app but we do not currently generate significant mobile advertising revenues. Management believes that mobile advertising represents an opportunity for the Company in the coming years and on an ongoing basis. Management expects the mobile advertising market will grow at substantial rates in the coming years. However, many challenges exist in this market. We believe these challenges will be solved primarily with new technologies. We believe our current technologies and other technology under development will solve some of these challenges. By solving these challenges, we will be able to monetize the mobile listenership we are growing today.

16

In June 2015, the Company received an Office Action where the examiner laid out new grounds of rejection addressed to the new claim language from our previous amendment to U.S. App No.: 12/146,922 - WATCH THIS - RAD-00330. Claims 20, 22-27, 36, and 38-43 were rejected under 35 U.S.C. 103(a) as being unpatentable over US 2006/0089843 filed 10/26/2004 by Flather in view of US 2008/0307454 filed 6/6/08 by Ahanger et al in view of US 2008/0109844 filed 11 /2/06 by Baldeschwieler et al. in view of US 2013/0061262 with priority to 1 /30/0S, filed by Briggs et al. The Company had until June 19, 2015 to respond to this decision, and while the Company believes that its claims are patentable, it choose not to pursue the claims further because it would have been cost prohibitive.

The Company is exploring alternative options as it relates to the WatchThis technology. On February 2, 2016 the Company sold the domain name www.watchthis.com for $30,000. While the USPTO has rejected our claims put forth, management believes that the viability of the technology is still feasible. Currently we have stopped development of this product until management identifies all of the options that are available for the business to potentially pursue.

In November 2013, we completed an asset purchase of RobotFruit, a mobile loyalty and application platform. Robot Fruit provides a complete SAAS based mobile platform for publishers and content owners to directly sell their mobile web and in-app ad inventory on leading mobile devices. The platform is a self-service mobile loyalty and development platform that has an easy to use interface which enables station owners, content owners, business owners, artists and bands to quickly deploy in HTML5, native iOS and Android based application environments. We anticipate making the technology available to broadcasters, content owners and artists in the coming months.

In April 2015, we completed an asset purchase of Amped Fantasy and SportsAlert™, a daily fantasy sports and alert platform. Amped Fantasy provides a complete daily fantasy sports web based platform where players compete to win cash and prizes. The platform is designed with an easy to use interface which enables players to compete across all major professional sports events. SportsAlert is an alert messaging platform that allows subscribers to obtain current stats and scores relating to teams or individual players performances. The daily fantasy sports industry is experiencing rapid growth. Traditional fantasy sports games have been an integral part of the sports industry for decades. Now, the rapidly expanding "daily fantasy" or "DFS" industry is quickly becoming the new alternative with sports fans. Industry leaders have reported annual growth of daily fantasy sports of close to 300% over the past several years, with in excess of 40 million active players. According to the Fantasy Sports Trade Association (FSTA), daily fantasy sports revenue in 2014 was around $1 billion and is projected to grow to $17 billion by 2020. With endorsements by professional sports organizations including the NFL, MLB, and NBA along with credible media outlets and organizations including Yahoo!, CBS, Rotowire, and more, daily fantasy sports is quickly becoming commonplace. We believe there is a large and growing market opportunity for our AmpedFantasy, Fantify, and SportsAlert products.

The Company received a Final Office Action rejecting the company's claims to U.S. App No.: 13/559,503 - Ads with Media Streams - RAD-0045.

Key Metrics:

We track listener hours because we believe it is the best key indicator of the growth of our Platform business. Revenues from advertising through our Platform represented substantially all of our revenues for the nine months ended May 31, 2016. We also track the number of active users on our Platform as well as the RadioLoyalty^TM app as indicators of the size and quality of our audience, which are particularly important to potential advertisers.

We calculate actual listener hours using our internal analytics systems. Some of our competitors do not always calculate their listener hours in the same way we do. As a result, their stated listener hours may not represent a truly comparable figure.

Player launches are defined as the number of individual times the UniversalPlayer™ was launched.

Registered users are defined as the number of users who have signed up for an account with us in order to access our broadcasters' content and to earn loyalty points. The number of registered users may overstate the number of actual unique individuals who have signed up for an account with us in order to earn loyalty points, as an individual may register for, and use, multiple accounts under unique registration information. This is in breach of our terms and conditions but we may not be able to effectively manage and authenticate registration information in order to ensure each user is a unique individual. We define registered users as those who have signed up with us to receive loyalty points. We calculate this by the number of submissions we receive from users signing up for our loyalty service.

We calculate listener hours as follows. When the UniversalPlayer^TM is launched a session is created - this is considered the listener's start time. At one minute following the launch of the UniversalPlayer^TM, we record 1 minute of listening time. If a session lasts between 1 and 59 seconds, we record 30 seconds of listening time. At ten-minute intervals following the session being created, we count each 10 minute period as listening time. So for example, if a user launched the UniversalPlayer TM at 11:00am, we will recognize 1 minute of listening time at 11:01, then 10 minutes of listening time at 11:10, 20 minutes at 11:20, etc.

Stations are defined as the total of all stations created by broadcasters that utilize the Platform. A single broadcaster may create many stations and these stations may be active or inactive.

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Events are user interactions such as a 10 minute interval, clicking song like/dislike, sharing what they are listening to, checking the news through our news app in the player, etc. The last event we see for the user is considered the end of their session. We then take that time minus the time the session started to determine how long the session is. So for example, if a user launched the UniversalPlayer TM at 11am, and liked a song at 11:07am, but exited the player at 11:09am, we would recognize 7 minutes of listening.

Comparison of the Nine Months Ended May 31, 2016 and May 31, 2015

	For the Nine Months Ended May 31, 2016		For the Nine Months Ended May 31, 2015
Revenue:
Advertising	$	455,372	$	721,583
Services		16,838		27,500
Total revenue	$	472,210	$	749,083

Revenues for the nine months ended May 31, 2016 and May 31, 2015, totaled $472,210 and $749,083 respectively. The period over period decline can be attributed to several factors. Video revenue decreased for the nine month period year over year by $104,639 attributable to reduced listening time, overall industry technical changes and ad related errors including Vpaid errors, ad response times, increased latency, creative errors and creative load time. Display revenue decreased for the nine month period year over year by $160,987. Tighter buying criteria by Customers as a result of quality scoring from companies such as Integral Ad Science, Doubleverify and ForensIQ also reduced buys from some Customers. 

	For the Nine Months Ended May 31, 2016		For the Nine Months Ended May 31, 2015
Costs of revenues:
Media network	$	230,561	$	280,591
Depreciation and amortization		-		77,986
Colocation services		20,547		116,337
Broadcaster commissions		39,851		89,602
Other		1,224		3,191
Total costs of revenue	$	292,183	$	567,707

Costs of revenues for the nine months ended May 31, 2016 and May 31, 2015 totaled $292,183 and $567,707, respectively. We incurred substantial media network costs associated with the distribution of our content across a variety of advertising networks. Our costs of distributing our content will proportionally decrease dramatically as we reach scale. Amortization of the software that powers the Platform accounted for the majority of the depreciation recorded during 2014. In order to operate the RadioLoyalty^TM online broadcasting platform, RadioLoyalty^TM mobile and tablet apps and our ad-serving technologies, we shifted our business to primarily utilize ASW's cloud. We refer to these costs as colocation services. Our advertising sales arrangements with over 5,000 RadioLoyalty^TM stations facilitate us paying the broadcasters a monthly revenue sharing fee or license fee in exchange for advertising inventory around their content and listenership. We refer to these costs as broadcaster commissions in the event that we purchase the ad inventory. Other costs of sales include depreciation associated with computer servers, streaming costs, adserving costs, and various application technologies that support our primary product offerings.

	For the Nine Months Ended May 31, 2016		For the Nine Months Ended May 31, 2015
Operating expenses
Product development	$	210	$	17,694
Officer compensation		75,000		66,324
Sales and marketing		18,975		88,749
Other		805,857		680,295
Total operating expenses	$	900,042	$	853,062

18

Operating expenses for the nine months ended May 31, 2016 and 2015 totaled $900,042 and $853,062, respectively. We have a broad-based business strategy to acquire more broadcasters directly, enter into joint ventures, revenue sharing arrangements or similar contracts with internet radio station guides (aggregators), and consider mergers and acquisition targets on an ongoing basis. Product development costs were associated with continuing improvements to the software and related infrastructure for our primary product offering as well as development work on our online product portfolio including the Robot Fruit, StreamTrak, Amped Fantasy, Fantify, SportsAlert and mobile technology. We expect these costs to increase in the current fiscal year. Marketing and sales costs included compensation for our sales staff and various internet marketing-related costs. Rents were primarily related to three leases we are obligated under for our Santa Barbara, California office. Officer compensation related to a variety of accruals to the two primary executives that operate our business. Other operating costs include telecom, depreciation, utilities, travel and entertainment and various other costs of doing business. 

	For the Nine Months Ended May 31, 2016			For the Nine Months Ended May 31, 2015
Other income (expenses)
Other income (expense)	$	-		$	(57,126	)
Interest expense		(249,215	)		(905,117	)
Interest expense – accretion		(370,463	)		(1,574,848	)
Loss on extinguishment		-			-
Gain on sale of co-location and domain		175,992			(101,562	)
Change in fair value of derivatives		438,067			321,961
Total other income (expenses)	$	(5,619	)	$	(2,316,692	)

Other (expense) income for the nine months ended May 31, 2016 and 2015, totaled $(5,619) and $(2,316,692), respectively. We incurred interest expense calculated on our convertible promissory notes and fees charged by the provider of our factoring line of credit, among others. We recorded the amortization of various debt discounts associated with our convertible promissory notes. The discounts are the result of derivative liabilities in which are recorded due to the variability of the notes conversion price. The derivative liabilities have to be re-measured as of each reporting date. For the nine months ended May 31, 2016 and 2015, the re-measurement resulted in a gain (loss) on change in fair value of derivative liabilities of $438,067 and $321,961, respectively. During the nine months ended May 31, 2016 and 2015, the Company's stock price decreased substantially from August 31, 2015 and 2014 which impacted the valuation of the derivative liabilities.

