As filed with the Securities and Exchange
Commission on April 20, 2016
Registration No. 333-209492
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM S-1
Amendment No. 1
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
ZONZIA MEDIA, INC.
(Exact name of registrant in its charter)
Nevada
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2741
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84-0871427
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(State or other Jurisdiction of
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(Primary Standard Industrial
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(I.R.S. Employer
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Incorporation or Organization)
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Classification Code Number)
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Identification No.)
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ZONZIA MEDIA, INC.
2580 Anthem Village Drive, Suite B-7
Henderson, NV 89074
(702) 707-3974
(Address and telephone number of principal
executive offices and principal place of business)
Stanley L. Teeple
2580 Anthem Village Drive, Suite B-7
Henderson, NV 89074
(702) 707-3974
(Name, address and telephone number of
agent for service)
With a copy to
Barnett & Linn
Attention: William B. Barnett, Esq.
23564 Calabasas Road, Ste. 205, Calabasas, CA
91302
Approximate date of proposed sale to the public:
From time to time after this Registration Statement becomes effective.
If
any securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the
following box:
x
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the
following box and list the Securities Act registration statement number of the earlier effective registration statement for the
same offering.
o
If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering.
o
If
this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering.
o
If
delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box.
o
Indicate by a 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. (Check One)
Large Accelerated Filer
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Accelerated Filer
o
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Non-accelerated Filer
o
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Smaller Reporting Company
x
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CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities
To Be Registered
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Amount To Be Registered
(1) (2)
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Proposed Maximum Offering Price Per Share
(3)
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Proposed Maximum
Aggregate Offering Price
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Amount Of Registration Fee
(4)
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Common Stock, $0.001 par value per share for sale by Selling Stockholders
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64,468,344
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$
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0.06
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(2)
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$
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3,868,101
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$
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389.52
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_______________
(1)
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We are registering a total of 101,135,010 shares of our common stock of which 34,468,343 shares are being registered for resale that have been issued to the Selling Stockholders named in this registration statement and 30,000,000 shares that we will sell to Kodiak Capital Group, LLC pursuant to an Investment Agreement entered into on February 10, 2016, which sales shall have an aggregate initial offering price not to exceed $2,000,000. In the event the maximum aggregate offering price is reached, any remaining unsold shares shall be removed from registration. The proposed maximum offering price per share will be determined by the registrant in connection with the issuance of the securities registered hereunder.
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(2)
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Pursuant to Rule 416 of the Securities Act, this registration statement also registers such additional shares of common stock as may become issuable to prevent dilution as a result of stock splits, stock dividends or similar transactions.
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(3)
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This represents a price that is calculated in accordance with Rule 457(c) of the Securities Act of 1933 solely for the purpose of computing the amount of the registration fee. Our common stock is not traded on a national exchange, but is traded as of the date of this prospectus on the OTCQB marketplace. The offering price is based on the average of the bid and ask price of our common stock on that market on February 10, 2016.
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(4)
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On May 29, 2015 the
Registrant filed a Form S-1 registration statement (File No. 333-204570) and paid a registration fee of $3,353.15. The
registration statement was withdrawn by filing a Form RW on December 17, 2015. In accordance with Rule 457(p) under the
Securities Act of 1933, we request that the fees paid to the SEC in connection with the prior filing be credited to the
Registrant’s account to offset against the filing fees for this registration statement.
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The registrant hereby amends this registration
statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment
which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange
Commission, acting pursuant to said Section 8(a), may determine.
SUBJECT TO COMPLETION, DATED April
20, 2016
The information in
this prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these
securities and is not soliciting an offer to buy these securities in any state
where the sale is
not permitted.
PROSPECTUS
ZONZIA
MEDIA, INC.
64,468,344 SHARES OF COMMON STOCK
This prospectus relates to the offer and
sale, from time to time, of up to 64,468,344 shares of the common stock of Zonzia Media, Inc., a Nevada corporation (“Zonzia,”
“the Company,” “we,” “us,” and “our,”), by the selling stockholders named in this
prospectus in the section “Selling Stockholders,” whom we refer to in this document as the “selling stockholders.”
Of the shares of common stock being offered by the selling stockholders, 30,000,000 may be issued pursuant to the equity purchase
agreement that we entered into with Kodiak Capital Group, LLC (“Kodiak Capital”), which we refer to in this prospectus
as the “Purchase Agreement.” Please refer to the section of this prospectus entitled “The Equity Purchase Transaction”
for a description of the Purchase Agreement and the section entitled “Selling Stockholders” for additional information
regarding the selling stockholders. Kodiak Capital is sometimes referred to herein as the “Equity Purchaser”.
We are not selling any shares of common
stock in this offering. We, therefore, will not receive any proceeds from the sale of the shares by the selling stockholders. We
will, however, receive proceeds from the sale of securities pursuant to our exercise of the put right under the Purchase Agreement.
The Equity Purchaser is an “underwriter”
within the meaning of the Section 2(a)(11) of the Securities Act of 1933, as amended. The other selling stockholder may be deemed
to be "underwriters" within the meaning of the Securities Act of 1933, as amended.
The selling stockholders may sell common
stock from time to time in the principal market on which the stock will be traded at the prevailing market price or in negotiated
transactions. See “Plan of Distribution” for more information about how the selling stockholders may sell the shares
of common stock being registered pursuant to this prospectus. The selling stockholders have informed us that they do not have any
agreement or understanding, directly or indirectly, with any person to distribute the common stock.
We have paid and will pay the expenses
incurred in registering the shares, including legal and accounting fees. See “Plan of Distribution.”
Our
common stock is currently quoted on the OTCQB market under the symbol “ZONX”. On April 14, 2016, the last quoted
sale price of our common stock as reported on the OTCQB was $0.03 per share.
An investment in our common stock is
speculative and involves a high degree of risk. Investors should carefully consider the risk factors and other uncertainties described
in this prospectus before purchasing our common stock. See “Risk Factors” beginning on page 6.
NEITHER THE SECURITIES AND EXCHANGE
COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS
IS TRUTHFUL, ACCURATE, OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is
April 20, 2016
TABLE OF CONTENTS
Page No.
Cautionary Statement Regarding Forward-Looking Statements
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1
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Prospectus Summary
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2
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Risk Factors
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6
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Market and Other Data
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14
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Use of Proceeds
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15
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Market For Our Common Stock and Other Related Stockholder Matters
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16
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Dilution
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18
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Our Business
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19
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Description of Properties
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28
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Legal Proceedings
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28
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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29
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Directors and Executive Officers
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39
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Executive Compensation
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45
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Certain Relationships and Related Transactions, and Director Independence
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50
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Security Ownership of Certain Beneficial Owners and Management
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52
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The Equity Purchase Transaction
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53
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Selling Stockholders
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55
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Plan of Distribution
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58
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Description of Registrant’s Securities
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60
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Shares Eligible For Future Sale
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62
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Legal Matters
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63
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Experts
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63
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Change in Accountants
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63
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Where You Can Find More Information
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64
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Index to Financial Statements
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F-1
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AVAILABLE INFORMATION
This prospectus constitutes
a part of a registration statement on Form S-1 (together with all amendments and exhibits thereto, the “Registration Statement”)
filed by us with the SEC under the Securities Act of 1933, as amended (the “Securities Act”). As permitted by the rules
and regulations of the SEC, this prospectus omits certain information contained in the Registration Statement, and reference is
made to the Registration Statement and related exhibits for further information with respect to Zonzia Media, Inc. and the securities
offered hereby. With regard to any statements contained herein concerning the provisions of any document filed as an exhibit to
the Registration Statement or otherwise filed with the SEC, in each instance reference is made to the copy of such document so
filed. Each such statement is qualified in its entirety by such reference.
Unless otherwise
specified, the information in this prospectus is set forth as of April 14, 2016, and we anticipate that changes in
our affairs will occur after such date. We have not authorized any person to give any information or to make any representations,
other than as contained in this prospectus, in connection with the offer contained in this prospectus. If any person gives you
any information or makes representations in connection with this offer, do not rely on it as information we have authorized. This
prospectus is not an offer to sell our common stock in any state or other jurisdiction to any person to whom it is unlawful to
make such offer.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS
All statements other than statements of historical
facts included or incorporated by reference in this report, including, without limitation, statements regarding our future financial
position and capital needs, business strategy, projected product development, budgets, projected revenues, projected costs and
plans and objectives of management for future operations, are forward-looking statements. Forward-looking statements generally
can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,”
“intend,” “project,” “estimate,” “anticipate,” or “believe” or the
negative thereof or any variation thereon or similar terminology.
Such forward-looking statements are made based
on management's beliefs, as well as assumptions made by, and information currently available to, management. Although we believe
that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations
will prove to have been correct. Such statements are not guarantees of future performance or events and are subject to known and
unknown risks and uncertainties that could cause the Company's actual results, events or financial positions to differ materially
from those included within the forward-looking statements. Important factors that could cause actual results to differ materially
from our expectations include, but are not limited to:
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future financial and operating results,
including projections of sales, revenue, income, expenditures, liquidity, and other financial items;
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our ability to develop relationships with
new customers and maintain or improve existing customer relationships;
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development of new products, brands and
marketing strategies;
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current or future revenue and revenue
projections;
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management’s goals and plans for
future operations;
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our ability to improve operational efficiencies,
manage costs and business risks and improve or maintain profitability;
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growth, expansion, diversification and
acquisition strategies, the success of such strategies, and the benefits we believe can be derived from such strategies;
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the outcome of regulatory, tax and litigation
matters;
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overall industry and market performance;
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effects of competition; and
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other assumptions described
in this report or underlying or relating to any forward looking statements.
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Readers are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of the date made. All subsequent written and oral forward-looking statements
attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements.
Except as required by law, we undertake no obligation to disclose any revision to these forward-looking statements to reflect events
or circumstances after the date made, changes in internal estimates or expectations, or the occurrence of unanticipated events.
PROSPECTUS SUMMARY
This summary highlights information contained
elsewhere in this prospectus. Because this is only a summary, it does not contain all of the information that may be important
to you. You should read this entire prospectus and should consider, among other things, the matters set forth under “Risk
Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our
consolidated financial statements and related notes thereto appearing elsewhere in this prospectus before making your investment
decision.
Unless the context otherwise requires, any
reference to “the Company,” “we,” “us,” or, “our” refers to Zonzia Media, Inc.,
a Nevada corporation.
ZONZIA MEDIA, INC.
Zonzia Media, Inc. is a multi-platform entertainment
company focused on delivering compelling, innovative content with the objective of generating advertising revenue and subscription
revenue. We plan to distribute content through three distinct platforms:
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1)
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Cable television;
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2)
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Hotel in-room channel; and
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3)
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Our website Zonzia.com.
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Through an “Over-The-Top” (“OTT”)
software technology, we plan to allow instant access to our available content from internet connected devices including home computers,
tablets, smart phones and other mobile devices. Upon the full launch of all three of our delivery platforms, which is contingent
upon our receipt of adequate funding, we plan to deliver a variety of content including:
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Original Programming
– featuring TV series, mini-series, and documentaries.
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Feature Films
– full-length feature films from major Hollywood studios and independent production companies.
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Television Shows
– TV series from major networks and independent production companies.
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Concerts, Sports and Live Events
– streaming live music concerts, live sports events and other live events.
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Initially, we are distributing licensed content through our cable
television and hotel network distribution platforms.
Corporate History
We were originally incorporated in 1981
in the State of Nevada. Our principal executive offices are located at 2580 Anthem Village Drive, Suite B-7
,
Henderson,
Nevada 89074, and our telephone number at that location is (702) 707-3974. Our website address is www.zonziamedia.com. The information
on our website is not part of this prospectus.
Management
The management of Zonzia Media, Inc. includes:
Name
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Age
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Office
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Myles A. Pressey III
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58
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Chairman of the Board and Interim Chief Financial Officer
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Johnathan F. Adair
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50
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Chief Executive Officer
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Stanley L. Teeple
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63
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Chief Compliance Officer
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Steven L. Sanders
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55
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Director
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Philip Fraley
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33
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Director
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Joseph Martin
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Director
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Advisory Board members:
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Charles R. Dutton
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Our Growth Strategy
We are committed to establishing three distinct
distribution platforms for content, as further described below in the section entitled “Business.” As the distribution
platforms become established, we will seek to generate advertising revenue and subscription revenue from distributed content.
Initially, we are distributing content that
we license from our supplier simplyME Distribution across two platforms: the cable television platform and the hotel network platforms.
The Company’s objective is to provide its own content for distribution as it is developed and acquired over time. Initially,
all advertisers on the Zonzia channel have been secured by simplyME Distribution and its outside ad agency.
We are currently focused on the following three
platforms to meet our distribution objectives:
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Cable Television Platform
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This platform has launched. It is currently
live in approximately 27 plus million households in the United States through a Channel Distribution Agreement with simplyME Distribution
LLC.
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Our supplier simplyME has agreements with
national cable providers, including Comcast, Dish Network, and Verizon FiOS to distribute Video on Demand (“VOD”) content.
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The business model is to generate advertising
revenue from users viewing content through the cable television platform.
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The growth strategy for this distribution
platform is to both enhance the quality of the channel content and increase the total amount of content over time.
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The Company plans to
use internet marketing, social media, and other advertising to drive traffic to this channel.
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Hotel Network Platform
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The Company has an agreement with Sonifi Solutions, Inc. to provide content to Sonifi’s hotel clients, which include the following, amongst others:
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Marriott Hotels
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Westin Hotels
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Hilton Hotels
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The initial roll-out to approximately
546,000 hotel rooms was launched on August 1, 2015 with licensed content on a Free-To-Guest 4-hour loop linear channel. The initial
roll-out to approximately 405,733 hotel rooms was launched in August 2015 with licensed content on a Free-To-Guest 24/7 linear
channel. Our Free-To-Guest VOD channel also went live in August 2105, with distribution scheduled in approximately 882,000 hotel
rooms.
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The revenue model contemplates Zonzia
paying an advertising agency commission and subsequently sharing the remaining revenue with content providers.
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The growth strategy is
to increase the number of hotel rooms displaying content and to provide compelling content through both our content partners and
eventually, our own original content.
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Website: Zonzia.com Platform
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The website, while up and operating, functions
for now as an informational site for visitors to learn more about the Company and our future offerings.
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Today, a visit to the website shows teasers
of content offerings to come such as photos from the Tribeca Film Festival.
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The Company is in negotiations for original
program offerings with various companies.
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The growth of the business
model will target advertising revenue based upon the number of site visits and subscription revenue based upon the number of subscribers
acquired, both of which are predicated upon the quality of the content.
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Additionally,
the website has a number of movie trailers for soon-to-be released feature length films.
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The Offering
This prospectus relates to the offer and
sale from time to time of up to 64,468,344 shares of our common stock by the selling stockholders, 34,468,343 shares of which were
issued include: (i) shares that were sold in private placements of our common stock; and (ii) shares to compensate our executives
and our consultants, and (iii) as consideration to extinguish debts and contractual payment obligations of the Company.
Kodiak Capital, one of the selling stockholders
under this prospectus, is offering for sale up to 30,000,000 shares of our common stock. Kodiak Capital is not an affiliate of,
or has any relation to, any of the other selling stockholders named herein. On February 10, 2016, we entered into the Purchase
Agreement with Kodiak Capital. Pursuant to the Purchase Agreements Kodiak Capital has agreed to purchase from us up to an aggregate
of $2 million worth of shares of our common stock from time to time, until December 31, 2016. Also on February 10, 2016, we entered
into a Registration Rights Agreement (the “Registration Rights Agreement”) with the Equity Purchaser, pursuant to
which we have filed with the U.S. Securities and Exchange Commission (the “SEC”) this registration statement that
includes this prospectus to register for resale under the Securities Act of 1933, as amended (the “Securities Act”),
the shares that may be issued to the Equity Purchaser under the Purchase Agreement. In consideration for entering into the Purchase
Agreement, we issued to the Equity Purchaser a Promissory Note having a principal amount of $120,000, which is due and payable
on June 30, 2016.
We do not have the right to commence any
sales to the Equity Purchaser under the Purchase Agreement until the SEC has declared effective the registration statement of which
this prospectus forms a part. Thereafter, we may, from time to time and at our sole discretion, direct the Equity Purchaser to
purchase shares of our common stock, but we would be unable to sell shares to them if such purchase would result in their respective
beneficial ownership equaling more than 9.99% of the outstanding common stock. Except as described in this prospectus, there are
no trading volume requirements or restrictions under the Purchase Agreement, and we will control the timing and amount of any sales
of our common stock to the Equity Purchaser. The purchase price of the shares that may be sold to the Equity Purchaser under the
Purchase Agreement will be equal to 70% of the lowest daily volume weighted average price of the common stock for the five consecutive
trading days immediately following our request for the Equity Purchaser to purchase the shares. We may at any time in our sole
discretion terminate the Purchase Agreement without fee, penalty or cost upon one business day notice. The Equity Purchaser may
not assign or transfer its rights and obligations under the Purchase Agreement.
As of April 14, 2016, there were 249,169,122
shares of our common stock outstanding, of which 103,814,321 shares were held by non-affiliates. Although the Purchase Agreement
provides that we may sell up to $2 million worth of shares of our common stock to Kodiak Capital, only 30,000,000 shares of our
common stock are being offered under this prospectus. If all of the 30,000,000 shares offered by the Equity Purchase under
this prospectus were issued and outstanding as of April 14, 2016, such shares would represent 22% of the total number of shares
held by non-affiliates. If we elect to issue and sell more than the 30,000,000 shares offered under this prospectus to the
Equity Purchaser, which we have the right, but not the obligation, to do, we must first register for resale under the Securities
Act any such additional shares, which could cause additional substantial dilution to our stockholders. The number of shares ultimately
offered for resale by the Equity Purchaser is dependent upon the number of shares we sell to them under the Purchase Agreement.
Issuances of our common stock in this
offering will not affect the rights or privileges of our existing stockholders, except that the economic and voting interests
of each of our existing stockholders will be diluted as a result of any such issuance. Although the number of shares of common
stock that our existing stockholders own will not decrease, the shares owned by our existing stockholders will represent a smaller
percentage of our total outstanding shares after any such issuance to the Equity Purchaser.
Offering Summary
Common Stock Offered by Selling Stockholders
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Up to 64,468,344 shares of our
common stock, all of which are being offered for resale by selling stockholders, including 30,000,000 that we may sell to the
Equity Purchaser under the Purchase Agreement.
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Common Stock Outstanding Prior to the Offering
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As
of the date of this prospectus, there are 249,169,122 shares issued and outstanding.
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Common Stock to be Outstanding After the Offering
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279,169,122 shares to be
outstanding after giving effect to the total issuance of 30,000,000 shares to the Equity Purchaser under the Purchase Agreement.
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Offering Price Per Share
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The purchase price per share of common
stock being offered to the Equity Purchaser will be set at seventy percent (70%) of the lowest closing bid price of the common
stock during the five consecutive trading days immediately following the date of our notice to the Equity Purchaser of our election
to put shares pursuant to the Purchase Agreement (i.e. 30% discount to market).
The shares being offered by the other
selling stockholders may be offered and sold from time to time at prevailing market prices or privately negotiated prices.
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Termination of the Offering
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The shares are being offered by the
Equity Purchaser for a period not to exceed December 31, 2016.The shares being offered by the other selling shareholders will conclude
when the selling shareholders have sold all 34,468,343 shares of common stock offered by them.
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Use of Proceeds
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We will not receive any proceeds from
the sale of the shares of common stock by the selling stockholders in this offering. However, we may receive up to $2 million from
sales of shares to the Equity Purchaser under the Purchase Agreement. Any proceeds that we receive from sales to the Equity Purchaser
under the Purchase Agreement will be used to develop or acquire high quality media content, for advertising and marketing expenses
and for other general corporate purposes. See “Use of Proceeds.”
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Risk Factors
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An investment in our common stock is highly speculative and involves a high degree of risk. Investors should carefully consider the risk factors and other uncertainties described in this prospectus before purchasing our common stock. See “Risk Factors” beginning on page 6.
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Fees and Expenses
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We will pay all expenses incident to the registration of such shares, except for sales commissions and other expenses of selling stockholders.
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RISK FACTORS
An investment in our common stock involves
a high degree of risk. You should carefully consider the following risk factors in addition to other information in this prospectus,
including the financial statements and the related notes thereto, and in our other filings with the SEC before purchasing our common
stock. The risks and uncertainties described below are those that are currently deemed to be material and specific to our Company
and industry. If any of these risks actually occur, our business may be adversely affected, and you may lose all or part of your
investment.
Risks Related to Our Business and Industry
Our sole operation has experienced a
net loss since its inception in May 2014, and because it has a limited operating history, our ability to fully and successfully
develop our business is unknown.
We do not have a significant operating history
with which investors can evaluate its business. We have only generated
de minimis
click-through revenue and have not fully
launched our content delivery platforms while incurring expenses.
There is a risk that we may not be able to
successfully develop our content and attract customers on favorable terms necessary to realize consistent, meaningful revenues
and profit. For us to achieve success, our services must receive broad market acceptance by consumers. Without this market acceptance,
we will not be able to generate sufficient revenue to continue our business operation, and our business may fail.
Our ability to achieve and maintain profitability
and positive cash flow is dependent upon our ability to generate revenues, manage development costs and expenses and compete successfully
with our direct and indirect competitors.
Based on current plans, we expect to incur
operating losses in future periods. This will happen because there are expenses associated with the development, marketing and
provision of our services. As a result, we may not generate significant net income from operations in the future. Failure to generate
significant net income from operations in the near future may cause us to reduce or cease activities.
Our company’s independent auditors
have expressed substantial doubt about our ability to continue as a going concern.
We have incurred losses and during our short
history we have been in a development phase without material revenues or operational cash flows. Additionally, we currently have
limited viable funding sources to pay our on-going obligations. Next, we do not currently have, and do not expect to have, recurring
revenue generating sources until we fully launch our advertising business while continuing to incur operating expenses. These factors,
along with having no substantial firm funding commitments, result in substantial doubt about our ability to continue as a going
concern. As such, our independent auditors included an explanatory paragraph regarding the substantial doubt about the ability
to continue as a going concern. The financial statements contain additional note disclosures describing the circumstances that
led to the inclusion of the explanatory paragraph.
In the second quarter of 2016, we expect
to generate a significant portion of our near-term revenues from advertising. A reduction in spending from our advertisers or losing
a substantial number of our advertisers will seriously harm our business.
In the near term (the next 12 to 18 months),
we expect nearly all of our revenue will be generated from advertisers. We expect to begin earning advertising revenue in the second/third
quarter of 2016 through advertisements placed with our content and distribution partner simplyME Distribution. We anticipate that
our ability to attract advertisers will be limited. Existing advertisers sourced by simplyME will not continue to do business with
us, if their investment in advertising with us does not generate sales leads, and ultimately customers. They will also cease doing
business with us if we or our distribution partners such as simplyME do not deliver their advertisements in an appropriate and
effective manner. If we are unable to remain competitive and provide value to our advertisers, they may stop placing ads with us,
which would adversely affect our revenues and business.
In addition, expenditures by advertisers tend
to be cyclical, reflecting overall economic conditions, budgeting and buying patterns. Adverse macroeconomic conditions can also
have a material negative impact on the demand for advertising and cause our advertisers to reduce the amounts they spend on advertising,
which could adversely affect our revenues and business.
We face intense competition. If we do
not continue to innovate and provide content and products that are compelling to users, we may not remain competitive, and our
revenues and operating results could be adversely affected.
Our business is rapidly evolving and intensely
competitive, and is subject to changing technologies, shifting user needs, and frequent introductions of new products and services.
Our ability to compete successfully depends heavily on providing products and services that provide enjoyable experiences and entertain
users. The competitive pressure to innovate encompasses providing a wider range of products and services and relevant and entertaining
content that may not have been a part of previous core business plans.
We have many competitors in different industries,
most of which have stronger brand recognition, longer operating histories, and significantly more financial resources. Our competitors
can use their experience and resources in ways that could affect our competitive position, including by making acquisitions, investing
aggressively in research and development, aggressively initiating intellectual property claims (whether or not meritorious) and
competing aggressively for advertisers and consumers.
Our competitors are constantly developing innovations
content delivery, online advertising, and web-based products and services. The development of new, technologically advanced products
is also a complex and uncertain process requiring high levels of innovation and investment, as well as the accurate anticipation
of technology, market trends and consumer needs. As a result, we may not be able to compete on a timely basis, particularly with
competitors with greater financial resources and longer operating histories. If we are unable to provide quality content using
effective and engaging distribution methods, then we will have difficulty generating user engagement and ultimately, advertising
revenue. If our competitors are more successful than we are in developing compelling content or in attracting and retaining users,
advertisers, and content providers, our revenues and operating results could be adversely affected.
Our business depends on a strong brand.
Failing to maintain and enhance our brand would hurt our ability to expand our base of users, advertisers, and other partners.
We are in the early stages of building a strong
brand identity that will be critical to the success of our business. We believe that the importance of brand recognition remains
crucial due to the relatively low barriers to entry in the internet market. Our brand may be negatively impacted by a number of
factors, including data protection and security issues, service outages, and product malfunctions. Failure to increase, maintain,
and continually enhance our brand, which likely will require us to incur significant, and potentially excessive, expenses will
adversely affect our business in a material manner.
If we fail to attract users to our viewer
and consumer base our revenues, financial results and overall business will be significantly harmed.
Our user base size and our users’ level
of engagement are critical to our success. Our financial performance will be expressly determined by our success in adding, retaining
and engaging active users. If we are unable to attract and publish engaging content, then our active user rate will decline, and
we will be unable to attract advertising and ecommerce customers. If individual consumers across our target audience do not perceive
our products to be compelling, useful, reliable and trustworthy, then we may not be able to attract or retain users or otherwise
maintain or increase the frequency and duration of their engagement. We may not be able to expand our active user base to the
necessary levels needed to generate positive cash flows from operations. Consumer engagement patterns are constantly evolving
and difficult to measure, and if we cannot provide a timely evolution of our brands, then our financial results will be severely
harmed. Any number of factors could potentially negatively affect user retention, growth and engagement, including if:
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users increasingly engage with other products
or activities;
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we fail to introduce content and other
video products that users find engaging;
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consumer experience is diminished as a
result of the decisions we make with respect to the frequency, prominence and size of ads that we display or the quality of the
ads displayed;
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we are unable to manage and prioritize
information to ensure users are presented with content that is interesting, useful and relevant to them;
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there are adverse changes in our products
that are mandated by legislation, regulatory authorities or litigation, including settlements or consent decrees; or
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technical or other problems
prevent us from delivering our products in a rapid and reliable manner or otherwise affect the user experience, such as any failure
to prevent spam or similar content.
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Our new products and changes to existing
products could fail to attract or retain users or generate revenue.
Our ability to retain, increase and engage
our user base and to increase our revenue depends heavily on our ability to provide successful new product offerings, such as original
television or other videos, both independently and/or in conjunction with developers or other third parties. Our product reviews
and introductions may include new and unproven products, including with which we have little or no prior experience. If new or
enhanced products fail to engage users, developers or marketers, then we may fail to attract or retain users or to generate sufficient
revenue or operating margin, and our business may be adversely affected.
We prioritize user growth and ultimately
our user’s experience over short-term financial results.
We sometimes make decisions regarding our content
and distribution methods that may reduce our short-term revenue or profitability if we believe that the decisions are consistent
with our mission and benefit the aggregate user experience and will thereby improve our financial performance over the long term.
For example, from time to time we may change the size, frequency or relative prominence of ads in order to improve ad quality and
overall user experience. Similarly, from time to time we may adjust our content or websites to deliver the most relevant content
to our users, which may adversely affect certain advertisers and could reduce their incentive to engage their marketing efforts
on our platforms and those of our brand partners. We also may introduce changes to existing content mixes to attract new targeted
demographics that may direct previous users away from our sites. These decisions may not produce the long-term benefits that we
expect, in which case our user growth and engagement, our relationships with developers and advertisers and our business and results
of operations could be harmed.
Our dependence on a sole back-office
technology partner subjects us to commercial risk.
Currently, all of our advertising sales, support,
revenue generation and tracking and collections efforts are provided by one third party vendor, Kaltura, Inc. If our relationship
with this service provider erodes or is harmed, that would likely result in the interruption of our business plan and likely will
result in adverse impacts on our financial results and future performance.
Our dependence on a sole distribution
partner for current advertisers subjects us to commercial risk.
Currently, all of the advertisers on the Zonzia
channel are sourced through our content supplier and distribution partner, simplyME Distribution LLC, with whom we have a revenue
share arrangement. Since the contracts with advertisers lie with simplyME and/or its advertising firm and we do not have a direct
contractual relationship with these advertisers, our ability to generate advertising revenue would be adversely impacted in the
event that our relationship with simplyME erodes or is harmed.
A variety of new and existing U.S. laws
could subject us to claims or otherwise harm our business.
We are subject to numerous U.S. laws and regulations
covering a wide variety of subject matters. New laws and regulations (or new interpretations of existing laws and regulations)
also may impact our business. The costs of compliance with these laws and regulations are high and are likely to increase in the
future. Any failure on our part to comply with these laws and regulations can result in negative publicity and diversion of management
time and effort and may subject us to significant liabilities and other penalties.
