UNITED STATES 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 March 31, 2016

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

For the transition period from _____ to _______

Commission File Number: 333-190999

APPYEA, INC.

(Exact Name of Registrant as Specified in its Charter)

South Dakota	46-1496846
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

777 Main Street, Suite 600, Fort Worth, Texas 76102

(Address of Principal Executive Offices)  (Zip Code)

Registrant's telephone number including area code:  (817) 887-8142

N/A

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 past 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 [  ]

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

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

Larger accelerated filer[   ]Accelerated filer[   ]

Non-accelerated filer [   ]Smaller reporting company[X]

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

Yes [  ]     No [X]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 319,087,526 shares outstanding as of May 18, 2016.

APPYEA, INC.

Index

		Page
Part I – FINANCIAL INFORMATION
Item 1.	Financial Statements
	Balance Sheets as of March 31, 2016 and June 30, 2015 (unaudited)	3
	Statements of Operations for the three and nine months ended March 31, 2016 and 2015 (unaudited)	4
	Statements of Cash Flows for the nine months ended March 31, 2016 and 2015 (unaudited)	5
	Notes to Financial Statements (unaudited)	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosure About Market Risk	21
Item 4.	Controls and Procedures	21
Part II - OTHER INFORMATION
Item 1.	Legal Proceedings	22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 3.	Defaults Upon Senior Securities	22
Item 4.	Mine Safety Disclosures	22
Item 5.	Other Information	22
Item 6.	Exhibits	22
SIGNATURES		23

PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

APPYEA, INC.

BALANCE SHEETS

(Unaudited)

	March 31,			June 30,
	2016			2015
ASSETS
Current Assets:
Cash and cash equivalents	$	4,503		$	265
Accounts receivable		-			339
Prepaid expenses		54,122			1,498,483
Deferred financing cost, net		5,500			-
Total Current Assets		64,125			1,499,087
Fixed assets, net		94,145			76,572
TOTAL ASSETS	$	158,270		$	1,575,659
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts payable		1,175			4,277
Derivative liabilities		183,739			158,775
Convertible loans and accrued interest, net of debt discounts		83,578			56,065
Convertible loans and accrued interest, net of debt discounts - related party		-			17,571
Total Current Liabilities		268,492			236,688
Total Liabilities		268,492			236,688
Commitments and Contingencies (Note 9)
Stockholders' Equity (Deficit):
Convertible preferred stock, $0.0001 par value, 5,000,000 shares authorized,  5,000,000 shares issued and outstanding at March 31, 2016 and June 30, 2015, respectively		500			500
Common stock, $0.0001 par value, 750,000,000 shares authorized, 182,935,431 and 37,847,163 shares issued and outstanding at March 31, 2016 and June 30, 2015, respectively		18,293			3,784
Additional paid-in capital		3,446,181			2,474,909
Accumulated deficit		(3,575,196	)		(1,140,222	)
Total Stockholders' Equity (Deficit)		(110,222	)		1,338,971
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	158,270		$	1,575,659

See accompanying notes to unaudited financial statements.

3

APPYEA, INC.

STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended March 31,						Nine Months Ended March 31,
	2016			2015			2016			2015
Revenues	$	3,554		$	871		$	5,412		$	2,950
Gross Profit		3,554			871			5,412			2,950
Operating Expenses
Sales and marketing		820			149			7,206			17,436
Legal and professional fees		96,653			164,632			1,823,046			185,785
General and administrative		14,955			1,649			22,618			21,354
Loss on sales of fixed assets		3,914			-			3,914			-
Depreciation		18,084			15,615			55,814			40,177
Total Operating Expenses		134,426			182,045			1,912,598			264,752
Loss from operations		(130,872	)		(181,174	)		(1,907,186	)		(261,802	)
Other Income (Expense)
Change in fair value of derivative liabilities		(1,985	)		(6,390	)		(334,475	)		(17,630	)
Interest expense		(74,229	)		(15,001	)		(193,313	)		(28,140	)
Net Other Income (Expense)		(76,214	)		(21,391	)		(527,788	)		(45,770	)
Net Loss	$	(207,086	)	$	(202,565	)	$	(2,434,974	)	$	(307,572	)
Net Loss Per Share: Basic and Diluted	$	(0.00	)	$	(0.01	)	$	(0.03	)	$	(0.01	)
Weighted Average Number of Shares Outstanding: Basic and Diluted		116,445,060			34,541,979			75,757,332			36,266,989

See accompanying notes to unaudited financial statements.

4

APPYEA, INC.

STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended March 31,
	2016			2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(2,434,974	)	$	(307,573	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense		55,814			40,177
Common stock issued for services		337,500			146,483
Amortization of stock issued for prepaid services		1,447,291			-
Amortization of deferred financing cost		13,202			-
Amortization of debt discounts		166,079			22,516
Loss on sales of fixed assets		3,914			-
Change in fair value of derivative liabilities		334,475			17,630
Changes in operating assets and liabilities:
Accounts receivable		339			11
Prepaid expenses		(2,930	)		-
Accounts payable		(3,102	)		10,672
Accrued interest		14,032			5,624
Net Cash Used in Operating Activities		(68,360	)		(64,460	)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceed from sales of fixed assets		700			-
Purchase of mobile application software		(20,000	)		-
Net cash used in Investing Activities		(19,300	)		-
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock for cash		-			23,250
Proceeds from convertible notes payable, net of original issue discounts		106,750			47,000
Payment of deferred financing costs		(14,852	)		-
Repayment of convertible notes payable		-			(2,000	)
Net cash provided by Financing Activities		91,898			68,250
Net cash increase for period		4,238			3,790
Cash at beginning of period		265			4,404
Cash at end of period	$	4,503		$	8,194
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for income taxes	$	-		$	-
Cash paid for interest	$	-		$	-
NON CASH INVESTING AND FINANCING ACTIVITIES
Purchase of mobile application software for convertible loan	$	58,000		$	60,000
Issuance of common stock for deferred financing costs	$	3,850		$	-
Issuance of common stock for conversion of debt and accrued interest	$	170,170		$	-
Resolution of derivative liabilities upon conversion of debt	$	474,261		$	-
Derivative liability recognized as debt discount	$	164,750		$	-
Cancelation of issuance of common stock for services	$	172		$	-

See accompanying notes to unaudited financial statements.

5

APPYEA, INC.

NOTES TO FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTH PERIODS ENDED MARCH 31, 2016 AND 2015

(UNAUDITED)

1. NATURE OF OPERATIONS

AppYea, Inc. ("AppYea", "the Company", "we" or "us") was incorporated in the State of South Dakota on November 26, 2012, to engage in the acquisition, purchase, maintenance and creation of mobile software applications. The Company is in the development stage with no significant revenues and a limited operating history.

