We need this addressed and cleaned up...this is the ugly ass in the room!...see what this Quarter tells me!
The Company intends to continue to sell and add locations to its Gander.tv business through direct marketing to bars, restaurants, nightclubs, performance spaces, and other prospects while it adds functionality for enhanced operations to its website. The Company will continue to execute its sales plan.
We have Digital Rights Agreements with the three leading music licensing companies: ASCAP, BMI, and SESAC. This provides us the rights to broadcast any licensed work over the Internet, and covers more than 17 million works. We have also entered into agreements with a number of ad networks, representing top agencies and ad campaigns that allow us to obtain video and display ads for placement on our websites.
11 -------------------------------------------------------------------------------- RESULTS OF OPERATIONS THREE MONTHS ENDED JUNE 30, 2014 COMPARED TO THREE MONTHS ENDED JUNE 30, 2013 Revenues Revenues for the three months ended June 30, 2014, were $149,376, compared to $7,004 for the three months ended June 30, 2013. The increase in revenues was attributable to the Company's efforts to integrate and charge for the placement of video and display ads on its web sites. The company is leveraging social media marketing with venues, promoters and performers as well as select advertising to attract viewers. In addition, the company is charging customers for other services including installation and online video broadcast fees from its Gander.tv web site.
General and Administrative Expenses General and administrative expenses for the three months ended June 30, 2014, were $543,599, compared to $149,577 for the three months ended June 30, 2013. Operating expenses increased due to additional personnel needed to launch and manage ad placements and to develop and improve the company's software applications. In addition, and with the increase in online traffic, the company had significant increases in the costs of hosting and streaming the content. The company also added to its video production group that is curating content for repurposing on other company owned web sites.
During the three months ending June 30, 2014, the company incurred net other expenses of $3,766,138 which resulted from interest expense, change in derivative liability, and a loss on extinguishment of debt, all relating to the issuance and accounting for our convertible debt.
Net Loss Our operating loss for the three month period ended June 30, 2014 was $396,764 which was an increase over the three months ending June 30, 2013 when we lost $143,183. In the current quarter, we continued to see an increase in gross profit which was $146,835 or 98% of revenue and up from 2nd quarter in 2013 when we generated $6,394 of gross profit which was 91% of revenue. The net loss for the three month period ended June 30, 2014 was $4,162,902, which was made up of the operating loss plus the treatment of derivative financing instruments.
RESULTS OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2014 COMPARED TO SIX MONTHS ENDED JUNE 30, 2013 Revenues Revenues for the six months ended June 30, 2014, were $241,025, compared to $10,135 for the six months ended June 30, 2013. The increase in revenue was attributable to the increase in the placement of display and video ads on the Company's web sites. The Company has entered into a number of ad network relationships and is able to electronically fill these ads on demand. As the company increased traffic, more ads were placed.
General and Administrative Expenses General and administrative expenses for the six months ended June 30, 2014, were $841,070, compared to $337,943 for the six months ended June 30, 2013. The Company increased expenses in 2014 due to the addition of personnel in development, ad placement, and video production departments. The Company has added internal resources and outsourced expenses to continue to improve and add to its software applications.
During the six months ending June 30, 2014, the company incurred net other expenses of $4,171,304 which resulted from interest expense, change in derivative liability, and a loss on extinguishment of debt, all relating to the issuance and accounting for our convertible debt.
Net Loss We had a net loss of $4,782,083 for the six month period ended June 30, 2014, as compared to a net loss of $346,860 for the six month period ended June 30, 2013.
The increased net loss is due to the increased operating loss plus the treatment of derivative financing instruments.
12 -------------------------------------------------------------------------------- LIQUIDITY AND CAPITAL RESOURCESAt June 30, 2014, we had: (i) total current assets of $184,640, consisting of $168,174 in cash, $4,792 in deferred finance expenses and $11,674 in prepaid expenses, (ii) total liabilities of $6,714,511, comprised of $1,134,150 due to related parties and accounts payable of $9,798, convertible debt of $461,927 and $5,108,636 of derivative liability, (iii) a working capital deficit of $6,529,871 and (iv) an accumulated deficit of $8,513,004.