Furthermore, many of these laws were adopted
before the advent of the internet and related technologies and, as a result, do not contemplate or address the unique issues of
the internet and related technologies. The laws that do reference the internet are being interpreted by the courts, but their applicability
and scope remain uncertain. For example, the laws relating to the liability of providers of online services are currently unsettled
within the U.S. Claims may be filed against us under U.S. laws for defamation, invasion of privacy and other tort claims, unlawful
activity, patent, copyright and trademark infringement or other theories based on the nature and content of the materials searched
and the ads posted by our users, our products and services or content generated by our users.
In addition, the Digital Millennium Copyright
Act has provisions that limit, but do not necessarily eliminate, our liability for listing or linking to third-party websites
that include materials that infringe copyrights or other rights, so long as we comply with the statutory requirements of this
act. Any future legislation impacting these safe harbors may adversely impact us. Various U.S. laws restrict the distribution
of materials considered harmful to children and impose additional restrictions on the ability of online services to collect information
from minors. In the area of data protection, many states have passed laws requiring notification to users when there is a security
breach for personal data, such as California’s Information Practices Act.
We may be subject to legal liability
associated with providing online services or content.
We will provide a wide variety of products
that enable users to exchange information and will also allow product and service providers to advertise and engage in various
online activities. The law relating to the liability of providers of these online services and products for activities of their
users is still somewhat unsettled. Claims may be threatened or brought against us for defamation, negligence, breaches of contract,
copyright or trademark infringement, unfair competition, unlawful activity, tort, including personal injury, fraud or other theories
based on the nature and content of information that we publish or to which we provide links or that may be posted online or generated
by us or by third parties, including our users. In addition, we may be subject to domestic or international actions alleging that
certain content we have generated or third-party content that we have made available within our services violates U.S. and non-U.S.
law.
Interruption or failure of our information
technology and communications systems could hurt our ability to effectively provide our products and services, which could damage
our reputation and harm our operating results.
The availability of our products and services
depends on the continuing operation of our information technology and communications systems. Our systems are vulnerable to damage
or interruption from earthquakes, terrorist attacks, floods, fires, power loss, telecommunications failures, computer viruses,
computer denial of service attacks or other attempts to harm our systems.
The occurrence of a natural disaster could
result in lengthy interruptions in our service. In addition, our products and services are highly technical and complex and may
contain errors or vulnerabilities. Any errors or vulnerabilities in our products and services, or damage to or failure of our systems,
could result in interruptions in our services, which could reduce our revenues and profits and damage our brand.
Our operating results may fluctuate,
which makes our results difficult to predict and could cause our results to fall short of expectations.
Our operating results may fluctuate as a result
of a number of factors, many outside of our control, and we have a short operating history. As a result, comparing our operating
results on a period-to-period basis will take time as we build our history and may not be meaningful in any one particular period.
As a result, you should not rely on our past results as an indication of our future performance. Our quarterly, year-to-date and
annual revenues and expenses may differ significantly from our projected rates. Any of these events could cause our stock price
to fall. Each of the risk factors listed in this section in addition to the following factors may affect our operating results:
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our ability to continue to attract users
to our distribution platforms;
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our ability to monetize advertising revenue
from distributed content;
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revenue fluctuations caused by changes
in property mix, platform mix and geographical mix;
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the amount and timing of operating costs
and expenses and capital expenditures related to the maintenance and expansion of our businesses, operations and infrastructure;
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our focus on long-term goals over short-term
results;
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our ability to keep our content platforms
operational at a reasonable cost and without service interruptions; and
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because our business
is ever changing and evolving, and because of our lack of long standing historical operating results, predicting our future operating
results is not reliable. In addition, advertising spending has historically been cyclical in nature, reflecting overall economic
conditions, as well as budgeting and buying patterns.
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We rely on highly skilled personnel,
and if we are unable to retain or motivate key personnel, hire qualified personnel or maintain our corporate culture, then we may
not be able to grow effectively.
Our performance largely depends on the talents
and efforts of highly skilled individuals. Our future success depends on our continuing ability to identify, hire, develop, motivate
and retain highly skilled personnel for all areas of our organization. Competition in our industry for qualified employees is
intense. In addition, our compensation arrangements, such as our equity award programs, may not always be successful in attracting
new employees and retaining and motivating our existing employees. Our continued ability to compete effectively depends on our
ability to attract new employees and to retain and motivate our existing employees.
Claims that current or future technologies
used in our products and services infringe or misappropriate the proprietary rights of others could adversely affect our ability
to use those technologies and cause us to incur additional costs.
We could be subject to third party infringement
claims if third parties challenge our use of a particular technology or proprietary information in our sites. Any litigation, regardless
of its outcome, would likely result in the expenditure of significant financial resources and the diversion of management’s
time and resources. In addition, litigation in which we are accused of infringement may cause negative publicity, adversely impact
prospective customers and require us to develop non-infringing technology, make substantial payments to third parties or enter
into royalty or license agreements, which may not be available on acceptable terms or at all.
We may acquire technologies or companies
in the future, and such acquisitions could disrupt our business and dilute our stockholders’ interests.
We may acquire additional technologies or
other companies in the future, and we cannot provide assurances that we will be able to successfully integrate their operations
or that the cost savings we anticipate will be fully realized. Entering into an acquisition or investment entails many risks,
any of which could materially harm our business, including:
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the diversion of management’s attention
from other business concerns;
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the failure to effectively assimilate
the acquired technology, employees or other assets of the acquired company into our business;
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the loss of key employees from either
our current business or the acquired business; and
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the assumption of significant
liabilities of the acquired company.
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If we complete acquisitions, we may dilute
the ownership of current stockholders. In addition, achieving the expected returns and cost savings from our past and future acquisitions
will depend in part on our ability to integrate the products and services, technologies, research and development programs, operations,
sales and marketing functions, finance, accounting and administrative functions and other personnel of these businesses into our
business in an efficient and effective manner. Any businesses that we acquire may not perform at anticipated levels. If we are
unable to successfully integrate acquired businesses, then our anticipated revenues may be lower, and our operational costs may
be higher.
Our strategy for growth may include joint
ventures, strategic alliances and mergers and acquisitions, which could be difficult to manage.
The successful execution of our growth strategy
will depend on many factors, including identifying suitable companies, negotiating acceptable terms, successfully consummating
the corporate relationships and obtaining the required financing on acceptable terms. We may be exposed to risks that we may incorrectly
assess new businesses and technologies. We could face difficulties and unexpected costs during and after the establishment of corporate
relationships.
Our insurance may not be sufficient.
We will carry insurance that we consider adequate
having regard to the nature of the risks of doing business and costs of coverage. We may not, however, be able to obtain insurance
against certain risks or for certain products or other resources located from time to time in certain areas of the world to the
extent that we may be forced to rely on outside providers. Currently, we are not fully insured against all possible risks, nor
are all such risks insurable. Our insurance coverage may not be adequate.
We do not own all of the intellectual
property that is needed for use of our content storage and distribution plans, and thus rely on contractual rights to use certain
intellectual property that is needed for our content storage and distribution infrastructure.
Pursuant to our agreement with Kaltura, Inc.,
we have the rights to use all software developed for our back-office infrastructure. However, we do not own all of the underlying
intellectual property and thus, rely on our contractual relationship for our ability to use certain intellectual property necessary
to run our business.
We may seek to protect intellectual property
through contracts, including, when possible, confidentiality agreements and inventors’ rights agreements with our business
partners and employees.
We intend to seek to protect intellectual property,
to the extent it is developed over time, in part by confidentiality agreements and, if applicable, inventors’ rights agreements
with strategic partners and employees, although such agreements have not been and may not be put in place in every instance. These
agreements may not adequately protect our trade secrets and other intellectual property or proprietary rights. There is also a
risk that the parties that enter into such agreements with us may breach them, that we will not have adequate remedies for any
breach or that such persons or institutions will assert rights to intellectual property arising out of these relationships.
Our failure to obtain or maintain the
right to use certain intellectual property may negatively affect our business.
Our future success and competitive position
depend in part on our ability to obtain and maintain rights with regard to certain intellectual property used in our solutions.
This may be achieved, in part, by prosecuting claims against others who we believe are infringing our rights and by defending claims
of intellectual property infringement brought by others. While we are not currently engaged in any intellectual property litigation,
in the future we may commence lawsuits against others if we believe that they have infringed our rights, or we may become subject
to lawsuits alleging that we have infringed the intellectual property rights of others. For example, to the extent that we have
previously incorporated third party technology and/or know-how into certain systems for which we do not have sufficient license
rights, we could incur substantial litigation costs, be forced to pay substantial damages or royalties or even be forced to cease
operations in the event that any owner of such technology or know-how were to challenge our subsequent installation of such system
(and any progeny thereof). Our involvement in intellectual property litigation could result in significant expense to us, adversely
affect the development of our waste remediation intellectual property and divert the efforts of our technical and management personnel,
whether or not such litigation is resolved in our favor. In the event of an adverse outcome in any such litigation, we may, among
other things, be required to:
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pay substantial damages;
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cease the development, manufacture, use,
sale or importation of machines or systems or components thereof that infringe on other patented intellectual property;
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expend significant resources to develop
or acquire non-infringing intellectual property;
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discontinue processes or systems incorporating
infringing technology; or
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obtain licenses to the
infringing intellectual property.
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Any such development, acquisition or license
could require the expenditure of substantial time and other resources and could have a material adverse effect on our business,
results of operations and financial condition.
Risks Related to our Common Stock
Our executive officers and directors
collectively have the power to control our management and operations, and have a significant majority in voting power on all matters
submitted to the stockholders of the company.
Management and affiliates of our management
currently beneficially own a majority of our outstanding common stock. Consequently, management has the ability to influence control
of the operations of the Company and, acting together, will have the ability to influence or control substantially all matters
submitted to stockholders for approval, including:
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Election of our board of directors;
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Amendment to the Company’s Articles
of Incorporation or Bylaws; and
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Adoption of measures
that could delay or prevent a change in control or impede a merger, takeover or other business combination.
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These stockholders have complete control over
our affairs. Accordingly, this concentration of ownership by itself may have the effect of impeding a merger, consolidation, takeover
or other business consolidation, or discouraging a potential acquirer from making a tender offer for the Common Stock.
Our executive officers face a conflict
since they will be seeking to sell shares offered hereunder on behalf of the Company, and may also sell shares that they hold personally
that are registered hereby, since our executive offices are included as selling stockholders herein.
This Registration Statement covers both the
offering of shares of our common stock to the public by the Company and the sale of shares held by selling stockholders, including
some of the Company’s executive officers. Thus, the Company’s executive officers may sell shares they own personally,
and will also be seeking to sell shares of stock offered by the Company. This presents a conflict of interest in that each such
executive officer could be presented an opportunity to sell shares either personally or on behalf of the Company, to a given potential
investor. If an executive officer prioritized the sale of his or her own shares, this could harm the Company.
Our common stock has not been widely
traded, and the price of our common stock may fluctuate substantially.
To date, there has been a limited public market
for shares of our common stock, with limited trading. An active public trading market may not develop or, if developed, may not
be sustained. The current market price of our common stock and any possible subsequent listing on the NASDAQ Market or other securities
exchange, if and when we are successful in doing so, will be affected by a number of factors, including those discussed above.
Future sales of our common stock by existing
stockholders could cause our stock price to decline.
If our existing stockholders sell substantial
amounts of our common stock in the public market, then the market price of our common stock could decrease significantly. The
perception in the public market that our stockholders might sell shares of common stock also could depress the market price of
our common stock. There are approximately 249 million shares of our common stock outstanding, of which approximately 2,055,833
shares are currently freely tradable. The balance of our shares currently contains certain restrictions on resale. We may in the
future issue and register additional shares of our common stock that might be freely transferable at the time of such transaction.
A decline in the price of shares of our common
stock might impede our ability to raise capital through the issuance of additional shares of our common stock or other equity securities.
We do not expect to pay dividends in
the foreseeable future, and any return on investment may be limited to the value of our common stock.
We do not anticipate paying dividends on our
common stock in the foreseeable future. The payment of dividends on our common stock will depend on our earnings, financial condition,
opportunities to invest in the growth of our business and other business and economic factors affecting us at such time as our
Board of Directors may consider relevant. If we do not pay dividends, then our common stock may be less valuable because a return
on investment will occur only if our stock price increases.
Our charter documents may discourage
or prevent a change in control, even if an acquisition would be beneficial to our stockholders, which could adversely affect our
stock price and prevent attempts by our stockholders to replace or remove our current management.
Our current articles of incorporation and bylaws,
which will remain in effect after the effective date of this Report, contain provisions that could delay or prevent a change in
control of our company or changes in our Board of Directors that our stockholders might consider favorable and limit the price
that certain investors might be willing to pay in the future for our securities. Among other things, these provisions:
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Authorize the issuance of preferred stock
that can be designated and issued by our Board of Directors without prior stockholder approval and with rights senior to those
of our common stock.
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Require advance written
notice of stockholder proposals and director nominations to be considered at stockholders’ meetings.
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These and other provisions in our articles
of incorporation and bylaws could make it more difficult for stockholders or potential acquirers to obtain control of our Board
of Directors or to initiate actions that are opposed by our then current Board of Directors, including a merger, tender offer or
proxy contest involving our company. Any delay or prevention of a change in control transaction or changes in our Board of Directors
could cause the market price of our common stock to decline.
We are authorized to issue preferred
stock, which could adversely affect the value of shares of our common stock.
Our articles of incorporation authorize us
to issue up to 2,000,000,000 shares of common stock and 200,000,000 shares of preferred stock, approximately 100,000,000 shares
of which preferred shares are available for future issuance as of the date of this Report. Our Board of Directors could designate
and issue preferred stock, in one or more series, the terms of which may be determined at the time of issuance by our Board of
Directors, without further action by stockholders. Terms of preferred stock could include voting rights, including the right to
vote as a series on particular matters, preferences as to dividends and liquidation, conversion rights, redemption rights and sinking
fund provisions. The designation of preferred stock could have a material adverse effect on the rights of holders of our common
stock and therefore could reduce the value of shares of our common stock. In addition, specific rights granted to future holders
of preferred stock could be used to restrict our ability to merge with, or sell our assets to, a third party. The ability of our
Board of Directors to issue preferred stock could have the effect of rendering more difficult, delaying, discouraging, preventing
or rendering more costly an acquisition of our company or a change in control of our company, thereby preserving control of our
company by current management.
The sale of our common stock to the Equity
Purchasers may cause dilution, and the sale of the shares of common stock acquired by the Equity Purchasers, or the perception
that such sales may occur, could cause the price of our common stock to fall.
On February 10, 2016, we entered into the Purchase
Agreement with the Equity Purchaser. Pursuant the Purchase Agreements the Equity Purchaser has committed to purchase up to an aggregate
of $2 million of our common stock. The shares that may be sold pursuant to the Purchase Agreement in the future may be sold by
us to the Equity Purchaser at our discretion from time to time, commencing after the SEC has declared effective the registration
statement that includes this prospectus until December 31, 2016. The per share purchase price for the shares that we may sell to
the Equity Purchaser under the Purchase Agreement will fluctuate based on the price of our common stock, and will be equal to 70%
of the lowest daily volume weighted average price of the common stock for the five consecutive trading days immediately following
our request for the Equity Purchaser to purchase the shares. Depending on market liquidity at the time, sales of such shares may
cause the trading price of our common stock to fall.
We generally have the right to control the
timing and amount of any sales of our shares to the Equity Purchaser, except that, pursuant to the terms of the Purchase Agreement,
we would be unable to sell shares to the Equity Purchaser if such purchase would result in an Equity Purchaser’s respective
beneficial ownership equaling more than 9.99% of the outstanding common stock. The Equity Purchaser may ultimately purchase all,
some or none of the shares of our common stock that may be sold pursuant to the Purchase Agreement and, after they have acquired
shares, the Equity Purchaser may sell all, some or none of those shares. Therefore, sales to the Equity Purchaser by us could
result in substantial dilution to the interests of other holders of our common stock. Additionally, the sale of a substantial
number of shares of our common stock to the Equity Purchaser, or the anticipation of such sales, could make it more difficult
for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect
sales.
The Equity Purchasers will pay less than the then-prevailing market price for our common stock.
The common stock to be issued to the Equity
Purchaser pursuant to the Purchase Agreement will be purchased at a thirty percent (30%) discount to the lowest daily volume weighted
average price of the common stock for the five consecutive trading days immediately following our request for the Equity Purchaser
to purchase the shares. The Equity Purchaser has a financial incentive to sell our common stock immediately upon receiving the
shares to realize the profit equal to the difference between the discounted price and the market price. If the Equity Purchaser
sells the shares, the price of our common stock could decrease. If our stock price decreases, the Equity Purchaser may have a further
incentive to sell the shares of our common stock that it holds. These sales may have a further impact on our stock price.
Our common stock is deemed to be a “penny
stock,” which may make it more difficult for investors to sell their shares due to suitability requirements.
Our common stock is deemed to be a “penny
stock” as that term is defined in Rule 3a51-1 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). This classification reduces the potential market for our common stock by reducing the number of potential investors.
This would be detrimental to the development of active trading in our common stock and make it more difficult for investors in
our common stock to sell shares to third parties or to otherwise dispose of them. This also could cause our stock price to decline
or impede any increase in price. Penny stocks are stocks:
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with a price of less than $4.00 per share;
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that are not traded on a “recognized”
national exchange; or
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in issuers with net tangible
assets less than $2 million (if the issuer has been in continuous operation for at least three years) or $10 million (if the issuer
has been in continuous operation for less than three years), or with average revenues of less than $6 million for the last three
years.
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Broker-dealers dealing in penny stocks are
required to provide potential investors with a document disclosing the risks of penny stocks. Moreover, broker-dealers are required
to determine whether an investment in a penny stock is a suitable investment for a prospective investor. Many broker-dealers will
not offer penny stocks to their clients. Moreover, many investors are disinclined to purchase penny stocks.
If we raise additional funds through
the issuance of equity or convertible debt securities, your ownership will be diluted.
If we raise additional funds through the issuance
of equity or convertible debt securities, the percentage ownership held by existing stockholders will be reduced, and new securities
may contain certain rights, preferences or privileges that are senior to those of our common stock. Furthermore, any additional
equity financing may be dilutive to stockholders, and debt financing, if available, may involve restrictive covenants, which may
limit our operating flexibility with respect to certain business matters.
Grants of stock options and other rights
to our employees may dilute your stock ownership.
We plan to attract and retain employees in
part by offering stock options and other purchase rights for a significant number of shares of our common stock. We intend to grant
stock options to certain officers and directors of our company. The issuance of shares of common stock pursuant to such stock options,
and stock options issued in the future, will have the effect of reducing the percentage of ownership in our company of our then
existing stockholders.
FINRA sales practice requirements also
may limit a stockholder’s ability to buy and sell our stock.
In addition to the “penny stock”
rules described above, the Financial Industry Regulatory Authority (known as
“FINRA”
) has adopted rules that
require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment
is suitable for that customer. Before recommending speculative low priced securities to their non-institutional customers, broker-dealers
must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives
and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low
priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers
to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse
effect on the market for our shares.
MARKET AND OTHER DATA
The industry and market data contained in this
prospectus are based on independent industry publications, reports by market research firms or other published independent sources
and, in each case, are believed by us to be reliable and accurate. However, industry and market data is subject to change and cannot
always be verified with complete certainty due to limits on the availability and reliability of raw data, the voluntary nature
of the data gathering process and other limitations and uncertainties inherent in any statistical survey. In addition, consumption
patterns and customer preferences can and do change. The industry and market data sources upon which we relied are publicly available
and were not prepared for our benefit or paid for by us.
USE OF PROCEEDS
This prospectus relates to shares of our common
stock that may be offered and sold from time to time by the selling stockholders. We will not receive any proceeds upon the sale
of shares by the selling stockholders in this offering. However, we may receive gross proceeds of up to $2 million under the Purchase
Agreement with the Equity Purchaser, assuming that we sell the full amount of our common stock that we have the right, but not
the obligation, to sell to the Equity Purchaser under those agreements. See “Plan of Distribution” elsewhere in this
prospectus for more information.
We currently expect to use the net proceeds
from the sale of shares to the Equity Purchaser under the Purchase Agreement to develop or acquire high quality media content,
for advertising and marketing expenses and for other general corporate purposes. We will have broad discretion in determining how
we will allocate the proceeds from any sales to the Equity Purchaser.
Even if we sell $2 million worth of shares
of our common stock to the Equity Purchaser pursuant to the Purchase Agreement, we will need to obtain additional financing in
the future in order to fully fund all of our planned operations, including attracting and retaining highly talented professionals.
We may seek additional capital in the private and/or public equity markets, pursue government contracts and grants as well as business
development activities to continue our operations, respond to competitive pressures, develop new products and services, and
to support new strategic partnerships. We are evaluating additional equity financing opportunities on an ongoing basis and
may execute them when appropriate. However, there can be no assurances that we can consummate such a transaction, or consummate
a transaction at favorable pricing.
MARKET PRICE FOR OUR COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
(a) Market Information.
Our shares of common stock are not traded
on a national exchange; rather, they are traded on the OTCQB marketplace under the symbol “ZONX”. At April 14,
2016, the closing bid price for one share of our common stock was $0.03. The following table sets forth, for the periods indicated,
the high and low trade prices for our common stock as reported on the on the OTCQB marketplace. During 2012 and 2013, our common
stock did not trade above $0.01.
On November 12, 2014, we
completed a 1 for 44 reverse split of our common stock. The following reverse split adjusted table reflects the high and low
quarterly quotations or traded prices. (Source: www.otcmarkets.com).
Quarterly Period
|
|
High
|
|
|
Low
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
0.19
|
|
|
$
|
0.03
|
|
Second Quarter (to April 14, 2016)
|
|
$
|
0.03
|
|
|
$
|
0.03
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
0.44
|
|
|
$
|
0.05
|
|
Second Quarter
|
|
$
|
0.34
|
|
|
$
|
0.11
|
|
Third Quarter
|
|
$
|
0.22
|
|
|
$
|
0.10
|
|
Fourth Quarter
|
|
$
|
0.13
|
|
|
$
|
0.03
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
0.18
|
|
|
$
|
0.02
|
|
Second Quarter
|
|
$
|
0.66
|
|
|
$
|
0.05
|
|
Third Quarter
|
|
$
|
0.44
|
|
|
$
|
0.03
|
|
Fourth Quarter
|
|
$
|
0.93
|
|
|
$
|
0.07
|
|
Trading in stocks quoted on the OTCQB marketplace
is often thin and is characterized by wide fluctuations in trading prices due to many factors that may have little to do with a
company’s operations or business prospects. We cannot assure you that there will be a market for our common stock in the
future.
Our transfer agent is Continental Stock Transfer
& Trust Company with an office at 17 Battery Place, 8
th
Floor, New York, New York 10004.
(b) Holders.
At April 14, 2015, there were 1,080
stockholders of record of our company’s common stock. Company stockholders who hold their shares in electronic format
in U.S. brokerage accounts are not deemed to be separate stockholders, as such shares are held of record by CEDE and Co., which
is counted by our company’s transfer agent as a single stockholder of record. As of April 14, 2015, there were 249,169,122
shares of our company’s common stock issued and outstanding and no shares of our preferred stock issued and outstanding.
(c) Dividends.
During the most recent fiscal year, we did
not declare or pay cash dividends. Our company does not intend to pay cash dividends on its common stock in the foreseeable future.
We anticipate retaining earnings (if any) for investing in our business and increasing our working capital. We are not subject
to restrictions respecting the payment of dividends, except that they may not be paid to render us insolvent.
(d) Securities Authorized for Issuance under
Equity Compensation Plans.
We have one equity compensation plan, our company’s
2007 Stock Option Plan. See “Executive Compensation—2007 Stock Option Plan.” Set forth in the table below are
(a) the number of shares of our common stock to be issued upon the exercise of outstanding options, (b) the weighted-average exercise
price of the outstanding options and (c) other than shares of our common stock to be issued upon the exercise of the outstanding
options, the number of shares of our common stock remaining available for future issuance under our company’s 2007 Stock
Option Plan as of December 31, 2015.
The following table summarizes certain information
regarding our 2007 Stock Option Plan as of December 31, 2015
Equity Compensation Plan Information
|
|
Number of securities to be issued upon exercise of outstanding options,
|
|
Weighted-average exercise price of outstanding options,
|
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in
|
Plan category
|
|
warrants and rights
|
|
warrants and rights
|
|
column (a))
|
|
|
(a)
|
|
(b)
|
|
(c)
|
Equity compensation plans approved by security holders
|
|
568,182
|
|
$6.60
|
|
340,909
|
Equity compensation plans not approved by security holders
|
|
871,591
|
|
$0.88
|
|
N/A
|
Total
|
|
1,439,773
|
|
|
|
340,909
|
The above table has been adjusted to reflect
retrospective application of our 1-for-44 reverse stock split, effective November 12, 2014.
2007 Stock Option Plan
Before December 31, 2011, we issued
options to both employees and non-employees under our 2007 Stock Option Plan, which reserved 909,091 shares of common stock
pursuant to the issuance of stock options under the Plan. As of December 31, 2015, we had 568,182 shares of common stock
subject to outstanding common stock options with a weighted average exercise price of $6.60. As of December 31, 2015
340,909 shares of common stock were available for future award grants under the 2007 Stock Option Plan.
In addition, we issued warrants to employees
and non-employees not reserved under a formal Plan. As of December 31, 2015, we had 3,000,000 warrants outstanding with a weighted
average exercise price of $0.22. All numbers relating to the 2007 Stock Option Plan have been adjusted to reflect the retrospective
application of our 1-for-44 reverse stock split effective November 12, 2014.
DILUTION
Investors who purchase our common stock
will be diluted to the extent of the difference between the public offering price per share of our common stock and the pro forma
as adjusted net tangible book value per share of our common stock immediately after this offering. Net tangible book value per
share is determined by dividing our total tangible assets less total liabilities by the number of outstanding shares of our common
stock. As of December 31, 2015, we had a negative net tangible book value of $(3,604,379), or approximately $(0.015) per share
of common stock.
Dilution in net tangible book value
per share represents the difference between the assumed offering price per share of common stock of $0.03 (the closing price of
our common stock on April 14, 2016) and the pro forma as adjusted net tangible book value per share of common stock immediately
after the sale of the 30,000,000 shares of common stock being registered for resale to the Equity Purchaser under the Purchase
Agreement. Therefore, after giving effect to our assumed receipt of $2,000,000 in estimated net proceeds from the issuance of
30,000,000 shares of common stock under the Purchase Agreement (which is the number of shares being registered for resale to the
Equity Purchaser hereunder) and registered in this offering (assuming a purchase price of $0.06 per share, 70% of the closing
price of the common stock and assuming such sale was made on December 31, 2015, and after deducting estimated offering commissions
and expenses payable by us), our pro forma as adjusted net tangible book value as of December 31, 2015 would have been $(3,194,032),
or $0.014 per share. This would represent an immediate decrease in the net tangible book value of $.001 per share
to existing shareholders attributable to this offering. The following table illustrates this per share dilution:
Assumed offering price per share of common stock
|
|
|
|
|
|
$
|
0.06
|
|
Net tangible book value per
share as of December 31, 2015
|
|
$
|
(0.015
|
)
|
|
|
|
|
Decrease in as adjusted net tangible book value per share attributable to the sale of shares under the Purchase Agreement
|
|
$
|
0.014
|
|
|
|
|
|
Pro forma net tangible book value per share after the sale of shares under the Purchase Agreement
|
|
|
|
|
|
|
(0.03
|
)
|
Dilution per share to new investors
|
|
|
|
|
|
$
|
0.03
|
|
To the extent that we sell more or less
than $2,000,000 worth of shares under the Purchase Agreement, or to the extent that some or all sales are made at prices lower
than or in excess of the assumed price per share of $0.06, then the dilution reflected in the table above will differ.
The above table is based on 234,343,197 shares of our common stock outstanding as of December 31, 2015, adjusted for the
assumed sale of $2,000,000 in shares to the Equity Purchaser under the Purchase Agreement at the assumed purchase price described
above and after deducting estimated offering commissions and expenses payable by us.
To the extent that we issue additional
shares of common stock in the future, there may be further dilution to investors participating in this offering. In addition, we
may choose to raise additional capital because of market conditions or strategic considerations, even if we believe that we have
sufficient funds for our current or future operating plans. If we raise additional capital through the sale of equity or convertible
debt securities, the issuance of these securities could result in further dilution to our shareholders.
The number of shares of our common
stock reflected in the discussion and calculations for the figures appearing in the table above is based on 234,343,197 shares
of our common stock outstanding as of December 31, 2015 and excludes, as of that date:
|
·
|
568,182 shares issuable upon exercise of outstanding options with a weighted average exercise
price of $6.60;
|
|
·
|
3,871,591 shares issuable upon exercise of outstanding warrants with a weighted average
exercise price of $0.37.
|
BUSINESS
Overview
Zonzia Media, Inc. is a multi-platform entertainment
company focused on delivering compelling, innovative content with the objective of generating both advertising revenue and subscription
revenue. We plan to distribute content through three distinct platforms:
|
1)
|
Cable
television platform;
|
|
2)
|
Hotel
in-room channel platform; and
|
|
3)
|
our
website Zonzia.com platform
|
Through an “Over-The-Top” (“OTT”)
software technology we plan to allow instant access to our available content from internet connected devices including home computers,
tablets, smart phones and other mobile devices. Upon the full launch of all three of our delivery platforms, which is contingent
upon the receipt of adequate funding, we plan to deliver a variety of content including:
|
·
|
Original Programming
– featuring TV series, mini-series, and documentaries.
|
|
·
|
Feature Films
– full-length feature films from major Hollywood studios and independent production companies.
|
|
·
|
Television Shows
– TV series from major networks and independent production companies.
|
|
·
|
Concerts, Sports and Live Events
– streaming live music concerts, live sports events and other live events.
|
When referring to our company and using phrases
such as “we” and “us,” our intent is to refer to Zonzia Media, Inc. (formerly Indigo-Energy, Inc. and HDIMAX
Media, Inc.).