The Company's common stock is traded on the OTC Markets (www.otcmarkets.com) under the symbol "APYP".  The first day of trading on the OTC Markets was December 15, 2014.

2. BASIS OF PRESENTATION

The Company's fiscal year end is June 30. The accompanying unaudited interim condensed financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and the rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial reporting and are presented in US dollars. Accordingly, these unaudited interim condensed financial statements do not include all information and footnote disclosures required for an annual set of financial statements prepared under United States generally accepted accounting principles. In the opinion of our management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the financial position, results of operations and cash flows as of March 31, 2016, and for the interim periods presented herein have been reflected in these unaudited interim condensed financial statements and the notes thereto. Interim results included herein are not necessarily indicative of the results to be expected for the fiscal year as a whole. These unaudited interim condensed financial statements should be read in conjunction with the audited financial statements and accompanying notes for the fiscal year ended June 30, 2015, included in its Annual Report on Form 10-K filed on October 28, 2015. Certain prior period amounts have been reclassified to conform to current period presentation.

3. GOING CONCERN AND LIQUIDITY

At March 31, 2016, the Company had cash of $4,503 and current liabilities of $268,492 and a working capital deficit of $204,367. The Company has generated net losses since inception. The Company anticipates future losses in its business. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

The Company's ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. There is no assurance that this series of events will be satisfactorily completed.

4. PREPAID EXPENSES

At March 31, 2016, and June 30, 2015, prepaid expenses totaled $54,122 and $1,498,483, respectively; and as of March 31, 2016, consisted of prepaid consulting fees of $47,192 and other prepaid expenses of $6,930.

Consulting fees consisted of the following:

Consulting fee

On March 9, 2015, the Company entered into a consulting agreement with the Cicero Consulting Group, LLC for the term of 12 months, and automatically renew for an additional 12 months unless terminated by the Company.  The Company valued this agreement in accordance with ASC505-50 as an Equity-Based Payment to Non-Employees at the current market price of the common stock.  The Company paid the consultant a commencement fee in the form of 1,723,329 shares of restricted common stock at the current market price, as of March 9, 2015, of $1.02. In October 2015, the Company and Cicero Consulting Group, LLC agreed to terminate the agreement, and Cicero Consulting Group, LLC agreed to return and cancel the shares. As a result, we fully recognized the remaining prepaid expense of $732,415 as consulting fees and reversed common stock of $172.

6

On May 6, 2015, the Company entered into a consulting agreement with the Alex Consulting, Inc. for the term of one year or until the terms of this Agreement has been satisfied, whichever comes first.  The Company valued this agreement in accordance with ASC505-50 as an Equity-Based Payment to Non-Employees at the current market price of the common stock.  The Company paid the consultant a commencement fee in the form of 700,000 shares of restricted common stock at the current market price, as of May 6, 2015, of $0.51. As at March 31, 2016, the Company had recognized a prepaid expense of $47,192 to be expensed over the period from January 1, 2015, to May 5, 2016.

On May 18, 2015, the Company entered into a consulting agreement with the SmallCapVoice.com, Inc. for the term of three months commencing on August 18, 2015.  The Company valued this agreement in accordance with ASC505-50 as an Equity-Based Payment to Non-Employees at the current market price of the common stock.  The Company paid a monthly fee of $2,500 and a onetime issuance of 28,000 shares of restricted common stock at the current market price, as of May 18, 2015, of $0.51. As at March 31, 2016, the Company had recognized a prepaid expense balance of $0 from this vendor, as the prepaid amount was fully expensed from July 1, 2015 to August 18, 2015.

5. FIXED ASSETS

As at March 31, 2016, and June 30, 2015, the balance of fixed assets represented a vehicle and mobile application software as follows:

	March 31, 2016			June 30, 2015
Mobile applications	$	257,870		$	179,870
Automobile		-			8,305
Fixed assets, gross		257,870			188,175
Accumulated depreciation		(163,725	)		(111,603	)
Fixed assets, net	$	94,145		$	76,572

During the nine months ended March 31, 2016, the Company sold automobile resulting in a loss of $3,914.

Depreciation expense for nine months ended March 31, 2016, and 2015, was $55,814 and $40,177, respectively.

6. CONVERTIBLE LOANS

At March 31, 2016, and June 30, 2015, convertible loans consisted of the following:

	March 31, 2016			June 30, 2015
April 2013 Notes - 2	$	-		$	14,000
January 2014 Note		-			10,000
October 2014 Note		-			30,000
February 2015 Note		-			15,000
March 2015 Note		-			10,000
April 2015 Note		-			10,000
August 2015 Note		16,733			-
September 2015 Note - 1		16,100			-
September 2015 Note - 2		15,493			-
October 2015 Note		58,000			-
November 2015 Note		25,000			-
Total notes payable		131,326			89,000
Accrued interest		7,391			10,762
Less: Debt discount		(55,139	)		(43,697	)
Total convertible loans		83,578			56,065

7

During nine months ended March 31, 2016, and 2015, the Company recognized interest expense of $12,713 and $4,105 and amortization of discounts of $159,308 and $16,052, respectively.

April 2013 Note

On April 2, 2013, the Company issued a $15,000 convertible promissory note payable. The unsecured convertible promissory note payable is due upon demand and carried an interest rate of 12% per annum. The note payable is convertible at the option of the holder, at 50% of the lowest traded price for the 20 days preceding conversion as posted on the OTC Markets or on such US National Exchange upon which the Company may be listed. On July 24, 2014, the Company repaid $1,000 in respect of this convertible note payable leaving an outstanding principle balance of $14,000 in respect of the promissory note.
Effective April 2, 2013, the Company recorded no beneficial conversion expense on the conversion feature as the specific conversion price was currently not determinable.  However, effective December 15, 2014 the Company's shares of common stock became publicly quoted and accordingly we evaluated the terms of the conversion features of the convertible debenture in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity's Own Stock and determined it is indexed to the Company's common stock and that the conversion features meet the definition of a liability and therefore bifurcated the conversion feature and accounted for it as a separate derivative liability.
The Company valued the conversion feature at the first day the shares were publicly quoted (December 15, 2014) at $21,736 using the Black Scholes valuation model. $17,020 included accrued interest of $3,020 of the value assigned to the derivative liability was recognized as a debt discount on the convertible debenture. The debt discount was recorded as a reduction (contra-liability) to the convertible debenture and is being amortized over the life of the convertible debenture.  The balance of $4,716 of the value assigned to the derivative liability was expensed on the first day the shares became publicly traded.

On September 21, 2015, the convertible note of $7,500 and accrued interest of $2,206 were converted into 1,493,257 common shares and the Company amortized $1,875 of the debt discount and reclassed the fair value of the derivative liability on the date of conversion of $27,145 to additional paid-in capital.