We did not generate taxable profits for the nine months ended May 31, 2016 and May 31, 2015, respectively. As a result, no provision for income taxes was recorded during either period.

Comparison of the Three Months Ended May 31, 2016 and May 31, 2015

	For the Three Months Ended May 31, 2016		For the Three Months Ended May 31, 2015
Revenue:
Advertising	$	120,041	$	203,189
Services		-		8,250
Total revenue	$	120,041	$	211,439

Revenues for the three months ended May 31, 2016 and 2015, totaled $120,041 and $211,439, respectively. The period over period decline can be attributed to several factors. Video revenue decreased for the three month period year over year by $34,703 attributable to reduced listening time, overall industry technical changes and ad related errors including Vpaid errors, ad response times, increased latency, creative errors and creative load time. Display revenue decreased for the three month period year over year by $47,301. Tighter buying criteria by Customers as a result of quality scoring from companies such as Integral Ad Science, Doubleverify and ForensIQ also reduced buys from some Customers. 

	For the Three Months Ended May 31, 2016		For the Three Months Ended May 31, 2015
Costs of revenues:
Media network	$	73,008	$	89,008
Depreciation and amortization		-		-
Colocation services		6,847		39,669
Broadcaster commissions		12,289		22,667
Other		99		(191	)
Total costs of revenue	$	92,243	$	151,153

19

Costs of revenues for the three months ended May 31, 2016 and 2015 totaled $92,243 and $151,153, respectively. We incurred substantial media network costs associated with the distribution of our content across a variety of advertising networks. Our costs of distributing our content will proportionally decrease dramatically as we reach scale. In order to operate the RadioLoyalty^TM online broadcasting platform, RadioLoyalty^TM mobile and tablet apps and our ad-serving technologies, we shifted our business to primarily utilize ASW's cloud. We refer to these costs as colocation services. Our advertising sales arrangements with over 5,000 RadioLoyalty^TM stations facilitate us paying the broadcasters a monthly revenue sharing fee or license fee in exchange for advertising inventory around their content and listenership. We refer to these costs as broadcaster commissions in the event that we purchase the ad inventory. Other costs of sales include depreciation associated with computer servers, streaming costs, adserving costs, and various application technologies that support our primary product offerings.

	For the Three Months Ended May 31, 2016		For the Three Months Ended May 31, 2015
Operating expenses
Product development	$	-	$	3,445
Officer compensation		25,000		7,825
Sales and marketing		6,177		11,771
Other		270,193		241,786
Total operating expenses	$	301,370	$	264,827

Operating expenses for the three months ended May 31, 2016 and 2015 totaled $301,370 and $264,827, respectively. We have a broad-based business strategy to acquire more broadcasters directly, enter into joint ventures, revenue sharing arrangements or similar contracts with internet radio station guides (aggregators), and consider mergers and acquisition targets on an ongoing basis. Product development costs were associated with continuing improvements to the software and related infrastructure for our primary product offering as well as development work on our online product portfolio including the Robot Fruit, StreamTrak, Amped Fantasy, Fantify, SportsAlert and mobile technology. We expect these costs to increase in the current fiscal year. Marketing and sales costs included compensation for our sales staff and various internet marketing-related costs. Rents were primarily related to three leases we are obligated under for our Santa Barbara, California office. Officer compensation related to a variety of accruals to the two primary executives that operate our business. Other operating costs include telecom, depreciation, utilities, travel and entertainment and various other costs of doing business. 

	For the Three Months Ended May 31, 2016			For the Three Months Ended May 31, 2015
Other income (expenses)
Other income (expense)	$	-		$	(444	)
Interest expense		(72,377	)		(409,812	)
Interest expense – accretion		(123,487	)		(1,574,848	)
Loss on extinguishment		-			-
Gain on sale of co-location and domain		-			(35,025	)
Change in fair value of derivatives		65,990			47,757
Total other income (expenses)	$	(129,874	)	$	(1,972,372	)

Other (expense) income for the three months ended May 31, 2016 and 2015, totaled $(129,874) and $(1,972,372), respectively. We incurred interest expense calculated on our convertible promissory notes and fees charged by the provider of our factoring line of credit, among others. We recorded the amortization of various debt discounts associated with our convertible promissory notes. The discounts are the result of derivative liabilities in which are recorded due to the variability of the notes conversion price. The derivative liabilities have to be re-measured as of each reporting date. For the three months ended May 31, 2016 and 2015, the re-measurement resulted in a gain (loss) on change in fair value of derivative liabilities of $65,990 and $47,757, respectively. During the three months ended May 31, 2016 and 2015 the Company's stock price decreased substantially from August 31, 2015 and 2014 which impacted the valuation of the derivative liabilities.

20

Liquidity and Capital Resources

As of May 31, 2016 we had cash totaling $13,867. We had net a working capital deficit of $4,419,481 as of May 31, 2016, compared to a net working capital deficit of $3,684,709 as of August 31, 2015. Our principal uses of cash during the nine months ending May 31, 2016 were funding our operations.

Going Concern

The Company's consolidated financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  For the nine months ended May 31, 2016, the Company recorded an operating loss of $720,015 and a net loss of $725,634. As of May 31, 2016, the Company had a working capital deficit of $3,958,692, which excluding the derivative liability was $460,789, indicating substantial doubt regarding the Company's ability to continue as a going concern.

Management is confident but cannot guarantee that the Company will be able to raise in order to repay debts and continue operations. During the year ending August 31, 2016, the Company is obligated to make payments on certain operating leases, convertible debts, and a capital lease, among others. The Company's normal operating costs are also significant and include consulting fees, professional fees, product development costs and marketing and sales costs associated with management's business plan. Additionally, the Company is currently in default on its capital lease. If the Company defaults on this capital lease, the lessor may decide to take back its equipment. The Company has replaced its use of the equipment with ASW's cloud so if the lessor decides to take back its equipment the impact operational impact would be minimal. Since inception and through May 31, 2016, the Company has successfully raised a significant amount of capital. However, the ability of the Company to continue as a going concern is dependent on the successful execution of the business plan in order to become profitable. If the Company is unable to become profitable or sustain its cash flow, the Company could be forced to modify its business operations or possibly cease operations entirely. Management cannot provide any assurances that the Company will be successful in its operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Working Capital Related Party Financing

The Company has only been operating since November 30, 2011. As a result, the Company has an extremely limited credit history. The Company's Chief Executive Officer, and the Chief Executive Officer of StreamTrack Media, Inc. use their personal credit cards to fund operations on a frequent basis. If the Company did not have access to these credit cards, the Company would have to rely exclusively on external sources of capital. The Company's external sources of capital are not always readily available. As a result, in time-constrained circumstances, the use of personal credit cards is necessary until such time as the Company is able to build up its own credit-worthiness and access more readily available and significant credit.

Capital Expenditures

Based on current estimates, we believe that our anticipated capital expenditures will be adequate to implement our current plans.

Historical Trends

The following table summarizes our cash flow data for the nine months ended May 31, 2016 and May 31, 2015.

	For the Nine Months Ended May 31, 2016			For the Nine Months Ended May 31, 2015
Net cash provided by (used in) operating activities	$	(580,602	)	$	(170,613	)
Net cash used in investing activities		166,084			(363,467	)
Net cash provided by financing activities		420,476			507,490

Cash flow provided by (used in) operating activities totaled ($580,602) for the nine months ended May 31, 2016, compared to $(170,613) used for the nine months ended May 31, 2015. Operating cash flow was negative as we continued operations and a focused effort on product development and efforts towards certain potential significant partnerships with third parties within the digital media industry.

Cash flow used in (provided by) investing activities totaled $166,084 for the nine months ended May 31, 2016, compared to ($363,467) the nine months ended May 31, 2015. The increase in cash provided by activities relates to the sale of our co-location and related assets in which $150,000 in proceeds were received.

Cash flow provided by financing activities totaled $420,476 for the nine months ended May 31, 2016, compared to $507,490 for the nine months ended May 31, 2015. We raised substantial capital through the issuance of convertible promissory notes, net proceeds from the line of credit, and advances from related our primary executive officers during the nine months ended May 31, 2016 and 2015, respectively.

21

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK..

Not required for a smaller reporting company.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

For purposes of this section, the term disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Act (15 U.S.C. 78a et seq.) is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by in our reports filed under the Securities Exchange Act of 1934, as amended (the "Exchange Act") is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

As of the end of the period covered by this Quarterly Report, we conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer (Principal Executive and Financial Officer); of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation, our Chief Executive Officer (Principal Executive and Financial Officer) concluded that the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and which also are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including the Company's Chief Executive Officer (Principal Executive and Financial Officer), to allow timely decisions regarding required disclosure.

Changes in Internal Controls over Financial Reporting

There has not been any changes in our internal controls over financial reporting during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

22

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is not party to any legal proceeding.

ITEM 1A. RISK FACTORS.

Not required for a smaller reporting company.