We were originally incorporated in
1981 in the State of Nevada. Our principal executive offices are located at 2580 Anthem Village Drive, Suite B-7, Henderson, Nevada
89052, and our telephone number at that location is (702) 707-3974. Our website address is www.zonzia.com. The information
on our website is not part of this prospectus.
Zonzia Media
We are a new multi-platform entertainment distribution
business with the goal of using the following three distribution platforms described below to generate advertising revenue. Initially,
we are distributing content that we license from our supplier simplyME Distribution across two platforms: the cable television
platform and the hotel network platforms. The Company’s objective is to provide its own original content for distribution
as it develops and acquires the content over time, eventually across all three platforms.
Platform #1-Cable Television
|
·
|
This platform has launched. A Zonzia VOD
channel is currently live in approximately 27 million households in the United States through a Channel Distribution Agreement
with simplyME Distribution LLC.
|
|
·
|
Our supplier simplyME has agreements with
national cable providers Comcast, Dish Network and Verizon FiOS to distribute VOD content. Initially, we are licensing
this content from simplyME.
|
|
·
|
The
business model is to generate advertising dollars from users viewing distributed content
through simplyME’s cable providers. As of December 31, 2015, we had not yet generated
advertising revenue, but expect to report advertising revenue for the second quarter
of 2016.
|
|
·
|
The growth strategy is to enhance the
quality of the VOD channel content and to increase the total amount of VOD content thereby generating increased advertising revenue.
|
|
·
|
The Company plans to use internet marketing,
social media, and other advertising to drive traffic to this channel.
|
|
·
|
Pursuant to an addendum
to our Channel Distribution Agreement with simplyME, we have secured an additional channel, to be named “ZonziaKidz,”
with its launch expected by mid 2016.
|
We are teaming up with simplyME Distribution
to provide programming, which is supported by national branded advertisers, to cable households through cable television providers
Comcast, Dish Network and Verizon FiOS. The contractual relationship with these providers lies with simplyME. We currently have
30 hours of programming and are in the process of ramping up our programming efforts which we anticipate will expand to approximately
90 hours of content sometime in the second or third quarter of 2016.
simplyME, our distribution and content supplier,
has secured advertisers in support of the initial programming, and we are working together with simplyME to secure additional advertisers
in the coming months. With the current advertisers on the Zonzia VOD channel provided through simplyME and its advertising firm,
Zonzia believes it will report revenue in the first quarter of 2016.
Description of Channel Distribution Agreement with simplyME
On February 9, 2015, Zonzia Media, Inc. (the
“Company”) entered into a Channel Distribution Agreement with simplyME Distribution (“simplyME”), whereby
simplyME agreed to transmit or otherwise distribute the Company’s content to end users across cable, satellite, IPTV, Internet,
mobile and television platforms. Under this agreement, simplyME agreed to use its contracts with providers to place the Company’s
content across on-demand platforms which include: Verizon FiOS, Verizon Wireless, DISH Network, DISH Hopper, Comcast, XBOX and
a sub-channel to be named by the Company. In exchange for these distribution services, the Company agreed to pay simplyME a distribution
fee due 30 days before launch, with an ongoing monthly fee. The parties agreed to split evenly advertising revenue under the agreement.
The agreement has an initial term of two years and may be renewed thereafter. A copy of this Channel Distribution Agreement is
filed as an exhibit to the registration statement of which this prospectus is a part.
Addendum Regarding Content License
On July 31, 2015, the Company and simplyME
entered into an addendum to the Channel Distribution Agreement, whereby simplyME extended media license rights to the Company with
respect to specific content, as partial consideration for the revenue-sharing arrangement that is in place between the Companies
under the Channel Distribution Agreement. The term for this addendum is up to two years. simplyME represents and warrants in the
addendum that it has the right to license or sublicense, as applicable, the content being licensed to the Company pursuant to the
Addendum.
The following table summarizes programming
licensed to the Company under the Addendum, which is the content initially being broadcast under the Channel Distribution Agreement
and related Addendum:
Series Title
|
|
Show Length
|
|
Genre
|
|
Episodes
|
|
Target Audience Age
|
|
|
|
|
|
|
|
|
|
Roll In The City
|
|
0:30:00
|
|
Celebrity Lifestyle
|
|
10
|
|
25-45
|
|
|
|
|
|
|
|
|
|
What’s The 411
|
|
0:30:00
|
|
Celebrity News
|
|
10
|
|
35-55
|
|
|
|
|
|
|
|
|
|
Urban Rajah
|
|
0:05:00
|
|
Food
|
|
25
|
|
20-45
|
|
|
|
|
|
|
|
|
|
Hot Kitchen
|
|
1:00:00
|
|
Cooking
|
|
30
|
|
16-55
|
ZonziaKidz
On June 30, 2015, we entered into an addendum
to our Channel Distribution Agreement with simplyME Distribution to secure an additional cable channel through simplyME, which
we plan to dedicate to children’s programming. To secure this channel, we agreed to commence making monthly payments on
November 1, 2015, with the launch of ZonziaKidz expected to occur in 2016. A copy of this Addendum to the Channel Distribution
Agreement is filed as an exhibit to the registration statement of which this prospectus is a part.
Description of the Revenue Model for Cable Television
Advertisers are provided access to our VOD
channel content offerings via our agreement with simplyME Distribution. Advertisers secured by simplyME pay us on the number of
times one of our shows is viewed. The benchmark metric for this calculation is known as CPM (cost per thousand views). Our CPM
is tracked and reported by the cable provider such as Comcast and Verizon, which we have the right to audit. Once the CPM is calculated,
simplyME invoices the advertisers, provides Zonzia with the breakout and audit trail, and wires funds into Zonzia’s bank
account. The usual and customary receivable timetable is net 60 days from national advertising agencies, and net 30 days when dealing
directly with the advertising companies.
Platform #2- Hotel Network
|
·
|
The Company has an agreement with Sonifi
Solutions, Inc. to provide Zonzia content to hotel rooms across the U.S. A copy of this Agreement is listed as an exhibit
to the registration statement of which this prospectus is a part.
|
|
·
|
The initial roll-out to approximately
546,000 hotel rooms was launched on August 1, 2015 with licensed content on a Free-To-Guest 4-hour loop linear channel. The initial
roll-out to approximately 405,733 hotel rooms was launched in August 2015 with licensed content on a Free-To-Guest 24/7 linear
channel. Our Free-To-Guest VOD channel also went live in August 2105, with distribution scheduled in approximately 882,000 hotel
rooms.
|
|
·
|
The revenue model contemplates Zonzia
paying an advertising agency commission and subsequently sharing the remaining revenue with content providers.
|
|
·
|
The growth strategy is
to increase the number of hotel rooms displaying our content and to provide compelling content through both our content partners
and our own original content.
|
Description of the agreement with Sonifi
Solutions, Inc. for Hotel Channel Distribution
On July 9, 2015, we entered into a Submission/Insertion
Order Agreement with Sonifi Solutions, Inc. Pursuant to the agreement, commencing July 15, 2015, Sonifi agrees to make audio-video
content, provided by the Company, available in hotel rooms on both a looping, free-to-guest linear channel and on a free-to-guest
Video-on-Demand (“VOD”) basis. Submissions for distribution on either the linear basis or VOD basis will be scheduled
monthly. The agreement provides that initially, submissions offered on a linear basis will be distributed to a minimum of 450,000
hotel guest rooms that are served by Sonifi and through Sonifi’s mobile applications. Sonifi has agreed to use commercially
reasonable efforts to distribute VOD submissions to approximately 900,000 guest rooms at Sonifi-served hotels under the Agreement.
The Submission/Insertion Order agreement with Sonifi was put in place between the parties to solidify the relationship and set
the main business terms in advance of the actual launch.
Payments to Sonifi for the linear based and
VOD based submissions are structured as follows: for the first twelve months of the term, the Company shall pay Sonifi the greater
of $55,000 or fifty percent (50%) of the Company’s gross advertising sales (net of any ad agency commission) per month, subject
to a $140,000 monthly cap. For the second twelve months, the Company shall pay Sonifi the greater of $70,000 or fifty percent (50%)
of the Company’s gross advertising sales (net of any ad agency commission) per month, subject to the same monthly cap. Thereafter
for the remainder of the initial term, the Company would pay $110,000 per month. The agreement has an initial term ending in June
2018, subject to earlier termination rights in accordance with the agreement.
Launch of Hotel Network Distribution
On August 1, 2015, distribution under the Sonifi
Solutions Hotel Network platform was launched, with initial linear based distribution to approximately 546,000 scheduled hotel
guest rooms under the channel name “ZONZIA PREMIERE.” This initial distribution was significantly broader than the
450,000 hotel rooms contemplated by the agreement. Sonifi has confirmed that this Zonzia channel is available in the majority of
hotels served by Sonifi Solutions.
In August 2015, the Video-On-Demand (VOD)
distribution was launched under the agreement with Sonifi, with distribution scheduled in approximately 882,000 hotel rooms. With
respect to both the Linear and VOD distributions, launch numbers are based on rooms that were scheduled to receive the ZONZIA
PREMIERE content as of the launch; definitive counts of rooms in which the content was actually available and played/viewed will
be available on a historical basis. The Company has been advised by Sonifi that definitive room counts may deviate from scheduled
room number counts by up to approximately 10%.
Description of License Agreement
with Sonifi Solutions, Inc.
In connection with the launch of the Zonzia
Premiere channel on the Hotel Network, on August 1, 2015, the Company entered into a License Agreement with Sonifi Solutions, Inc.,
whereby the Company granted Sonifi a non-exclusive, non-assignable, royalty free right and license to receive, transmit and distribute
through third parties, general entertainment programming provided by the Company. This allows Sonifi to distribute the content
through its in-guest room satellite-delivered television programming and/or interactive hotel entertainment platform. The territory
covered by the license includes the United States and the Caribbean. During the term, Sonifi shall earn a monthly distribution
fee of $0.22 for each guest room that subscribes to the distributed programming as of the end of the month. The agreement has a
term of two years, unless terminated earlier in accordance with the agreement.
Description of Content Offerings per the
Agreement with Sonifi Solutions Inc.
The following table summarizes the programming
that is initially available through the Sonifi Solutions, Inc. agreement at the time of its launch on August 1, 2015. Similar to
the content being distributed through the Cable television distribution platform, all initial content that is being distributed
through the Hotel Network distribution platform is content that is being licensed from simplyME pursuant to the Addendum to Distribution
Channel Agreement described above. The Company has the right to broadcast content supplied by simplyME for a period of two years,
during which time the Company plans to acquire its own content.
SERIES TITLE
|
|
GENRE
|
|
EPISODES
|
|
AUDIENCE
|
|
|
|
|
|
|
|
Profiles
|
|
Celebrity
|
|
300
|
|
25-55
|
|
|
|
|
|
|
|
Runway France
|
|
Fashion
|
|
10
|
|
20-45
|
|
|
|
|
|
|
|
Nightclub Ratings
|
|
Nightlife
|
|
10
|
|
18-34
|
|
|
|
|
|
|
|
The Art of Fighting
|
|
Martial Arts
|
|
9
|
|
18-45
|
|
|
|
|
|
|
|
Music Confidential
|
|
Music
|
|
13
|
|
18-34
|
|
|
|
|
|
|
|
Game News Update
|
|
Video Games
|
|
13
|
|
16-34
|
|
|
|
|
|
|
|
John Legend Documentary
|
|
Documentary
|
|
1
|
|
16-35
|
|
|
|
|
|
|
|
Pharrell Williams Documentary
|
|
Documentary
|
|
1
|
|
16-35
|
Description of the Revenue Model for the Hotel Channel
The Hotel Channel platform model is very similar
to the Cable Channel platform model in that we will secure advertisers for our Linear and VOD channel offerings. Advertisers will
be solicited and contracted by simplyME distribution and its outside ad agency. We anticipate that advertisers will pay us on the
number of times one of our shows is viewed. The benchmark metric for this calculation is known as CPM (cost per thousand views).
Our Hotel Channel CPMs will be tracked and reported by Sonifi. Based on the tracking report simplyME and the advertising agency
will invoice the advertisers and will subsequently collect payments. Once they receive payments from the advertisers, simplyME
and the advertising agency will wire the funds to Zonzia’s bank account. The usual and customary receivable timetable is
net 60 days from national advertising agencies, and net 30 days when dealing directly with the advertising companies.
Platform #3- Website: Zonzia.com
|
·
|
The website, while up and operating, functions
for now as an informational site for visitors to learn more about the Company and our future offerings.
|
|
·
|
Today, a visit to the website shows teasers
of content offerings to come, such as photos from the Tribeca Film Festival.
|
|
·
|
The Company is in negotiations for original
program offerings with various companies and is working on preparing to launch a fully operational, ad revenue and subscription
revenue generating model.
|
|
·
|
The growth of the business
model will be advertising revenue based upon the number of site visits and subscriber revenue based on the number of subscribers
signing up to the site, both of which are predicated upon the quality of the content.
|
Description of the Revenue Model for the Zonzia Website
Advertisers will be provided access to our
internet website to compliment the content offerings. Our intent is that advertisers for our website will be solicited and contracted
by an outside advertising agency. Advertisers would then pay us on the number of times our web pages are viewed. The benchmark
metric for this calculation is known as CPM (cost per thousand views). The CPM for our website will be calculated and reported
by a third party vendor, Kaltura, Inc., who is also our website and infrastructure provider. Once the tracking report has been
issued and the CPMs calculated, an ad agency (to be selected) will invoice the advertisers, collect the payments and wire the
funds into Zonzia’s bank account. The usual and customary receivable timetable is net 60 days from national advertising
agencies, and net 30 days when dealing directly with the advertising companies.
Additionally, over time we plan to give our
viewers access to social media pages, behind the scenes access, games, and more. We also anticipate providing our viewers with
the opportunity to receive instant coupons from our participating advertisers.
Offerings Under Development
Our strategy involves our continued effort
to develop the following core offerings. Please see “Management’s Discussion & Analysis – Plan of Operations”
for more information.
Zonzia (Over-The-Top) Channel
We plan to make our content readily available
on computers, tablets, mobile devices and other internet connected devices. Our content will be posted on www.zonzia.com. Over-The-Top
(OTT) refers to any content not delivered as specifically programmed linear channels from the pay TV operator, which may encompass
even on-demand content provided as TV Everywhere by the pay TV operator. Further, OTT has the component of running on the "open
internet" or an unmanaged network.
We anticipate that our Video on Demand (VOD)
and Subscription Video on Demand (SVOD) offerings will include full length feature films, TV series, documentaries, live events
and general programming. We are cross-soliciting film, TV and live event promoters, offering them a number of favorable deal options
which will allow them to have direct access to our targeted demographics including charging them up-front production fees and entering
into revenue sharing deals. By matching video and live event producers and promoters with our advertising customers, advertisers
will have the ability to produce and embed user-targeted commercials in our VOD and SVOD offerings. Our intention is that by providing
entertaining content to an expanding end user base, our brand awareness will increase, enabling us to develop strong relationships
and retention rates with our advertisers, ecommerce and other brand partners.
In addition to being able to deliver innovative
and entertaining content across all of our delivery platforms, our overall success is heavily dependent on our ability to develop
nationwide brand recognition which is intended to result in a significant viewer and ultimately consumer base. Our brand recognition
and viewer base is expected to drive rapid expansion of individual consumer impressions that are essential in the development
and effectiveness of our advertising program offerings. Since we generate advertising revenue from the number of user impressions
we achieve, our content and other product offerings must be attractive to our individual users.
Viewer Subscriptions
As we launch our delivery platforms, particularly
our website and mobile applications, our content and accompanying interactive services may be initially available for free for
limited periods in order to aggressively increase our brand awareness and consumer base.
As our brand awareness and consumer base gains
momentum, we will launch a targeted subscription campaign drive which we anticipate will begin in the second and third quarters
of 2016. Subsequent to the initial launch and trial period, we expect to begin charging subscribers a monthly fee of $4.99 per
month. Our content offerings may include concerts and sporting events.
Advertising
To date, our advertising relationships have
evolved through our agreement with simplyME Distribution LLC. That agreement contemplates that advertisers may advertise through
video, sponsorship and/or banner advertising slots. Under our agreement with simplyME, we will evenly split all net advertising
revenue generated pursuant to that agreement with simplyME. The core revenue model for monetizing the three platforms, is advertising
driven. Advertisers pay on a Cost Per Thousand Impression (CPM) basis. For example, if our CPM rate was at $30 and our platforms
are visited (tuned on or turned on) for a viewership of 10 million views, that would equate to $300,000 in revenue. If a consumer,
or hotel patron is tuned to our channel and particular advertising is shown while the event or programming is being viewed, then
the views are recorded, verified, and the advertiser is invoiced at the CPM rate.
We intend to use advertising as a means of
generating revenue by engaging users on all of our Platforms, including our website, www.zonzia.com, mobile applications, and VOD
and other channel offerings.
Our advertising program, which will provide
our customers many different options, is designed to maximize relevance to search queries and web content. Our advertising options,
which will be specifically co-designed by our sales and marketing team, will allow our customers to create targeted ads to appear
beside related search results or web content on our websites and include:
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Display Advertising –
This
includes banner ads and consists of text and graphics based ads that appear next to content relevant to the various product offerings.
We will offer these banner ads in several sizes, allowing for each to contain logos, pictures, other graphics and video.
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Display Advertorials –
Display
advertorials are advertisements in the form of editorial content and designed to provide consumers additional insights to our customers’
products or services. Advertorials are generally limited to 500 words and may be created by our content development team or may
be provided directly by the customer or the customer’s representative. Advertorials are believed to be the most cost-effective
digital advertising, based on their high search engine optimization.
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Native Advertising –
Native
advertising programs are designed to specifically match content and advertising directed at smaller, targeted groups of users based
on specific interests.
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Video Advertising
–
Similar to television commercials widely seen on network TV, video advertisements will run throughout some of our streaming
video offerings.
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Sales and Support
Our sales support, billing systems, customer
tracking and revenue collection efforts are provided by a third party vendor, Kaltura, Inc., who is also our website and infrastructure
provider.
Pursuant to a Master License and Professional
Services Agreement between the Company and Kaltura, Inc., Kaltura, Inc. develops and maintains software systems and platforms
for the Company, which are used for content distribution, sales support, billing and revenue collection. The agreement contemplates
a total of $775,000 in payments being made over a one-year period. Under the agreement, the Company has a royalty-free, non-transferable
right to use the software developed by Kaltura, Inc., and Kaltura, Inc. retains rights with regard to techniques, know-how, and
source code developed in the course of the engagement. Kaltura, Inc. provides a limited warranty with regard to its work during
the term of the engagement. A copy of this Master License and Professional Services Agreement is filed as an exhibit to the registration
statement of which this prospectus is a part.
We are targeting developing and growing our
sales and support infrastructure in-house as cash flow and talent become available. When we are in a position to perform these
functions internally, we expect to initially operate from leased offices in Los Angeles and New York City.
Marketing
In line with our overall business plan, we
are focusing on the continued growth and recognition of our brands through providing meaningful content and high-quality products
and consumer experience. Our marketing, promotional and public relations activities will be designed to promote our brand image
and differentiate it from competitors. In doing so, we believe our viewer base, and ultimately our consumer base, will grow rapidly
and provide our customers with increasing impressions, allowing for maximization of advertising efforts.
Investor Relations
We engaged Benchmark Advisory Partners
LLC of Del Mar, California as our investor relations firm pursuant to a Consulting Agreement dated April 27, 2015. The term
of the Consulting Agreement was six months, and we paid this consultant a one-time fee of 500,000 shares of restricted stock upon
signing the agreement. A copy of this Consulting Agreement is filed as an exhibit to the registration statement of which this
prospectus is a part. Subsequently, the engagement was terminated by the Company August 1, 2015.
Information Technology and Intellectual
Property
We have engaged Kaltura, Inc. to build the
infrastructure to support our content delivery platforms, pursuant to the Master License and Professional Services Agreement described
above. We have, and expect to continue to invest heavily in this infrastructure on an on-going basis.
Intellectual property rights involving our
technology platforms are important to the future success of our Company. As a result, we consider the acquisition and maintenance
of certain protectable and enforceable rights in patent, trademark, copyright, trade dress, trade secret and know how in those
technology platforms to be important to the future growth of our Company, and in that regard we intend to continue to maintain
and to formalize on a going forward basis, rights in our service marks, our trademarks, our copyrighted materials and content,
our website and mobile applications, our domain names and our patentable business methods, as needed. With respect to our trade
secrets and know how in our technology platforms, we have and will continue to maintain a regimen of entering into protective confidentiality
and intellectual property license agreements with our employees, our customers, our partners and other third parties to protect
our confidential technology and business information.
As of the date of this report the Company has
filed Trademark Applications with the United States Patent and Trademark Office (USPTO) for:
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ZONZIAKIDZ
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Serial Number 86656259
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ZONZIA
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Serial Number 86656246
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Zonzia
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Serial Number 86656250
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ON (stylized)
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Serial Number 86656262
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On (stylized)
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Serial Number 86656267
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Content Strategy
We have expended significant financial and
other Company resources in developing our content strategy and expect to continue to do so on an on-going basis. Our overall strategy
is to provide, together with our business partners, a generous mix of established video libraries consisting of well-known movies,
television shows, historical sporting events, documentaries and docu-movies; as well as original productions and co-productions
which will be contingent upon acquiring adequate funding.
The competition for well-known and highly-rated
programming across all genres is intense, and most of our competitors consist of large companies with well established brands and
significantly greater resources.
Our point of differentiation from our competitors,
which we hope to establish as we develop and acquire content, is that we plan to make available a channel within a channel concept.
The consumer would pay the basic subscription price to access our general content and then will be able to add niche premium content
via sub-channels at an additional price. For example:
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A specific sporting broadcast
and news channel
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A specific entertainment venue
or concert series channel
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A specific children program channel
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While the Company is still a development company
and has not yet acquired all of the content offerings described above, the Company believes its concept for a branded layered channel
is compelling. Ultimately, the vision is that a user could go to the Zonzia Channel and access kids, sports, or entertainment sub-channels,
all within the Zonzia network.
Our business model and content strategy is
also based around the need to sell advertising.
Video
We believe the growing demand for streaming
entertainment, increasingly available on mobile devices and tablets, is evident from the increasing development activity from major
cable networks, film and production studios, and sports leagues to name a few. Companies like Netflix, one of the first and most
well-known brands streaming digital content, have experienced extreme success in rapidly building their brands and market share
while monetizing that success by requiring users to pay fees. We believe that our business model and content strategy allows us
to provide users a unique and entertaining streaming digital experience for certain of our products.
We anticipate that our streaming platforms
will allow aspiring film and television directors and producers to showcase their accomplishments in addition to showings of other
first run movies and live streaming concerts and sporting events. We anticipate that our movies, short films and television shows
will include various genres, such as documentaries, docu-series, biopics and children’s programming. Our strategy and safety
policies strictly prohibit the streaming of adult entertainment and any form of pornography.
We also are seeking commercial arrangements
with concert and sporting event promoters in which we would charge them a production fee to reach the targeted demographics that
our website, mobile applications, and other distribution channels provide. Additionally, our officers have relationships with a
significant number of freelance video contributors.
Competition
The digital broadcasting industry is intensely
competitive and many of our competitors are well established internet companies, ecommerce and search engine companies, television
networks and conglomerates. Many of these competitors have significantly greater financial resources and may prove to be more attractive
to our content providers and developers.
Our business is characterized by rapid change
and converging, as well as new and disruptive, technologies. We face formidable competition in every aspect of our business, particularly
from companies that seek to connect people with information on the web and provide them with relevant advertising. Our advertising
business faces competition from:
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Various types of search engines, ecommerce
websites, news-based content providers and other media and entertainment based sites. Many of these sites have more established
brands and possess significant financial resources causing significant barriers to entry.
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Other forms of advertising, such as television,
radio, newspapers, magazines, billboards and yellow pages, for ad dollars. Our advertisers typically advertise in multiple media,
both online and offline.
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Providers of online products
and services. Our online products and services compete directly with new and established companies, which offer communication,
information and entertainment services integrated into their products or media properties.
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Currently we have programming as described
in the Business section available through our Zonzia Cable television platform and our Hotel Network distribution platforms. Our
point of differentiation from our competitors, which we hope to establish as we develop and acquire content, is that we plan to
make available a channel within a channel concept. The consumer would pay the basic subscription price to access our general content
and then will be able to add niche premium content via sub-channels at an additional price, as described above in more detail under
“Business -- Content Strategy.”
Employees
We presently have three full-time corporate
officers including: Myles A. Pressey III -- Chairman of the Board and Interim Chief Financial Officer, Johnathan F. Adair -- Chief
Executive Officer, and Stanley L. Teeple -- Chief Compliance Officer/ Secretary.
Our operations are overseen directly by our
corporate officers. Our officers oversee all responsibilities in the areas of corporate administration, business development and
research. The Company contemplates engaging a full-time Chief Content Officer as business and cash flow allow for the expansion.
We intend to expand our current sales and marketing
teams; administrative teams; and content and business development teams. Competition for qualified personnel in our industry is
intense.
Seasonality
We do not expect seasonality to have a material
impact on our business.
Research and Development
We do not expect to incur material research
and development costs for the next 12 months.
Government Regulation
We are subject to numerous domestic and foreign
laws and regulations covering a wide variety of subject matter. New laws and regulations (or new interpretations of existing laws
and regulations) also may impact our business. The costs of compliance with these laws and regulations are high and are likely
to increase in the future. Any failure on our part to comply with these laws may subject us to liabilities and other penalties.
Corporate History
Zonzia Media, Inc. was originally incorporated
in 1981 in the State of Nevada. In December 2005, following a recapitalization that resulted in a change of control, Indigo was
an independent energy company that engaged primarily in the exploration of natural gas and oil in the Appalachian Basin in Pennsylvania,
West Virginia, Illinois, and Kentucky through December 2010. These activities were carried out on leased properties,
some of which were proven, primarily through the entry into joint venture and other operating agreements.
In December 2010, the Company’s management
was notified by a representative of the New Jersey Attorney General’s Office (“NJAG”) that they were pursuing
a civil action against Everett Charles Ford Miller (“Everett Miller”) and related entities alleging violations of securities
laws amongst others. At the time of the civil action, Everett Miller was a Board Member of the Company, a significant shareholder,
and a significant note holder. On December 17, 2010, the Company was named as a nominal defendant in the civil complaint as a result
of Carr Miller Capital’s significant investment in the Company. At the time, and through the date of this filing,
there have been no allegations of wrongdoing on the Company’s part but the complaint does state that the Company was unjustly
enriched by the actions of Carr Miller Capital. The Company had no knowledge of any wrongdoing alleged to have been
committed by Everett Miller and a release from the NJAG was ultimately obtained on July 29, 2013.
On July 29, 2013, a group of large equity and
debt holders formed a new entity, New Hope Partners, LLC, and entered into a settlement agreement with the receiver to effectively
purchase a majority interest in the Company. The closing of the transaction between the receiver and New Hope Partners resulted
in a change of control of the Company (for more detail, including the settlement agreement, see Current Report on Form 8-K filed
August 5, 2013).
Subsequent to New Hope Partners obtaining a
controlling interest in the second half of 2013, the Company’s primary focus was on organizational efforts, settling previously
outstanding obligations on the best terms possible, and re-establishing its regulatory compliance. On May 12, 2014 the Company
filed its annual report on Form 10-K for the fiscal year ended December 31, 2013 and believes it has subsequently been current
with its periodic filing requirements under the Exchange Act of 1934. Additionally and as further discussed below, the Company
settled over $12 million of previously accrued liabilities primarily through the issuance of shares of restricted common stock
during the first half of 2014.
Since entering into a plan of merger on May
25, 2014, as amended on September 2, 2014 and November 20, 2014, the Company has been engaged in the digital publishing and broadcasting
business. In this regard, the Company completed a merger with HDIMAX, Inc., a private operating company, on November 21, 2014 and
changed its name to HDIMAX Media, Inc.
On January 22, 2015, the Company entered into
a Settlement Agreement with the former owner of HDIMAX, Inc. effectively and substantively cancelling the merger. For additional
details, including a copy of the Settlement Agreement, please see our Current Report on Form 8-K filed on January 29, 2015.
On March 9, 2015 the Company changed its name
to Zonzia Media, Inc. and its ticker symbol changed to “ZONX”. The Company is aggressively developing its digital content
and multi-platform entertainment distribution channels.