On November 5, 2015, the convertible note of $6,500 and accrued interest of $3,497 were converted into 5,295,702 common shares and the Company amortized $1,587 of debt discount and reclassed the fair value of the derivative liability on the date of conversion of $32,568 to additional paid-in capital.

As of March 31, 2016, the outstanding principal balance of the note, accrued interest and unamortized debt discount were $0. Debt discount of $7,092 was amortized for nine months ended March 31, 2016.

January 2014 Note 

On January 9, 2014, the Company issued a $10,000 convertible promissory note payable. The unsecured convertible promissory note payable has a 12-month term and carries an interest rate of 8% per annum. The note payable is convertible at the option of the holder, at 50% of the lowest traded price for the 60 days preceding conversion as posted on the OTC Markets or on such US National Exchange upon which the Company may be listed.

Effective January 9, 2014, the Company recorded no beneficial conversion expense on the conversion feature as the specific conversion price was currently not determinable.  However, effective December 15, 2014 the Company's shares of common stock became publicly quoted and accordingly we evaluated the terms of the conversion features of the convertible debenture in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity's Own Stock and determined it is indexed to the Company's common stock and that the conversion features meet the definition of a liability and therefore bifurcated the conversion feature and accounted for it as a separate derivative liability.

8

The Company valued the conversion feature at the first day the shares were publicly quoted (December 15, 2014) at $13,722 using the Black Scholes valuation model. $10,745 included accrued interest of $745 of the value assigned to the derivative liability was recognized as a debt discount on the convertible debenture.  The debt discount was recorded as a reduction (contra-liability) to the convertible debenture and is being amortized over the life of the convertible debenture.  The balance of $2,977 of the value assigned to the derivative liability was expensed on the first day the shares became publicly traded.
On August 6, 2015, the convertible note of $10,000 and accrued interest of $1,530 was converted into 768,720 common shares and the Company amortized the remaining debt discount of $3,403 and reclassed the fair value of the derivative liability on the date of conversion of $42,670 to additional paid-in capital.

As of March 31, 2016, the outstanding principal balance of the note, accrued interest and unamortized debt discount were $0. Debt discount of $4,477 was amortized for the nine months ended March 31, 2016.

October 2014 Note

On October 15, 2014, as part of its acquisition of a social networking mobile application and a vehicle, the Company agreed to pay $60,000 on a deferred basis in a convertible promissory note payable for a term of 12 months and carried an interest rate of 7% per annum. The unsecured note payable is convertible at the option of the holder at a 45% discount to the lowest closing bid price for the Company's common stock during the 20 trading days immediately preceding the conversion date.
Effective October 15, 2014, the Company recorded no beneficial conversion expense on the conversion feature as the specific conversion price is currently not determinable.  However, effective December 15, 2014 the Company's shares of common stock became publicly quoted and accordingly we evaluated the terms of the conversion features of the convertible debenture in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity's Own Stock and determined it is indexed to the Company's common stock and that the conversion features meet the definition of a liability and therefore bifurcated the conversion feature and accounted for it as a separate derivative liability.

The Company valued the conversion feature at the first day the shares were publicly quoted (December 15, 2014) at $62,415 using the Black Scholes valuation model. $60,702 included accrued interest of $702 of the value assigned to the derivative liability was recognized as a debt discount on the convertible debenture.  The debt discount was recorded as a reduction (contra-liability) to the convertible debenture and is being amortized over the life of the convertible debenture.  The balance of $1,713 of the value assigned to the derivative liability was expensed on the first day the shares became publicly traded.

On June 16, 2015, $30,000 of the convertible note was converted into 652,174 common shares of the Company.

On September 22, 2015, $7,150 of the convertible note was converted into 1,000,000 common shares and the Company amortized $715 of the debt discount and reclassed the derivative liability on the date of conversion of $25,850 to additional paid-in capital.

During October, 2015, $22,850 of the convertible note and accrued interest of $3,543 were converted into 15,480,000 common shares and the Company reclassed the fair value of the derivative liability on the date of conversion of $33,649 to additional paid-in capital.

As of March 31, 2016, the outstanding principal balance of the note, accrued interest and unamortized debt discount were $0. Debt discount of $9,211 was amortized for nine months ended March 31, 2016.

February 2015 Note

On February 9, 2015, the Company issued a $15,000 convertible promissory note payable. The unsecured convertible promissory note payable is due upon demand and carried an interest rate of 12% per annum. The note payable is convertible at the option of the holder, at 50% of the lowest traded price for the 60 days preceding conversion as posted on the OTC Markets or on such US National Exchange upon which the Company may be listed.
Effective February 9, 2015, the Company evaluated the terms of the conversion features of the convertible debenture in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity's Own Stock and determined it is indexed to the Company's common stock and that the conversion features meet the definition of a liability and therefore bifurcated the conversion feature and accounted for it as a separate derivative liability.

9

The Company valued the conversion feature at the issue date (February 9, 2015) at $21,817 using the Black Scholes valuation model. $15,000 of the value assigned to the derivative liability was recognized as a debt discount on the convertible debenture.  The debt discount was recorded as a reduction (contra-liability) to the convertible debenture and is being amortized over the life of the convertible debenture.  The balance of $6,817 of the value assigned to the derivative liability was expensed on the issue date of the convertible note payable.

On August 18, 2015, the convertible note of $15,000 and accrued interest of $651 was converted into 1,043,398 common shares and the Company amortized $6,750 of the debt discount and reclassed the derivative liability on the date of conversion of $39,201 to additional paid-in capital.
As of March 31, 2016, the outstanding principal balance of the note, accrued interest and unamortized debt discount were $0. Debt discount of $8,750 was amortized for the nine months ended March 31, 2016.

March 2015 Note

On March 13, 2015, the Company issued a $10,000 convertible promissory note payable. The unsecured convertible promissory note payable is due upon demand and carries an interest rate of 12% per annum. The note payable is convertible at the option of the holder, at 50% of the lowest traded price for the 60 days preceding conversion as posted on the OTC Markets or on such US National Exchange upon which the Company may be listed.
Effective March 13, 2015, the Company evaluated the terms of the conversion features of the convertible debenture in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity's Own Stock and determined it is indexed to the Company's common stock and that the conversion features meet the definition of a liability and therefore bifurcated the conversion feature and accounted for it as a separate derivative liability.
The Company valued the conversion feature at the issue date (March 13, 2015) at $14,552 using the Black Scholes valuation model. $10,000 of the value assigned to the derivative liability was recognized as a debt discount on the convertible debenture.  The debt discount was recorded as a reduction (contra-liability) to the convertible debenture and is being amortized over the life of the convertible debenture.  The balance of $4,552 of the value assigned to the derivative liability was expensed on the issue date of the convertible note.