Of the $1,134,150 due to related parties, $185,227 was due May 1, 2012, and the Company is negotiating a settlement with the note holder; the remainder of the debt due to related parties, the majority of which has no specific repayment terms and is due on demand. The Company acknowledged $288,000 of the related party debt due to Chris Carey Advisors, LLC in the form of a Promissory Note dated December 31, 2011. On April 30, 2013 the Company amended that note with a maturity date of January 1, 2014 when the note will be due and, if unpaid, any remaining balance would accrue interest at 5% per annum. On July 24, 2014, the Company entered into an agreement with Chris Carey Advisors, LLC which included a discount of the debt outstanding as of June 30, 2014 for an interest payment plus the ability to convert at a discount as outlined above in "Notes to the Financial Statements".
Net cash used in operating activities for the six months ended June 30, 2014, was $496,692, which included a net loss of $4,782,083, compared to net cash used in operating activities of $179,862 for the six months ended June 30, 2013.
Net cash provided by financing activities for the six months ended June 30, 2014, was $627,651, compared to negative net cash provided in financing activities of $187,245 for the six months ended June 30, 2013.
Cash Requirements From its inception (August 26, 2010) to the date hereof, the Company has obtained funding through loans from related parties, private placements, sales of equity and convertible debt instruments. The Company plans to fund its activities during the remainder of fiscal 2014 and beyond from cash on hand and through the sale of debt or equity securities and/or bank financing.
On February 25, 2013, Eyes on the Go, Inc. (the "Company") entered into a Securities Purchase Agreement with two accredited investors (the "Purchasers") to sell, in one or more tranches, up to $500,000 in Original Issue Discount Senior Secured Convertible Debentures of the Company, which are due and payable 270 days after the date of issuance (the "Debentures"). The Debentures have a ten percent (10%) original issue discount and are convertible into shares of the Company's common stock at the option of the holder at a purchase price equal to the lesser of $.0015 or 85% of the average volume weighted average price on the five (5) trading days immediately prior to the conversion date. The Debentures are secured by all of the assets of the Company. In connection with the sale of the Debentures, Chardan Capital Markets, LLC (the "Placement Agent") acted as placement agent.
On April 1, 2014, the Purchasers purchased Debentures from the Company in the aggregate amount of $50,400, which had a principal amount of $56,000, and the Company received net proceeds of approximately $45,000, following the payment of fees and expenses.
On May 6, 2014, the Purchasers purchased Debentures from the Company in the aggregate amount of $50,400, which had a principal amount of $56,000, and the Company received net proceeds of approximately $45,000, following the payment of fees and expenses.
On May 19, 2014, the Purchasers purchased Debentures from the Company in the aggregate amount of $156,150, which had a principal amount of $173,500, and the Company received net proceeds of approximately $140,535, following the payment of fees and expenses.
On April 1, 2014, and under similar terms as the Convertible Debentures outlined above, another third party investor purchased Debentures from the Company in the principle amount of $15,000, and the Company received net proceeds of $15,000.
On April 7, 2014, another third party investor purchased Debentures from the Company in the principle amount of $30,000, and the Company received net proceeds of $30,000. The Debenture provides for a 10% interest rate with a conversion to common stock at a discount of 50% to market.
On June 10, 2014, the same investor purchased Debentures from the Company in the principle amount of $40,000, and the Company received net proceeds of $40,000.
The Debenture provides for an 8% interest rate with a conversion to common stock at a discount of 50% to market.
On May 24, 2014, another third party investor purchased Debentures from the Company in the principle amount of $60,000, and the Company received net proceeds of $60,000. The Debenture provides for a 12% interest rate with a conversion to common stock at a discount of 50% to market.
On May 25, 2014, another third party investor purchased Debentures from the Company in the principle amount of $63,500, and the Company received net proceeds of $60,000. The Debenture provides for a 12% interest rate with a conversion to common stock at a discount of 45% to market.
13-------------------------------------------------------------------------------- We can give no assurance that sufficient funding will be available on acceptable terms, or at all, and, if it is not, we may have to significantly reduce, or discontinue, our operations. To the extent that we raise additional funds by issuing equity securities or securities that are convertible into our debt securities, our stockholders may experience significant dilution.
The Company believes that it will require capital in the form of equity or borrowed money of approximately $400,000 during the next 12 months. The Company's current liquidity presents a material risk to investors because the Company does not currently have sufficient funds to pay its outstanding obligation of $185,227 to Mark Astrom if a settlement cannot be reached, or to expand its business as planned. Although the Company has entered into a financing arrangement in the form of Convertible Debt, it has received no commitment of the level of funding or whether the funding will continue and no assurance can be given that any such commitment will be forthcoming or, if so, in what amount.
Off-Balance Sheet Arrangements We currently do not have any off-balance sheet arrangements.