Where You Can Find More Information
We file annual, quarterly and other requisite
filings with the U.S. Securities and Exchange Commission (the “SEC”). Members of the public may read and copy materials
that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Members
of the public may obtain additional information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The SEC also maintains an internet site that contains reports, proxy and information statements and other information regarding
issuers that file electronically with the SEC. That site is located at http://www.sec.gov.
You also may request a copy of our filings,
at no cost, by writing or telephoning us at:
Zonzia Media, Inc.
2580 Anthem Village Drive, Suite B-7
Henderson, Nevada 89074
Telephone: (702) 707-3974
Attention: Investor Relations
Consequence of Delays
The timing and successful execution of our
overall business strategy is dependent upon our current ability to raise additional capital at terms favorable to us. If outside
funds are not obtained through the sale of securities or other financing arrangements, the Company’s revenues will be limited.
DESCRIPTION OF PROPERIES
As of December 31, 2015, the Company did not
have any owned or leased property.
LEGAL PROCEEDINGS
Congoo, LLC v. HDIMAX Max Media, Inc. Civ.
Action No. 3:15-cv-01423
The Plaintiff’s in the case provide online
advertising opportunities for a fee. The Plaintiff alleged the Company owes them in excess of $422,000 based on an agreement, dated
prior to our merger, with an entity controlled by our former Chairman and Chief Executive Officer. The plaintiff alleges that the
entity with the prior agreement merged into our Company and changed the name. We are contesting the claim and have filed an initial
response on March 23, 2015.
On April 24, 2015 the Plaintiff’s attorney
notified the district court judge requesting our adjournment from participation in the complaint and that we may be entitled to
a dismissal.
From time to time, we are involved in lawsuits,
claims, investigations and proceedings that arise in the ordinary course of business. There are no matters pending that we expect
to have a material adverse impact on our business, results of operations, financial condition or cash flows.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion of our financial
condition and results of operations should be read in conjunction with (i) our audited financial statements for the period from
May 24, 2014 (inception) through December 31, 2014 and (ii) the unaudited financial statements for the period ended December
31, 2015 that appear elsewhere in this registration statement.
This registration statement contains certain
forward-looking statements and our future operating results could differ materially from those discussed herein. Certain statements
contained in this discussion, including, without limitation, statements containing the words “believes”, “anticipates,”
“expects” and the like, constitute “forward-looking statements” within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). However,
as we will issue “penny stock,” as such term is defined in Rule 3a51-1 promulgated under the Exchange Act, we are ineligible
to rely on these safe harbor provisions. Such forward-looking statements involve known and unknown risks, uncertainties and other
factors which may cause our actual results, performance or achievements to be materially different from any future results, performance
or achievements expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to
place undue reliance on such forward-looking statements. We disclaim any obligation to update any such factors or to announce publicly
the results of any revisions of the forward-looking statements contained herein to reflect future events or developments. For
information regarding risk factors that could have a material adverse effect on our business, refer to the Risk Factors section
of this prospectus beginning on page 6.
Forward-Looking Statements
The information set forth in Management’s
Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) contains certain “forward-looking
statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange
Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, including, among others (i) expected changes
in the Company’s revenues and profitability, (ii) prospective business opportunities and (iii) the Company’s strategy
for financing its business. Forward-looking statements are statements other than historical information or statements of current
condition. Some forward-looking statements may be identified by use of terms such as “believes,” “anticipates,”
“intends” or “expects.” These forward-looking statements relate to the plans, objectives and expectations
of the Company for future operations. Although the Company believes that its expectations with respect to the forward-looking statements
are based upon reasonable assumptions within the bounds of its knowledge of its business and operations, in light of the risks
and uncertainties inherent in all future projections, the inclusion of forward-looking statements in this Annual Report should
not be regarded as a representation by the Company or any other person that the objectives or plans of the Company will be achieved.
You should read the following discussion
and analysis in conjunction with the Financial Statements and Notes attached hereto, and the other financial data appearing elsewhere
in this Annual Report.
The Company’s results of operations
could differ materially from those projected in the forward-looking statements as a result of numerous factors, including, but
not limited to, the following: the risks set forth under Item 1A of the Annual Report, the risk of significant natural disaster,
the inability of the Company to insure against certain risks, such as changing government regulations affecting our products and
businesses.
Overview
On November 21, 2014, we completed
the reverse acquisition of HDIMAX, Inc. As a result of the acquisition of HDIMAX, Inc., we became a digital publishing and broadcast
company focused on delivering engaging and entertaining video content. On January 22, 2015 we entered into a Settlement Agreement
and effectively disposed of the assets and associated licensing agreements we entered into with HDIMAX, Inc. and other brands
controlled by the former owner HDIMAX, Inc. with the exception of the website www.hdimax.com. While we do not intend to further
develop the website www.hdimax.com, our operations continue to consist of digital content development and distribution under our
new name, Zonzia Media, Inc. which became effective March 9, 2015.
We completed the reverse acquisition
of HDIMAX, Inc., a private operating company with an inception date in May 2014 during the year ended December 31, 2014. As a result,
and in accordance with accounting principles generally accepted in the United States (“US GAAP”) and the rules and
regulations as promulgated by the Securities and Exchange Commission (“SEC”), our financial statements are consolidated
as of December 31, 2014 and reflective of the continuation of HDIMAX, Inc. (accounting acquirer and legal acquiree). Since the
inception date of HDIMAX, Inc. is contained in the year ended December 31, 2014, the comparative financial information presented
in the Form 10-K is for the periods ended December 31, 2015 and from May 24, 2014, the date of inception to December 31, 2014.
Business
We strive to create meaningful and compelling
content for users through strategy and innovation in the digital space. We believe that, by providing elegantly innovative, entertaining,
and in some cases exclusive content and relevant product offerings, we will provide a unique internet based experience attractive
to clients and consumers worldwide.
By developing brand awareness and correspondingly
expanding our consumer base, we sell advertising space and provide third parties with an online marketplace to sell their products
for which we collect a percentage of the selling price. We currently use third parties to manage all facets of our advertising
programs, including customer generation, advertising operations and customer billing and collections functions.
We provide our clients and customers
advertising and ecommerce opportunities through engaging consumers on our delivery platforms including our website, television
channels, and mobile applications.
Results of Operations
For the year ended December 31,
2015 and for the period from May 24, 2014 (inception) through December 31, 2014:
The financial statements and dollar amounts
included herein are stated in United States dollars and are prepared in accordance with United States generally accepted accounting
principles.
Since HDIMAX, Inc. was considered the
accounting acquirer and surviving entity upon completion of the merger transaction on November 21, 2014 and subsequently cancelled
in January 2015, the following management’s discussion and analysis provides information and analysis associated with our
advertising and content development operations. Additionally, since the year ended December 31, 2014 only includes operations
since the inception date, May 24, 2014, a period of less than eight months, operational results for the year ended December 31,
2015 are difficult to compare. In addition, the results of operations are not expected to be indicative of our future operations
due to the Settlement Agreement with an effective date of January 22, 2015.
Revenue
During the period ended December 31, 2014
we generated net revenue of $439. The amount recognized was based on a lower than market net cost per impression as dictated by
our third party service provider arrangement. For the year ended December 31, 2015, the Company generated $0 of revenue.
Sales and Marketing
We incurred total sales and
marketing expenses of $610,676 and $1,006,012 during the period ended December 31, 2015 and from May 24, 2014 to December 31,
2014, respectively. The majority of these expenses consisted of payments to third party content developers, lead
and internet impression generators, and other brand marketing expenses primarily paid on behalf on our former website brand
partners.
Officer Compensation
Officer compensation for period ended
December 31, 2015 of $79,687,046 was the result of the issuance of the Company’s common stock. For the period from May 24,
2014 to December 31, 2014 the Company spent $23,295,167, which was primarily the result of accruing compensation due under employment
agreements that became effective upon the completion of the reverse acquisition of HDIMAX, Inc. Of the amount incurred for
the period, $22,800,000 relates to the obligation to issue 60,000,000 shares of common stock to former officers and directors.
Upon entry into the settlement agreement with HDIMAX, Inc. and related entities on January 22, 2015, the compensation obligations
were forgiven and no shares of common stock will be issued under the former agreements. In addition, approximately $130,000 of
incurred and accrued cash based compensation recognized during the period from May 24, 2014 to December 31, 2014 has been
forgiven.
Professional Fees
The Company incurred $1,951,773 and
$729,411 of professional fees during the period ended December 31, 2015 and from the period May 24, 2014 to December 31, 2014,
respectively. For December 31, 2015 the majority of the fees were incurred for audit and accounting fees of $186,154, consulting
fees of $1,664,969, legal of $48,430 and loan expense of $34,000. The majority of these fees expended for the period from May
24, 2014 to December 31, 2014 were incurred for the preparation and completion of our reverse acquisition of HDIMAX, Inc. During
the on-going ramp up of our principal business operations, through at least the first half of 2016, we expect to continue to incur
significant legal, accounting, and other consulting fees associated with entering into material definitive contracts.
General & Administrative
Our general and administrative
expenses of $534,058 were primarily associated with various office and administrative expenses, as well as ongoing capital
raising efforts. For the period from May 24, 2014 to December 31, 2014 we expended $53,565 which was primarily associated
with our on-going capital raising efforts and administrative costs associated with the completion of the HDIMAX, Inc.
acquisition. Our general and administrative costs are expected to significantly fluctuate until we fully commence our planned
principle business operations expected to occur in the second half of 2016.
Liquidity and Capital Resources
Working Capital
At December 31, 2015, we had a working
capital deficit of approximately $3,600,000 primarily due to professional service providers, officers and directors, and other
related parties. The working capital deficit includes convertible notes that will be settled via the issuance of shares of common
stock if not fully repaid with cash prior to September 2016 and derivative liabilities associated with our previously outstanding
options and warrants being reclassified from equity to liabilities during the period ended December 31, 2015. We do not expect
that we will be required to settle any of our derivative liabilities in cash which at December 31, 2015 approximated $664,000.
Our working capital is not sufficient to meet our operations. Additionally, our ability to execute our content strategy and
meet our day to day liquidity needs through the remainder of the year requires us to raise additional capital.
As part of our Submission/Insertion Order
with Sonifi we are required to make payments, beginning in August 2015, at the greater of $55,000 or fifty percent (50%) of the
of our gross advertising sales (net of any ad agency commission) per month, subject to a $140,000 monthly cap through August of
2016. During the second and third years of the agreements with Sonifi we are obligated to pay the greater of $70,000 or fifty
percent (50%) of the Company’s gross advertising sales (net of any ad agency commission) per month subject to the same monthly
cap, and $110,000 per month, respectively. The agreement has an initial term ending in September 2018, subject to earlier termination
rights in accordance with the agreement. As Part of our License Agreement with Sonifi we are required to make payments, beginning
in August 2015, of twenty-two cents ($0.22) per each guest room in all participating properties subscribing to the service. The
agreement has an initial term ending July 31, 2017, subject to earlier termination rights in accordance with the agreement. Additionally,
we incurred non-refundable cash advance obligations totaling $480,000 during the year ended December 31, 2015 for certain content
currently broadcast across our distribution platforms.
Our plans presented in this Report, particularly
under “Plan of Operations” below, are dependent upon our ability to raise significant capital in the near term. If
we are unsuccessful in generating sufficient cash through operations or raising additional capital through means such as debt issuances,
equity offerings or short-term advances from related parties, we will be required to significantly reduce our operational efforts
and curtail our rapid growth strategy. Further, as of the date of this Report we do not have any firm funding commitment.
Cash Flow
Cash Used in Operating Activities
Our cash used in operations, totaling
approximately $785,000, primarily consisted of payments to service providers to prepare and execute our Settlement Agreement with
our former officers and directors. Our operational cash used significantly declined from the period from May 24, 2014 to December
31, 2014 as a result of significant, non-recurring, stock based compensation of approximately $78,234,785. For the near term,
and under informal agreements, many of our services providers and related parties have agreed to defer payment until we increase
our liquidity, which resulted in off-sets to our net loss and cash used in operations totaling approximately $785,000.
Additionally, we recognized non-cash gains of approximately $918,000 related to the reversal of previously accrued compensation
due to our former officers and an internet marketing service provider that we were released from during the period, partially
off-set by the approximately $108,000 expense for our Settlement Agreement. As noted above, we will require additional capital
in order to monetize our content strategy and overall plan of operations.
Cash Provided by Financing Activities
Cash for the period was provided by
the issuance of 4,073,928 shares of restricted and unregistered shares of common stock totaling $440,850, the issuance of two
promissory notes in the amount of $70,000, and the issuance of convertible promissory notes for gross proceeds of $309,000.
Our ability to continue as a going concern
for at least the next 12 months will depend on our ability to raise the money we require through equity or debt financing. Through
the end of December 2015 we raised an additional $150,000 through the issuance of two additional convertible promissory notes.
There is no assurance that we will be able to obtain further funds required for our continued operations or that additional
financing will be available to us when needed or, if available, that it can be obtained on reasonable terms. If we are not able
to obtain the additional financing on a timely basis, we will not be able to meet our other obligations as they become due, and
we will be forced to scale down or perhaps even cease our operations. As of the date of this Report we do not have any firm funding
commitment.
Plan of Operations
Much of the year
ended December 31, 2015 was spent modifying our business model and dissolving our business relationship with our former
Chairman and Chief Executive Officer which initially culminated in the entry into a Settlement Agreement on January 22,
2015. Subsequent to the Settlement Agreement, we spent significant amounts of time and effort on administrative tasks
such as changing our Company name, assessing our on-going liabilities and operational plans, and maintaining our
regulatory compliance. An integral part of these activities was to attract and retain highly experienced individuals to form
our management team, Board of Directors, and Advisory Board. We believe that we have successfully attracted and retained
these individuals. Once in place, our team began the process of rebranding the Company into Zonzia Media and assessing the
value of various content delivery platforms and developing the corresponding relationships with applicable service
providers.
Capital Raising
Since late in 2014 through the date of this
report, our Officers, Directors and other consultants and Advisory Board Members have devoted significant time and effort to raising
the capital necessary to fully implement our principal business plans including securing content and building the required content
delivery infrastructure. While we have received positive feedback from these efforts, we do not have any firm funding commitments
as of the date of this report sufficient to fully implement our business strategies in the near term.
Distribution
Through our distribution agreement with Sonifi
Solutions our Zonzia Premiere channel is currently being distributed in hotel rooms across the US. In September 2015, as a 4-hour
loop linear channel, Zonzia Premiere programming reported playing in 575,253 hotel rooms across the U.S. Using standard Nielsen
and hotel occupancy metrics, this represents Zonzia content being available to an average monthly Audience Universe of approximately
28.4 Million hotel guests. Also in September 2015, Zonzia Premiere content in Free Video On Demand (VOD) was available in 878,628
hotel rooms across the US. Also in September 2015, as a 24/7 linear channel, Zonzia Premiere programming reported playing
in 405,733 hotel rooms across the U.S.
Through our distribution agreement with simplyME
Distribution, in September 2015 Zonzia content in Free Video On Demand was available in approximately 27 million households across
the US.
Advertising
In September of 2015 Zonzia engaged Trifecta
Media to sell advertising for all of our cable and hotel distributed content. Trifecta Media specializes in advertiser sales across
a diverse spectrum of media platforms including cable and hotels. Trifecta’s advertising is anticipated to begin airing
and contributing revenue in March 2016.
OTT Platform, Content Delivery and Storage
In September of 2015 Zonzia engaged Kaltura,
a leading video technology company, to develop and power all of Zonzia’s OTT Video On Demand services.
Kaltura’s OTT software is one of the
most advanced and comprehensive pay OTT solution on the market today. It includes advanced monetization, social and personalization
features; innovative tools for improving user acquisition and retention; and multi-screen, multi-device support.
With Kaltura’s OTT monetization tools,
Zonzia will be able to simultaneously deploy its unique mixture of advertising supported and subscriber based business models providing
for maximum flexibility. These tools will support server-side and native ad insertion technology for Video On Demand and live content,
in-app purchases, a range of payment options and even discounts for introducing friends. Kaltura’s Digital Rights Management
(DRM) support will provide full content protection, while Kaltura’s monetization tools will be customized to Zonzia’s
unique content distribution model and will be designed to deliver a seamless experience to our consumers across all devices.
By allowing each viewer in the household to
set up an individual profile, Kaltura’s OTT software will deliver each viewer a personalized experience, which will increase
Zonzia’s subscriber engagement. This will give us tremendous insight and understanding of our subscribers’ unique behavior
allowing us to continually strengthen loyalty and maximize revenues.
Kaltura’s OTT software will provide a
consistent cross-device experience which will allow our users to take their favorite Zonzia content wherever they go and intuitively
interact between screens with TV control and synched second-screen metadata. The household “parent” account can decide
which members of the household can access content on specific devices and can set VOD budgets per user.
Kaltura’s OTT software will give us the
ability to boost viewer engagement, attract new subscribers and monetize content across multiple devices.
Content Development
In our hotel rooms and cable households we
are currently distributing content which we licensed from our partner simplyME Distribution. Zonzia’s objective is to provide
licensed content, original content and live content over all of our platforms. Under the direct supervision of our Officers we
have made significant contacts within the industry and have had preliminary meetings with various entertainers, producers, and
other content developers to provide a significant volume of video and other live streaming events pending the financial ability
to acquire and develop our intended content library.
We recently signed an agreement with M Squared
Entertainment to distribute its celebrity based show
Behind The Velvet Rope
across all of Zonzia’s platforms.
Behind
The Velvet Rope
is currently being distributed through Zonzia’s hotel room and cable household distribution network.
Behind The Velvet Rope
, hosted by Arthur Kade, is the all-access entertainment destination which brings consumers up-close
and personal with celebrities through red carpet and in-studio interviews. Each episode features prominent celebrities from the
worlds of film, music, TV, fashion, sports, theater and publishing. Host Arthur Kade has interviewed some of the industry’s
most revered and iconic names such as Meryl Streep, George Clooney and Leonardo DiCaprio.
Zonzia also recently signed an agreement with
Ace Entertainment Inc. to distribute its jazz based series
Studio Jams
across all of Zonzia’s platforms.
Studio
Jams
is an up-close and personal behind-the-scenes insider’s peek at the brilliant artistry encompassing the wondrous
creation of jazz music. Each episode features a different group of esteemed jazz musicians gathered together in a recording studio
to create new music, reminisce about old music and just have a great time. Many of these iconic artists are working together for
the very first time.
Studio Jams
is also currently distributed worldwide on Voice of America, the official external radio
and television broadcasting service of the U.S. federal government, reaching an estimated worldwide audience of 125 million people.
Critical Accounting Policies And Estimates
Embedded Conversion Features and Other Equity-linked
Instruments
The Company classifies all of its common stock
purchase warrants and options, embedded debt conversion features, and other derivative financial instruments as equity if the contracts
(1) require physical settlement or net-share settlement or (2) give the Company a choice of net-cash settlement or settlement in
its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that
(1) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is
outside the control of the Company), (2) give the counterparty a choice of net-cash settlement or settlement in shares (physical
settlement or net-share settlement), or (3) contracts that contain reset provisions. The Company assesses classification of its
equity-linked instruments at each reporting date to determine whether a change in classification between equity and liabilities
(assets) is required.
The Company accounts for variable conversion
elements embedded in its convertible instruments that meet the definition of a derivative as liabilities. The variable conversion
elements are re-measured at fair value with the changes in the value reported as a component of other income (expense) in the accompanying
results of operations. The Company estimates the fair value of the variable conversion element using a Black-Scholes Merton Pricing
model based on the variable number of additional shares of common stock the Company is required to issue upon conversion.
The derivative liabilities are measured at
fair value using a Black Scholes Merton Pricing Model. The model is based on assumptions including quoted market prices and estimated
volatility factors based on historical quoted market prices for the Company’s common stock, and are classified within Level
3 of the fair value hierarchy as established by US GAAP. Significant declines in the Company’s listed market exposes us to
a requirement to issue significant numbers of shares of common stock that can be sold in the market which likely will result in
further declines of the listed stock price and will likely have a detrimental impact on our ability to raise additional capital.
Additionally, fluctuations in the volatility assumptions used in the Black Scholes model can result in material changes in the
estimated fair value of our financial instruments.
There have not been any other material
changes to the critical accounting policies and estimates previously disclosed in our Annual Report on Form 10-K for the year
ended December 31, 2015.
Plan of Operations
While our officers have extensive experience
in internet and channel content distribution, our company is in the early stages of pursuing our mission to entertain a global
audience through content that we license, acquire, or we obtain through revenue share deals with content providers. Our primary
targeted genres include movies, TV shows, comedy, music, sports, food, health and fitness. We believe our business model and content
strategy gives us a significant opportunity to deliver value to users, developers and marketers while realizing our monetization
objectives. Keys to meeting our objectives include, but are not limited to:
|
·
|
Establish multiple distribution channels
for our content, each with an extensive reach to potential users.
|
|
·
|
Distribute high definition television
content available through our content partner simplyME.
|
|
·
|
Attract popular licensed television content.
This is a targeted objective of our Advisory Board.
|
|
·
|
Develop a strong ad operation setup to
sell across all of our content delivery platforms, including through our distribution partner simplyME Distribution.
|
|
·
|
Execute on a solid marketing
strategy to promote our content on social media and top consumer websites which is currently under construction via an agreement
with software and technology provider Kaltura, Inc., with an initial roll-out projected for the second quarter 2016.
|
The chart below summarizes some of the Company’s targeted
milestones and related timeframes with regard to its objectives to establish distribution platforms, license or develop content
and secure advertisers.
Objective: Establish Distribution Platforms
Distribution Platform
|
Targeted Development Milestone
|
Targeted Timeframe
|
1.
Cable Television
Current Status:
Launched with 30 programming hours,
live in approximately 27 million households in the United States
|
|
Achieved
|
• Household Reach
|
Available in an additional 13 million households
|
Second
quarter 2016
|
• Programming Hours
|
90 programming hours of content
|
Second quarter 2016
|
|
|
|
2.
Hotel-in-room channel
Current status:
Launched with 4-hour loop
linear channel under agreement with Sonifi, providing content to 545,000 hotel rooms; and launched with 24/7 linear channel
under agreement with Sonifi, providing content to 405,733 hotel rooms; and launched VOD distribution under agreement
with Sonifi providing content to approximately 882,00 hotel rooms
|
|
Achieved
|
•
Hotel Room Reach
|
Expand to 900,000 hotel rooms via VOD
|
Second
quarter 2016
|
|
|
|
3.
Website: Zonzia.com
Current status:
site in initial stages, with substantive
content offerings to come
|
Partial functions available, including VOD
Complete website available, including original content
|
Second quarter 2016
Fourth quarter 2016
|
Objective: Content Development and Acquisition
Offering
|
Targeted Milestone
|
Targeted Timeframe
|
Linear Programming
|
Content provided through simplyME
Original programming
|
Achieved
Fourth quarter 2016
|
Zonzia Over-the-top Channel
|
Offer general content programming
|
Second quarter
2016
|
Video on Demand (VOD) and Subscription Video on Demand (SVOD)
|
Offer full length feature films, TV series, documentaries,
live events and general programming
|
Fourth quarter 2016
|
Objective: Secure Advertisers across
All Distribution Platforms
Platform
|
Targeted
Timeframe
|
Cable television
|
First quarter 2016
|
Hotel-in-room channel
|
Second quarter 2016
|
Zonzia.com and original content
|
Third and Fourth quarters
2016
|
Objective: Secure Capital to Fund Development
The timing and successful execution of our
overall business strategy is dependent upon our current ability to raise additional capital at terms favorable to us. Our officers
and directors have spent significant time and effort cultivating relationships with individuals and entities that may be interested
in investing in our Company.
Since late in 2014 through the date of this
report, our Officers, Directors and other consultants and Advisory Board Members have devoted significant time and effort to raising
the capital necessary to fully implement our principal business plans including securing content and building the required content
delivery infrastructure. While we have received positive feedback from these efforts and much preliminary interest from potential
debt and/or equity investors, we do not have any firm funding commitments as of the date of this report sufficient to fully implement
our business strategies in the near term.
Launch Strategy
Our content and platform launch strategy
is to produce and acquire compelling content that creates a connection with our targeted audience across desired platforms. If
we are successful in our capital raising efforts, we intend to be operating on all of our delivery platforms and subscription
services in the fourth quarter of 2016.
The overall objective is to drive significant
viewers to engage in the offerings of our Video-On-Demand and Over-The-Top Channel. We intend to engage in an aggressive business
to business public relations drive to rapidly evolve a marketplace for our viewers, clients, and consumers.
Please see the section entitled “Use
of Proceeds” on page 15 for a detailed description on how the Company intends to use proceeds raised from this offering
in seeking to accomplish the development milestones set forth in this Plan of Operations.
Develop High Quality and Entertaining
Content to Increase User Engagement
We anticipate aggressively pursuing content
acquisitions and as a result we believe that a portion of our potential licensing partners will require non-refundable, prepaid
royalty payments in order to present their content on our distribution platforms. The majority of the costs incurred with this
type of third party content development are paid through revenue sharing arrangements in which the vendors receive a percentage
of the impression revenue from our advertising basis. We intend to prioritize product development investments that we believe will
drive user engagement. One of our critical, near-term uses of funds is to significantly improve and expand our content library
and unique offerings. Our expenditures likely will include, at least partially, up-front payments to movie and live event producers
and/or promoters. Key to increasing our content offerings is our ability to analyze and organize vast amounts of information in
real time to enable us to select the unique content that we believe will be most compelling to each individual user. We are focused
on providing entertaining content and other products to increase engagement, representing a core part of our strategy to maximize
our long-term business performance.
Marketing and Business Development
During the period ending December 31,
2015 we incurred total expenses of over $610,676 on sales and marketing expenses, reflecting our commitment to invest to improve
our ad products in order to attract more customers to work with us, to create more value for marketers and to enhance marketers’
ability to make their advertising more relevant for users. Our advertising strategy centers on the belief that, with ad products
that are relevant, well-targeted, social and well-integrated with our content offerings, we can enhance the user experience while
providing an attractive return for marketers. We expect to continue to spend significantly in order to grow our brand awareness,
develop relevant ecommerce partner relationships and increase advertising value.
Attract and Retain Highly Talented Management
and Professional Consultants
The technology industry is highly competitive
and heavily dependent upon attracting and maintaining innovative and experienced individuals. We are heavily dependent on our officer
group, and loss of the services of these officers could have a material impact on our ability to implement our business plan.
Based on our value based approach, we seek
to engage legal, accounting and other management consulting professionals upon the completion of extensive due diligence processes
accounting for experience level, customer satisfaction and cost comparisons.
Content Storage and Delivery
We engaged Kaltura, Inc. to build the infrastructure
to store our anticipated content library on a cloud based server; provide necessary display setting conversions allowing the content
to be viewed on multiple devices including mobile phones, tablets, and televisions as well as in high definition; and allow for
direct delivery to our strategic content delivery interface partners who ultimately provide the material to our targeted viewers.
Our technology partner Kaltura, Inc.
has begun building the platforms that will allow us to distribute our content securely in variety manners including Video-On-Demand,
mobile devices, and other devices with internet capability.
Content Development
Initially, we are distributing content that
we license from our partner simplyME Distribution across two platforms: the cable and hotel network platforms. The Company’s
objective is to provide its own content for distribution as it is developed and acquired over time. Under the direct supervision
of our Officers we have made significant contacts within the industry and have had preliminary meetings with various entertainers,
producers, and other content developers to provide a significant volume of video and other live streaming events pending the financial
ability to acquire and develop our intended content library.
Brand Awareness
Through our officers and other relationships
within in the industry we have begun a social media brand awareness campaign designed to attract consumers to our content delivery
platforms.
Recent Activities
Subsequent to the Settlement Agreement with
our former CEO in January 2015, we have spent significant amounts of time and effort attracting and retaining highly experienced
individuals to form our management team, Board of Directors, and Advisory Board. We believe that we have successfully attracted
and retained these individuals. Once in place, our team began the process of rebranding the Company into Zonzia Media and assessing
the value of various content delivery platforms and developing the corresponding relationships with applicable service providers.
Off Balance Sheet Arrangements
We currently do not have any off-balance sheet
arrangements.
Stock Based Compensation
We have on occasion issued equity and equity
linked instruments to employees and non-employees in lieu of cash for the receipt of goods and services and, in certain circumstances
the settlement of short-term loan arrangements. The applicable GAAP establishes that share-based payment transactions with non-employees
shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever
is more reliably measurable.
In these transactions, the Company issues unregistered
and restricted equity instruments.
While the Company believes that its shareholders
currently have approximately 12 million shares of freely-traded stock with a quoted market price (a Level 1input within the GAAP
hierarchy), the fair value of the unregistered and restricted shares issued in compensation transactions with non-employees as
valued by the quoted market price does not reflect the economic substance of the transactions and does not represent the Company’s
principal market, correspondingly, the quoted market price is not the most reliably measurable fair value. This determination was
based upon the liquidity restrictions placed upon our unregistered restricted equity instruments along with the quoted market not
being the most active or principal trading market.
When unregistered common shares are issued
for the settlement of short-term financing arrangements, the reacquisition price of the extinguished financing arrangement is determined
by the value of the debt which is more clearly evident, and no additional inducement expense is recognized.