On December 21, 2015, $5,500 of the convertible note and accrued interest of $750 were converted into 6,250,000 common shares and the Company amortized $917 of debt discount and reclassed the fair value of the derivative liability on the date of conversion of $15,688 to additional paid-in capital.

On January 25, 2016, $4,500 of the convertible note and accrued interest of $120 were converted into 7,700,000 common shares and the Company amortized $750 of debt discount and reclassed the fair value of the derivative liability on the date of conversion of $9,258 to additional paid-in capital.

As of March 31, 2016, the outstanding principal balance of the note was $0 the note had accrued interest of $454 and an unamortized debt discount of $0. Debt discount of $6,667 was amortized for nine months ended March 31, 2016.

April 2015 Note

On April 9, 2015, the Company issued a $10,000 convertible promissory note payable. The unsecured convertible promissory note payable is due upon demand and carries an interest rate of 12% per annum. The note payable is convertible at the option of the holder, at 50% of the lowest traded price for the 30 days preceding conversion as posted on the OTC Markets or on such US National Exchange upon which the Company may be listed.
Effective April 9, 2015, the Company evaluated the terms of the conversion features of the convertible debenture in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity's Own Stock and determined it is indexed to the Company's common stock and that the conversion features meet the definition of a liability and therefore bifurcated the conversion feature and accounted for it as a separate derivative liability.

10

The Company valued the conversion feature at the issue date (April 9, 2015) at $16,215 using the Black Scholes valuation model. $10,000 of the value assigned to the derivative liability was recognized as a debt discount on the convertible debenture.  The debt discount was recorded as a reduction (contra-liability) to the convertible debenture and is being amortized over the life of the convertible debenture.  The balance of $6,215 of the value assigned to the derivative liability was expensed on the issue date of the convertible note.

On November 3, 2015, $6,000 of the convertible note was converted into 4,000,000 common shares and the Company amortized $2,500 of debt discount and reclassed the fair value of the derivative liability on the date of conversion of $18,481 to additional paid-in capital.

On January 4, 2016, $4,000 of the convertible note and accrued interest of $1,269 were converted into 5,854,055 common shares and the Company amortized $1,000 of debt discount and reclassed the fair value of the derivative liability on the date of conversion of $11,277 to additional paid-in capital.

As of March 31, 2016, the outstanding principal balance of the note, accrued interest and unamortized debt discount were $0. Debt discount of $7,500 was amortized for nine months ended March 31, 2016.

August 2015 Note

On August 13, 2015, the Company issued a $25,000 convertible promissory note payable. The unsecured convertible promissory note payable is due upon demand and carries an interest rate of 8% per annum. The note payable is convertible at the option of the holder, at the lower of i) the closing sale price of the common stock on the principal market on the trading day and ii) 50% of the lowest sale price for the 30 consecutive trading.
Effective August 13, 2015, the Company evaluated the terms of the conversion features of the convertible debenture in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity's Own Stock and determined it is indexed to the Company's common stock and that the conversion features meet the definition of a liability and therefore bifurcated the conversion feature and accounted for it as a separate derivative liability.
The Company paid cash fees to this lender of $3,500 recognized as an original issue discount to the note. The Company valued the conversion feature at the issue date (August 13, 2015) at $60,723 using the Black Scholes valuation model. $21,500 of the value assigned to the derivative liability was recognized as a debt discount on the convertible debenture.  The debt discount was recorded as a reduction (contra-liability) to the convertible debenture and is being amortized over the life of the convertible debenture.  The balance of $39,223 of the value assigned to the derivative liability was expensed on the issue date of the convertible note.

During March 2016, $8,267 of the convertible note was converted into 19,683,452 common shares and the Company amortized $3,141 of the debt discount and reclassed the derivative liability on the date of conversion of $41,535 to additional paid-in capital.

As of March 31, 2016, the outstanding principal balance of the note was $16,733, the note had accrued interest of $1,246 and an unamortized debt discount of $5,192. Debt discount of $19,808 was amortized for nine months ended March 31, 2016.

September 2015 Note - 1

On September 9, 2015, the Company issued a $27,000 convertible promissory note payable and incurred $2,000 financing costs to a third party which were recognized as deferred financing costs. The unsecured convertible promissory note payable is due upon demand and carries an interest rate of 8% per annum. The note payable is convertible at the option of the holder, at 55% of the lowest trading price for the 20 prior trading days as reported on the OTC Markets, or any exchange upon which the common stock may be traded in the future.
Effective September 9, 2015, the Company evaluated the terms of the conversion features of the convertible debenture in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity's Own Stock and determined it is indexed to the Company's common stock and that the conversion features meet the definition of a liability and therefore bifurcated the conversion feature and accounted for it as a separate derivative liability.

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The Company valued the conversion feature at the issue date (September 9, 2015) at $41,070 using the Black Scholes valuation model. $27,000 of the value assigned to the derivative liability was recognized as a debt discount on the convertible debenture.  The debt discount was recorded as a reduction (contra-liability) to the convertible debenture and is being amortized over the life of the convertible debenture.  The balance of $14,070 of the value assigned to the derivative liability was expensed on the issue date of the convertible note.

During March 2016, $10,900 of the convertible note and accrued interest of $452 were converted into 15,422,749 common shares and the Company amortized $4,542 of the debt discount and reclassed the derivative liability on the date of conversion of $25,696 to additional paid-in capital.

As of March 31, 2016, the outstanding principal balance of the note was $16,100, the note had accrued interest of $725 and an unamortized debt discount of $6,708. Debt discount of $20,292 and deferred financing cost assets of $1,167 were amortized for nine months ended March 31, 2016.

September 2015 Note - 2

On September 9, 2015, the Company issued a $35,750 convertible promissory note payable and incurred $2,750 financing costs to a third party which were recognized as deferred financing costs. The unsecured convertible promissory note payable is due upon demand and carries an interest rate of 10% per annum. The note payable is convertible at the option of the holder, at the lesser of i) 50% multiplied by the lowest trading price during the previous 25 trading day period ending on the latest complete trading day prior the date of this Note and ii) the 50% multiplied by the lowest trading price for the common stock during the 25 trading day period ending on the latest complete trading day prior to the conversion date as reported on the OTC Markets, or applicable trading market.
Effective September 9, 2015, the Company evaluated the terms of the conversion features of the convertible debenture in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity's Own Stock and determined it is indexed to the Company's common stock and that the conversion features meet the definition of a liability and therefore bifurcated the conversion feature and accounted for it as a separate derivative liability.
The Company paid cash fees to this lender of $2,500 recognized as an original issue discount to the note. The Company valued the conversion feature at the issue date (September 9, 2015) at $53,140 using the Black Scholes valuation model. $33,250 of the value assigned to the derivative liability was recognized as a debt discount on the convertible debenture.  The debt discount was recorded as a reduction (contra-liability) to the convertible debenture and is being amortized over the life of the convertible debenture.  The balance of $19,890 of the value assigned to the derivative liability was expensed on the issue date of the convertible note.