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

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None

23

ITEM 6. EXHIBITS

(a) Exhibits:

Number	Description
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

24

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	STREAMTRACK, INC.
Date: July 20, 2016	By:	/s/ Michael Hill
	Name:	Michael Hill
	Title:	Chairman of the Board of Directors, Chief Executive Officer, President, and Chief Financial Officer (Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer)

25

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Michael Hill, certify that:

1.	I have reviewed this report on Form 10-Q of StreamTrack, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
c.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

 

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (of persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.

Dated:  July 20, 2016	By:	/s/ Michael Hill
		Michael Hill, Chief Executive Officer and Chief Financial Officer
		(Principal Executive and Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of StreamTrack, Inc. (the "Company") on Form 10-Q for the period ending May 31, 2016 (the "Report") I, Michael Hill, Chief Executive Officer and Chief Financial Officer of the Company, certify, pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:  July 20, 2016	By:	/s/ Michael Hill
		Michael Hill, Chief Executive Officer and Chief Financial Officer
		(Principal Executive and Financial Officer)

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

XML

Document and Entity Information - shares	9 Months Ended
	May 31, 2016	Jul. 12, 2016
Document And Entity Information
Entity Registrant Name	Streamtrack, Inc.
Entity Central Index Key	0001442376
Document Type	10-Q
Document Period End Date	May 31, 2016
Amendment Flag	false
Current Fiscal Year End Date	--08-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		4,190,265,983
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2016

XML

Condensed Consolidated Balance Sheets - USD ($)	May 31, 2016	Aug. 31, 2015
Current assets:
Cash	$ 13,867	$ 7,909
Accounts receivable, net of allowances of $6,000 and $6,000, respectively	92,987	114,253
Prepaid expenses	2,995	2,196
Total current assets	109,849	124,358
Property and equipment, net	403,856	660,973
Other assets
Other assets	34,722	56,613
Total other assets	34,722	56,613
Total assets	548,427	841,944
Current liabilities:
Accounts payable and accrued expenses	1,153,259	1,147,249
Line of credit	933,926	610,950
Derivative liability embedded within convertible note payable	460,789	898,856
Capital lease payable - in default	54,704	54,704
Related party payables	228,120	159,660
Convertible notes payable, net of discount of $39,004 and $19,794, respectively	921,519	739,798
Related party convertible notes payable, net of discount of $161,451 and $0, respectively	777,013	197,850
Total current liabilities	4,529,330	3,809,067
Long term liabilities
Convertible notes payable, net of discount of $46,869 and $155,249, respectively	28,131	115,907
Related party convertible notes payable, net of discount of $0 and $442,744, respectively	215,500	428,370
Total long term liabilities	243,631	544,277
Total liabilities	4,772,961	4,353,344
Series C preferred stock; $0.0001 par value; 20,000 shares authorized; 11,270 and 11,800 shares issued and outstanding as of May 31, 2016 and August 31, 2015	1,690,500	1,770,000
Commitments and contingencies (note 5)
Stockholders' Deficit:
Series A preferred stock; $0.0001 par value; 100 shares authorized; 0 shares issued and outstanding as of May 31, 2016 and August 31, 2015
Series B preferred stock; $0.0001 par value; 200,000 shares authorized; 200,000 shares issued and outstanding as of May 31, 2016 and August 31, 2015	20	20
Common stock, $0.0001 par value; Unlimited shares authorized at May 31, 2016 and August 31, 2015; 4,198,519,796 shares issued and outstanding at May 31, 2016; 3,403,519,796 shares issued and outstanding as of August 31, 2015	419,852	340,352
Additional paid-in capital	$ 3,341,837	$ 3,341,837
Common stock to be issued	87,500	75,000
Accumulated deficit	$ (9,764,243)	$ (9,038,609)
Total stockholders' deficit	(5,915,034)	(5,281,400)
Total liabilities and stockholders' deficit	$ 548,427	$ 841,944

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	May 31, 2016	Aug. 31, 2015
Assets
Accounts receivable, net of allowances	$ 6,000	$ 6,000
Current liabilities:
Convertible notes payable, net of discount	39,004	19,794
Related party convertible notes payable, net of debt discount	161,451	0
Long term liabilities
Convertible notes payable, net of discount	46,869	155,249
Related party convertible promissory notes, net of debt discount	$ 0	$ 442,744
Stockholders' deficit:
Preferred stock series C, par value	$ 0.0001	$ 0.0001
Preferred stock series C, Authorized	20,000	20,000
Preferred stock series C, Issued	11,270	11,800
Preferred stock series C, outstanding	11,270	11,800
Preferred stock series A, par value	$ 0.0001	$ 0.0001
Preferred stock series A, Authorized	100	100
Preferred stock series A, Issued	0	0
Preferred stock series A, outstanding	0	0
Preferred stock series B, par value	$ 0.0001	$ 0.0001
Preferred stock series B, Authorized	200,000	200,000
Preferred stock series B, Issued	200,000	200,000
Preferred stock series B, outstanding	200,000	200,000
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, Authorized
Common stock, Issued	4,198,519,796	3,403,519,796
Common stock, outstanding	4,198,519,796	3,403,519,796

XML

Condensed Consolidated Statements of Operations (unaudited) - USD ($)	3 Months Ended		9 Months Ended
	May 31, 2016	May 31, 2015	May 31, 2016	May 31, 2015
Revenue
Advertising	$ 120,041	$ 203,189	$ 455,372	$ 721,583
Services		8,250	16,838	27,500
Total revenues	120,041	211,439	472,210	749,083
Costs of revenues:
Media network	73,008	89,008	230,561	280,591
Depreciation and amortization				77,986
Colocation services	6,847	39,669	20,547	116,337
Broadcaster commissions	12,289	22,667	39,851	89,602
Other costs	99	(191)	1,224	3,191
Total costs of revenues	92,243	151,153	292,183	567,707
Gross profit	27,798	60,286	180,027	181,376
Operating expenses
Product development		3,445	210	17,694
Officer compensation	25,000	7,825	75,000	66,324
Sales and marketing	6,177	11,771	18,975	88,749
Other expenses	270,193	241,786	805,857	680,295
Total operating expenses	301,370	264,827	900,042	853,062
Loss from operations	(273,572)	(204,541)	(720,015)	(671,686)
Other income (expense):
Other income (expense)		(444)		(57,126)
Interest expense (including accretion of debt discount of $123,487, $308,135, $370,463 and $639,895, respectively)	(195,864)	(409,812)	(619,678)	(905,117)
Gain on sale of co-location and domain			175,992
Loss on extinguishment		(35,025)		(101,562)
Loss on settlements		(1,574,848)		(1,574,848)
Change in fair value of derivatives	65,990	47,757	438,067	321,961
Total other income (expense)	(129,874)	(1,972,372)	(5,619)	(2,316,692)
Loss before provision for income taxes	(403,446)	(2,176,913)	(725,634)	(2,988,378)
Provision for income taxes
Net loss	$ (403,446)	$ (2,176,913)	$ (725,634)	$ (2,988,378)
Basic net income (loss) per common share attributable to common stockholders	$ (0.00)	$ (0.00)	$ (0.00)	$ (0.00)
Diluted net income (loss) per common share attributable to common stockholders	$ (0.00)	$ (0.00)	$ (0.00)	$ 0.00
Weighted-average number of shares used in computing basic per share amounts	4,198,519,796	2,049,228,223	4,109,920,895	1,035,812,512
Weighted-average number of shares used in computing dilutive per share amounts	4,198,519,796	2,049,228,223	4,109,920,895	1,035,812,512

XML

Condensed Consolidated Statements of Operations (unaudited) (Parenthetical) - USD ($)	3 Months Ended		9 Months Ended
	May 31, 2016	May 31, 2015	May 31, 2016	May 31, 2015
Condensed Consolidated Statements Of Operations Parenthetical
Accretion of debt discount	$ 123,487	$ 308,135	$ 370,463	$ 639,895

XML

Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($)	9 Months Ended
	May 31, 2016	May 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (725,634)	$ (2,988,378)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	288,916	267,871
Re-measurement of derivative liabilities	(438,067)	(321,961)
Accretion of debt discount	370,463	639,895
Stock issued for services and finance fees		10,134
Amortization of finance fees		12,844
Gain on sale of co-location and domain	(175,992)
Loss on Settlements		1,574,848
Loss on extinguishment of debt		101,562
Changes in operating assets and liabilities:
Accounts receivable	21,266	155,157
Prepaid expenses	(799)	10,558
Other current assets		(7,378)
Accounts payable and accrued expenses	10,785	248,775
Related party accrued liabilities	68,460	125,460
Net cash used in operating activities	(580,602)	(170,613)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase or development of property and equipment	(21,039)	(357,967)
Proceeds from sale of co-location and domain	179,980
Other assets	7,143	(5,500)
Net cash provided by (used in) investing activities	166,084	(363,467)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of convertible promissory notes		181,459
Payments on related party notes payable		(89,284)
Note receivable		(7,875)
Proceeds from line of credit	322,976	36,129
Payments on capital lease		(9,000)
Proceeds from issuance of convertible promissory notes - related parties	85,000	261,750
Fees paid to ASC under settlement		59,311
Proceeds from sale of common stock / common stock to be issued	12,500	75,000
Net cash provided by financing activities	420,476	507,490
Change in cash and cash equivalents	5,958	(26,590)
Cash and cash equivalents, beginning of period	7,909	26,590
Cash and cash equivalents, end of period	13,867
Supplemental disclosures of cash flow information
Cash paid for interest	5,728
Cash paid for income taxes
Non cash investing and financing activities:
Issuance of common stock for conversion of debt and accrued interest		304,778
Conversion of Series C preferred stock in common stock	79,500
Beneficial conversion feature recorded on convertible debt		938,614
Issuance of common stock for accounts payable		172,414
Increase in line of credit for facility fee	2,500
Assets acquired with Series C preferred stock		$ 120,000

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Nature of Business

9 Months Ended

May 31, 2016

Notes to Financial Statements

Note 1 - Nature of Business

StreamTrack, Inc. (the "Company") is a digital media and technology services company. The Company provides audio and video streaming and advertising services through its RadioLoyalty^TM Platform (the "Platform") to over 5,000 internet and terrestrial radio stations and other broadcast content providers. The Platform consists of a web-based and mobile player that manages streaming audio and video content, social media engagement, display and video ad serving within the web player and is also capable of replacing audio ads with video ads within the web player in a live or on-demand environment. The Company offers the Platform directly to its broadcasters and integrates or white labels its technologies with web-based internet radio guides and other web-based content providers. The Company is also continuing development of Amped Fantasy and SportsAlert™, a fantasy sports product. The Company was incorporated as a Wyoming corporation on May 6, 2008.