In situations in which we issue unregistered
restricted common shares in exchange for goods and services, and the value of the goods and services are not the most reliably
measurable, we recognize the fair value of the unregistered restricted equity instruments based on the value of similar instruments
issued in private placements in exchange for cash in the most recent transactions (a Level 2 input within the GAAP hierarchy).
The Company has determined this methodology reflects the risk adjusted fair value of our unregistered restricted equity instruments
using a commercially reasonable valuation technique within the most active market.
Quantitative and Qualitative Disclosures
about Market Risk
Under the scaled disclosure requirements applicable
to smaller reporting companies (as defined in Item 10(f)(1) of Regulation S-K), we are not required to report quantitative and
qualitative disclosures about market risk specified in Item 305 of Regulation S-K.
DIRECTORS AND EXECUTIVE OFFICERS
The following individuals serve as directors
and executive officers of our company as of the date of this report. All directors of our company hold office until the next annual
meeting of our stockholders or until their successors have been elected and qualified. The executive officers of our company are
appointed by our board of directors and hold office until their death, resignation or removal from office.
Name
|
|
Age
|
|
Office
|
Myles A. Pressey III
|
|
58
|
|
Chairman of the Board and Interim Chief Financial Officer
|
Johnathan F. Adair
|
|
50
|
|
Chief Executive Officer
|
Stanley L. Teeple
|
|
63
|
|
Chief Compliance Officer
|
Steven L. Sanders
|
|
55
|
|
Director
|
Philip Fraley
|
|
33
|
|
Director
|
Joseph Martin
|
|
44
|
|
Director
|
|
|
|
|
|
Advisory Board members:
|
|
|
|
|
Charles R. Dutton
|
|
|
|
|
Myles A. Pressey III
Since September 2014, Mr. Pressey has devoted
his full time to the Company, first as Chief Business Development Officer and then, beginning in late January 2015, as both Chairman
of the Board and Chief Interim Financial Officer. Throughout his career, Mr. Pressey served in many roles in investment and relationship
management. Mr. Pressey has provided financial advisor services to high net worth individuals, represented retired professional
basketball players in sponsorship deals and negotiated and managed endorsement and television appearance deals for athletes and
entertainers. From February 2012 through July 2014, Mr. Pressey has owned and operated Regency Park Entertainment, an independent
film production and finance company. From January2010 to January 2012, Mr. Pressey was the Managing Director of Film & Media
at Sun Center Studios, Pennsylvania’s only state-of-the-art sound stage facility and campus dedicated to servicing major
film and television production companies within the entertainment industry. Before joining Sun Center Studios in 2010, Mr. Pressey
served as the Chief Executive Officer of Pressey Padell Sports & Entertainment, which was founded in 2008 and focused on all
facets of business management for athletes and entertainers. Pressey Padell Sports & Entertainment handled not only endorsements
and TV appearances but also guided each athlete and entertainer and their families through all of their financial, marketing and
endorsement matters. Mr. Pressey devotes his full time business efforts on behalf of Zonzia Media, Inc.
In connection with Mr. Pressey’ appointment
as the Company’s Chairman of the Board of Directors and Interim Chief Financial Officer, Mr. Pressey entered into an employment
agreement with the Company on January 29, 2015. The employment agreement provides for an initial term of four years, with an automatic
one-year renewal thereafter, unless the employment agreement is terminated by advance written notice of either party. Under the
terms of the employment agreement, Mr. Pressey receives a base salary in the amount of $250,000 per year. Subject to the discretion
of the CEO and the Board of Directors, Mr. Pressey shall be eligible for an annual bonus of not less than fifteen percent (15%)
and not more than thirty-five percent (35%) of annual base salary. Mr. Pressey received an initial grant of 125,000,000 shares
of the Company’s restricted common stock within 30 days of signing the employment agreement. In addition, pursuant to an
amendment to Mr. Pressey’s compensation approved by the Board of Directors, Mr. Pressey is entitled to a potential subsequent
equity award; provided that this entire subsequent award is subject to the achievement of corporate performance benchmarks set
by the Board of Directors. For example, if the Company achieves twenty-five million dollars ($25,000,000) in revenue on a consolidated
reporting basis during any calendar year, Mr. Pressey III will be entitled to the entire award of 62,500,000 shares to be issued
in equal annual increments over the remaining term of his employment agreement, all subject to Mr. Pressey’s continued service.
The employment agreement further provides that Mr. Pressey is entitled to 4 weeks of paid vacation per year.
The Company may terminate the employment agreement
with Mr. Pressey for cause, without cause, or by reason of his death or disability. Mr. Pressey may terminate the employment agreement
for any reason by advance written notice. If the employment agreement is terminated by reason of death, disability, resignation
by Mr. Pressey or termination by the Company without Cause (as defined in the employment agreement) then the Company will be required
to pay to Mr. Pressey severance pay of four months base compensation and continue all other benefits under the agreement for a
period of four months. If the Company terminates the employment agreement for Cause, then Mr. Pressey will only be entitled to
the base salary and benefits earned through and including the date of termination. Mr. Pressey has agreed not to compete with us
during the term of his employment agreement and for a period of twelve months thereafter. We also agree to indemnify Mr. Pressey
pursuant to the employment agreement.
Before establishing Pressey Padell Sports&
Entertainment, Mr. Pressey held various business and investment management roles. Mr. Pressey holds a Bachelor of Arts Degree from
Antioch University.
Mr. Pressey’s experience with current
and retired professional athletes, entertainers, capital market and investment and business management is critical to our content,
marketing and business development strategy that is centered on our ability to establish and maintain long-term relationships with
content providers across all of our media offerings.
Johnathan F. Adair
Mr. Adair has served as the Company’s
Chief Executive Officer since November 2015. From January through October, 2015, Mr. Adair served as the Company’s Chief
Operating Officer. Mr. Adair is a seasoned veteran and well versed in all aspects of the entertainment industry with over 20 years
of experience. Mr. Adair’s background includes post at Sony Pictures Entertainment, Universal Pictures, The Walt Disney Company
and the Los Angeles Philharmonic. From February 2012 through December 2014, Mr. Adair served as a partner at Regency Park Entertainment,
an independent film production and finance company. From January 2010 to January 2012 Mr. Adair served as a partner at Valley Vista
Entertainment an independent film and TV production company. At Sony Pictures, Mr. Adair created and guided the marketing strategies
for the company’s licensed consumer products division including the blockbuster Spiderman 2, which broke both box office
and licensed sales records. At Universal Pictures, Mr. Adair ran the worldwide marketing operations for Universal Home Entertainment
Productions representing over $120 million in revenue. While at the Walt Disney Company, Mr. Adair directed the consumer products
marketing and promotional strategies for the Winnie The Pooh and Mickey Mouse brands and Disney’s television and live action
film properties. Mr. Adair devotes full-time of his business efforts to Zonzia Media, Inc.
In connection with Mr. Adair’
appointment as the Company’s COO in January 2015 and as the Company’s CEO as of November, 2015, Mr. Adair entered into
an employment agreement with the Company. The employment agreement provides for an initial term of four years, with an automatic
one-year renewal thereafter, unless the employment agreement is terminated by advance written notice of either party. Under the
terms of the employment agreement, Mr. Adair receives a base salary in the amount of $250,000 per year. Subject to the discretion
of the CEO and the Board of Directors, Mr. Adair shall be eligible for an annual bonus of not less than fifteen percent (15%) and
not more than thirty-five percent (35%) of annual base salary. Mr. Adair received an initial grant of 5,000,000 shares of the Company’s
restricted common stock within 30 days of signing the employment agreement, and will be granted 2,500,000 additional shares of
the Company’s common stock on each of the subsequent four anniversaries of the commencement of employment, should Mr. Adair
continue to be employed in good standings on such dates. The employment agreement further provides that Mr. Adair is entitled to
4 weeks of paid vacation per year.
The Company may terminate the employment agreement
with Mr. Adair for cause, without cause, or by reason of his death or disability. Mr. Adair may terminate the employment agreement
for any reason by advance written notice. If the employment agreement is terminated by reason of death, disability, resignation
by Mr. Adair or termination by the Company without Cause (as defined in the employment agreement) then the Company will be required
to pay to Mr. Adair severance pay of four months base compensation and continue all other benefits under the agreement for a period
of four months. If the Company terminates the employment agreement for Cause, then Mr. Adair will only be entitled to the base
salary and benefits earned through and including the date of termination. Mr. Adair has agreed not to compete with us during the
term of his employment agreement and for a period of twelve months thereafter. We also agree to indemnify Mr. Adair pursuant to
the employment agreement.
An accomplished and award winning violinist
and pianist, Johnathan headed the marketing and communications divisions of the Los Angeles Philharmonic Association. Johnathan
began his career at Sony Music where he served in the business affairs, marketing and A&R divisions. Johnathan is a graduate
with honors of Harvard University.
Stanley L. Teeple
Mr. Teeple has served as the Company’s
Secretary and Chief Compliance Officer since December 2014. From October 2006 through December 2010 Mr. Teeple was Chief Financial
Officer for Indigo-Energy, Inc. (a former name of the Company). From January 2011 through September 2013, as President of Stan
Teeple, Inc., Mr. Teeple provided services as Chief Financial Officer and provided consulting services for various companies, including
Element Renewal, a privately held water treatment company. In October 2013, Mr. Teeple undertook the engagement from New Hope Partners
LLC, a privately held group of shareholders of Indigo-Energy, Inc., to work on the turnaround and compliance-related efforts, in
hopes of returning the company to fully-reporting status. In May 2014, that task was accomplished and Indigo Energy engaged Mr.
Teeple as its interim CFO and consultant. That engagement continued until December 1, 2014 when the Company named Mr. Teeple as
its Chief Compliance Officer and Secretary.
In connection with Mr. Teeple’ appointment
as the Company’s Secretary and Chief Compliance Officer, Mr. Teeple entered into an employment agreement with the Company
on December 1, 2014 and a subsequent Modification Agreement on January 29, 2015. The employment agreement and modification provides
for an initial term of four years, with an automatic one-year renewal thereafter, unless the employment agreement is terminated
by advance written notice of either party. Under the terms of the employment agreement, Mr. Teeple receives a base salary in the
amount of $250,000 per year. Subject to the discretion of the CEO and the Board of Directors, Mr. Teeple shall be eligible for
an annual bonus of not less than fifteen percent (15%) and not more than thirty-five percent (35%) of annual base salary. Mr. Teeple
received an initial grant of 5,000,000 shares of the Company’s restricted common stock within 30 days of signing the employment
agreement, and will be granted 2,500,000 additional shares of the Company’s common stock on each of the subsequent four anniversaries
of the commencement of employment, should Mr. Teeple continue to be employed in good standings on such dates. The employment agreement
further provides that Mr. Teeple is entitled to 4 weeks of paid vacation per year.
The Company may terminate the employment
agreement with Mr. Teeple for cause, without cause, or by reason of his death or disability. Mr. Teeple may terminate the employment
agreement for any reason by advance written notice. If the employment agreement is terminated by reason of death, disability, resignation
by Mr. Teeple or termination by the Company without Cause (as defined in the employment agreement) then the Company will be required
to pay to Mr. Teeple severance pay of four months base compensation and continue all other benefits under the agreement for a period
of four months. If the Company terminates the employment agreement for Cause, then Mr. Teeple will only be entitled to the base
salary and benefits earned through and including the date of termination. Mr. Teeple has agreed not to compete with us during the
term of his employment agreement and for a period of twelve months thereafter. We also agree to indemnify Mr. Teeple pursuant to
the employment agreement.
Over the last 30 years Mr. Teeple has held
numerous senior management positions in a number of public and private companies across a broad spectrum of industries. Additionally
he has operated and worked for various court appointed trustees and principals as CEO, COO, and CFO in the entertainment, pharmaceuticals,
food, travel, and tech industries. He previously operated his consulting business on a project-to-project basis, and holds various
other directorships and now devotes full time to Zonzia Media, Inc. His businesses operational strengths include knowing how to
manage and maximize the resources and preserve the integrity of a company from start-up through to maturity.
Steven L. Sanders
Mr. Sanders has served as a member of the Board
of Directors of Zonzia Media, Inc. since February 19, 2105. As Chairman, CEO, and Chief Investment Strategist (CIS) at StoneRidge
Investment Partners, LLC since 2009, Steven Sanders is a leader in the money management industry. Mr. Sanders has led multiple
firms to growth and profitability over his extensive 30-year career. In 2009, Mr. Sanders led the growth of StoneRidge from $200
Million to $1.2 Billion in assets under management while driving enhancements to the firm's equity investment process and helping
launch and develop StoneRidge’s suite of custom designed fixed income products.
Possessing nearly 30 years of investment and
entrepreneurial experience, Mr. Sanders serves as Board Chairman of Beltraith Capital, LLC, a holding company formed by Mr. Sanders
to raise capital and acquire a controlling interest in StoneRidge in 2009.
Prior to joining StoneRidge, from 2006-2009,
Mr. Sanders served as Chief Investment Strategist at Creative Financial Group Asset Management, with $1.8 Billion in assets under
management. During that period, Mr. Sanders Co-founded and served as Chairman & CEO of First Genesis Financial Group, a subdivision
of Creative Financial Group. While there, Mr. Sanders developed and co-managed the firm’s absolute return, macro-economic
thematic investment strategy.
Mr. Sanders has provided economic and financial
market commentary to national and local television networks such as CNBC, Bloomberg, CNN, ABC World News, Fox TV, and CN8’s
Money Matters Today. His presentations on Macro Economics and Financial Markets are in demand at many investment conferences. Mr.
Sanders has served as a spokesperson for Citibank Master Card and Visa’s national financial education program and authored
a booklet about the virtues of saving and spending wisely, “Money Matters for Young Adults”. Since 2007, he has co-hosted
Financial Voices; a weekly financial and economic awareness program which airs on 900AM WURD Radio in Philadelphia and broadcast
internationally via the web. Mr. Sanders serves as Chairman of the Investment Committee for The Philadelphia Foundation, a member
of the Board of Trustees at the Pennsylvania Academy of Fine Arts, Advisory Board member of The Network for Teaching Entrepreneurship
Philadelphia and Board member for TOCFWH. Mr. Sanders holds a B.B.A. in Risk Management from Howard University. His engagement
provides that Zonzia issues 150,000 shares of restricted stock annually for his service as a member of the Board of Directors.
Philip Fraley
Mr. Fraley is President of Real Partners,
LLC, a financial services and wealth advisory firm, where he has served since May 2012. Prior to that, Mr. Fraley served as a Director
of Guggenheim Partners from May 2010 to May 2012. He has spent the past 10 years of his career working in the family office
and investment advisory industry specializing in investment, wealth management and merchant banking for both U.S. and international
clients. Previously, Philip held positions at Guggenheim Partners and BNY Mellon. Philip is a graduate of the University of
Pittsburgh with a B.S. in Accounting.
Mr. Fraley joined the Zonzia Board of Directors
on June 3, 2015 and continues to pursue his other business interests providing Zonzia services as required. His engagement provides
that Zonzia issues 150,000 shares of restricted stock annually for his service as a member of the Board of Directors.
Joseph Martin
Mr. Martin joined the Company’s Board
of Directors on July 30, 2015. As Co-Chair of the Intellectual Property Group at the 175-lawyer regional law firm Archer &
Greiner, P.C. from November 1999 through July 2015, Mr. Martin has represented cutting edge technology companies for a good part
of his professional career. As both an intellectual property litigator and a business consultant, Mr. Martin has specialized in
helping entrepreneurial clients protect and monetize their IP assets, resolve governance disputes, and grow revenue through strategic
acquisitions and financings. Since January 2010, Mr. Martin has served as the President of the Board of Trustees of the Tuckerton
Seaport Museum, where he leads an innovative Board and executive team which has garnered numerous awards and national recognition
as a museum of distinction. Mr. Martin is a graduate of Rutgers University School of Law where he earned his Juris Doctorate degree
and received his B.A. degree from the College of New Jersey.
Advisory Board
The Advisory Board Charter provides that Advisory
Board members will assist Zonzia’s Directors, management, and specifically the Chairman of the Board of Directors regarding
business issues including marketing, content development, sales, financing, expansion, creativity and others.
Mandate for Membership
Selection
as an Advisory Board member is due to an individual’s specific skill-set of knowledge and experiences that places him or
her on the leading edge of what Zonzia has defined as its operating model. Each member has distinct knowledge on different aspects
of business such as marketing, product development and sales techniques that are of use to the Directors. Each must be a seasoned
professional who has unique insight, knowledge, and experience in the world of entertainment, film, music, and development of creative
content. Moreover, each must have a like mind with the Board and management of the Company in areas of character, moral codes,
and faith which is so important to our corporate mission.
Charles “Roc” Dutton
Mr. Dutton
joined the Company’s Advisory Board in May of 2015 and is compensated for his contributions with an annual stock award
of 75,000 shares of restricted common stock.
Charles Roc Dutton, 61 hails from Baltimore, Maryland. In his youth, Dutton
had a short-lived stint as an amateur boxer with the nickname “Roc.” Upon graduation from Hagerstown Junior College
in Maryland he enrolled as a drama major at Towson State University in Towson, Maryland. After his time at Towson,
Dutton earned a master's degree in acting from the Yale School of Drama.
From January 2009
until January 2013 Mr. Dutton worked as a self-employed developer, actor, and producer of various made-for-television and film
roles. From February- October 2013 Mr. Dutton was engaged as a primary actor in the television series “Zero Hour”.
From November –December 2013 Mr. Dutton was engaged filing the feature film “The Monkey’s Paw”. From January
2014 through June 2015 Mr. Dutton worked as an independent actor and television and film producer.
In 1984, Dutton
made his Broadway debut in August Wilson's
Ma Rainey's Black Bottom
, winning a Theatre
World Award and a Tony Award nomination for Best Actor. In 1988, Dutton played a killer in the television
miniseries
The Murder of Mary Phagan
opposite Jack Lemmon and Kevin Spacey. 1990 brought him a
second Best Actor Tony nomination for his role in another Wilson play,
The Piano Lesson
. From 1991-1994, he
starred in the Fox television series
Roc
. Dutton co-starred in
Alien 3
, the debut film of
director David Fincher, then co-starred in 1993's
Rudy
. Other films he has appeared in include
Get
on the Bus
;
A Time to Kill
;
Cookie's Fortune
;
Crocodile Dundee II
;
Country;
Menace
; and
Secret Window
.
Dutton
won Outstanding Guest Actor Emmy Awards in 2002 and 2003 for his roles in
The Practice
and
Without
a Trace
. He was previously nominated in 1999, for his guest-starring role as Alvah Case in the HBO prison drama
Oz
in its second season premiere episode. For this role, he was also nominated for an NAACP Image Award. Also in 1999,
he starred in an ensemble cast in
Aftershock: Earthquake in New York
in which he played the Mayor of New York
City. Dutton gained acclaim for his comedy show
Roc
shown on FOX television (but produced by HBO)
from 1991–1994, especially mid-run when the show was broadcast live. His work in this role won him a NAACP Image Award.
He co-starred in the popular but short-lived 2005 CBS science fiction series,
Threshold
.
In 2000, Dutton
directed the HBO miniseries
The Corner
. The miniseries was close to his heart for Dutton grew up on the streets of
East Baltimore. It was adapted from
The Corner: A Year in the Life of an Inner-City Neighborhood
(Broadway
Books, 1997) by David Simon (a reporter for the
Baltimore Sun
) and Ed Burns (a retired
Baltimore homicide detective).
The Corner
won several Emmys in 2000, including Best Miniseries. Dutton won for his
direction of the miniseries. He worked with Simon previously in a 1996 episode of
Homicide: Life on the Street
.
He starred
as Montgomery County, Maryland Police Chief Charles Moose in the 2003 made-for-TV movie
D.C. Sniper: 23 Days of Fear
, and appears in Season 2 of
The L Word
. Dutton also appeared in “Another Toothpick,” an episode of
The
Sopranos
. He guest starred on
House M.D.
as the father of Doctor Eric Foreman (Omar Epps) and on
Sleeper
Cell: American Terror
as the father of undercover FBI agent Darwyn Al-Sayeed. He also directed two episodes of
Sleeper
Cell
.
On February
14, 2013 Dutton returned to TV in
Zero Hour
playing the role of a priest.
In 2013, Dutton played
Detective Margolis in the horror film
The Monkey's Paw
.
Family Relationships
There are no family relationships among our
directors or officers.
Conflicts Of Interest
Our directors and officers are subject to restrictions
regarding opportunities that may compete with our company’s business plan. New opportunities that are brought to the attention
of our directors and officers must be presented to our Board of Directors and made available to our company for consideration and
review under principles of state law corporate opportunity doctrines.
Involvement in Certain Legal Proceedings
None of our directors or executive officers
has been involved in any of the following events during the past ten years:
|
(a)
|
any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years before that time;
|
|
|
|
|
(b)
|
any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offences);
|
|
|
|
|
(c)
|
being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities;
|
|
|
|
|
(d)
|
being found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
|
|
|
|
|
(e)
|
being the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: (i) any federal or state securities or commodities law or regulation; or (ii) any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease- and-desist order, or removal or prohibition order; or (iii) any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
|
|
|
|
|
(f)
|
being the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Securities Exchange Act of 1934), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
|
EXECUTIVE COMPENSATION
Executives and Directors Compensation
During the period ended December 31, 2014
we entered into various employment arrangements with our previous and current executive officers. Some of these arrangements were
retroactively forgiven and cancelled as part of our Master Settlement Agreement entered into on January 22, 2015, as described
in the notes to the Summary Compensation Table. For a more detailed description of the Master Settlement Agreement, please see
Corporate History, page 27.
The following table provides certain summary
information concerning compensation of our named executive officers for our fiscal year ended December 31, 2015:
Summary Compensation Table
Position
|
|
Year
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards ($)
|
|
|
Non-
equity Incentive Plan Compensation
($)
|
|
|
Non-
qualified Deferred Compensation Earnings
($)
|
|
|
All
Other Compensation ($)
|
|
|
Total
($)
|
|
Rajinder Brar
|
|
|
2014
|
|
|
370,511
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
370,511
|
|
Former
CEO and CFO
(1)
|
|
|
2015
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
Aneliya Vasilieva
|
|
|
2014
|
|
|
83,333
|
|
|
|
-0-
|
|
|
|
9,975,000
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
10,058,333
|
|
Former
Chief Content Officer
(2)
|
|
|
2015
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
Myles A. Pressey III
|
|
|
2014
|
|
|
93,833
|
|
|
|
-0-
|
|
|
|
13,725,000
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
13,818,833
|
|
Interim
CEO and Chief Business Development Officer
(3)
|
|
|
2015
|
|
|
250,000
|
|
|
|
-0-
|
|
|
|
47,500,000
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
47,750,000
|
|
James Walter Sr.
|
|
|
2014
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
476,875
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
476,875
|
|
Former
CEO and CFO
(4)
|
|
|
2015
|
|
|
100,000
|
|
|
|
-0-
|
|
|
|
1,900,000
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
2,000,000
|
|
Stanley L. Teeple
|
|
|
2014
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
Chief Compliance Officer
|
|
|
2015
|
|
|
250,000
|
|
|
|
-0-
|
|
|
|
1,975,000
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
2,225,000
|
|
Johnathan F. Adair
|
|
|
2014
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
Chief Executive Officer
|
|
|
2015
|
|
|
250,000
|
|
|
|
-0-
|
|
|
|
1,900,000
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
2,150,000
|
|
Lynnwood Bibbens
|
|
|
2014
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
Chief
Strategy Officer
(5)
|
|
|
2015
|
|
|
250,000
|
|
|
|
-0-
|
|
|
|
1,900,000
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
2,150,000
|
|
Frank McEnulty
|
|
|
2014
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
Chief
Financial Officer
(6)
|
|
|
2015
|
|
|
182,000
|
|
|
|
-0-
|
|
|
|
236,000
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
418,000
|
|
Naresh
Malik
(7)
|
|
|
2014
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
|
2015
|
|
|
250,000
|
|
|
|
-0-
|
|
|
|
1,500,000
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
1,750,000
|
|
_______________
(1)
|
Mr.
Brar was appointed Chairman and Chief Executive Officer on November 21, 2014. Effective January 22, 2015 Mr. Brar resigned
all previously appointed Officer and Board positions.
|
|
|
(2)
|
Ms.
Vasilieva was appointed Chief Content Officer on November 21, 2014. Effective January 22, 2015 Ms. Vasilieva resigned as Chief
Content Officer. The above compensation represents accrued amounts related to a December 2014 employment agreement that was
retroactively cancelled with all previously accrued amounts being forfeited. Stock awards, representing 26,250,000 shares
of restricted and unregistered common stock, scheduled to vest on January 1, 2015 were cancelled.
|
|
|
(3)
|
Mr.
Pressey III was appointed Chief Business Development Officer and a Board Member on November 21, 2014. Effective January 22,
2015 Mr. Pressey III resigned as Chief Business Development Officer and Director. The above compensation represents accrued
amounts related to a December 2014 employment agreement that was retroactively cancelled. Stock awards, representing 33,750,000
shares of restricted and unregistered common stock, scheduled to vest on January 1, 2015 were cancelled. Additionally, $900,000
of stock based compensation was earned on a pre-merger basis while in the employ of the public shell company and correspondingly
eliminated from being presented in the accompanying statement of operations for the period ended December 31, 2014. Mr. Pressey
was appointed as the Company’s Chief Business Development Officer and its Interim Chief Executive Officer and Interim
Chief Financial Officer on January 29, 2015.
|
|
|
(4)
|
Mr.
Walter Sr. resigned as the Sole Officer and Director of the Company on November 21, 2014. Additionally, $476,875 of stock
based compensation was earned on a pre-merger basis while in the employ of the public shell company and correspondingly eliminated
from being presented in the accompanying statement of operations for the period ended December 31, 2014. On January 22, 2015
Mr. Walter was appointed as the Sole Officer and Director and subsequently resigned all Officer positions on January 29, 2015.
|
|
|
(5)
|
Mr. Bibbens resigned
from the company in July 2015.
|
|
|
(6)
|
Mr.
McEnulty
resigned from the Company in November 2015.
|
|
|
(7)
|
Mr. Malik resigned
from the company in November 2015.
|
Compensation of Executive Officers
Other than Mr. James C. Walter Sr., none of
the named executive officers shown in the Summary Compensation Table served as executive officers of the non-surviving public company
shell.
Outstanding Equity Awards at Fiscal Year
End
As of December 31, 2014 the Company’s
named executive officers collectively held restricted stock awards totaling 120,000,000 shares of common stock, half of which
were scheduled to vest as of January 1, 2015 with an additional 60,000,000 shares of restricted common stock scheduled to vest
as of July 15, 2015. In accordance with our Settlement Agreement dated January 22, 2015 all of these previously issued equity
compensation awards were retroactively cancelled in January 2015. Accordingly, they are not shown in the table below. The table
below sets forth all other options and stock awards received by the named executive officers of the Company with respect to fiscal
year 2015:
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
|
|
Option
Exercise
Price
($)
|
|
|
Option
Expiration
Date
|
|
Number of
Shares or
Units of
Stock that
Have Not
Vested
(#)
|
|
|
Market
Value of
Shares or
Units of
Stock that
Have Not
Vested
($)
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights that
Have Not
Vested
(#)
|
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights that
Have Not
Vested
(#)
|
|
James C. Walter Sr.
|
|
|
5,682
(1)
|
|
|
|
–
|
|
|
|
–
|
|
|
$
|
11.00
|
|
|
10/16/17
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
Stanley L. Teeple
|
|
|
227,273
(1)
|
|
|
|
–
|
|
|
|
–
|
|
|
$
|
0.44
|
|
|
10/16/17
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
_________________
(1)
Options and option price
has been adjusted to reflect our 1 for 44 reverse stock split effective November 12, 2014.
Compensation of Directors
For the period ended December 31, 2015,
one of our Directors also served as an executive officer of the Company. No officer received additional compensation in respect
to his service on the Board in 2015. Accordingly, the tabular disclosure called for by Item 402(r) of Regulation S-K is not
applicable.
Employment Agreements
We have entered into employment agreements
with the following current executive officers, the terms of which are summarized below.
Myles A. Pressey III, Chairman
and Interim Chief Financial Officer
Mr. Pressey III entered into an employment
agreement with the Company on January 29, 2015. The employment agreement provides for an initial term of four years, with an automatic
one-year renewal thereafter, unless the employment agreement is terminated by advance written notice of either party. Under the
terms of the employment agreement, Mr. Pressey III receives a base salary in the amount of $250,000 per year. Subject to the discretion
of the Board of Directors, Mr. Pressey III shall be eligible for an annual bonus of not less than fifteen percent (15%) and not
more than thirty-five percent (35%) of annual base salary. Mr. Pressey received an initial grant of 125,000,000 shares of the
Company’s restricted common stock within 30 days of signing the employment agreement. In addition, pursuant to an amendment
to Mr. Pressey’s compensation approved by the Board of Directors, Mr. Pressey is entitled to a potential subsequent equity
award; provided that this entire subsequent award is subject to the achievement of corporate performance benchmarks set by the
Board of Directors. For example, if the Company achieves twenty-five million dollars ($25,000,000) in revenue on a consolidated
reporting basis during any calendar year, Mr. Pressey III will be entitled to the entire award of 62,500,000 shares to be issued
in equal annual increments over the remaining term of his employment agreement, all subject to Mr. Pressey’s continued service.