During March 2016, the convertible note of $20,258 and accrued interest of $1,943 was converted into 34,459,213 common shares and the Company amortized $4,816 of the debt discount and reclassed the derivative liability on the date of conversion of $51,587 to additional paid-in capital.

As of March 31, 2016, the outstanding principal balance of the note was $15,493, the note had accrued interest of $0 and an unamortized debt discount of $3,128. Debt discount of $32,622 and deferred financing cost assets of $2,139 were amortized for nine months ended March 31, 2016.

October 2015 Note

On October 14, 2015, the Company issued a $58,000 convertible promissory note payable and paid $20,000 cash to purchase mobile applications. The unsecured convertible promissory note payable is due upon demand and carries an interest rate of 15% per annum. The note payable is convertible at a 45% of the lowest closing bid price for the Company’s common stock during the 20 trading days immediately preceding a conversion date.
Effective October 14, 2015, the Company evaluated the terms of the conversion features of the convertible debenture in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity's Own Stock and determined it is indexed to the Company's common stock and that the conversion features meet the definition of a liability and therefore bifurcated the conversion feature and accounted for it as a separate derivative liability.

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The Company valued the conversion feature at the issue date (October 14, 2015) at $463,519 using the Black Scholes valuation model. $58,000 of the value assigned to the derivative liability was recognized as a debt discount on the convertible debenture.  The debt discount was recorded as a reduction (contra-liability) to the convertible debenture and is being amortized over the life of the convertible debenture.  The balance of $405,519 of the value assigned to the derivative liability was expensed on the issue date of the convertible note.

As of March 31, 2016, the outstanding principal balance of the note was $58,000, the note had accrued interest of $4,084 and an unamortized debt discount of $29,000. Debt discount of $29,000 was amortized for nine months ended March 31, 2016.

November 2015 Note

On November 25, 2015, the Company issued a $25,000 convertible promissory note payable and incurred $2,000 financing costs to a third party which were recognized as deferred financing costs. The unsecured convertible promissory note payable is due upon demand and carries an interest rate of 10% per annum. The note payable is convertible at 50% of the lowest daily trading price, determined on the then current trading market for the Company's common stock, for 15 trading days prior to conversion at the option of the Holder, in whole at any time and from time to time.
Effective November 25, 2015, the Company evaluated the terms of the conversion features of the convertible debenture in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity's Own Stock and determined it is indexed to the Company's common stock and that the conversion features meet the definition of a liability and therefore bifurcated the conversion feature and accounted for it as a separate derivative liability.
The Company valued the conversion feature at the issue date (November 25, 2015) at $42,984 using the Black Scholes valuation model. $25,000 of the value assigned to the derivative liability was recognized as a debt discount on the convertible debenture.  The debt discount was recorded as a reduction (contra-liability) to the convertible debenture and is being amortized over the life of the convertible debenture.  The balance of $17,984 of the value assigned to the derivative liability was expensed on the issue date of the convertible note.

As of March 31, 2016, the outstanding principal balance of the note was $25,000, the note had accrued interest of $882 and an unamortized debt discount of $11,111. Debt discount of $13,889 and deferred financing cost assets of $1,111 were amortized for nine months ended March 31, 2016.

Deferred Financing Costs

In connection with the convertible notes issued in September 2015, the Company paid cash commissions of $4,750. In addition, the Company paid cash fees of $6,160 and issued an aggregate of 100,000 common shares valued at $3,850 as commissions for all of the convertible loans issued during the nine months ended March 31, 2016. 

In connection with the convertible notes issued in November 2015, the Company paid cash commission of $2,000.

In connection with the convertible notes issued in October 2014 Note – Related party, the Company paid cash commission of $1,942.

These aggregate fees of $18,702 were recognized as deferred financing costs which are being amortized to interest expense over the life of the notes. Aggregate amortization recognized during the nine months ended March 31, 2016, was $13,202, and the unamortized balance of deferred financing costs was $5,500 as of March 31, 2016.

7. CONVERTIBLE LOANS – RELATED PARTY

At March 31, 2016, and 2015, convertible loan – related party consisted of the following:

	March 31, 2016		June 30, 2015
October 2014 Note – Related party	$	-	$	22,000
Accrued interest		-		2,342
Less: Debt discount		-		(6,771	)
Total		-		17,571
Less: current portion of convertible loan		-		(17,571	)
Long-term convertible notes payable	$	-	$	-

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During nine months ended March 31, 2016, and 2015, the Company recognized interest expense of $1,319 and $1,519 and amortization of discount of $6,771 and $6,464, respectively. The related party loan is owed to the father of the sole officer and Director of the Company.

October 2014 Note – Related party

On October 14, 2014, the Company issued a $22,000 convertible promissory note payable. The unsecured convertible promissory note payable is due upon demand and carried an interest rate of 15% per annum. The note payable is convertible at the option of the holder, at 50% of the lowest traded price for the 60 days preceding conversion as posted on the OTC Markets or on such US National Exchange upon which the Company may be listed.
Effective October 14, 2014, the Company recorded no beneficial conversion expense on the conversion feature as the specific conversion price was currently not determinable.  However, effective December 15, 2014 the Company's shares of common stock became publicly quoted and accordingly we evaluated the terms of the conversion features of the convertible debenture in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity's Own Stock and determined it is indexed to the Company's common stock and that the conversion features meet the definition of a liability and therefore bifurcated the conversion feature and accounted for it as a separate derivative liability.
The Company valued the conversion feature at the first day the shares were publicly quoted (December 15, 2014) at $26,782 using the Black Scholes valuation model. $22,570 included accrued interest of $570 of the value assigned to the derivative liability was recognized as a debt discount on the convertible debenture.  The debt discount was recorded as a reduction (contra-liability) to the convertible debenture and is being amortized over the life of the convertible debenture.  The balance of $4,212 of the value assigned to the derivative liability was expensed on the first day the shares became publicly traded.

During the period ended March 31, 2016, convertible note of $22,000 and accrued interest of $3,661 were purchased by third parties and converted into 20,561,051 common shares and the Company reclassed the fair value of the derivative liability on the date of conversion of $99,655 to additional paid-in capital.

As of March 31, 2016, the outstanding principal balance of the note, accrued interest and unamortized debt discount were $0. Debt discount of $6,771 was amortized for nine months ended March 31, 2016.