Basis of Presentation

The accompanying interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's Form 10-K for year ended August 31, 2015.  In the opinion of management, all adjustments necessary in order for the consolidated financial statements to be not misleading have been reflected herein.  The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year ended August 31, 2016. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, StreamTrack Media, Inc. and RadioLoyalty, Inc., California corporations. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company's management, the consolidated financial statements include all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company's financial position for the periods presented.

Going Concern

The Company's financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  For the nine months ended May 31, 2016, the Company recorded an operating loss of $720,015 and a net loss of $725,634. As of May 31, 2016, the Company had a working capital deficit of $3,958,692, which excluding the derivative liability was $460,789. The net loss and negative working capital indicate substantial doubt about the entity's ability to continue as a going concern.

Management is confident but cannot guarantee that the Company will be able to raise additional capital in order to repay debts and continue operations. As of August 31, 2015, during fiscal 2016, the Company is obligated to make payments on certain operating leases, convertible debts, and a capital lease, among others. The Company's normal operating costs are also significant and include consulting fees, professional fees, product development costs and marketing and sales costs associated with management's business plan. Since inception and through the date of these financial statements, the Company has successfully raised a significant amount of capital through debt and equity offerings. The Company anticipates launching several new product offerings and initiating certain new significant partnerships during the fiscal year ending August 31, 2016. The Company anticipates those products and partnerships to be profitable but notes that it will require an unknown amount of capital for product development and commercial deployment. The Company will attempt to have its potential partners pay for the some of these costs but management cannot be certain that it will succeed in entering into such arrangements. Management may potentially make a business decision to move forward, delay, or cancel certain partnerships because of the Company's overall capital needs. Nonetheless, the ability of the Company to continue as a going concern is dependent on the successful execution of the business plan and become profitable. If the Company is unable to become profitable and sustain positive cash flow from operations, the Company could be forced to modify its business operations or possibly cease operations entirely. Management cannot provide any assurances that the Company will be successful in its operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the financial statements, as well as the reported amounts of revenue and expenses during the periods presented. Estimates are used for determining the allowance for doubtful accounts, stock-based compensation, fair values of warrants to purchase common stock, derivative liabilities and income taxes. To the extent there are material differences between these estimates, judgments, or assumptions and actual results, the Company's financial statements could be affected. In many cases, the accounting treatment of a particular transaction is specifically dictated by U.S. GAAP and does not require management's judgment in its application. There are also areas in which management's judgment in selecting among available alternatives would not produce a materially different result.

Net Loss Per Share

Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period.

Diluted net loss per share is computed by giving effect to all potential shares of common stock, including convertible debt instruments, preferred stock, restricted stock unit grants and detachable stock warrants. Basic and diluted net loss per share was the same for the nine months ended May 31, 2016 and 2015 presented as the inclusion of all potential common shares outstanding would have been anti-dilutive.

Recent Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, "Revenue from Contracts with Customers", which supersedes most of the current revenue recognition requirements. The core principle of the new guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for these goods or services. New disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers are also required. This guidance is effective for the Company in the first quarter of fiscal year 2018 and early application is not permitted. Entities must adopt the new guidance using one of two retrospective application methods. The Company is currently evaluating the standard but does not expect it to have a material impact on our financial position, results of operations or cash flows.

In August 2014, the FASB issued ASU 2014-15, which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date the financial statements are issued.2 An entity must provide certain disclosures if "conditions or events raise substantial doubt about the entity's ability to continue as a going concern." The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted.

The Financial Accounting Standards Board issues Accounting Standard Updates ("ASUs") to amend the authoritative literature in Accounting Standards Codification ("ASC"). There have been a number of ASUs to date that amend the original text of ASC. The Company believes those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to the Company or (iv) are not expected to have a significant impact on the Company.

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Composition of Certain Financial Statement Captions

9 Months Ended

May 31, 2016

Notes to Financial Statements

Note 2 - Composition of Certain Financial Statement Captions

Property and Equipment

Property and equipment consisted of the following:

	May 31, 2016			August 31, 2015
Software	$	1,807,091		$	1,775,220
Servers, computers, and other related equipment		153,824			198,924
Leasehold improvements		1,675			1,675
		1,962,518			1,975,819
Less accumulated depreciation and amortization		(1,558,662	)		(1,314,846	)
Property and equipment, net	$	403,856		$	660,973

Depreciation expense totaled $288,916 and $267,871 for the nine months ended May 31, 2016 and 2015, respectively.  There have been no write-offs or impairments of property and equipment since the Company's inception on November 30, 2011.

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following:

	May 31, 2016		August 31, 2015
Accounts payable	$	751,578	$	751,129
Accrued interest		269,817		184,007
Accrued broadcaster commissions		94,862		92,304
Credit card		37,002		120,049
Accounts payable and accrued expenses	$	1,153,259	$	1,147,489

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Fair Value

9 Months Ended

May 31, 2016

Notes to Financial Statements

Note 3 - Fair Value

Fair value is an exit price, representing the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. Fair value measurements are required to be disclosed by level within the following fair value hierarchy:

Level 1– Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

Level 2 – Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument's anticipated life.

Level 3 – Inputs lack observable market data to corroborate management's estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

When determining fair value, whenever possible the Company uses observable market data, and relies on unobservable inputs only when observable market data is not available. Fair-value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of May 31, 2016 and August 31, 2015. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, accounts receivable, prepaids, accounts payable, accrued liabilities, notes payable, and convertible notes payable. Fair values for these items were assumed to approximate carrying values because of their short term in nature or they are payable on demand.

The fair value of these financial assets and liabilities was determined using the following inputs:

	Fair Value Measurement Using
	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Fair values as of May 31, 2016
Liabilities:
Derivative liabilities	$	-	$	460,789		-	$	460,789
Total liabilities measured at fair value	$	-	$	460,789		-	$	460,789
Fair values as of August 31, 2015
Liabilities:
Derivative liabilities		-	$	898,856		-	$	898,856
Total liabilities measured at fair value	$	-	$	898,856		-	$	898,856

The Company's derivative liabilities were classified as Level 2 within the fair value hierarchy because they were valued using significant other observable inputs. At each reporting period, the Company calculates the derivative liability using the Black-Scholes pricing model taking into account variables such as expected life, risk free interest rate, expected volatility, the fair market value of the Company's common stock and the conversion price.

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Asset Acquisition / Disposition

9 Months Ended

May 31, 2016

Notes to Financial Statements

Note 4 - Asset Acquisition / Disposition

Asset Acquisitions

On April 24, 2015, the Company, entered into an Asset Purchase Agreement with Lux Digital Pictures GmbH Partners ("Lux") pursuant to which, the Company issued 800 shares of Series C Convertible Preferred Stock for the rights to various domains, source codes, etc related to Lux's Sports Alert and Amped Fantasy Sports products. The Company determined the price of the Series C issued to be $120,000 based upon the conversion value of $150 worth of common stock for each share of Series C. The Company recorded the value of the asset as software within property and equipment on the accompanying consolidated balance sheets. The Company capitalized the value of the Series C as the products received were near completion and need limited modification prior to the Company placing into production. The expected life of the asset acquired was estimated to be 36 months.

Asset Disposition

On February 19, 2016, the Company, entered into and closed an Asset Purchase Agreement with Electric Lightwave, LLC ("Electric Lightwave"), a wholly owned subsidiary of Integra Telecom Holdings, Inc. pursuant to which, Electric Lightwave purchased from the Company certain assets related to the Company's data center located in Santa Barbara, including equipment and inventory, for a purchase price of $150,000. As of the date of the sale all the assets were fully depreciated. In connection with the transaction, the Company recorded a gain of $146,012, as rent deposit of $3,988 was transferred as part of the sale, which is recorded within gain on sale of co-location and domain on the accompanying statement of operations.

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Commitments and Contingencies

9 Months Ended

May 31, 2016

Notes to Financial Statements

Note 5 - Commitments and Contingencies

On October 23, 2013, the Superior Court in the Judicial District of Danbury, Connecticut entered an order approving the stipulation of the parties (the "Stipulation") in the matter of ASC Recap LLC ("ASC") v. StreamTrack, Inc. Under the Stipulation, the Company agreed to issue, as settlement of liabilities owed by the Company to ASC in the aggregate amount of $766,288 (the "Claim Amount"), shares of common stock (the "Settlement Shares") as follows:

(a) In one or more tranches as necessary, 3,740,000 shares of common stock (the "Initial Issuance") and an additional 200,000 shares of common stock as a settlement fee.