The employment agreement further provides that Mr. Pressey is entitled to 4 weeks of paid vacation per year.
The Company may terminate the employment
agreement with Mr. Pressey III for cause, without cause, or by reason of his death or disability. Mr. Pressey III may terminate
the employment agreement for any reason by advance written notice. If the employment agreement is terminated by reason of death,
disability, Mr. Pressey III’s resignation or termination by the Company without Cause (as defined in the employment agreement)
then the Company will be required to pay to Mr. Pressey III severance pay of four months base compensation and continue all other
benefits under the agreement for a period of four months. If the Company terminates the employment agreement for Cause, then Mr.
Pressey III will be entitled to the base salary and benefits earned through and including the date of termination. Mr. Pressey
III has agreed not to compete with us during the term of his employment agreement and for a period of twelve months thereafter.
The Company also agreed to indemnify Mr. Pressey III pursuant to the employment agreement.
Stanley L. Teeple, Chief Compliance Officer
We entered into an employment agreement with
Stanley Teeple, our Chief Compliance Officer dated December 1, 2014. Mr. Teeple performs the duties and functions of his office
under the supervisory authority of our Board of Directors and Chief Executive Officer. The employment agreement provides for an
initial term ending December 31, 2016, with an automatic one-year renewal thereafter, unless the employment agreement is terminated
by advance written notice of either party. Under the terms of the employment agreement, Mr. Teeple receives a base salary in the
amount of $250,000 per year, subject to review at least annually by the CEO or Board of Directors. For 2014, Mr. Teeple is eligible
for a $100,000 bonus and for 2015 and subsequent years, a bonus of not less than 5% and not more than thirty-five percent (35%)
of prior year annual base salary shall be awarded in the discretion of the CEO and Board of Directors or committee thereof. Mr.
Teeple shall receive a one-time grant of one million shares of the Company’s common stock, to be issued not later than June
30, 2015. Mr. Teeple is also entitled to participate in and receive such other benefits and compensation that our company may furnish
to other management personnel or employees generally. The employment agreement further provides that Mr. Teeple is entitled to
3 weeks of paid vacation per year commencing January 1 2015. He is also entitled to and other executive level benefits under the
employment agreement.
We may terminate the employment agreement with
Mr. Teeple for cause, without cause, or by reason of his death or disability. Mr. Teeple may terminate the employment agreement
for any reason by advance written notice. If the employment agreement is terminated by reason of death, disability, or termination
by the Company without Cause (as defined in the employment agreement) then our company will be required to pay to Mr. Teeple severance
pay of four months base compensation and continue all other benefits under the agreement for a period of four months. If we terminate
the employment agreement for cause or if Mr. Teeple terminates the employment agreement, then Mr. Teeple will be entitled to the
base salary and benefits earned through and including the date of termination. Mr. Teeple has agreed not to compete with us during
the term of his employment agreement and for a period of twelve months thereafter. We also agree to indemnify Mr. Teeple pursuant
to the employment agreement.
Johnathan F. Adair, Chief Executive Officer
Mr. Adair entered into an employment agreement
with the Company on January 29, 2015. The employment agreement provides for an initial term of four years, with an automatic one-year
renewal thereafter, unless the employment agreement is terminated by advance written notice of either party. Under the terms of
the employment agreement, Mr. Adair receives a base salary in the amount of $250,000 per year. Subject to the discretion of the
CEO and the Board of Directors, Mr. Adair shall be eligible for an annual bonus of not less than fifteen percent (15%) and not
more than thirty-five percent (35%) of annual base salary. Mr. Adair shall receive an initial grant of 5,000,000 shares of the
Company’s restricted common stock within 30 days of signing the employment agreement, and will be granted 2,500,000 additional
shares of the Company’s common stock on each of the subsequent four anniversaries of the commencement of employment, should
Mr. Adair continue to be employed in good standings on such dates. The employment agreement further provides that Mr. Adair is
entitled to 4 weeks of paid vacation per year.
The Company may terminate the employment
agreement with Mr. Adair for cause, without cause, or by reason of his death or disability. Mr. Adair may terminate the employment
agreement for any reason by advance written notice. If the employment agreement is terminated by reason of death, disability, resignation
by Mr. Adair or termination by the Company without Cause (as defined in the employment agreement) then the Company will be required
to pay to Mr. Adair severance pay of four months base compensation and continue all other benefits under the agreement for a period
of four months. If the Company terminates the employment agreement for Cause, then Mr. Adair will only be entitled to the base
salary and benefits earned through and including the date of termination. Mr. Adair has agreed not to compete with us during the
term of his employment agreement and for a period of twelve months thereafter. We also agree to indemnify Mr. Adair pursuant to
the employment agreement.
Pension Benefits
We do not maintain any pension plan or arrangement
under which our named executive officers are entitled to participate or receive post-retirement benefits.
Nonqualified Deferred Compensation
We do not maintain any nonqualified deferred
compensation plan or arrangement under which our named executive officers are entitled to participate.
Employee Benefit Plans
2007 Stock Option Plan.
Our Board of
Directors adopted our company’s 2007 Stock Option Plan (the “2007 Stock Option Plan”). The 2007 Stock Option
Plan was approved by our stockholders at a meeting of stockholders held on October 15, 2007. The description set forth below summarizes
the principal terms and conditions of the 2007 Stock Option Plan, does not purport to be complete and is qualified in its entirety
by reference to the 2007 Stock Option Plan, a copy of which has been filed with the Securities and Exchange Commission as an Exhibit
to this Report.
General
. The primary objectives of the
2007 Stock Option Plan are to:
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attract and retain selected key employees,
consultants and directors;
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encourage their commitment;
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motivate superior performance;
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facilitate attainment of ownership interests
in our company;
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align personal interests with those of
our stockholders; and
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enable them to share
in the long-term growth and success of our company.
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Shares Subject to 2007 Stock Option Plan
.
The number of shares of common stock of our company reserved under the 2007 Stock Option Plan is 90,9091
1
. The number
of shares available under both the 2007 Stock Option Plan and outstanding incentive awards are subject to adjustments to prevent
enlargement or dilution of rights resulting from stock dividends, stock splits, recapitalization or similar transactions, or resulting
from a change in applicable laws or other circumstances.
Administration.
The Plan shall be administered
by either the Board of Directors of the Company (the “Board”) or by a committee (the “Committee”) to which
administration of the Plan, or of part of the Plan, may be delegated by the Board (in either case, the “Administrator”).
The Board shall appoint and remove members of such Committee, if any, in its discretion in accordance with applicable laws. If
necessary in order to comply with Rule 16b-3 under the Exchange Act and Section 162(m) of the Code, the Committee shall, in the
Board’s discretion, be comprised solely of “non-employee directors” within the meaning of said Rule 16b-3 and
“outside directors” within the meaning of Section 162(m) of the Code. The foregoing notwithstanding, the Administrator
may delegate nondiscretionary administrative duties to such employees of the Company as it deems proper and the Board, in its absolute
discretion, may at any time and from time to time exercise any and all rights and duties of the Administrator under the Plan.
Eligibility.
Every person
who at the date of grant of an Option is an employee of the Company or of any Affiliate (as defined below) of the Company is eligible
to receive Non-qualified stock options (“NQSOs”) or Incentive Stock Options (“ISOs”) under the Plan. Every
person who at the date of grant is a consultant to, or non-employee director of, the Company or any Affiliate (as defined below)
of the Company is eligible to receive NQSOs under the Plan. The term “Affiliate” as used in the Plan means a parent
or subsidiary corporation as defined in the applicable provisions (currently Sections 424(e) and (f), respectively) of the Code.
The term “employee” includes an officer or director who is an employee of the Company. The term “consultant”
includes persons employed by, or otherwise affiliated with, a consultant.
_______________
1
This reflects the 1-for-44 reverse
stock split, which became effective on November 12, 2014. Originally, 40,000,000 shares of our common stock were reserved
under the 2007 Stock Option Plan.
Terms and Conditions
All Options granted under the 2007 Stock Option
Plan shall be subject to the terms and conditions provided therein, including:
1. Time of Option Exercise.
Subject to the other relevant provisions of the Plan, Options granted under the Plan shall be exercisable (a) immediately as of
the effective date of the stock option agreement granting the Option, or (b) in accordance with a schedule as may be set by the
Administrator (each such date on such schedule, the “Vesting Base Date”) and specified in the written stock option
agreement relating to such Option. In any case, no Option shall be exercisable until a written stock option agreement in form satisfactory
to the Company is executed by the Company and the optionee.
2. Nontransferability
of Option Rights. Except with the express written approval of the Administrator which approval the Administrator is authorized
to give only with respect to NQSOs, no Option granted under the Plan shall be assignable or otherwise transferable by the optionee
except by will, by the laws of descent and distribution or pursuant to a qualified domestic relations order. During the life of
the optionee, an Option shall be exercisable only by the optionee.
3. Payment. All options
issued under the Plan are deemed to be cashless. Options may be exercised using the intrinsic value of the options.
4. Termination of Employment.
All options issued under the plan are to be vested immediately unless stipulated otherwise by the Administrator at the time of
issuance. The Employee shall have 90 days from termination to exercise the option or it shall expire.
5. Determination of Value.
For purposes of the Plan, the fair market value of Shares or other securities of the Company shall be determined as follows:
(a) Fair market value
shall be the closing price of such stock on the date before the date the value is to be determined on the principal recognized
securities exchange or recognized securities market on which such stock is reported, but if selling prices are not reported, its
fair market value shall be the mean between the high bid and low asked prices for such stock on the date before the date the value
is to be determined (or if there are no quoted prices for such date, then for the last preceding business day on which there were
quoted prices).
(b) In the absence of
an established market for the stock, the fair market value thereof shall be determined in good faith by the Administrator, with
reference to the Company’s net worth, prospective earning power, dividend-paying capacity, and other relevant factors, including
the goodwill of the Company, the economic outlook in the Company’s industry, the Company’s position in the industry,
the Company’s management, and the values of stock of other corporations in the same or similar line of business.
Federal Income Tax Consequences
The holder of an ISO does not realize taxable
income upon the grant or upon the exercise of the option (although the option spread is an item of tax preference income potentially
subject to the alternative minimum tax). If the stock acquired upon exercise of the options sold or otherwise disposed of within
two (2) years from the option grant date or within one year from the exercise date then, in general, gain realized on the sale
is treated as ordinary income to the extent of the option spread at the exercise date, and the Company receives a corresponding
deduction. Any remaining gain is treated as capital gain. If the stock is held for at least two (2) years from the grant date and
one year from the exercise date, then gain or loss realized upon the sale will be capital gain or loss and the Company will not
be entitled to a deduction. A special basis adjustment applies to reduce the gain for alternative minimum tax purposes.
Section 409A of the Code generally provides
that any deferred compensation arrangement that does not satisfy specific written requirements regarding (i) timing and form of
payouts, (ii) advance election of deferrals and (iii) restrictions on acceleration of payouts results in immediate taxation of
all amounts deferred to the extent not subject to a substantial risk of forfeiture. In addition, taxes on the amounts included in
income also are subject to a 20% excise tax and interest. In general, to avoid a violation of Section 409A of the Code, amounts
deferred may be paid out only upon separation from service, disability, death, a specified time, a change in control (as defined
by the Treasury Department) or an unforeseen emergency. Furthermore, the election to defer generally must be made in the calendar
year before performance of services, and any provision for accelerated payout other than for reasons specified by the Treasury
may cause the amounts deferred to be subject to early taxation and to the imposition of the excise tax. Section 409A of the Code
is broadly applicable to any form of deferred compensation other than tax-qualified retirement plans and bona fide vacation, sick
leave, compensatory time, disability pay or death benefits and may be applicable to certain awards under the 2007 Stock Option
Plan. The Treasury Department has provided guidance on transition issues and final regulations under new Section 409A of the Code.
Incentive awards under the 2007 Stock Option Plan that are subject to Section 409A of the Code are intended to satisfy the requirements
of Section 409A of the Code, as specified in an incentive agreement.
Generally, taxable compensation earned by “covered
employees” (as defined in Section 162(m) of the Code) for options or other applicable incentive awards is intended to constitute
qualified performance-based compensation. We should, therefore, be entitled to a tax deduction for compensation paid in the same
amount as the ordinary income recognized by the covered employees without any reduction under the limitations of Section 162(m)
on deductible compensation paid to such employees. However, the committee may determine, within its sole discretion, to grant incentive
awards to such covered employees that do not qualify as performance-based compensation. Under Section 162(m), our company is denied
a deduction for annual compensation paid to such employees in excess of $1,000,000.
THE FOREGOING IS A SUMMARY OF THE UNITED
STATES FEDERAL INCOME TAX CONSEQUENCES THAT GENERALLY WILL ARISE UNDER THE CODE WITH RESPECT TO INCENTIVE AWARDS GRANTED UNDER
THE 2007 STOCK OPTION PLAN AND DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF ALL RELEVANT PROVISIONS OF THE CODE.
MOREOVER, THIS SUMMARY IS BASED ON CURRENT
FEDERAL INCOME TAX LAWS UNDER THE CODE, WHICH ARE SUBJECT TO CHANGE. THE TREATMENT OF FOREIGN, STATE, LOCAL OR ESTATE TAXES IS
NOT ADDRESSED. THE TAX CONSEQUENCES OF THE INCENTIVE AWARDS ARE COMPLEX AND DEPENDENT ON EACH INDIVIDUAL’S PERSONAL TAX SITUATION.
ALL PARTICIPANTS ARE ADVISED TO CONSULT WITH THEIR OWN TAX ADVISERS RESPECTING INCENTIVE AWARDS.
Limitation of Liability and Indemnification
Matters
Our articles of incorporation contain provisions
that limit the liability of our directors for monetary damages to the fullest extent permitted by Nevada law.
Our articles of incorporation and bylaws authorize
our company to provide indemnification to our directors and officers and persons who are or were serving at our request as a director,
officer, manager or trustee of another corporation or of a partnership, limited liability company, joint venture, trust or other
enterprise to the fullest extent permitted by Nevada law. Our articles of incorporation and bylaws also authorize our company,
by action of our Board of Directors, to provide indemnification to employees and agents of our company and persons who are serving
or did serve at our request as an employee or agent of another corporation or of a partnership, limited liability company, joint
venture, trust or other enterprise with the same scope and effect as provided to our directors and officers as described above.
Our company has not entered into any indemnification
agreement with any of its directors or officers.
We anticipate obtaining director and officer
liability insurance with respect to possible director and officer liabilities arising out of certain matters, including matters
arising under the Securities Act.
Option Exercises and Stock Vested
None of our named executive officers exercised
stock options during 2014 and through the date of this Report.
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Other than as disclosed below, none of the
following persons have, since our date of incorporation, had any material interest, direct or indirect, in any transaction with
us or in any presently proposed transaction that has or will materially affect us:
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Any person proposed as a nominee for election
as a director;
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Any person who beneficially owns, directly
or indirectly, shares carrying more than 10% of the voting rights attached to our outstanding shares of common stock;
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Any relative or spouse
of any of the foregoing persons who has the same house as such person.
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Related Transactions
On May 24, 2014 our prior Chairman and
Chief Executive Officer contributed the brands, rights, and ecommerce opportunities of HDIMAX.com and Frontlinewire.com to
the Company in exchange for 48,500,000 shares of common stock of the Company. Since we were under control of our founder on
the date of the transaction, our founder’s historical cost became the carrying cost of the contributed assets totaling
$488. As of December 31, 2014 the cost of registering the websites was fully amortized; however, we maintained the rights to
the domain names.
During the period ended December 31, 2014 we
paid our founder, Chairman, and Chief Executive Officer and related entities $211,591 for the development of content and other
marketing related expenses. The amount is classified in sales and marketing in the accompanying statement of operations.
As of December 31, 2014 we owed a related
party $340,163 as result of the related party directly paying third party vendors on our behalf. In February 2015 we issued 7,500,000
shares of restricted and unregistered common stock in full settlement of these previously accrued obligations.
During the year-ended December 31, 2015
a total of four of our Officers agreed to waive all or portions of their base salaries or previously accrued bonuses earned during
the year ended December 31, 2014 and through December 31, 2015 totaling $388,988. Since we consider our Officers related parties
we have determined the bonus and salary forgiveness was in the nature of a capital contribution and no gain was recognized in the
accompanying statements of operations.
We issued to a Director 250,000
shares of restricted and unregistered shares of common stock for cash proceeds totaling $25,000 in January
2015.
As part of the Settlement Agreement
we entered into on January 22, 2015 we cancelled restricted stock award grants to two of our former officers. Since we did not
replace a cancelled award totaling 52,500,000 shares of restricted and unregistered shares of common stock, and effectively repurchased
the award for no consideration as assumed by the application of accounting principles generally accepted in the United States,
the unrecognized grant-date fair value of the award totaling $9,975,000 was recognized during the year-ended December 31, 2015.
Additionally, we cancelled a restricted stock award granted to our current Chief Executive Officer totaling 67,500,000 shares and
replaced the award with the grant of 125,000,000 shares of restricted and unregistered shares as part of a new employment agreement
on January 29, 2015. The total compensation cost recognized during the year-ended December 31, 2015 associated with the cancellation
and replacement of this restricted stock award was $47,500,000.
During the year-ended December 31,
2015 we issued 2,000,000 shares of unregistered and restricted common stock to an affiliate for consulting services valued at
$680,000. A promissory note in the amount of $35,000 was issued to the same affiliate of the company, for cash proceeds of $35,000
in April 2015. As additional consideration on the promissory note, this same affiliate received 215,000 shares of unregistered
and restricted common stock valued at $32,039. Upon renewal of this promissory note in May 2015 this affiliate received 100,000
shares of unregistered and restricted common stock valued at $17,260.
Section 16(a) Beneficial Ownership Reporting
Compliance
Section 16(a) of the Exchange Act requires
that the directors, officers and persons who beneficially own more than 10% of the equity securities of reporting companies, file
reports of ownership and changes in ownership with the Securities and Exchange Commission (the “SEC”). Directors, officers
and greater than 10% stockholders are required by SEC regulation to furnish our company with copies of all Section 16(a) forms
that they file. Based solely on our review of the copies of such forms we received, we believe that during the year ended December
31, 2014, and through the date of this Report, all such filing requirements applicable to our company were complied with.
Code of Ethics
We have not adopted a corporate code of ethics
that applies to our Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer or controller, or persons
performing similar functions. Our decision not to adopt such a code of ethics results from our having only a limited number of
officers and directors operating as the management for our company. We believe that, as a result of the limited interaction that
occurs, having such a small management structure for our company eliminates the current need for such a code.
Committees of our Board of Directors
Audit Committee
We do not have a formal standing audit committee.
Rather, audit committee functions are performed by our entire Board of Directors. These functions include: (1) selection and oversight
of our independent accountant; (2) establishing procedures for the receipt, retention and treatment of complaints regarding accounting,
internal controls and auditing matters; (3) establishing procedures for the confidential, anonymous submission by our employees
of concerns regarding accounting and auditing matters; (4) engaging outside advisors; and (5) funding for the outside auditory
and outside advisors engagement by the audit committee.
Audit Committee Financial Expert
None of our directors or officers has the
qualifications or experience to be considered a financial expert. We believe that the cost related to retaining a financial expert
at this time is prohibitive. However, we do intend to appoint an audit committee financial expert in the foreseeable future.
Director Independence
Three of the members of our Board of Directors
may be deemed to be independent under the standards for independence contained in the Nasdaq Marketplaces Rules, Rule 4350(d) and
Rule 4200(a)(15).
Compensation Committee
Compensation committee functions are performed
by our entire Board of Directors. Our Board of Directors does not have a charter or other formal policies regarding compensation.
Nominating and Corporate Governance Committee
Nominating and Corporate Governance committee
functions are performed by our entire Board of Directors. Our Board of Directors does not have a charter or other formal policies
regarding director nominations or corporate governance.
Stockholder Communications
Any stockholder may communicate directly to
our Board of Directors by sending a letter to our company’s address of record.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
Principal Stockholders and Management
The following table provides certain information regarding the
ownership of our common stock as of April 8, 2016 by:
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each of our executive officers;
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each person known to us to own more than
5% of our outstanding common stock; and
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all of our executive
officers and directors and as a group.
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Name and Address of Stockholders†
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Shares Beneficially Owned (1)(2)
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Percentage
Ownership (1)
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Myles A. Pressey III (Chairman of the Board and Interim Chief Financial Officer)
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128,409,091
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51.53%
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Stanley L. Teeple
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8,313,841
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3.34%
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Johnathan F. Adair (3)
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7,500,000
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3.01%
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Steven L. Sanders (Director)
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150,000
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*
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Philip Fraley (Director)
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150,000
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*
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Joseph Martin (Director)
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3,331,819
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1.34%
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Officers and Directors as a group (6) persons
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147,854,751
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59.39%
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† Each stockholder’s address is c/o Zonzia Media, Inc.
74 N. Pecos Road, Suite D, Henderson, Nevada 89074
* Represents less than 1%.
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(1)
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Based on an aggregate of 249,169,122 shares of common
stock outstanding as of April 8, 2016, excluding outstanding options and warrants convertible
into shares of common stock totaling 17,614,504.
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(2)
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Unless otherwise indicated, shares are fully vested shares of the Company common stock.
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(3)
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Formerly Chief Operating Officer and Appointed Chief Executive Officer effective November 6, 2015.
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Changes in Control
Not applicable.
THE EQUITY PURCHASE
TRANSACTION
General
On February 10, 2016, we entered into a
Purchase Agreement and the Registration Rights Agreement with the Equity Purchaser. Pursuant to the terms of the Purchase Agreement,
the Equity Purchaser has agreed to purchase from us up to $2 million in the aggregate worth of our common stock from time to time,
until December 31, 2016. Pursuant to the terms of the Registration Rights Agreements, we have filed with the SEC the registration
statement that includes this prospectus to register for resale under the Securities Act of 1933, as amended (the “Securities
Act”) the shares that may be issued to the Equity Purchaser under the Purchase Agreement.
We do not have the right to commence any
sales to the Equity Purchaser under the Purchase Agreement until the SEC has declared effective the registration statement of
which this prospectus forms a part. Thereafter, we may, from time to time and at our sole discretion, direct the Equity Purchaser
to purchase shares of our common stock. The purchase price per share will be equal to 70% of the lowest daily volume weighted
average price of the common stock for the five consecutive trading days immediately following our request for the Equity Purchaser
to purchase the shares. In consideration for entering into the Purchase Agreement, we issued to the Equity Purchaser a Promissory
Note in the principal amount of $120,000, which is payable with interest at 10% on June 30, 2016. This fee for entering into
the Purchase Agreement is due regardless of any draw-down from the Equity Purchaser.
Purchase of Shares Under the Purchase Agreements
Under the Purchase Agreements, we may direct
Kodiak Capital to purchase up to $2 million of shares of our common stock. The closing of the sale of the shares will occur on
the sixth trading day following our request for the Equity Purchaser to purchase the shares. The purchase price per share will
be equal to 70% of the lowest daily volume weighted average price of the common stock for the five consecutive trading days immediately
following our request for the Equity Purchaser to purchase the shares. There is no minimum amount that we may require the Equity
Purchaser to purchase at any one time.
Other than as set forth above, there are no
trading volume requirements or restrictions under the Purchase Agreement, and we will control the timing and amount of any sales
of our common stock to the Equity Purchaser.
Conditions to Sales
Under the Purchase Agreement, the following
conditions, which cannot be waived by the Investor, must be satisfied in order for us to sell shares of our common stock to the
Equity Purchaser.
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The registration statement of which this
prospectus forms a part, and any amendment or supplement thereto, must be effective for the sale by the Equity Purchaser of the
shares to be purchased by the Equity Purchaser, and (i) neither we nor the Equity Purchaser have received notice that the SEC has
issued or intends to issue a stop order with respect to the registration statement or that the SEC otherwise has suspended or withdrawn
the effectiveness of the registration statement, either temporarily or permanently, or intends or has threatened to do so and (ii)
there is no other suspension of the use or withdrawal of the effectiveness of the registration statement or this prospectus.
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Our representations and warranties contained
in the Purchase Agreement must be true and correct in all material respects (except for representations and warranties specifically
made as of a particular date), except for any conditions that have temporarily caused any representations or warranties to be incorrect
and which have been corrected with no continuing impairment to us or the Equity Purchaser.
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We must have performed in all material
respects all covenants, agreements and conditions required by the Purchase Agreement to be performed, satisfied or complied with
by us.
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No statute, rule, regulation, executive
order, decree, ruling or injunction has been enacted, entered, promulgated or adopted by any court or governmental authority of
competent jurisdiction that prohibits or directly and materially adversely affects any of the transactions contemplated by the
Purchase Agreement, and no proceeding has been commenced that may have the effect of prohibiting or materially adversely affecting
any of the transactions contemplated by the Purchase Agreement.
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The trading of our common stock has not
been suspended by the SEC, the principal trading market for our common stock or Financial Industry Regulatory Authority, Inc. and
our common stock has been approved for listing or quotation on and has not been delisted from such principal market.
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The number of shares of our common stock
to be purchased by the Equity Purchaser at a particular closing may not exceed the number of shares that, when aggregated with
all other shares of common stock then beneficially owned by such Equity Purchaser, would result in the Equity Purchaser owning
more than 9.99% of all of our outstanding common stock.
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We must have no knowledge
of any event more likely than not to have the effect of causing the registration statement of which this prospectus forms a part
to be suspended or otherwise ineffective.
|
Our Termination Rights
We have the unconditional right, at any time,
for any reason and without any payment or liability to us, to give notice to the Equity Purchaser to terminate the Purchase Agreement.
No Short-Selling by the Equity Purchasers
The Equity Purchaser has agreed that neither
it nor any of its affiliates shall engage in any direct or indirect short-selling of our common stock during any time prior to
the termination of the Purchase Agreement.
Effect of Performance of the Purchase Agreement
on Our Stockholders
All shares of common stock registered in this
offering are expected to be freely tradable. It is anticipated that shares registered in this offering will be sold over a period
commencing on the date that the registration statement including this prospectus becomes effective through December 31, 2016. The
sale by the Equity Purchaser of a significant amount of shares registered in this offering at any given time could cause the market
price of our common stock to decline and to be highly volatile. The Equity Purchaser may ultimately purchase all, some or none
of the shares of common stock not yet issued but registered in this offering. If we sell these shares to the Equity Purchaser,
the Equity Purchaser may sell all, some or none of such shares. Therefore, sales to the Equity Purchaser by us under the Purchase
Agreement may result in substantial dilution to the interests of other holders of our common stock. In addition, if we sell a substantial
number of shares to the Equity Purchaser under the Purchase Agreement, or if investors expect that we will do so, the actual sales
of shares or the mere existence of our arrangement with the Equity Purchaser may make it more difficult for us to sell equity or
equity-related securities in the future at a time and at a price that we might otherwise wish to effect such sales. However, we
have the right to control the timing and amount of any sales of our shares to the Equity Purchaser and the Purchase Agreement may
be terminated by us at any time at our discretion without any cost to us.
Pursuant to the terms of the Purchase Agreement,
we have the right, but not the obligation, to direct Kodiak Capital to purchase up to $2 million shares of our common stock. Depending
on the price per share at which we sell our common stock to the Equity Purchaser, we may be authorized to issue and sell to the
Equity Purchaser under the Purchase Agreement more shares of our common stock than are offered under this prospectus. If we choose
to do so, we must first register for resale under the Securities Act any such additional shares, which could cause additional
substantial dilution to our stockholders. The number of shares ultimately offered for resale by the Equity Purchaser under this
prospectus is dependent upon the number of shares we direct the Equity Purchaser to purchase under the Purchase Agreement.
The
following table sets forth the amount of proceeds we would receive from the Equity Purchaser from the sale of shares at varying
purchase:
Assumed Average
Purchase Price
Per Share
|
|
|
Number of Registered
Shares to be Issued if
Full Purchase (1)
|
|
|
Percentage of Outstanding Shares After Giving Effect to the Issuance (2)
|
|
|
Additional Proceeds
from the Sale of
Registered Shares Under the Purchase Agreement
|
|
$
|
0.03
|
(3)
|
|
|
30,000,000
|
|
|
|
10.74
|
%
|
|
$
|
900,000
|
|
$
|
0.10
|
|
|
|
20,000,000
|
|
|
|
7.43
|
%
|
|
$
|
2,000,000
|
|
$
|
0.25
|
|
|
|
8,000,000
|
|
|
|
3.11
|
%
|
|
$
|
2,000,000
|
|
$
|
0.50
|
|
|
|
4,000,000
|
|
|
|
1.57
|
%
|
|
$
|
2,000,000
|
|
$
|
1.00
|
|
|
|
2,000,000
|
|
|
|
0.79
|
%
|
|
$
|
2,000,000
|
|
______________
(1)
|
Although the Purchase Agreement with the Equity Purchaser provides that we may sell up $2 million of our common stock to the Equity Purchaser in the aggregate, we are only registering 30,
000,000 shares for resale by the Equity Purchaser under this prospectus, which may or may not cover all the shares we ultimately sell to the Equity Purchaser under the Purchase Agreement, depending on the purchase price per share. As a result, we have included in this column only those shares that we are registering in this offering.
|
|
|
(2)
|
The denominator
is based on 249,169,122 shares outstanding as of April 8, 2016,
and is adjusted to include the number of shares set forth in the adjacent column which we would have sold to the Equity
Purchaser at the applicable assumed purchase price per share. The numerator is based on the number of shares issuable
under the Purchase Agreement at the corresponding assumed purchase price set forth in the adjacent column. The number of
shares in such column does not include shares that may be issued to the Equity Purchaser under the Purchase Agreement
which are not registered in this offering.
|
|
|
(3)
|
$0.03 is the
closing price of the common stock on April 14, 2016.
|
SELLING STOCKHOLDERS
This prospectus relates to the possible
resale by the selling stockholders, including 30,000,000 shares of common stock that may be issued to the Equity Purchaser pursuant
to the Purchase Agreement. We are filing the registration statement of which this prospectus forms a part pursuant to the provisions
of the agreements executed in connection with the selling stockholders’ agreement to purchase the shares.