8. DERIVATIVE LIABILITIES

The Company analyzed the conversion option for derivative accounting consideration under ASC 815, Derivatives and Hedging, and hedging, and determined that the instrument should be classified as a liability since the conversion option becomes effective at issuance resulting in there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.

Fair Value Assumptions Used in Accounting for Derivative Liabilities.

ASC 815 requires we assess the fair market value of derivative liability at the end of each reporting period and recognize any change in the fair market value as other income or expense item.

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The Company determined our derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes pricing model to calculate the fair value as of March 31, 2016. The Black-Scholes model requires six basic data inputs: the exercise or strike price, time to expiration, the risk free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each convertible note is estimated using the Black-Scholes valuation model. The following weighted-average assumptions were used in the March 31, 2016, and June 30, 2015:

	Nine Months Ended			Year Ended
	March 31, 2016			June 30, 2015
Expected term	0.00 - 1.00 years			0.29 - 1.00 years
Expected average volatility		25%-242	%		108%-218	%
Expected dividend yield		-			-
Risk-free interest rate		0.00%-0.57	%		0.01%-0.25	%

 At March 31, 2016, the estimated fair values of the liabilities measured on a recurring basis are as follows:

Fair Value Measurements at March 31, 2016
			Quoted Prices in		Significant Other		Significant
			Active Markets		Observable Inputs		Unobservable Inputs
	March 31, 2016		(Level 1)		(Level 2)		(Level 3)
March 2015 Note	$	1,059	$	-	$	-	$	1,059
August 2015 Note		47,161		-		-		47,161
September 2015 Note - 1		24,402		-		-		24,402
September 2015 Note - 2		29,917		-		-		29,917
October 2015 Note		40,142		-		-		40,142
November 2015 Note		41,058		-		-		41,058
	$	183,739	$	-	$	-	$	183,739

The following table summarizes the changes in the derivative liabilities during the nine months ended March 31, 2016: 

Fair Value Measurements Using Significant Observable Inputs (Level 3)
Balance - June 30, 2015	$	158,775
Addition of new derivative recognized as debt discounts		164,750
Addition of new derivatives recognized as loss on derivatives		496,687
Settled on issuance of common stock		(474,261	)
Loss on change in fair value of the derivative		(162,212	)
Balance - March 31, 2016	$	183,739

The aggregate loss on derivatives during the nine months ended March 31, 2016 was $334,475.

9. COMMITMENTS AND CONTINGENCIES

Leases and Long term Contracts

The Company has not entered into any long term leases, contracts or commitments.

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Legal

To the best of the Company's knowledge and belief, no legal proceedings are currently pending or threatened.
 Rent

As of January 30, 2013, the Company leases office space at $200 per month with three-month terms, which shall be automatically extended for successive three-month periods unless there is the notice to cancel. The lease can be cancelled at any time by either party with 30 days’ notice prior to expiration of an applicable term.  For the nine months ended March 31, 2016 and 2015, the Company incurred $1,882 and $1,651, respectively.
Consulting Agreements

On March 9, 2015, the Company entered into a consulting agreement with the Cicero Consulting Group, LLC for the term of 12 months, and automatically renew for an additional 12 months unless terminated by the Company.  The Company valued this agreement in accordance with ASC505-50 as an Equity-Based Payment to Non-Employees at the current market price of the common stock.  The Company paid the consultant a commencement fee in the form of 1,723,329 shares of restricted common stock at the current market price, as of March 9, 2015, of $1.02. In October of 2015, the Company and Cicero Consulting Group, LLC agreed to terminate the agreement, and Cicero Consulting Group, LLC agreed to return and cancel the shares. 

On May 6, 2015, the Company entered into a consulting agreement with the Alex Consulting, Inc. for the term of one year or until the terms of this Agreement has been satisfied, whichever comes first.  The Company valued this agreement in accordance with ASC505-50 as an Equity-Based Payment to Non-Employees at the current market price of the common stock.  The Company paid the consultant a commencement fee in the form of 700,000 shares of restricted common stock at the current market price, as of May 6, 2015, of $0.51. As at March 31, 2016, the Company had recognized a prepaid expense of $47,192 to be expensed through May 5, 2016.

On May 18, 2015, the Company entered into a consulting agreement with the SmallCapVoice.com, Inc. for the term of three months commencing on August 18, 2015.  The Company valued this agreement in accordance with ASC505-50 as an Equity-Based Payment to Non-Employees at the current market price of the common stock.  The Company paid a monthly fee of $2,500 and a onetime issuance of 28,000 shares of restricted common stock at the current market price, as of May 18, 2015, of $0.51. The fair value of the shares of $9,177 was expensed over the period from July 1, 2015, to August 18, 2015.

On July 1, 2015, the Company entered into a consulting agreement with the Castle Rock Resources, LLC, for the term of six months and automatically renew for an additional 6 months unless terminated by the Company.  The Company valued this agreement in accordance with ASC505-50 as an Equity-Based Payment to Non-Employees at the current market price of the common stock.  The Company paid the consultant a commencement fee in the form of 2,400,000 shares of restricted common stock at the current market price, as of July 1, 2015, of $0.12 or $288,000. The cost associated with this issuance was expensed in full during the nine months ended March 31, 2016

On July 13, 2015, the Company entered into a consulting agreement with Gilles Trahan, for the term of six months.  The Company valued this agreement in accordance with ASC505-50 as an Equity-Based Payment to Non-Employees at the current market price of the common stock.  The Company paid the consultant a commencement fee in the form of 300,000 shares of restricted common stock at the current market price, as of July 13, 2015, of $0.13 or $39,000. The cost associated with this issuance was expensed in full during the nine months ended March 31, 2016.

On July 15, 2015, the Company entered into a consulting agreement with the Almorli Advisors.  The Company valued this agreement in accordance with ASC505-50 as an Equity-Based Payment to Non-Employees at the current market price of the common stock.  The Company paid the consultant a cash fee of 8% of total capital provided to the Company and restricted shares of the Company equal to 5% of the total capital provided to the Company at the current market price, resulting in a deferred financing cost of $10,010. The fee is to be expensed over the period from August 2015 to September 2016. During the nine months ended March 31, 2016, we recognized interest expense of $6,843.

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10. SHAREHOLDERS' EQUITY

Convertible Preferred Stock

The Company is authorized to issue 5,000,000 shares of convertible preferred stock at a par value of $0.0001.

A convertible preferred share is convertible into 100 shares of common stock and has the voting rights of 1,000 share of common stock.

As at March 31, 2016, and June 30, 2015, 5,000,000 shares of the Company's convertible preferred stock were issued and outstanding.

Common Stock

The Company is authorized to issue 750,000,000 shares of common stock at a par value of $0.0001.