(b) Through the Initial Issuance and any required additional issuances, that number of shares of common stock with an aggregate value equal to (A) the sum of  (i) the Claim Amount and (ii) reasonable attorney fees and trade execution fees in the amount of $75,000, divided by (B) the Purchase Price (defined under the Stipulation as the market price (defined as the lowest closing bid price of the Company's common stock during the valuation period set forth in the Stipulation) less the product of the Discount (equal to 25%) and the market price. The parties reasonably estimated that the fair market value of the Settlement Shares and all other amounts to be received by ASC is equal to approximately $1,100,000.

(c) If at any time during the valuation period the closing bid price of the Company's common stock is below 90% of the closing bid price on the day before an issuance date, the Company will immediately cause to be issued to ASC such additional shares as may be required to effect the purposes of the Stipulation.

(d) Notwithstanding anything to the contrary in the Stipulation, the number of shares beneficially owned by ASC will not exceed 9.99% of the Company's outstanding common stock.

In connection with the Settlement Shares, the Company relied on the exemption from registration provided by Section 3(a)(10) under the Securities Act.

In connection with the settlement, during the nine months ended May 31, 2015 the Company issued 336,993,000 shares of common stock to ASC in which gross proceeds of $231,725 were generated from the sale of the common shares. In connection with the transaction, ASC received fees of $59,311 and provided payments of $172,414 to settle outstanding vendor payables. There were no shares issued to ASC during the nine months ended May 31, 2016. The remaining amount on the settlement of liabilities owed by the Company to ASC is in the aggregate amount of $151,290 as of May 31, 2016. The Company cannot reasonably estimate the amount of proceeds ASC expects to receive from the sale of these shares which will be used to satisfy the liabilities. Thus, the Company accounts for the transaction as the shares are sold and the liabilities are settled. All amounts are included within accounts payable. Shares which are held by ASC at each reporting period are accounted for as issued but not outstanding.

Legal Proceedings

The Company is potentially subject to various legal proceedings and claims arising in the ordinary course of its business. There are no pending legal proceedings against the Company as of the date of these financial statements.

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Capital Lease

9 Months Ended

May 31, 2016

Notes to Financial Statements

Note 6 - Capital Lease

On March 22, 2013, the Company reached a settlement and release agreement with IBM Credit, LLC, ("IBM") the lessor associated with the Company's computer servers and software classified under capital lease. The balance owed to IBM as of March 22, 2013 was agreed to be $108,704. The Company agreed to make payments of $9,000 per month, with a final payment of $9,704 on March 1, 2014, in order to satisfy this balance. As of May 31, 2016 and August 31, 2015, the Company was in default of this agreement and the amount outstanding of $54,704 is reflected as a current liability on the accompanying consolidated balance sheets. 

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Related Party Transactions

9 Months Ended

May 31, 2016

Notes to Financial Statements

Note 7 - Related Party Transactions

The Company has only been operating since November 30, 2011. As a result, the Company has an extremely limited credit history. The Company's Chief Executive Officer, and the Chief Executive Officer of StreamTrack Media, Inc. (the "Executives") use their personal credit cards to fund operations on a frequent basis. If the Company did not have access to these credit cards, the Company would have to rely exclusively on external sources of capital. The Company's external sources of capital are not always readily available. As a result, in time-constrained circumstances, the use of personal credit cards is necessary until such time as the Company is able to build up its own credit-worthiness and access more readily available and significant credit.

The related party payable as of May 31, 2016 and August 31, 2015 consists of unpaid compensation and non-interest bearing cash advances and charges on personal credit lines made on behalf of the Company by the Executives. The balances owed to the Executives are not secured and are due on demand. Interest will be charged on these balances based upon effective credit card rates. During the nine months ended May 31, 2015, the Executives converted a significant portion of amounts due to them for unpaid compensation and other advances to long-term convertible notes payable, see Note 8 for additional information. In addition, the Executives agreed to a temporary reduction in their annual salary from $240,000 to $50,000 per annum for the period from December 1, 2014 to December 1, 2015. As of May 31, 2016 and August 31, 2015, amounts due to these Executive related to accrued compensation and advances were $227,668 and $159,660, respectively.

See Notes 8 and 10 for additional related party transactions.

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Debt Instruments

9 Months Ended

May 31, 2016

Notes to Financial Statements

Note 8 - Debt Instruments

Asset-Based Debt Financing

On April 11, 2013, the Company executed a non-dilutive asset-based debt financing (the "Lender Financing") with a third party (the "Lender"). The Lender Financing for a line of credit, secured by all of the Company's assets. The Company's management also executed limited recourse guarantees with the Lender. Interest is payable monthly based on a floating interest rate determined based on a formula outlined in detail within the financing agreement. The Company anticipates the effective monthly interest rate charged on the outstanding balance owed to the third party will be between 3.2% and 1.1%.

On January 22, 2016, the Company executed an addendum to the Lender Financing agreement whereby the maturity date has been extended to December 15, 2016 with interest calculated at Prime plus 15.25% per annum. In the event the facility is below $750,000 prior to March 15, 2016 the interest rate shall be Prime plus 12.5%; below $500,000 prior to June 15, 2016 the interest rate shall be Prime plus 10%.

Vendor Convertible Note

On November 1, 2012, the Company issued a convertible note for $140,000 (the "Vendor Note") to a former Vendor ("Vendor"). The Vendor Note was executed on November 1, 2012 and was immediately convertible into the Company's common stock at a 50% discount to the lowest bid price for the five days prior to the conversion date. As of August 31, 2015, the note was fully converted. 

Creditor #2 Convertible Promissory Notes

In April 2014, the Creditor entered into an exchange agreement with another lender (the "Creditor #2") whereby the Creditor transferred the Creditor's notes and accrued interest to Creditor #2. In April, the Company entered into i) a note agreement for $284,560 representing amounts transferred from the Creditor; ii) two $125,000 notes in which the proceeds were received on the same date (collectively referred to as the "Creditor #2 Notes") with Creditor #2. The Creditor #2 Notes bear interest per annum at 10.0%, payable six months after the issuance date and are convertible on the date of issuance based upon based upon a 45% discount to lowest trading price, for the 15 trading days prior to conversion. As a result, the lower the stock price at the time the Creditor #2 converts the Creditor #2 Notes, the more common shares the Creditor #2 will receive. There were no conversions during the nine months ended May 31, 2016 and thus the remaining principal balance was $391,242 as of May 31, 2016 and August 31, 2015.

To the extent the Creditor #2 converts the Creditor #2 Notes and then sells its common stock, the market price of the common stock may decrease due to the additional shares in the market. This could allow the Creditor #2 to receive greater amounts of common stock upon conversion. The sale of each share of common stock could further depress the stock price. Due to the floating conversion price of the notes, the Company does not know the exact number of shares that the Creditor #2 would be issued upon conversion. The shares issuable upon conversion of the Creditor #2 Notes may result in substantial dilution to the interests of the Company's other shareholders. In this regard, even though the investor may not hold shares amounting to more than 9.99% of the outstanding shares at one time, this restriction does not prevent the investor from selling some of its holdings and then receiving additional shares. In this way, the investor could sell more than the 9.99% limit while never holding more than the limit.

During the nine months ended February 28, 2015, the Company amortized a discount of $62,500 to interest expense. As of August 31, 2015, the discount was fully amortized.

Creditor #3 Convertible Promissory Note

In December 2014, a convertible promissory note holder ("Holder") entered into an exchange agreement with another lender (the "Creditor #3") whereby the Holder transferred the Holder's notes and accrued interest to Creditor #3. In December 2014, the Company entered into i) a note agreement for $150,000 representing the principal amount transferred from the Holder. The Creditor #3 Note bears interest per annum at 10.0%, due on August 22, 2015 and is convertible on the date of issuance based upon based upon a 25% discount to lowest trading price, for the 5 trading days prior to conversion. As a result, the lower the stock price at the time the Creditor #3 converts the Creditor #3 Notes, the more common shares the Creditor #3 will receive. There were no conversions during the nine months ended May 31, 2016 and thus the remaining principal balance was $93,350 as of May 31, 2016 and August 31, 2015.

To the extent the Creditor #3 converts the Creditor #3 Note and then sells its common stock, the market price of the common stock may decrease due to the additional shares in the market. This could allow the Creditor #3 to receive greater amounts of common stock upon conversion. The sale of each share of common stock could further depress the stock price. Due to the floating conversion price of the notes, the Company does not know the exact number of shares that the Creditor #3 would be issued upon conversion. The shares issuable upon conversion of the Creditor #3 Note may result in substantial dilution to the interests of the Company's other shareholders. In this regard, even though the investor may not hold shares amounting to more than 4.99% of the outstanding shares at one time, this restriction does not prevent the investor from selling some of its holdings and then receiving additional shares. In this way, the investor could sell more than the 4.99% limit while never holding more than the limit.

Upon issuance, the Company recorded a discount of $150,000 due to the derivative liability, as discussed below in Note 9, having a fair market value in excess of the principal amount of the convertible note. As of August 31, 2015, the discount was fully amortized.

Convertible Promissory Notes

As of May 31, 2016 and August 31, 2015, the Company has outstanding 38 and 33 convertible promissory notes respectively issued between December 2011 and September 2015. The convertible promissory notes bear interest at either 4% or 8% per year and are due in full, including principal and interest, two-three years from the issuance date ranging from August 2014 to February 2018. The convertible promissory notes also include a conversion option whereby the holders may elect at any time to convert any portion or the entire balance into the Company's common stock at conversion prices ranging from $0.0001 to $1.25. There were no transactions in which impacted the convertible notes payable during the nine months ended May 31, 2016, other than the accrual of interest. As of May 31, 2016 and August 31, 2015, the balance of convertible notes payable was $1,702,120 and $1,615,120 respectively.