Pursuant to the Registration Rights Agreement,
which we entered into with the Equity Purchaser on February 10, 2016 concurrently with our execution of the Purchase Agreement,
we agreed to provide certain registration rights with respect to sales by the Equity Purchaser of the shares of our common stock
that may be issued to the Equity Purchaser under the Purchase Agreement. See the description under the heading “The Equity
Purchase Transactions” for more information about the Purchase Agreement.
In addition to the 30,000,000 shares of
common stock that may be issued to the Equity Purchaser, this prospectus also covers the resale by the selling stockholders named
below from time to time of up to a total of 34,468,343 shares of our common stock that were issued to such selling stockholders
pursuant to transactions exempt from registration under the Securities Act. All of the common stock offered by the selling stockholders
is being offered for their own accounts.
Issuances of Securities being Offered
A description of each transaction in which
common stock being offered in this offering was sold to the selling stockholders is set forth below. Generally, in addition to
the shares that may be issued to the Equity Purchaser, the shares that are being offered for resale by the selling stockholders
can be categorized as follows: (i) shares that were sold in private placements of our common stock; and (ii) shares to compensate
our executives and our consultants, and (iii) as consideration to extinguish debts and contractual payment obligations of the Company.
Private Placement Transactions
A majority of the shares included in the selling
stockholder table below are held by third party investors. Each of the investors in the foregoing private placements is a U.S.
person having sufficient knowledge in business and financial matters to be capable of evaluating the merits and risks of the transaction.
The transactions were exempt from registration under the Securities Act of 1933, based upon Section 4(2) for transactions by the
issuer not involving any public offering and Rule 506 of Regulation D promulgated thereunder. There was no underwriter, no underwriting
discounts or commissions, no general solicitation, no advertisement, and resale restrictions were imposed by placing restrictive
legends on the certificates.
Issuance to Executives and Consultants
Excluding the shares being registered for
the Equity Purchaser, shares held by affiliates represent approximately 54.5% of the shares included in the Selling
Stockholders’ table. Mr. Pressey III beneficially owns a total of approximately 128 million shares of restricted common
stock, of which 10,000,000, or approximately 29%, are being registered hereby. Shares are also being registered for Johnathan
Adair, our Chief Executive Officer and Stanley Teeple our Chief Compliance Officer. In addition we are registering 150,000
shares held by Director Steven Sanders and 2,500,000 for Director Joseph Martin.
The remainder of the shares included in the
table below, was issued to consultants in exchange for services or was issued as consideration to extinguish historical debts and
contractual payment obligations of the Company.
Selling Stockholders
The following table sets forth certain information
regarding the selling stockholders and the shares offered by them in this prospectus.
Except as specifically set forth in the footnotes
to the table, none of the selling stockholders has held a position as an officer or director of the Company, nor has any selling
stockholder had any material relationship of any kind with us or any of our affiliates, other than as an employee, as set forth
in the footnotes to the table. All information with respect to share ownership has been furnished by the selling stockholders.
The shares being offered are being registered to permit public resale of the shares and each selling stockholder may offer all
or part of the shares owned for resale from time to time. In addition, none of the selling stockholders has any family relationships
with our officers, directors or controlling stockholders, except as indicated in the footnotes to the table. For additional information
regarding our capitalization, including shares held by officers, directors and 5% holders, refer to “Security Ownership of
Certain Beneficial Owners and Management” above.
The term “selling stockholders”,
except for the Equity Purchaser, includes any transferees, pledges, donees, or other successors in interest to the selling stockholders
named in the table below. To our knowledge, subject to applicable community property laws, each person named in the table
has sole voting and investment power with respect to the shares of common stock set forth opposite such person’s name. We
will file a supplement to this prospectus to name successors to any named selling stockholders who are able to use this prospectus
to resell the securities registered hereby.
We will receive no proceeds from the sale of
the registered shares. We have agreed to bear the expenses of registration of the shares, other than commissions and discounts
of agents or broker-dealers and transfer taxes, if any. We have no contractual obligations to provide any of our shareholders with
registration of their shares.
Name of Selling Stockholder
1
|
Number of Shares of Common Stock Beneficially Owned Prior to Offering
2
|
Total Number of Shares to be
Offered for Selling Stockholders Account
|
Total Shares to be Owned and Percent of Total Outstanding After Completion of this Offering
2,3,4
|
Davis Martin Consulting, LLC
|
3,181,818
|
2,500,000
|
681,818
|
0%
|
International Private Capital Group LLC
|
2,046,765
|
905,051
|
1,141,714
|
0%
|
James C. Walter Jr.
|
5,402,273
|
500,000
|
4,902,273
|
1.96
%
|
Jerry Bratz Sr.
|
1,556,851
|
1,033,370
|
523,481
|
0%
|
Johnathan Adair
(5)
|
5,000,000
|
2,500,000
|
2,500,000
|
1.00 %
|
Karrey Anne Geddes
|
17,045
|
17,045
|
0
|
0%
|
Lance A. McKinlay
|
184,393
|
184,393
|
0
|
0%
|
Leslie Greif
|
490,332
|
490,332
|
0
|
0%
|
Lynwood Bibbens
|
5,000,000
|
1,250,000
|
3,750,000
|
1.50 %
|
Margaret W. Morie
|
130,360
|
130,360
|
0
|
0%
|
Mark Spuler
|
277,777
|
277,777
|
0
|
0%
|
McKinlay Law Group
|
1,428,572
|
1,428,572
|
0
|
0%
|
Michael J. Ducas
|
6,568,182
|
3,568,182
|
3,000,000
|
1.20 %
|
Myles A. Pressey III
(6)
|
128,409,091
|
10,000,000
|
118,409,091
|
47.52 %
|
Naresh Malik
(7)
|
5,000,000
|
1,250,000
|
3,750,000
|
1.50 %
|
New Hope Partners LLC
|
16,381,105
|
3,017,468
|
13,363,637
|
5.36 %
|
Raynard A. Barnard
|
57,971
|
57,971
|
0
|
0%
|
Sandra Delgozzo
|
22,727
|
22,727
|
0
|
0%
|
Scott Alan Stiner
|
2,250,000
|
1,000,000
|
1,250,000
|
1%
|
Stanley L. Teeple
(8)
|
8,313,841
|
3,632,023
|
4,681,818
|
1.88 %
|
Steven Sanders
|
150,000
|
150,000
|
0
|
0%
|
Weltman Bernfield LLC
|
52,627
|
52,627
|
0
|
0%
|
William Barnett
|
400,000
|
400,000
|
0
|
0%
|
William Michael Long
|
25,445
|
25,445
|
0
|
0%
|
Christopher A. Wilson
|
37,500
|
37,500
|
0
|
0%
|
Gerard L. Oskam
|
37,500
|
37,500
|
0
|
0%
|
Kodiak Capital Group, LLC
(9)
|
0
|
30,000,000
(10)
|
0
|
0%
|
Total
|
192,422,175
|
64,468,343
|
157,953,832
|
63.39
%
|
1.
|
Unless a relationship is specified in the notes below, each selling stockholder is a third party investor with no other relationship with the registrant.
|
2.
|
The number of shares listed in these
columns include all shares beneficially owned and all options or warrants to purchase shares held, whether or not deemed to
be beneficially owned, by the selling stockholder. The ownership percentages listed in these columns include only shares beneficially
owned by the listed selling stockholder. Beneficial ownership is determined in accordance with the rules of the SEC. In computing
the number of shares beneficially owned by a person and the percentage ownership of that person, we have included the shares
the person has the right to acquire within 60 days of the date above, including through the exercise of any option, warrant
or other right or conversion of any security. The shares that a stockholder has the right to acquire within 60 days, however,
are not included in the computation of the percentage ownership of any other stockholder. The ownership percentages are
calculated assuming that 249,169,122 shares, excluding outstanding options and warrants convertible into shares
of common stock totaling 17,614,505 shares, were outstanding as of December 31, 2015. Although we may at
our discretion elect to issue to the Equity Purchaser up to an aggregate amount of $2 million of our common stock under the
Purchase Agreement, such shares are not included in determining the percentage of shares owned before this offering.
|
3.
|
Shares have been adjusted for the 1 for 44 reverse stock split effective November 12, 2014
|
4.
|
Under the rules adopted by the SEC, a person is deemed to be a beneficial owner of securities with respect to which the person has or shares: (a) voting power, which includes the power to vote or direct the vote of the security, or (b) investment power, which includes the power to dispose of or to direct the disposition of the security. Unless otherwise indicated below, the persons named in the table above have sole voting and investment power with respect to all shares beneficially owned. Assumes that all the securities listed hereunder have been sold.
|
5.
|
Johnathan F. Adair was appointed as our Chief Executive Officer on November 6, 2015.
|
6.
|
Myles A. Pressey III was elected as a director and our Interim Chief Financial Officer effective January 29, 2015.
|
7.
|
Naresh Malik resigned as our Chief Executive Officer on November 6, 2015.
|
8.
|
Mr. Teeple was appointed as our Chief Compliance Officer effective December 3, 2014.
|
9.
|
Ryan C. Hodson, is the Managing Member
of Kodiak Capital Group, LLC and has the voting and dispositive power with respect to the shares held by Kodiak.
|
10.
|
Assumes a purchase price of $0.0 3, which price represents
the closing price bid price for the Company’s common stock as reported by Bloomberg
Finance, L.P., for the 5 trading days ended April 8, 2016. Because the actual
date and price per share for the Company’s put right under the Purchase Agreement is
unknown, the actual purchase price for the shares is unknown. Accordingly, the actual shares
issuable pursuant to the Purchase Agreement may be more or less than the amount of shares
being registered herein.
|
PLAN OF DISTRIBUTION
The Equity Purchasers are “underwriters,”
and the other selling stockholders may be deemed to be an “underwriter,” within the meaning of the Securities Act.
Except for the Equity Purchaser, who has no assignment rights, the other selling stockholders and any of their respective pledgees,
donees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of common stock being offered
under this prospectus on any stock exchange, market or trading facility on which shares of our common stock are traded or in private
transactions. These sales may be at fixed or negotiated prices. The selling stockholders may use any one or more of the following
methods when disposing of shares:
|
·
|
ordinary brokerage transactions and transactions
in which the broker-dealer solicits investors;
|
|
·
|
block trades in which the broker-dealer
will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
|
|
·
|
purchases by a broker-dealer as principal
and resale by the broker-dealer for its account;
|
|
·
|
an exchange distribution in accordance
with the rules of the applicable exchange;
|
|
·
|
privately negotiated transactions;
|
|
·
|
to cover short sales made after the date
that this Registration Statement is declared effective by the Commission;
|
|
·
|
broker-dealers may agree with the selling
stockholder to sell a specified number of such shares at a stipulated price per share;
|
|
·
|
a combination of any such methods of sale;
and
|
|
·
|
any other method permitted
pursuant to applicable law; provided, however, that selling stockholders who are executive officers or directors of the Company
have agreed to sell the shares they hold personally through their individual broker (not a broker that may be engaged on behalf
of the Company, if applicable) and not as principal acting for their own accounts.
|
The selling stockholder may also sell shares
under an exemption from the registration requirements under the Securities Act, if available, rather than under this prospectus.
In general, selling stockholders who are executive
officers will make sales of shares they hold personally through their individual brokers, and not as principal acting for their
own accounts, and accordingly, will not directly solicit potential investors with offers to sell stock they hold personally.
Broker-dealers engaged by the selling stockholders
may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling
stockholder (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated.
Except for the Equity Purchaser, the other
selling stockholders may from time to time pledge or grant a security interest in some or all of the Shares owned by it and, if
it defaults in the performance of their secured obligations, the pledgees or secured parties may offer and sell shares of common
stock from time to time under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable
provision of the Securities Act of 1933 amending the list of selling stockholders to include the pledgee, transferee or other
successors in interest as selling stockholders under this prospectus.
Upon the company being notified in writing
by a selling stockholder that any material arrangement has been entered into with a broker-dealer for the sale of common stock
through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, a
supplement to this prospectus will be filed, if required, pursuant to Rule 424(b) under the Securities Act, disclosing (i) the
name of each such selling stockholder and of the participating broker-dealer(s), (ii) the number of shares involved, (iii) the
price at which such the shares of common stock were sold, (iv) the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable, (v) that such broker-dealer(s) did not conduct any investigation to verify the information
set out or incorporated by reference in this prospectus, and (vi) other facts material to the transaction. In addition, upon the
company being notified in writing by a selling stockholder that a donee or pledgee intends to sell more than 500 shares of common
stock, a supplement to this prospectus will be filed if then required in accordance with applicable securities law.
Except for the Equity Purchaser, the other
selling stockholders also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees
or other successors in interest will be the selling beneficial owners for purposes of this prospectus.
The Equity Purchasers are “underwriters,”
and the other selling stockholders and any broker-dealers or agents that are involved in selling the shares offered under this
prospectus may be deemed to be "underwriters," within the meaning of the Securities Act in connection with these sales.
Commissions received by these broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed
to be underwriting commissions or discounts under the Securities Act. Any broker-dealers or agents that are deemed to be underwriters
may not sell shares offered under this prospectus unless and until we set forth the names of the underwriters and the material
details of their underwriting arrangements in a supplement to this prospectus or, if required, in a replacement prospectus included
in a post-effective amendment to the registration statement of which this prospectus is a part.
The Company has advised the selling
stockholders that it may not use shares registered on this Registration Statement to cover short sales of common stock made prior
to the date on which this Registration Statement shall have been declared effective by the Commission. If the selling stockholder
uses this prospectus for any sale of the common stock, it will be subject to the prospectus delivery requirements of the Securities
Act. The selling stockholder will be responsible to comply with the applicable provisions of the Securities Act and Exchange Act,
and the rules and regulations thereunder promulgated, including, without limitation, Regulation M, as applicable to such selling
stockholder in connection with resales of their respective shares under this Registration Statement. The Equity Purchaser has agreed
not to engage in any direct or indirect short selling of our common stock during the term of the Purchase Agreement.
The Company is required to pay all fees and
expenses incident to the registration of the shares, but the company will not receive any proceeds from the sale of the common
stock by selling stockholders. The Company has agreed to indemnify the selling stockholder against certain losses, claims, damages
and liabilities, including liabilities under the Securities Act.
Blue Sky Restrictions on Resale
If a selling stockholder wants to
sell shares of our common stock under this registration statement in the United States, the selling stockholder will also
need to comply with state securities laws, also known as “Blue Sky laws,” with regard to secondary sales. All
states offer a variety of exemption from registration for secondary sales. Many states, for example, have an exemption for
secondary trading of securities registered under Section 12(g) of the Exchange Act or for securities of issuers that publish
continuous disclosure of financial and non-financial information in a recognized securities manual, such as Standard &
Poor’s. The broker for the selling stockholder will be able to advise the selling stockholder as to which states that
our common stock is exempt from registration with that state for secondary sales.
Any person who purchases shares of our common
stock from a selling stockholder under this registration statement who then wants to sell such shares will also have to comply
with Blue Sky laws regarding secondary sales.
When the registration statement becomes effective,
and the selling stockholders indicate in which state(s) they desire to sell their shares, we will be able to identify whether it
will need to register or will rely on an exemption therefrom.
DESCRIPTION OF REGISTRANT’S SECURITIES
Authorized Capital Stock
Our authorized capital stock consists of 2,200,000,000
shares, 2,000,000,000 shares of which are common stock, par value $.001 per share, and 200,000,000 shares of which are preferred
stock, par value $.001 per share.
Common Stock
Dividends.
Each share of our common
stock is entitled to receive an equal dividend, if one is declared, which is unlikely. We have never paid dividends on our common
stock and do not intend to do so in the foreseeable future. We intend to retain future earnings (if any) to finance our growth.
See “Risk Factors.”
Liquidation.
If our company is liquidated,
then assets that remain (if any) after the creditors are paid and the owners of preferred stock receive liquidation preferences
(as applicable) will be distributed to the owners of our common stock
pro rata
.
Voting Rights.
Each share of our common
stock entitles the owner to one vote. There is no cumulative voting. A simple majority can elect all of the directors of our company
at a given meeting, and the minority would not be able to elect any director of our company at that meeting.
Preemptive Rights.
Owners of our common
stock have no preemptive rights. We may sell shares of our common stock to third parties without first offering such shares to
current stockholders.
Redemption Rights.
We do not have the
right to buy back shares of our common stock except in extraordinary transactions, such as mergers and court approved bankruptcy
reorganizations. Owners of our common stock do not ordinarily have the right to require us to buy their common stock. We do not
have a sinking fund to provide assets for any buy back.
Conversion Rights.
Shares of our common
stock cannot be converted into any other kind of stock except in extraordinary transactions, such as mergers and court approved
bankruptcy reorganizations.
Nonassessability.
All outstanding shares
of our common stock are fully paid and nonassessable.
Preferred Stock
Our articles of incorporation authorize our
Board of Directors to issue “blank check” preferred stock. Our Board of Directors may divide this preferred stock into
series and establish the rights, preferences and privileges thereof. Our Board of Directors may, without prior stockholder approval,
issue any or all of the shares of this preferred stock with dividend, liquidation, conversion, voting or other rights that could
adversely affect the relative voting power or other rights of our common stock. Preferred stock could be used as a method of discouraging,
delaying or preventing a takeover or other change in control of our company. Issuances of preferred stock in the future could have
a dilutive effect on our common stock. See “Risk Factors—Risks Related to our Common Stock.”
As of the date of this Report, there are no
shares of our preferred stock outstanding.
Nevada Anti-Takeover Statutes
Nevada law provides that an acquiring person
who acquires a controlling interest in a corporation may only exercise the voting rights of control shares if those voting rights
are conferred by a majority vote of the corporation’s disinterested stockholders at a special meeting held upon the request
of the acquiring person. If the acquiring person is accorded full voting rights and acquires control shares with at least a majority
of all the voting power, then stockholders who did not vote in favor of authorizing voting rights for those control shares are
entitled to payment for the fair value of such stockholders’ shares. A “controlling interest” is an interest
that is sufficient to enable the acquiring person to exercise at least one-fifth of the voting power of the corporation in the
election of directors. “Control shares” are outstanding voting shares that an acquiring person or associated persons
acquire or offer to acquire in an acquisition and those shares acquired during the 90-day period before the person involved became
an acquiring person.
These provisions of Nevada law apply only
to “issuing corporations” as defined therein. An “issuing corporation” is a Nevada corporation that (a)
has 200 or more stockholders, with at least 100 of such stockholders being both stockholders of record and residents of Nevada,
and (b) does business in Nevada directly or through an affiliated corporation. As of the date of this Report, we do not have 100
stockholders of record that are residents of Nevada. Therefore, these provisions of Nevada law do not apply to acquisitions of
our shares and will not so apply until such time as both of the foregoing conditions are satisfied. At such time as these provisions
of Nevada law may apply to us, they may discourage companies or persons interested in acquiring a significant interest in or control
of our company, regardless of whether such acquisition may be in the interest of our stockholders.
Nevada law also restricts the ability of a
corporation to engage in any combination with an interested stockholder for three years from when the interested stockholder acquires
shares that cause the stockholder to become an interested stockholder, unless the combination or purchase of shares by the interested
stockholder is approved by the board of directors before the stockholder became an interested stockholder. If the combination was
not previously approved, then the interested stockholder may only effect a combination after the three-year period if the stockholder
receives approval from a majority of the disinterested shares or the offer satisfies certain fair price criteria.
An “interested stockholder” is
a person who is:
|
·
|
the beneficial owner, directly or indirectly,
of 10% or more of the voting power of the outstanding voting shares of the corporation; or
|
|
·
|
an affiliate or associate
of the corporation and, at any time within three years immediately before the date in question, was the beneficial owner, directly
or indirectly of 10% or more of the voting power of the then outstanding shares of the corporation.
|
Our articles of incorporation and bylaws do
not exclude us from these restrictions.
These provisions are intended to enhance the
likelihood of continuity and stability in the composition of the board of directors and in the policies formulated by the board
of directors and to discourage some types of transactions that may involve the actual or threatened change of control of our company.
These provisions are designed to reduce our vulnerability to an unsolicited proposal for the potential restructuring or sale of
all or a part of our company. However, these provisions could discourage potential acquisition proposals and could delay or prevent
a change in control of our company. They also may have the effect of preventing changes in our management.
Periodic Securities and Exchange Commission
Reports
We file reports with the SEC electronically.
The reports we file are Forms 10-K, 10-Q and 8-K. You may read copies of materials we file with the SEC at the SEC’s Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference
Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that will contain copies of the reports we file
electronically. The address for the Internet site is www.sec.gov.
Stock Transfer Agent
Our stock transfer agent for our securities
is Continental Stock Transfer & Trust Company.
SHARES ELIGIBLE FOR FUTURE SALE
Market Considerations
Currently, our common stock trades on the OTCQB
marketplace. This market is separate and distinct from the NASDAQ stock market and other stock exchanges. NASDAQ has no business
relationship with issuers of securities quoted on the OTCQB. The SEC’s order handling rules, which apply to NASDAQ-listed
securities, do not apply to securities quoted on the OTC.
Shares Covered by this Prospectus
As of April 8, 2016, we have 249,169,122
shares of our common stock outstanding, of which approximately 9,350,000 shares are currently freely tradable prior to this offering.
Of the outstanding shares, all of the 34,468,344 shares being registered for resale in this offering may be sold without
restriction or further registration under the Securities Act, except for any shares purchased by our “affiliates,”
as that term is defined in Rule 144 under the Securities Act, whose sales may be made only in compliance with the limitations
of Rule 144 described below.
The remaining shares outstanding after this
offering are deemed “restricted securities” under Rule 144. Restricted securities may be sold in the public market
only if registered or if they qualify for an exemption under the Securities Act, such as Rule 144, which rule is summarized below.
Rule 144
Certain outstanding shares of our common stock
which are not included in this prospectus may be eligible for sale in the public market under Rule 144. In general, under Rule
144 as currently in effect, a person who has beneficially owned restricted shares of our common stock for at least six months would
be entitled to sell their securities provided that (1) such person is not deemed to have been one of our affiliates at the time
of, or at any time during the three months preceding, a sale, (2) we are subject to the reporting requirements of the Exchange
Act for at least 90 days before the sale and (3) if the sale occurs prior to satisfaction of a one-year holding period, we provide
current information at the time of sale.
In the event that the registration statement
of which this prospectus is a part lapses for any reason (the Company is required to maintain its effectiveness for one year after
the effective date), all currently outstanding shares of common stock will be subject to resale pursuant to Rule 144, subject to
the limitations described herein. Common stock issued upon exercise of the options at any time while a registration statement covering
such shares is not effective will be subject to sale pursuant to Rule 144 upon the expiration of the holding period, which commences
on the date the Company receives payment of the exercise price under the option agreements.
Persons who have beneficially owned restricted
shares of our common stock for at least six months but who are our affiliates at the time of, or at any time during the three months
preceding, a sale, would be subject to additional restrictions, by which such person would be entitled to sell within any three-month
period only a number of securities that does not exceed the greater of:
|
·
|
1% of the total number of securities of
the same class then outstanding; or
|
|
·
|
the average weekly trading
volume of such securities during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale.
|
provided
, that, in each case, that
we are subject to the periodic reporting requirements of the Exchange Act for at least three months before the sale.
However, since our common stock is traded over
the counter, which is not an “automated quotation system,” our stockholders will not be able to rely on the market-based
volume limitation described in the second bullet above. If, in the future, our securities are listed on an exchange or quoted on
NASDAQ, then our stockholders would be able to rely on the market-based volume limitation. Unless and until our stock is so listed
or quoted, our stockholders can only rely on the percentage based volume limitation described in the first bullet above.
Such sales by affiliates must also comply with
the manner of sale, current public information and notice provisions of Rule 144. The selling stockholders will not be governed
by the foregoing restrictions when selling their shares pursuant to this prospectus.
Restrictions on the Use of Rule 144 by
Shell Companies or Former Shell Companies
Rule 144 is not available for the resale of
securities initially issued by companies that are, or previously were, shell companies, like us, unless certain conditions are
met. As a result, it is likely that pursuant to Rule 144 our non-stockholders, who were issued shares of our common stock while
we were a shell company, will be able to sell the their shares of our common stock from and after November 26, 2015 (the one year
anniversary of the Form 10 disclosure) without registration. However, we are registering for public resale certain shares of our
outstanding common stock which were issued prior to the acquisition of HDIMAX, as described elsewhere in this in the registration
statement of which this prospectus forms a part.
LEGAL MATTERS
The validity of the issuance of the common
stock offered by the selling stockholders under this prospectus will be passed upon for us by Barnett & Linn. William Barnett
owns a total of 400,000 shares of our common stock.
EXPERTS
The financial statements for the period
ended December 31, 2014 included in this prospectus and elsewhere in the registration statement, have been audited by Haynie &
Company, an independent registered public accounting firm, to the extent and for the periods indicated in their report appearing
elsewhere herein, and are included in reliance upon such report and upon the authority of such firm as experts in accounting and
auditing. The financial statements for the period ended December 31, 2015 included in this prospectus and elsewhere in the
registration statement, have been audited by WSRP, LLC, an independent registered public accounting firm, to the extent and for
the periods indicated in their report appearing elsewhere herein, and are included in reliance upon such report and upon the authority
of such firm as experts in accounting and auditing
CHANGE IN ACCOUNTANTS
On September 14, 2015,
we were notified that the Haynie and Company audit partner on our account was no longer with the firm and had joined the firm WSRP,
LLC. As a result, Zonzia Media, Inc. dismissed Haynie and Company as our independent registered public accounting firm effective
immediately. The dismissal was approved by the Board of Directors of the Company.
Haynie’s reports
on the financial statements as of December 31, 2014 and for the period from May 24, 2014 (the Company’s inception) to December
31, 2014 contained a going concern note resulting from the fact that the Company has no source of recurring revenue; negative working
capital; and has suffered recurring losses from operations. Other than the foregoing, Haynie’s reports on the financial statements
for the fiscal year end December 31, 2014 and for the period from May 24, 2014 to December 31, 2014 did not contain an adverse
opinion or a disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope, or accounting principles.
During the Company’s
period from May 24, 2014 to December 31, 2014 and through September 14, 2015, there were no disagreements with Haynie on any matter
of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if
not resolved to the satisfaction of Haynie, would have caused it to make reference to the subject matter of the disagreements in
connection with its report. Further, there were no reportable events as described in Item 304(a)(1)(v) of Regulation S-K occurring
during the Company’s period from May 24, 2014 to December 31, 2014 and through September 14, 2015.
The Company provided
a copy of the foregoing disclosures to Haynie prior to the date of our filing a current report on Form 8-K containg them on September
18, 2015. Haynie furnished us with a letter addressed to the Securities and Exchange Commission, a copy of which was filed as Exhibit
16.1 to such Form 8-K.
On September 14, 2015,
the Board of Directors of the Company engaged WSRP, LLC (“WSRP”) as the Company’s new independent registered
public accounting firm. One of the partners with WSRP is the same auditor who was engaged on the audit of the Company while at
Haynie.
During the period
from May 24, 2014 to December 31, 2014 through September 14, 2015 and during any subsequent interim period preceding the date of
engagement, neither the Company, nor anyone acting on its behalf, consulted with WSRP regarding (a) the application of accounting
principles to a specified transaction, either completed or proposed, or the type of audit opinion that would have been rendered
on the Company’s financial statements, and no written report was provided to the Company nor was oral advice rendered that
was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting
issue; or (b) any matter that was either the subject of a disagreement (as defined in paragraph 304(a)(1)(iv) of Regulation S-K)
or a reportable event (as described in paragraph 304(a)(1)(v) of Regulation S-K.).
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement
on Form S-1 under the Securities Act with respect to the common stock offered by this prospectus. This prospectus, which is part
of the registration statement, omits certain information, exhibits, schedules and undertakings set forth in the registration statement.
For further information pertaining to us and our common stock, reference is made to the registration statement and the exhibits
and schedules to the registration statement. Statements contained in this prospectus as to the contents or provisions of any documents
referred to in this prospectus are not necessarily complete, and in each instance where a copy of the document has been filed as
an exhibit to the registration statement, reference is made to the exhibit for a more complete description of the matters involved.
You may read and copy all or any portion of
the registration statement without charge at the public reference room of the SEC at 100 F Street, N. E., Washington, D. C. 20549.