In July 2015, the Company issued 2,400,000 shares of common stock valued at $288,000 to Alex Castle Rock Resources, LLC and 300,000 shares of common stock valued at $39,000 to Gilles Trahan in exchange for consulting services. The fair value of these shares was expensed during the nine months ended March 31, 2016. In addition, the Company issued 100,000 shares of common stock valued at $3,850 to Almorli Advisors for loan commissions which were recognized as deferred financing costs.

During the nine months ended March 31, 2016, an aggregate of 139,011,597 common shares were issued for the conversion of debt and accrued interest of $170,170.

In October, 2015, 1,723,329 shares of common stock were cancelled, previously issued to the Cicero Consulting Group, LLC in March 2015. 

On February 29, 2016, the Company issued 5,000,000 shares of common stock to its interim CEO with a fair value of $10,500 for services performed as acting CEO.

As at March 31, 2016, and June 30, 2015, 182,935,431 and 37,847,163 shares of the Company's common stock were issued and outstanding, respectively.

11. RELATED PARTY TRANSACTIONS

The President of the Company provides management and office premises to the Company for no compensation.

During the nine months ended March 31, 2016, the former president paid accounts payable of $2,688 on behalf of the Company and the Company repaid $2,688. As of March 31, 2016 and June 30, 2015, the balance due to a related party was $0, respectively.

As of March 31, 2016, and June 30, 2015, the Company had an outstanding convertible note payable of $0 and $22,000 to the father of the sole officer and Director of the Company (see Note 7).

12. SUBSEQUENT EVENTS

Subsequent to March 31, 2016, the Company issued 136,152,095 shares of common stock for conversion of convertible loans with principal and accrued interest balances of $98,332.

In May 2016, the Company received financing in the amount of $27,000 from a third party investor. The $27,000 bears 8% interest and matures in five months. The holder shall be entitled, at its option, at any time, to convert all or any amount of principal face amount of this note the outstanding into shares of the Company’s common stock. Conversion price is 55% of the lowest trading price of the common stock for the 20 prior trading days including the day upon which a notice of conversion is received by the Company or it transfer agent.

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Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operation

Introduction

The following discussion and analysis was prepared to supplement information contained in the accompanying financial statements and is intended to provide certain details regarding the Company’s financial condition as of March 31, 2016, and the results of operations for the three and nine months ended March 31, 2016.  It should be read in conjunction with the unaudited financial statements and notes thereto contained in this report as well as the audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal years ended June 30, 2015 and June 30, 2014.

Overview

AppYea, Inc. (“AppYea,” “we,” “our,” “us,” or the “Company”) was incorporated in the State of South Dakota on November 26, 2012. We are engaged in the acquisition, purchase, maintenance and creation of mobile software applications (or “apps”). The Company’s current business plans include the marketing of its mobile applications, as well the expansion of its mobile application portfolio through the acquisition of third party developed mobile applications and/or mobile applications development companies. The Company has derived revenue by way of the sale of its developed and acquired mobile applications as well as through advertisement integration. The Company currently uses advertising integration in the free versions of our mobile applications that are downloaded by consumers. The Company plans to continue using advertisement integration in the free versions of its mobile apps. However, at the time of the initial download, or at any time after the initial download of our application, the consumer can choose to pay for the full, “ad-free,” version of the application, at which time the advertisements are removed. We currently have 13 fully developed gaming applications, as well as a group of 14 applications that provide wait times at various amusement parks, and 23 additional source code applications that operate in the following categories: Business, Education, Entertainment, Finance, Lifestyle, Medical, Music, Navigation, News, Travel, Utilities and Wellness.  We also have acquired an automobile application and a social media application.

The Company is currently focused on the sale of its fully developed applications to mobile phone users, and finalizing the development of its source code applications.

The Company is currently actively seeking acquisitions of developed mobile applications and/or mobile applications development companies, however, we currently do not have any proposals or arrangements to enter into any acquisition or other business combinations.

Results of Operations

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

We generated revenue of $3,554 and $871 for the three months ended March 31, 2016 and 2015, respectively. For the three months ended March 31, 2016, we had a larger mobile apps offering than in the corresponding period during the prior year. During our limited history, we have generated nominal revenue and have very little operating history upon which to evaluate our business.

Operating expenses, which consisted of sales and marketing costs, legal and professional fees, general and administrative expenses, depreciation expense, and loss on sales of fixed assets, were $134,426 and $182,045, for the three months ended March 31, 2016 and 2015, respectively. Operating expense decreases during the three months ended March 31, 2016 were primarily the result of decreased professional fees.

Other expenses totaled $76,214 for the three months ended March 31, 2016 compared to $21,391 for the three months ended March 31, 2015.  The increase in other expenses was primarily the result of an increase in interest expense during the period ended March 31, 2016.

As a result of the foregoing, we incurred losses of $207,086 and $202,565 during the three months ended March 31, 2016 and 2015, respectively.

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For the Nine Months Ended March 31, 2016 and March 31, 2015

We generated revenue of $5,412 and $2,950 for the nine months ended March 31, 2016 and 2015, respectively. For the nine months ended March 31, 2016, we had a larger mobile apps offering than in the corresponding period during the prior year. During our limited history, we have generated nominal revenue and have very little operating history upon which to evaluate our business.

Operating expenses, which consisted of sales and marketing costs, legal and professional fees, general and administrative expenses, loss on sales of fixed assets, and depreciation expense, were $1,912,598 and $264,752, for the nine months ended March 31, 2016 and 2015, respectively. Operating expense increases during the nine months ended March 31, 2016 were primarily the result of increased professional fees as well as the costs associated with managing and maintaining our public financial reporting requirements.

Other expenses totaled $527,788 for the nine months ended March 31, 2016 compared to $45,770 for the nine months ended March 31, 2015.  The increase in other expenses was primarily related to an increase in interest expense as well as the loss on the  change in the fair value of our derivative liabilities.

As a result of the foregoing, we incurred losses of $2,434,974 and $307,572 during the nine months ended March 31, 2016 and 2015, respectively.

Our activities have been entirely directed at the development of our internal apps, the acquisition of third party apps, and the sourcing of capital to fund these activities.

Liquidity and Capital Resources

As of March 31, 2016, we had cash or cash equivalents of $4,503.

Net cash used in operating activities was $68,360 for the nine months ended March 31, 2016 and net cash used in operating activities was $64,460 for the nine months ended March 31, 2015. During the nine month ended March 31, 2016 we incurred a net loss of $2,434,974, which was primarily the cause of the increase in our net cash used in operating activities. At March 31, 2016 our operating activities and available capital resources were not sufficient to fund our operations going forward. We believe that we are going to need to obtain additional funding for our activities during the next twelve months to: 1) further fund the development of our source code applications, 2) to fund any potential acquisitions of developed mobile applications and/or mobile applications development companies, and 3) to fund any operating deficits.