As of May 31, 2016 and August 31, 2015, convertible promissory notes outstanding of $1,153,964 and $1,068,964 respectively, are held by related parties. These related parties consist of the Company's officers, former officers, significant shareholders or entities controlled by these individuals. As of May 31, 2016 and August 31, 2015, $938,464 and $197,850, respectively, of these notes were included within the current portion of convertible promissory notes on the accompanying balance sheet as the note was due within one year of the balance sheet.

For some of the convertible promissory notes, the conversion feature associated with the convertible promissory notes provide for a rate of conversion that is below market value. This conversion feature is accounted for as a beneficial conversion feature. A beneficial conversion feature was recorded and classified as a debt discount on the balance sheet at the time of issuance of each convertible promissory note with a corresponding credit to additional paid-in capital.

In addition, six of the convertible promissory note purchasers were issued warrants to purchase shares of the Company's common stock. The valuation of the stock warrants and the beneficial conversion feature associated with the issuance of convertible promissory notes utilized valuation inputs and related figures provided by a professional and independent valuation firm. The Company allocated a portion of the proceeds received from the convertible promissory notes to the warrants using the relative fair value resulting in a debt discount to each convertible promissory note.

The discounts are amortized over the term of the convertible promissory note using the straight line method. The amortized value for each period is recorded as an offset against the debt discount on the balance sheet, classified as interest expense. During the nine months ended May 31, 2016 and 2015, $370,463 and $427,390 of the discounts were amortized to interest expense, respectively. As of May 31, 2016, $247,324 discounts remained which will be expensed in fiscal 2016 through 2018.

Future Maturities

As of August 31, 2015, future maturities of notes payable is as follows for the years ending August 31; $957,442 current; $1,067,270 2017; and $75,000 2018. Included within those amounts due to related parties are: $197,820 current and $871,114 for 2017.

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Derivatives

9 Months Ended

May 31, 2016

Derivatives

Note 9 - Derivatives

Creditor #2 Note

The Creditor #2 Notes were executed on April 15, 2014 and were immediately convertible into the Company's common stock at a 45% discount to the lowest trading price for the 15 days prior to the conversion date. As a result of the fact that the number of shares the Creditor #2 Notes was convertible into was indeterminable, the Company determined a derivative liability was embedded within the Creditor #2 Notes. The Company measured the derivative liability using the input attributes disclosed below and recorded a derivative liability of $3,158,190 as of April 15, 2014 of which $1,219,891 was included within "change in fair value of derivatives" due to a portion of the derivative liability being in excess of the $250,000 in proceeds received and $1,481,723, which included offset of $206,576 from relief of the derivative liability related to the Creditor Notes, within "Loss on extinguishment" due to extinguishment accounting on the Creditor Note transferred to Creditor #2.

On May 31, 2016, the Company re-measured the derivative liability using the input attributes below and determined the value to be $330,777 of which $275,921 was classified as income within "change in fair value of derivatives" and was recorded for the nine months ended May 31, 2016 in the statement of operations.

	May 31,			August 31,
	2016			2015
Expected life (in years)		0.50			0.50
Balance of note outstanding	$	391,242		$	391,242
Stock price	$	0.0001		$	0.0001
Effective conversion price	$	0.00005		$	0.00005
Shares issuable upon conversion		7,113,490,909			7,113,490,909
Risk-free interest rate		0.49	%		0.50	%
Expected volatility		63.47	%		361.00	%
Expected dividend yield		-			-

Creditor #3 Note

The Creditor #3 Note was immediately convertible into the Company's common stock at a 25% discount to the lowest traded price for the five days prior to the conversion date. As a result of the fact that the number of shares the Creditor #3 is convertible into is indeterminable, the Company determined a derivative liability was embedded within the Creditor #3. The Company measured the derivative liability using the input attributes disclosed below and recorded a derivative liability of $50,000 as of December 24, 2014. As a result of the valuation of the derivative liability being in excess of the value of the carrying value of Creditor #3 by $50,000, a loss on derivative liability of $50,000 was recorded by the Company.

On May 31, 2016, the Company re-measured the derivative liability using the input attributes below and determined the value to be $38,709 of which $64,100 was classified as income within "change in fair value of derivatives" and was recorded for the nine months ended May 31, 2016 in the statement of operations.

	May 31,			August 31,
	2016			2015
Expected life (in years)		0.50			0.50
Balance of note outstanding	$	93,350		$	93,350
Stock price	$	0.0001		$	0.0001
Effective conversion price	$	0.000075		$	0.000075
Shares issuable upon conversion		1,244,666,667			1,244,666,667
Risk-free interest rate		0.49	%		0.50	%
Expected volatility		63.47	%		361.00	%
Expected dividend yield		-			-

 Other Notes with Adjustable Conversion Features

As discussed in Note 8, on December 24, 2014 the Company issued a $72,890 promissory note to a third party. The convertible promissory note was immediately convertible into the Company's common stock at a 10% discount to the lowest traded price for the five days prior to the conversion date. As a result of the fact that the number of shares the promissory note is convertible into is indeterminable, the Company determined a derivative liability was embedded within the promissory note. The Company measured the derivative liability using the input attributes disclosed below and recorded a derivative liability of $94,487 as of December 24, 2014. As a result of the valuation of the derivative liability being in excess of the value of the carrying value of convertible promissory note by $21,597, a loss on derivative liability of $21,597 was recorded by the Company. In addition, on March 17, 2015 the Company received an additional $41,459 in proceeds under the promissory note. On March 17, 2015, the Company recorded an additional derivative liability of $69,098, resulting in a loss on derivative liability of $27,639.

On May 31, 2016, the Company re-measured the derivative liability using the input attributes below and determined the value to be $56,286 of which $67,281 was classified as income within "change in fair value of derivatives" and was recorded for the nine months ended May 31, 2016 in the statement of operations.

	May 31,			August 31,
	2016			2015
Expected life (in years)		0.65			1.40
Balance of note outstanding	$	114,350		$	114,350
Stock price	$	0.0001		$	0.0001
Effective conversion price	$	0.00009		$	0.00009
Shares issuable upon conversion		1,270,555,556			1,270,555,556
Risk-free interest rate		0.62	%		0.50	%
Expected volatility		134.29	%		369.00	%
Expected dividend yield					-

As discussed in Note 8, on April 28, 2015 the Company issued a $56,806 promissory note to a third party. The convertible promissory note was immediately convertible into the Company's common stock at a 15% discount to the lowest traded price for the five days prior to the conversion date. As a result of the fact that the number of shares the promissory note is convertible into is indeterminable, the Company determined a derivative liability was embedded within the promissory note. The Company measured the derivative liability using the input attributes disclosed below and recorded a derivative liability of $66,831 as of April 28, 2015.

On May 31, 2016, the Company re-measured the derivative liability using the input attributes below and determined the value to be $35,019 of which $30,764 was classified as income within "change in fair value of derivatives" and was recorded for the nine months ended May 31, 2016 in the statement of operations.

	May 31,			August 31,
	2016			2015
Expected life (in years)		.92			1.40
Balance of note outstanding	$	56,806		$	56,806
Stock price	$	0.0001		$	0.0001
Effective conversion price	$	0.000085		$	0.000085
Shares issuable upon conversion		668,305,882			668,305,882
Risk-free interest rate		0.62	%		0.50	%
Expected volatility		134.29	%		369.00	%
Expected dividend yield		-			-

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Stockholders' Equity

9 Months Ended

May 31, 2016

Notes to Financial Statements

Note 10 - Stockholders' Equity

Series A Preferred Stock

Each share of Series A Preferred Stock has voting rights equal to the voting equivalent of the common stock into which it is convertible at the time of the vote. The holders of the Series A Preferred Stock are not entitled to dividends.  The Series A Preferred Stock has no preferential rights to the Company's common stock and will share in any liquidation proceeds with the common stock on an as converted basis. No shares of Series A Preferred Stock are outstanding as of May 31, 2016.

Series B Preferred Stock

On October 25, 2013, the Company filed a Certificate of Designation of Series B Preferred Stock (the "Series B Certificate of Designation") with the Secretary of State of Wyoming. Pursuant to the Series B Certificate of Designation, the Company designated 200,000 shares of its blank check preferred stock as Series B Preferred Stock. The Series B Preferred Stock will rank senior to the common stock, Series A Preferred Stock and any subsequently created series of preferred stock that does not expressly rank pari passu with or senior to the Series B Preferred Stock (the "Junior Stock"). The Series B Preferred Stock will not be entitled to dividends. In the event of a liquidation, the Series B Preferred Stock will be entitled to a payment of the Stated Value of $1.00 per share prior to any payments being made in respect of the Junior Stock. Each share of Series B Preferred Stock will entitle the holder to vote on all matters voted on by holders of common stock as a single class. With respect to any such vote, each share of Series B Preferred Stock will entitle the holder to cast such number of votes equal to 0.000255% of the total number of votes entitled to be cast. Effective upon the closing of a Qualified Financing, all issued and outstanding shares of Series B Preferred Stock will automatically convert into common stock in an amount determined by dividing the product of the number of shares being converted and the Stated Value by the Conversion Price. The Conversion Price will be equal to the price per share of the common stock sold under the Qualified Financing (or, if the Qualified Financing involves the sale of securities convertible into common stock, by the conversion price of such convertible securities). A "Qualified Financing" is defined as the sale by the Company in a single offering of common stock or securities convertible into common stock for gross proceeds of at least $5,000,000.

On October 31, 2013, the Company entered into amendment, waiver and exchange agreements (the "Exchange Agreements") with Michael Hill (the Company's chief executive officer and director) and Aaron Gravitz (the Company's director). Under each Exchange Agreement, the Company issued to each of Mr. Hill and Mr. Gravitz 100,000 shares of Series B Preferred Stock in exchange for $100,000 in unpaid compensation.

Series C Preferred Stock

Effective December 29, 2014, the Company filed a Certificate of Designation of Series C Convertible Preferred Stock (the "Series C") with the Secretary of State of Wyoming. Pursuant to the Series C, the Company designated 20,000 shares of its blank check preferred stock as Series C Preferred Stock. Each share of Series C is convertible into $150 in fair market value of the Company's common stock, which fair market value will be equal to the average closing price of the common stock on the over-the-counter market during the 10 trading days immediately prior to the delivery to the Company of a conversion notice. The Series C will share in any liquidation proceeds with the common stock on an as-converted basis, will not have voting rights prior to being converted to common stock, and in the event of any payment of dividends by the Company, will be entitled to dividends on an as-converted basis with the common stock. The Company has presented the Series C outside of stockholders' equity due to the variable conversion price.

On April 24, 2015, the Company entered into an Exchange Agreement with Lux pursuant to which the Company issued 10,000 shares of its Series C in exchange for 1,495,313 shares of Company common stock tendered by Lux to the Company for cancellation.  The Lux common stock was originally issued to Lux by the Company on March 12, 2013. In connection with the transaction, the Company recorded a loss on settlement of $1,499,850, which represented the difference in the fair market value of the Series C issued of $1.5 million and the common stock received of $150. See Note 4 for additional transaction with Lux.

On April 24, 2015, the Company entered into an Exchange Agreement with Mark J. Richardson ("MJR") pursuant to which the Company issued 500 shares of its Series C in exchange for 15,140 shares of Company common stock tendered by MJR to the Company for cancellation.  The MJR common stock was originally issued to MJR by the Company on March 13, 2013. In connection with the transaction, the Company recorded a loss on settlement of $74,998, which represented the difference in the fair market value of the Series C issued of $75,000 and the common stock received of $2.

See below and Note 4 for discussion related to additional issuances of Series C.

Common Stock

Each share of common stock has the right to one vote per share. The holders of common stock are also entitled to receive dividends as and when declared by the board of directors of the Company, whenever funds are legally available, subject to the rights under any outstanding preferred stock.

Effective February 17, 2015, the Company filed Articles of Amendment to the Company's Articles of Incorporation with the Secretary of State of Wyoming to (i) increase the Company's authorized shares of common stock from 1,000,000,000 to an unlimited number; and (ii) allow for shareholders to take actions by the written consent of the holders of outstanding shares having not less than the minimum number of votes that would be required to authorize or take the action at a meeting at which all shares entitled to vote on the action were present and voted.

On October 26, 2015, the Company filed a Preliminary Schedule 14C Information Statement with the Securities and Exchange Commission in connection with approval by the Company's board of directors and majority stockholders of an amendment the Articles of Incorporation to: (i) change the Company's name from StreamTrack, Inc. to Total Sports Media, Inc., (ii) effect a 1-for 800 reverse split of the Company's common stock and (iii) decrease the authorized number of shares of common stock from an unlimited number to 40,000,000. The amendment will be effective upon filing with the Secretary of State of Wyoming, which the Company anticipates to occur approximately, but not less than, 20 days after the definitive information statement is mailed to stockholders.

During the nine months ended May 31, 2016, 530 shares of Series C with a value of $79,500 were converted into 795,000,000 shares of common stock.

Detachable Stock Warrants

On April 27, 2015, the Company entered into an Investment Agreement with RTV Media Corp. ("RTV") pursuant to which RTV initially invested $75,000 into the Company in consideration for $75,000 of worth of warrants at an exercise price of $0.0001 to purchase the common stock of the Company. Upon exercise, RTV has up to five years to exercise the warrants. In addition, RTV agreed to invest up to an additional $425,000 of capital into the Company in consideration for which additional warrants will be granted upon investment. The Company has accounted for the warrants as common stock to be issued as there are no provisions within the agreement in which will require the Company to return the capital provided.  

As of May 31, 2016, the Company has a total of 225,000 detachable stock warrants outstanding. The warrants have a three-year term and are exercisable into the Company's common stock at an exercise price of $0.41 per share.

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Subsequent Events

9 Months Ended

May 31, 2016

Notes to Financial Statements

Note 11 - Subsequent Events

In accordance with ASC 855-10, we have analyzed our operations subsequent to May 31, 2016 to the date these financial statements were issued, and have determined that we do not have any material subsequent events to disclose in these financial statements.

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Nature of Business (Policies)

9 Months Ended

May 31, 2016

Notes to Financial Statements

Basis of Presentation

The accompanying interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's Form 10-K for year ended August 31, 2015.  In the opinion of management, all adjustments necessary in order for the consolidated financial statements to be not misleading have been reflected herein.  The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year ended August 31, 2016. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, StreamTrack Media, Inc. and RadioLoyalty, Inc., California corporations. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company's management, the consolidated financial statements include all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company's financial position for the periods presented.

Going Concern

The Company's financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  For the nine months ended May 31, 2016, the Company recorded an operating loss of $720,015 and a net loss of $725,634. As of May 31, 2016, the Company had a working capital deficit of $3,958,692, which excluding the derivative liability was $460,789. The net loss and negative working capital indicate substantial doubt about the entity's ability to continue as a going concern.

Management is confident but cannot guarantee that the Company will be able to raise additional capital in order to repay debts and continue operations. As of August 31, 2015, during fiscal 2016, the Company is obligated to make payments on certain operating leases, convertible debts, and a capital lease, among others. The Company's normal operating costs are also significant and include consulting fees, professional fees, product development costs and marketing and sales costs associated with management's business plan. Since inception and through the date of these financial statements, the Company has successfully raised a significant amount of capital through debt and equity offerings. The Company anticipates launching several new product offerings and initiating certain new significant partnerships during the fiscal year ending August 31, 2016. The Company anticipates those products and partnerships to be profitable but notes that it will require an unknown amount of capital for product development and commercial deployment. The Company will attempt to have its potential partners pay for the some of these costs but management cannot be certain that it will succeed in entering into such arrangements. Management may potentially make a business decision to move forward, delay, or cancel certain partnerships because of the Company's overall capital needs. Nonetheless, the ability of the Company to continue as a going concern is dependent on the successful execution of the business plan and become profitable. If the Company is unable to become profitable and sustain positive cash flow from operations, the Company could be forced to modify its business operations or possibly cease operations entirely. Management cannot provide any assurances that the Company will be successful in its operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the financial statements, as well as the reported amounts of revenue and expenses during the periods presented. Estimates are used for determining the allowance for doubtful accounts, stock-based compensation, fair values of warrants to purchase common stock, derivative liabilities and income taxes. To the extent there are material differences between these estimates, judgments, or assumptions and actual results, the Company's financial statements could be affected. In many cases, the accounting treatment of a particular transaction is specifically dictated by U.S. GAAP and does not require management's judgment in its application. There are also areas in which management's judgment in selecting among available alternatives would not produce a materially different result.

Net Loss Per Share

Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period.

Diluted net loss per share is computed by giving effect to all potential shares of common stock, including convertible debt instruments, preferred stock, restricted stock unit grants and detachable stock warrants. Basic and diluted net loss per share was the same for the nine months ended May 31, 2016 and 2015 presented as the inclusion of all potential common shares outstanding would have been anti-dilutive.

Recent Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, "Revenue from Contracts with Customers", which supersedes most of the current revenue recognition requirements. The core principle of the new guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for these goods or services. New disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers are also required. This guidance is effective for the Company in the first quarter of fiscal year 2018 and early application is not permitted. Entities must adopt the new guidance using one of two retrospective application methods. The Company is currently evaluating the standard but does not expect it to have a material impact on our financial position, results of operations or cash flows.

In August 2014, the FASB issued ASU 2014-15, which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date the financial statements are issued.2 An entity must provide certain disclosures if "conditions or events raise substantial doubt about the entity's ability to continue as a going concern." The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted.

The Financial Accounting Standards Board issues Accounting Standard Updates ("ASUs") to amend the authoritative literature in Accounting Standards Codification ("ASC"). There have been a number of ASUs to date that amend the original text of ASC. The Company believes those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to the Company or (iv) are not expected to have a significant impact on the Company.