Net cash used in investing activities was $19,300 for the nine months ended March 31, 2016 and $0 for the nine months ended March 31, 2015.  During the nine months ending March 31, 2016 we spent $20,000 on acquiring mobile applications while we made no such expenditures during the nine months ended March 31, 2015. During the nine months ended March 31, 2016, we also received $700 in proceeds from sales of fixed assets.  The Company is currently seeking application acquisitions and subject to our executing any purchase agreements, we may have significant cash outlays for investing activities. Should we close on any acquisitions, we will most likely need to sell additional securities and/or borrow additional funds in order to fund such acquisitions and to meet our business objectives during the next twelve months.

Net cash provided by financing activities for the nine months ended March 31, 2016 was $91,898, compared to net cash provided by financing activities of $68,250 for the nine months ended March 31, 2015.  During the nine months ended March 31, 2016, we received $106,750 by way of loans under convertible notes payable.

As of March 31, 2016, our total assets were $158,270 and our total liabilities were $268,492. Included in our assets of as of March 31, 2016 was $4,503 of cash, $54,122 in prepaid expenses, $5,500 of deferred financing costs and net fixed assets of $94,145.  As of June 30, 2015 our total assets were $1,575,659 and our total liabilities were $236,688.

Plan of Operation and Funding

During the next twelve months, we anticipate that our principal sources of liquidity will consist of any, or all, of the following: 1) proceeds from sales of our common stock, 2) revenue generated from our operations, and 3) additional debt borrowings. While we are presently generating revenue and we anticipate our revenue will continue to increase, we are currently operating at a loss.

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On a long-term basis, our ability to ultimately achieve and maintain profitability and positive cash flow is dependent upon our ability to successfully continue to develop our products and our ability to generate revenues.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties and are based on the beliefs and assumptions of management and information currently available to management. The use of words such as “believes”, “expects”, “anticipates”, “intends”, “plans”, “estimates”, “should”, “likely” or similar expressions, indicates a forward-looking statement.

The identification in this report of factors that may affect our future performance and the accuracy of forward-looking statements is meant to be illustrative and by no means exhaustive. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty.

Factors that could cause our actual results to differ materially from those expressed or implied by forward-looking statements include, but are not limited to:

· Trends affecting the Company’s financial condition, results of operations or future prospects;

· The Company’s business and growth strategies;

· The Company’s financing plans and forecasts;

· The factors that we expect to contribute to our success and the Company’s ability to be successful in the future;

· The Company’s business model and strategy for realizing positive results as sales increase;

· Competition, including the Company’s ability to respond to such competition and its expectations regarding continued competition in the market in which the Company competes;

· Expenses;

· The Company’s expectations with respect to continued disruptions in the global cap ital markets and reduced levels of consumer spending and the impact of these trends on its financial results;

· The Company’s ability to meet its projected operating expenditures and the costs associated with development of new projects;

· The Company’s ability to pay dividends or to pay any specific rate of dividends, if declared;

· The impact of new accounting pronouncements on its financial statements;

· That the Company’s cash flows from operating activities will be sufficient to meet its projected operating expenditures for the next twelve months;

· The Company’s market risk exposure and efforts to minimize risk;

· Development opportunities and its ability to successfully take advantage of such opportunities;

· Regulations, including anticipated taxes, tax credits or tax refunds expected;

· The outcome of various tax audits and assessments, including appeals thereof, timing of resolution of such audits, the Company’s estimates as to the amount of taxes that will ultimately be owed and the impact of these audits on the Company’s financial statements;

· The Company’s overall outlook including all statements under Management’s Discussion and Analysis or Plan of Operation;

· That estimates and assumptions made in the preparation of financial statements in conformity with US GAAP may differ from actual results; and

· Expectations, plans, beliefs, hopes or intentions regarding the future.

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Item 3.  Quantitative and Qualitative Disclosure About Market Risk

Smaller reporting companies are not required to provide the information required by this item.

Item 4.  Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The Company’s management conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and Rule 15d-15(e) under the 1934 Act) pursuant to Rule 13a-15 under the 1934 Act.  The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports it files or submits under the 1934 Act is recorded, processed, summarized and reported on a timely basis and that such information is communicated to management and the Company’s board of directors to allow timely decisions regarding required disclosure.

Based on this evaluation, it has been concluded that the design and operation of our disclosure controls and procedures are not effective since the following material weaknesses exist:

· Since inception our chief executive officer also functions as our chief financial officer.  As a result, our officers may not be able to identify errors and irregularities in the financial statements and reports.

· We were unable to maintain full segregation of duties within our financial operations due to our reliance on limited personnel in the finance function.  While this control deficiency did not result in any material adjustments to our financial statements, it could have resulted in a material misstatement that might have been prevented or detected by a segregation of duties.

· Documentation of all proper accounting procedures is not yet complete.

To the extent reasonably possible given our limited resources, as financial resources become available we intend to take measures to cure the aforementioned weaknesses, including, but not limited to, the following:

· Increasing the capacity of our qualified financial personnel to ensure that accounting policies and procedures are consistent across the organization and that we have adequate control over financial statement disclosures.

Changes in Internal Control over Financial Reporting

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

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PART II. OTHER INFORMATION

Item 1.Legal Proceedings.

To the best of the Company’s knowledge and belief, no legal proceedings are currently pending or threatened.

Item 1A.Risk Factors.

We are not required to provide this information as we are a Smaller Reporting Company.

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

During the nine months ended March 31, 2016, an aggregate of 139,011,597 common shares were issued for the conversion of debt and accrued interest of $170,170.

On February 29, 2016, the Company issued 5,000,000 shares of common stock to its interim CEO with a fair value of $10,500.

Item 3.Default Upon Senior Securities.

None.

Item 4.Mine Safety Disclosures.

Not applicable to our Company.

Item 5.Other Information.

None.

Item 6.Exhibits

31 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Douglas O. McKinnon.

32 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Douglas O. McKinnon.

101.INS*    XBRL Instance Document

101.SCH*   XBRL Taxonomy Schema

101.CAL*   XBRL Taxonomy Calculation Linkbase

101.DEF*    XBRL Taxonomy Definition Linkbase

101.LAB*    XBRL Taxonomy Label Linkbase

101.PRE*     XBRL Taxonomy Presentation Linkbase

* Furnished herewith. XBRL (eXtensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

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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.

APPYEA, INC.

Date:  May 19, 2016 By:  /s/ Douglas O. McKinnon

Douglas O. McKinnon, Chief Financial Officer, Principal Accounting Officer, Chief Executive Officer

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