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Composition of Certain Financial Statement Captions (Tables)

9 Months Ended

May 31, 2016

Composition Of Certain Financial Statement Captions Tables

Property and Equipment

	May 31, 2016			August 31, 2015
Software	$	1,807,091		$	1,775,220
Servers, computers, and other related equipment		153,824			198,924
Leasehold improvements		1,675			1,675
		1,962,518			1,975,819
Less accumulated depreciation and amortization		(1,558,662	)		(1,314,846	)
Property and equipment, net	$	403,856		$	660,973

Accounts Payable and Accrued Expenses

	May 31, 2016		August 31, 2015
Accounts payable	$	751,578	$	751,129
Accrued interest		269,817		184,007
Accrued broadcaster commissions		94,862		92,304
Credit card		37,002		120,049
Accounts payable and accrued expenses	$	1,153,259	$	1,147,489

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Fair Value (Tables)

9 Months Ended

May 31, 2016

Fair Value Tables

Fair Value of financial assets and liabilities

	Fair Value Measurement Using
	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Fair values as of May 31, 2016
Liabilities:
Derivative liabilities	$	-	$	460,789		-	$	460,789
Total liabilities measured at fair value	$	-	$	460,789		-	$	460,789
Fair values as of August 31, 2015
Liabilities:
Derivative liabilities		-	$	898,856		-	$	898,856
Total liabilities measured at fair value	$	-	$	898,856		-	$	898,856

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Derivatives (Tables)

9 Months Ended

May 31, 2016

Creditor Notes 2 [Member]

Change in fair value of derivatives

	May 31,			August 31,
	2016			2015
Expected life (in years)		0.50			0.50
Balance of note outstanding	$	391,242		$	391,242
Stock price	$	0.0001		$	0.0001
Effective conversion price	$	0.00005		$	0.00005
Shares issuable upon conversion		7,113,490,909			7,113,490,909
Risk-free interest rate		0.49	%		0.50	%
Expected volatility		63.47	%		361.00	%
Expected dividend yield		-			-

Creditor Notes 3 [Member]

Change in fair value of derivatives

	May 31,			August 31,
	2016			2015
Expected life (in years)		0.50			0.50
Balance of note outstanding	$	93,350		$	93,350
Stock price	$	0.0001		$	0.0001
Effective conversion price	$	0.000075		$	0.000075
Shares issuable upon conversion		1,244,666,667			1,244,666,667
Risk-free interest rate		0.49	%		0.50	%
Expected volatility		63.47	%		361.00	%
Expected dividend yield		-			-

Other Notes with Adjustable Conversion Features [Member]

Change in fair value of derivatives

	May 31,			August 31,
	2016			2015
Expected life (in years)		0.65			1.40
Balance of note outstanding	$	114,350		$	114,350
Stock price	$	0.0001		$	0.0001
Effective conversion price	$	0.00009		$	0.00009
Shares issuable upon conversion		1,270,555,556			1,270,555,556
Risk-free interest rate		0.62	%		0.50	%
Expected volatility		134.29	%		369.00	%
Expected dividend yield					-

Convertible Promissory Notes [Member]

Change in fair value of derivatives

	May 31,			August 31,
	2016			2015
Expected life (in years)		.92			1.40
Balance of note outstanding	$	56,806		$	56,806
Stock price	$	0.0001		$	0.0001
Effective conversion price	$	0.000085		$	0.000085
Shares issuable upon conversion		668,305,882			668,305,882
Risk-free interest rate		0.62	%		0.50	%
Expected volatility		134.29	%		369.00	%
Expected dividend yield		-			-

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Nature of Business (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	May 31, 2016	May 31, 2015	May 31, 2016	May 31, 2015
Nature Of Business Details Narrative
Operating loss	$ (273,572)	$ (204,541)	$ (720,015)	$ (671,686)
Net income (loss)	(403,446)	$ (2,176,913)	(725,634)	$ (2,988,378)
Working capital deficit	3,958,692		3,958,692
Working capital deficit excluding derivative liability	$ 460,789		$ 460,789

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Composition of Certain Financial Statement Captions (Details) - USD ($)	May 31, 2016	Aug. 31, 2015
Property and equipment, gross	$ 1,962,518	$ 1,975,819
Less accumulated depreciation and amortization	(1,558,662)	(1,314,846)
Property and equipment, net	403,856	660,973
Software [Member]
Property and equipment, gross	1,807,019	1,775,220
Servers computers and other related equipment [Member]
Property and equipment, gross	153,824	198,924
Leasehold improvements [Member]
Property and equipment, gross	$ 1,675	$ 1,675

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Composition of Certain Financial Statement Captions (Details 1) - USD ($)	May 31, 2016	Aug. 31, 2015
Composition Of Certain Financial Statement Captions Details 1
Accounts payable	$ 751,578	$ 751,129
Accrued interest	269,817	184,007
Accrued broadcaster commisions	94,862	92,304
Credit card	37,002	120,049
Accounts payable and accrued expenses	$ 1,153,259	$ 1,147,489

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Composition of Certain Financial Statement Captions (Details Narrative) - USD ($)	9 Months Ended
	May 31, 2016	May 31, 2015
Composition Of Certain Financial Statement Captions Details Narrative
Depreciation expense, total	$ 288,916	$ 267,871

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Fair Value (Details) - USD ($)	May 31, 2016	Aug. 31, 2015
Liabilities:
Derivative liabilities	$ 460,789	$ 898,856
Total liabilities measured at fair value	460,789	898,856
Quoted Prices in Active Markets for Identical Instruments Level 1 [Member]
Liabilities:
Derivative liabilities
Total liabilities measured at fair value
Significant Other Observable Inputs Level 2 [Member]
Liabilities:
Derivative liabilities	460,789	898,856
Total liabilities measured at fair value	460,789	898,856
Significant Unobservable Inputs Level 3 [Member]
Liabilities:
Derivative liabilities
Total liabilities measured at fair value

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Commitments and Contingencies (Details Narrative)	May 31, 2016 USD ($)
Commitments And Contingencies Details Narrative
Remaining amount on the settlement of liabilities	$ 151,290

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Capital Lease (Details Narrative) - USD ($)	May 31, 2016	Aug. 31, 2015
Capital Lease Details Narrative
Capital lease payable - in default	$ 54,704	$ 54,704

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Related Party Transactions (Details Narrative) - USD ($)	May 31, 2016	Aug. 31, 2015
Related Party Transactions Details Narrative
Related party payables	$ 228,120	$ 159,660

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Debt Instruments (Details Narrative) - USD ($)	9 Months Ended
	May 31, 2016	May 31, 2015	Aug. 31, 2015
Amortized discount to interest expense	$ 370,463	$ 639,895
Convertible promissory notes	39,004		$ 19,794
Convertible notes payable	777,013		197,850
Future maturities of notes payable, current			957,442
Future maturities of notes payable in 2017			1,067,270
Future maturities of notes payable in 2018			75,000
Creditor Notes 3 [Member]
Remaining principal balance	93,350		93,350
Creditor Notes 2 [Member]
Remaining principal balance	391,242		391,242
Convertible Promissory Note [Member]
Amortized discount to interest expense		$ 427,390
Discount due to derivative liability	247,324
Convertible promissory notes held by related parties	1,153,964		1,068,964
Convertible promissory notes	1,702,120		1,615,120
Convertible notes payable	$ 938,464		$ 197,850

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Derivatives (Details) - Creditor Notes 2 [Member] - USD ($)	9 Months Ended	12 Months Ended
	May 31, 2016	Aug. 31, 2015
Expected life (in years)	6 months	6 months
Balance of note outstanding	$ 391,242	$ 391,242
Stock price	$ 0.0001	$ 0.0001
Effective conversion price	$ 0.00005	$ 0.00005
Shares issuable upon conversion	7,113,490,909	7,113,490,909
Risk-free interest rate	0.49%	0.50%
Expected volatility	63.47%	361.00%
Expected dividend yield

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Derivatives (Details 1) - Creditor Notes 3 [Member] - USD ($)	9 Months Ended	12 Months Ended
	May 31, 2016	Aug. 31, 2015
Expected life (in years)	6 months	6 months
Balance of note outstanding	$ 93,350	$ 93,350
Stock price	$ 0.0001	$ 0.0001
Effective conversion price	$ 0.000075	$ 0.000075
Shares issuable upon conversion	1,244,666,667	1,244,666,667
Risk-free interest rate	0.49%	0.50%
Expected volatility	63.47%	361.00%
Expected dividend yield

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Derivatives (Details 2) - Other Notes with Adjustable Conversion Features [Member] - USD ($)	9 Months Ended	12 Months Ended
	May 31, 2016	Aug. 31, 2015
Expected life (in years)	7 months 24 days	1 year 4 months 24 days
Balance of note outstanding	$ 114,350	$ 114,350
Stock price	$ 0.0001	$ 0.0001
Effective conversion price	$ 0.00009	$ 0.00009
Shares issuable upon conversion	1,270,555,556	1,270,555,556
Risk-free interest rate	0.62%	0.50%
Expected volatility	134.29%	369.00%
Expected dividend yield

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Derivatives (Details 3) - Convertible Promissory Notes [Member] - USD ($)	9 Months Ended	12 Months Ended
	May 31, 2016	Aug. 31, 2015
Expected life (in years)	11 months 1 day	1 year 4 months 24 days
Balance of note outstanding	$ 56,806	$ 56,806
Stock price	$ 0.0001	$ 0.0001
Effective conversion price	$ 0.000085	$ 0.000085
Shares issuable upon conversion	668,305,882	668,305,882
Risk-free interest rate	0.62%	0.50%
Expected volatility	134.29%	369.00%
Expected dividend yield

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Derivatives (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	May 31, 2016	May 31, 2015	May 31, 2016	May 31, 2015
Derivative liability			$ 2,500
Change in fair value of derivatives	$ 65,990	$ 47,757	438,067	$ 321,961
Creditor Notes 2 [Member]
Derivative liability			330,777
Change in fair value of derivatives			275,921
Creditor Notes 3 [Member]
Derivative liability			38,709
Change in fair value of derivatives			64,100
Other Notes with Adjustable Conversion Features [Member]
Derivative liability			56,286
Change in fair value of derivatives			67,281
Convertible Promissory Notes [Member]
Derivative liability			35,019
Change in fair value of derivatives			$ 30,764

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Stockholders Equity (Details Narrative)	9 Months Ended
	May 31, 2016 USD ($) $ / shares shares
Stockholders Equity Details Narrative
Common stock series C, shares issued	530
Common stock series C, value | $	$ 79,500
Common stock series C, converted shares	795,000,000
Detachable stock warrants outstanding	225,000
Warrants Term	3 years
Detachable stock warrants exercise price | $ / shares	$ 0.41