Copies of the registration statement may be obtained from the SEC at prescribed rates from the public reference room of the SEC
at such address. You may obtain information regarding the operation of the public reference room by calling 1-800-SEC-0330. In
addition, registration statements and certain other filings made with the SEC electronically are publicly available through the
SEC’s web site at http://www.sec.gov. The registration statement, including all exhibits and amendments thereto, has been
filed electronically with the SEC.
We are subject to the information and periodic
reporting requirements of the Exchange Act and, accordingly, we file annual reports containing financial statements audited by
an independent registered public accounting firm, quarterly reports containing unaudited financial data, current reports and other
reports and information with the SEC. You may inspect and copy each of our periodic reports, proxy statements and other information
at the SEC’s public reference room, and at the web site of the SEC referred to above.
FINANCIAL STATEMENT TABLE OF CONTENT
Report
of Independent Registered Public Accounting Firm
|
|
F-2
|
Report
of Independent Registered Public Accounting Firm
|
|
F-3
|
Balance
Sheets
|
|
F-4
|
Statements
of Operations
|
|
F-5
|
Statements
of Stockholders’ Equity (Deficit)
|
|
F-6
|
Statements
of Cash Flows
|
|
F-7
|
Notes
to Financial Statements
|
|
F-8
|
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Zonzia Media, Inc.
We have audited the accompanying balance
sheets of Zonzia Media, Inc. as of December 31, 2015, and the related statements of operations, stockholders’ equity, and
cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility
is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with
the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provide a reasonable basis for our opinion.
In our opinion, the financial statements
referred to above present fairly, in all material respects, the financial position of Zonzia Media, Inc. as of December 31, 2015,
and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally
accepted in the United States of America.
The accompanying financial statements
have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements,
the Company has no source of recurring revenue; negative working capital; and has suffered recurring losses from operations; which
raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are
also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ WSRP, LLC
WSRP, LLC
Salt Lake City, Utah
April 12, 2016
Report of Independent Registered Public
Accounting Firm
To the Board of Directors
Zonzia Media, Inc. (formerly HDIMAX Media, Inc. and Indigo-Energy,
Inc.)
Henderson, NV
We have audited the accompanying consolidated
balance sheet of Zonzia Media, Inc. (formerly HDIMAX Media, Inc. and Indigo- Energy, Inc.) as of December 31, 2014 and the related
consolidated statement of operations, stockholders’ deficit and cash flows for the period from May 24, 2014 to December
31, 2014. These consolidated financial statements are the responsibility of Zonzia Media, Inc.’s management. Our responsibility
is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with
the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits
included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control
over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
In our opinion, the financial statements
referred to above present fairly, in all material respects, the financial position of Zonzia Media, Inc. (formerly HDIMAX Media,
Inc. and Indigo-Energy, Inc.), as of December 31, 2014 and the results of their operations and their cash flows for the period
from May 24, 2014 to December 31, 2014 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements
have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements,
the Company has no source of recurring revenue; negative working capital; and has suffered recurring losses from operations; which
raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are
also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Haynie & Company P.C.
Haynie & Company, P.C.
Salt Lake City, Utah
April 15, 2015
ZONZIA MEDIA, INC.
(formerly HDIMAX Max, Inc. and Indigo-Energy, Inc.)
BALANCE SHEETS
|
|
December 31, 2015
|
|
|
December 31, 2014
|
|
ASSETS
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
6
|
|
|
$
|
208
|
|
Licensed content
|
|
|
443,077
|
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
443,083
|
|
|
|
208
|
|
|
|
|
|
|
|
|
|
|
Other Assets
|
|
|
|
|
|
|
|
|
Other assets
|
|
|
6,000
|
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
449,083
|
|
|
$
|
208
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
1,625,535
|
|
|
$
|
710,769
|
|
Accrued expenses
|
|
|
480,000
|
|
|
|
690,247
|
|
Related party accounts payable
|
|
|
–
|
|
|
|
340,163
|
|
Accrued compensation
|
|
|
858,796
|
|
|
|
495,167
|
|
Accrued interest
|
|
|
9,601
|
|
|
|
–
|
|
Convertible promissory notes payable, net of discounts
|
|
|
378,705
|
|
|
|
–
|
|
Promissory notes payable
|
|
|
35,000
|
|
|
|
–
|
|
Derivative liability
|
|
|
664,426
|
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
4,052,063
|
|
|
|
2,236,346
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity (Deficit)
|
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par value, 200,000,000 shares authorized and none
issued and outstanding at December 31, 2015 and 2014
|
|
|
–
|
|
|
|
–
|
|
Common stock, $0.001 par value, 2,000,000,000 shares authorized and
234,343,197 and 758,065,119 shares issued and outstanding at
|
|
|
|
|
|
|
|
|
December 31, 2015 and 2014, respectively
|
|
|
234,344
|
|
|
|
758,065
|
|
Additional paid-in capital
|
|
|
104,430,107
|
|
|
|
22,923,087
|
|
Accumulated deficit
|
|
|
(108,267,431
|
)
|
|
|
(25,917,290
|
)
|
|
|
|
|
|
|
|
|
|
Total stockholders' equity (deficit)
|
|
|
(3,602,980
|
)
|
|
|
(2,236,138
|
)
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity (deficit)
|
|
$
|
449,083
|
|
|
$
|
208
|
|
The
accompanying notes are an integral part of these financials statements
ZONZIA MEDIA, INC.
(formerly HDIMAX Media, Inc. and Indigo-Energy, Inc.)
STATEMENTS OF OPERATIONS
|
|
For the Year-Ended December 31, 2015
|
|
|
For the Period from Inception on May 24, 2014 to
December 31, 2014
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
$
|
–
|
|
|
$
|
439
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
534,058
|
|
|
|
53,565
|
|
Sales and marketing
|
|
|
610,676
|
|
|
|
1,006,102
|
|
Officer compensation
|
|
|
79,687,046
|
|
|
|
23,295,167
|
|
Professional fees
|
|
|
1,951,773
|
|
|
|
729,411
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
82,783,553
|
|
|
|
25,084,245
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(82,783,553
|
)
|
|
|
(25,083,806
|
)
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
Gain on change in fair value of derivatives
|
|
|
22,510
|
|
|
|
–
|
|
Interest expense
|
|
|
(409,120
|
)
|
|
|
(13,462
|
)
|
|
|
|
|
|
|
|
|
|
Total other income (expense)
|
|
|
(386,610
|
)
|
|
|
(13,462
|
)
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(83,170,163
|
)
|
|
$
|
(25,097,268
|
)
|
|
|
|
|
|
|
|
|
|
Net loss per share - basic and diluted
|
|
$
|
(0.33
|
)
|
|
$
|
(0.14
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
252,185,672
|
|
|
|
185,663,218
|
|
The
accompanying notes are an integral part of these financial statements
ZONZIA MEDIA, INC.
(formerly HDIMAX Media, Inc. and Indigo-Energy, Inc.)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
|
|
Common Stock
|
|
|
Additional Paid-in Capital
|
|
|
Accumulated Deficit
|
|
|
Total
|
|
|
|
Shares
|
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, Inception May 24, 2014
|
|
|
–
|
|
|
$
|
–
|
|
|
$
|
488
|
|
|
$
|
–
|
|
|
$
|
488
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of founder's shares in May 2014
|
|
|
48,500,000
|
|
|
|
48
|
|
|
|
(48
|
)
|
|
|
–
|
|
|
|
–
|
|
Cancellation of founder's shares related to reverse
capitalization in November 2014
|
|
|
(48,500,000
|
)
|
|
|
(48
|
)
|
|
|
47
|
|
|
|
–
|
|
|
|
(1
|
)
|
Reverse capitalization of November 2014
|
|
|
757,689,386
|
|
|
|
757,689
|
|
|
|
(488
|
)
|
|
|
(820,022
|
)
|
|
|
(62,821
|
)
|
Common stock issued for debt settlement in December 2014
|
|
|
375,733
|
|
|
|
376
|
|
|
|
123,088
|
|
|
|
–
|
|
|
|
123,464
|
|
Stock based compensation
|
|
|
–
|
|
|
|
–
|
|
|
|
22,800,000
|
|
|
|
–
|
|
|
|
22,800,000
|
|
Net loss
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(25,097,268
|
)
|
|
|
(25,097,268
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2014
|
|
|
758,065,119
|
|
|
$
|
758,065
|
|
|
$
|
22,923,087
|
|
|
$
|
(25,917,290
|
)
|
|
$
|
(2,236,138
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Settlement agreement with former Officers and Directors
|
|
|
(709,121,205
|
)
|
|
|
(709,121
|
)
|
|
|
162,000
|
|
|
|
820,022
|
|
|
|
272,901
|
|
Stock-based compensation
|
|
|
162,367,500
|
|
|
|
162,368
|
|
|
|
77,261,273
|
|
|
|
–
|
|
|
|
77,423,641
|
|
Stock issued for services
|
|
|
5,736,797
|
|
|
|
5,737
|
|
|
|
1,412,235
|
|
|
|
–
|
|
|
|
1,417,972
|
|
Common stock issued for cash
|
|
|
4,073,928
|
|
|
|
4,074
|
|
|
|
436,776
|
|
|
|
–
|
|
|
|
440,850
|
|
Common stock issued for employee agreement termination
|
|
|
5,000,000
|
|
|
|
5,000
|
|
|
|
1,895,000
|
|
|
|
–
|
|
|
|
1,900,000
|
|
Common stock issued for settlement of related party payables
|
|
|
7,500,000
|
|
|
|
7,500
|
|
|
|
332,663
|
|
|
|
–
|
|
|
|
340,163
|
|
Common stock issued in lieu of interest
|
|
|
721,058
|
|
|
|
721
|
|
|
|
111,246
|
|
|
|
–
|
|
|
|
111,967
|
|
Related party debt forgiveness
|
|
|
–
|
|
|
|
–
|
|
|
|
388,988
|
|
|
|
–
|
|
|
|
388,988
|
|
Reclassification of options and warrants to liability
|
|
|
–
|
|
|
|
–
|
|
|
|
(493,161
|
)
|
|
|
–
|
|
|
|
(493,161
|
)
|
Net loss
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(83,170,163
|
)
|
|
|
(83,170,163
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2015
|
|
|
234,343,197
|
|
|
$
|
234,344
|
|
|
$
|
104,430,107
|
|
|
$
|
(108,267,431
|
)
|
|
$
|
(3,602,980
|
)
|
The
accompanying notes are an integral part of these financial statements
ZONZIA MEDIA, INC.
(formerly HDIMAX Media, Inc. and Indigo-Energy, Inc.)
STATEMENTS OF CASH FLOWS
|
|
For the Year-Ended December 31, 2015
|
|
|
For the Period from Inception on May 24, 2014 to December 31, 2014
|
|
Cash Flows from Operating Activities
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(83,170,163
|
)
|
|
$
|
(25,097,268
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
78,234,785
|
|
|
|
22,800,000
|
|
Common stock issued in lieu of interest
|
|
|
111,967
|
|
|
|
–
|
|
Loss on change in fair value of derivatives
|
|
|
22,510
|
|
|
|
–
|
|
Debt discount and deferred issuance cost amortization
|
|
|
–
|
|
|
|
12,560
|
|
Debt discount accretion
|
|
|
69,205
|
|
|
|
–
|
|
Stock issued for services
|
|
|
3,317,972
|
|
|
|
–
|
|
Changes in assets and liabilities
|
|
|
|
|
|
|
|
|
Licensed content
|
|
|
(443,077
|
)
|
|
|
–
|
|
Other assets
|
|
|
(6,000
|
)
|
|
|
–
|
|
Accounts payable
|
|
|
914,766
|
|
|
|
460,530
|
|
Accrued expenses
|
|
|
(210,247
|
)
|
|
|
496,754
|
|
Related party accounts payable
|
|
|
–
|
|
|
|
272,465
|
|
Accrued compensation
|
|
|
363,629
|
|
|
|
495,167
|
|
Accrued interest
|
|
|
9,601
|
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
(785,052
|
)
|
|
|
(559,792
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flow from Financing Activities
|
|
|
|
|
|
|
|
|
Proceeds from issuance of related party promissory notes
|
|
|
70,000
|
|
|
|
560,000
|
|
Payments on related party promissory notes
|
|
|
(35,000
|
)
|
|
|
–
|
|
Proceeds from issuance of convertible promissory notes
|
|
|
309,000
|
|
|
|
–
|
|
Proceeds from issuance of common stock
|
|
|
440,850
|
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
784,850
|
|
|
|
560,000
|
|
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents
|
|
|
(202
|
)
|
|
|
208
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of the period
|
|
|
208
|
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of the period
|
|
$
|
6
|
|
|
$
|
208
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosure of Cash Flow Information
|
|
|
|
|
|
|
|
|
Cash paid for income taxes
|
|
$
|
–
|
|
|
$
|
–
|
|
Cash paid for interest
|
|
$
|
–
|
|
|
$
|
–
|
|
|
|
|
|
|
|
|
|
|
NON CASH INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Common stock issued for settlement of related party payables
|
|
$
|
340,163
|
|
|
$
|
–
|
|
Related to party debt forgiveness
|
|
$
|
388,988
|
|
|
$
|
–
|
|
The accompanying notes are an integral part of these financial statements
ZONZIA MEDIA, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR-ENDED DECEMBER 31, 2015
NOTE 1 – DESCRIPTION OF BUSINESS
Zonzia Media, Inc, initially organized
as HDIMAX Media, Inc., and incorporated in the State of Delaware on May 24, 2014, is a digital publishing and broadcast Company
focused on content development and multi-platform content distribution, advertising, and ecommerce.
Reverse Merger with Indigo-Energy,
Inc.
On November 21, 2014, through a wholly-owned
subsidiary of a public shell Company then known as Indigo-Energy, Inc., HDIMAX Acquisition Corporation, a Nevada corporation,
was merged with and into HDIMAX, Inc., a Delaware corporation (“HDIMAX”) (such merger, the “Merger”) pursuant
to the Agreement and Plan of Merger, effective as of September 2, 2014, and as amended effective as of November 20, 2014, by and
among Indigo-Energy, Inc. (our “company” or “we” or “us”), HDIMAX and HDIMAX Acquisition Corporation
(the “Merger Agreement”). HDIMAX was the surviving corporation of the Merger and as such will continue as a wholly-owned
subsidiary of our Company. Upon closing the merger, we changed our name to HDIMAX Media, Inc.
As a result of the Merger, all of HDIMAX’s
common stock was converted into 712,121,205 shares of our Company’s common stock, which represents approximately 94% of
the outstanding shares of our company’s common stock after giving effect to the Merger. The common stock issuance, representing
94% of the outstanding shares of the consolidated Company was accounted for as a reverse capitalization in accordance with accounting
principles generally accepted in the United States (“US GAAP”) and the Rules and Regulations as promulgated by the
United States Securities and Exchanges Commission (“SEC”).
On January 22, 2015, we entered into a
Settlement Agreement in which we cancelled all of the 712,121,205 shares of restricted and unregistered common stock previously
issued to effectuate the merger with Rajinder Brar, the previous sole owner of HDIMAX, Inc. In consideration for the shares being
cancelled, Rajinder Brar received 3,000,000 shares of newly restricted common stock after the execution of the settlement agreement.
We forfeited our rights to sell advertising and other products on websites previously controlled by Mr. Brar and related entities,
with the exception of
www.hdimax.com
. An outline of the significant terms of the Settlement Agreement
includes, but is not limited to, the following:
|
·
|
The 712,121,205
shares of HDIMAX Media, Inc. (formerly Indigo-Energy) common stock issued to Rajinder Brar, the owner of 100% of the previously
issued outstanding stock of HDIMAX, Inc. immediately preceding the reverse acquisition transaction, were cancelled.
|
|
·
|
Rajinder Brar, Aneliya
Vasileva, and Myles Pressey III, previously appointed as the Company’s officers and Board of Directors immediately following
the completion of the reverse acquisition, resigned and forfeited future compensation terms associated with any and all previously
agreed upon employment agreements, inclusive of the compensation accrued as of December 31, 2014.
|
|
·
|
Mr. James C. Walter
Sr. was reappointed to serve as a Director charged with appointing new officers. Mr. Walter Sr. served as the Sole Officer
and Director of the Company immediately preceding the completion of the reverse acquisition transaction.
|
|
·
|
The Company’s
option agreement to acquire Fashion Style Magazine, Inc., an entity wholly owned by Rajinder Brar, was cancelled.
|
|
·
|
The Omnibus Agreement
and License dated November 21, 2014, by and between the Company and Fashion Style Magazine, Inc. was terminated. The brands
and assets wholly owned by Rajinder Brar through Fashion Style Magazine, Inc. were intended to be a core portion of the consolidated
Company’s business operations subsequent to the completion of the reverse acquisition.
|
|
·
|
The Company forfeited
all rights to Frontlinewire.com, a brand and website acquired in the reverse acquisition.
|
|
·
|
The Company maintained
all rights to hdimax.com, a brand and website acquired in the reverse acquisition, but agreed to assign those assets back
to their original owners by May 1, 2015. We do not intend to further develop or publish content at www.hdimax.com.
|
For additional details, including a copy
of the Settlement Agreement, please see our Current Report on Form 8-K filed on January 28, 2015.
On March 9, 2015 we changed our name to
Zonzia Media, Inc. and we are developing a new multi-platform entertainment distribution channel with the goal of being a unique
hybrid of a linear channel, a video-on-demand channel and an over-the-top channel. Our technology will allow our viewers instant
access to our available content.
NOTE 2 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements
have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United
States of America (“US GAAP”) and have been presented on a going concern basis, which contemplates the realization
of assets and satisfaction of liabilities in the normal course of business.
Use of Estimates
In preparing financial statements in conformity
with generally accepted accounting principles, we are required to make estimates and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and
revenues and expenditures during the reported periods. Actual results could differ materially from those estimates.
Cash and Cash Equivalents
We consider all highly liquid instruments
with an original maturity of 90 days or less at the time of purchase to be cash equivalents.
Fair Value Measurements
The fair value of a financial instrument
is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked
to offer prices. The fair value should be calculated based on assumptions that market participants would use in pricing
the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should
include consideration of non-performance risk, including the party’s own credit risk.
Fair value measurements do not include
transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine
fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to
the fair value measurement. The fair value hierarchy is defined into the following three categories:
Level 1: Quoted market prices in active
markets for identical assets or liabilities.
Level 2: Observable market-based inputs
or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs that are
not corroborated by market data.
Income Taxes
Deferred taxes are provided on an asset
and liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carry
forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the difference
between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be
realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Net Income/(Loss) Per Common Share
Income/ (loss) per share of common stock
is calculated by dividing the net income/ (loss) by the weighted average number of shares of common stock outstanding during the
period. The Company has no potentially dilutive securities in 2015 and 2014. Accordingly, basic and dilutive income (loss) per
common share are the same.
Advertising Costs
The Company expenses advertising costs
when incurred. Advertising costs incurred amount to $0 and $0 for the years ended December 31, 2015 and 2014, respectively.
Embedded Conversion Features and Other
Equity-linked Instruments
The Company classifies all of its common
stock purchase warrants and other derivative financial instruments as equity if the contracts (1) require physical settlement
or net-share settlement or (2) give the Company a choice of net-cash settlement or settlement in its own shares (physical settlement
or net-share settlement). The Company classifies as assets or liabilities any contracts that (1) require net-cash settlement (including
a requirement to net cash settle the contract if an event occurs and if that event is outside the control of the Company), (2)
give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement), or
(3) contracts that contain reset provisions. The Company assesses classification of its equity-linked instruments at each reporting
date to determine whether a change in classification between equity and liabilities (assets) is required.
Recently Issued Accounting Pronouncements
In June 2009, the FASB established the
Accounting Standards Codification (“Codification” or “ASC”) as the source of authoritative accounting
principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in accordance
with generally accepted accounting principles in the United States (“GAAP”). Rules and interpretive releases
of the Securities and Exchange Commission (“SEC”) issued under authority of federal securities laws are also sources
of GAAP for SEC registrants. Existing GAAP was not intended to be changed as a result of the Codification, and accordingly
the change did not impact our financial statements. The ASC does change the way the guidance is organized and presented.
We reviewed all other recently issued accounting pronouncements
and determined that the updates below could have an effect on the Company’s financial statements.
FASB Account Standards Update, No. 2014-15,
Going Concern, dated August 2014 says, in connection with preparing financial statements for each annual and interim reporting
period, an entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that
raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the
financial statements are issued (or within one year after the date that the financial statements are available to be issued when
applicable).
Management’s evaluation should be
based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued
(or at the date that the financial statements are available to be issued when applicable).
The amendments in this update are effective
for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application
is permitted. The Company has not chosen early adoption.
FASB Account Standards Update, No. 2014-09,
Revenue from Contracts with Customers, dated May 2014 says, an entity should recognize revenue to depict the transfer of promised
goods and services to customers in an amount that reflects the consideration to which the entity expects to entitled in exchange
for those goods and services.
To achieve that core principle, an entity
should apply the following steps:
|
·
|
Identify
the contract(s) with a customer.
|
|
·
|
Identify
the performance obligations in the contract.
|
|
·
|
Determine
the transaction price.
|
|
·
|
Allocate
the transaction price to the performance obligations in the contract.
|
|
·
|
Recognize
revenue when (or as) the entity satisfies a performance obligation.
|
For a public entity, the amendments in
this Update are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that
reporting period. Early application is not permitted.
Going Concern
Since our inception on May 24, 2014, we
have generated immaterial revenues resulting in the incurrence of net losses through December 31, 2015. This has further led to
negative working capital, all which results in substantial doubt about the Company’s ability to continue as a going concern.
Our management, Board, and Advisory Board
has focused its efforts and our limited resources on raising additional capital through debt or equity offerings at terms not
detrimental to our planned future operations. As of the date of this report we do not have any firm funding commitments.
NOTE 3 – RELATED PARTY TRANSACTIONS
During the year-ended December 31, 2015
we settled prior obligations due to a related party totaling $340,163 via the issuance of 7,500,000 shares of restricted and unregistered
shares of common stock. The settled obligation also represents that balance outstanding as of December 31, 2014.
During the year-ended December 31, 2015
a total of four of our Officers agreed to waive all or portions of their base salaries or previously accrued bonuses earned during
the year ended December 31, 2014 and through December 31, 2015 totaling $388,988. Since we consider our Officers related parties
we have determined the bonus and salary forgiveness was in the nature of a capital contribution and no gain was recognized in
the accompanying statements of operations.
We issued a Director 250,000 shares of
restricted and unregistered shares of common stock for cash proceeds totaling $25,000 in January 2015.
As part of the Settlement Agreement we
entered into on January 22, 2015 we cancelled restricted stock award grants to two of our former officers. Since we did not replace
a cancelled award totaling 52,500,000 shares of restricted and unregistered shares of common stock, and effectively repurchased
the award for no consideration as assumed by the application of accounting principles generally accepted in the United States,
the unrecognized grant-date fair value of the award totaling $9,975,000 was recognized during the year-ended December 31, 2015.
Additionally, we cancelled a restricted stock award granted to our current Chief Executive Officer totaling 67,500,000 shares
and replaced the award with the grant of 125,000,000 shares of restricted and unregistered shares as part of a new employment
agreement on January 29, 2015. The total compensation cost recognized during the year-ended December 31, 2015 associated with
the cancellation and replacement of this restricted stock award was $47,500,000.
During the year-ended December 31, 2015
we issued 2,000,000 shares of unregistered and restricted common stock to an affiliate for consulting services valued at $680,000.
A promissory note in the amount of $35,000 was issued to the same affiliate of the company, for cash proceeds of $35,000 in April
2015. As additional consideration on the promissory note, this same affiliate received 215,000 shares of unregistered and restricted
common stock valued at $32,039. Upon renewal of this promissory note in May 2015 this affiliate received 100,000 shares of unregistered
and restricted common stock valued at $17,260.
Employment Agreement Amendment
On May 15, 2015, we amended our Chairman
and Chief Business Development Office, Mr. Myles Pressey III’s, employment agreement. Mr. Pressey III was originally going
to be granted 25,000,000 shares of fully vested restricted and unregistered shares of common stock on January 29, 2016 whereas
the amendment calls for Mr. Pressey III to receive up to 62,500,000 shares of restricted and unregistered common stock subject
to the achievement of performance benchmarks set by the Board of Directors. The modification of Mr. Pressey III’s equity
award resulted in the recognition of compensation totaling $10,262,819 during the year ended December 31, 2015.
NOTE 4 – STOCKHOLDERS’
EQUITY
The following provides information for
the shares of restricted and unregistered shares of common stock that we issued (or cancelled) from January 1, 2015 through the
date of this report:
In January 2015 we issued 75,000 shares
of restricted and unregistered common stock for consulting services valued at $25,000.
In January 2015 we issued 57,971 shares
restricted and unregistered shares of common stock for cash totaling $10,000.
We issued a Director 250,000 shares of
restricted and unregistered shares of common stock for cash proceeds totaling $25,000 in January 2015.
In January 2015 we issued a total of 145,000,000
shares of restricted and unregistered shares of common stock as compensation to our officers, directors, and other consultants
valued at $63,991,061.
In January 2015 we issued 5,000,000 shares
of restricted and unregistered shares of common stock to a former employee of HDIMAX, Inc. valued at $1,900,000.
In January 2015, in accordance with the
terms of our Settlement Agreement with our former Chairman and Chief Executive Officer, we cancelled 712,121,205 shares of unregistered
and restricted common stock. We recognized settlement expense, included in the general and administrative expenses in the accompanying
statement of operations, totaling $107,901 and reversed the previously recognized accumulated deficit adjustment of $820,022 associated
with the Settlement. Rajinder Brar received 3,000,000 shares of newly restricted common stock after the execution of the settlement
agreement.
In February 2015 we issued 142,500 shares
of restricted and unregistered common stock for accounting and legal services valued at $21,179.
In February 2015 we issued a total of
200,000 shares of restricted and unregistered shares of common stock as compensation directors valued at $38,348.
In February 2015 we issued 3,750,000 shares
of restricted and unregistered common stock for consulting services valued at $719,021.
In February 2015 we issued 177,777 restricted
and unregistered shares of common stock for cash totaling $32,800.
In February 2015 we issued 7,500,000 shares
of restricted and unregistered common stock in settlement of previously accrued related party liabilities totaling $340,163.
In March 2015 we issued 100,000 restricted
and unregistered shares of common stock for cash totaling $28,050.
In April 2015 we issued 440,000 shares
of restricted and unregistered common stock in conjunction with the issuance of notes payable for total consideration of $64,770.
In April 2015 we issued 4,500,000 shares
of restricted and unregistered common stock for consulting services valued at $927,054.
In April 2015 we issued a total of 5,000,000
shares of restricted and unregistered shares of common stock as compensation to our officers valued at $1,500,000.
In April 2015 we issued 25,445 shares
of restricted and unregistered shares of common stock for cash totaling $5,000.
In May 2015 we issued a total of 3,200,000
shares of restricted and unregistered shares of common stock as compensation to our officers and directors valued at $968,000.
In May 2015 we issued 509,524 shares of
restricted and unregistered common stock for consulting services valued at $112,621.
In May 2015 we issued 1,641,929 shares
of restricted and unregistered shares of common stock for cash totaling $170,000.
In May 2015 we issued Warrants for the
Purchase of 1,500,000 shares of restricted and unregistered shares of common stock as additional incentive for a $150,000 cash
investment in the company that was part of the $170,000 in the previous footnote.
In May 2015 we issued 250,000 shares of
restricted and unregistered shares of common stock for interest on outstanding notes and payables valued at $45,582.
In June 2015 we issued a total of 150,000
shares of restricted and unregistered shares of common stock as compensation to our officers and directors valued at $49,500.
In June 2015 we issued 250,000 shares
of restricted and unregistered common stock for consulting services valued at $50,000.
In June 2015 we issued 476,915 shares
of restricted and unregistered shares of common stock for cash totaling $85,000.
In July 2015 we issued 1,152,564 shares
of restricted and unregistered shares of common stock for cash totaling $70,000.
In July 2015 we issued 150,000 shares
of restricted and unregistered shares of common stock to a Director for services totaling $7,747.
In August 2015 we issued 50,000 shares
of restricted and unregistered common stock for services valued at $3,364.
In September 2015 we issued 225,000 shares
of restricted and unregistered common stock for services valued at $18,145.
In September 2015 we issued 31,058 shares
of restricted and unregistered shares of common stock for interest on outstanding notes valued at $3,711.
In November 2015 we issued 191,327 shares
of restricted and unregistered shares of common stock for cash totaling $15,000.
In December 2015 we issued 402,273 shares
of restricted and unregistered common stock for services valued at $14,309.
In December 2015 we issued 4,500,000 shares
of restricted and unregistered common stock as compensation valued at $141,250.
Warrants
During the year-ended December 31, 2015
we issued warrants to certain investors as part of the private placements of our restricted and unregistered common stock.
The following table presents a summary
of our warrant activity through December 31, 2015:
|
|
As of December 31, 2015
|
|
|
|
Shares
|
|
|
Weighted Average Exercise Price
|
|
|
Weighted Average Remaining Term (years)
|
|
|
Aggregate Intrinsic Value
|
|
Outstanding, December 31, 2014
|
|
|
871,591
|
|
|
$
|
0.88
|
|
|
|
2.83
|
|
|
$
|
–
|
|
Warrants granted
|
|
|
3,000,000
|
|
|
|
0.22
|
|
|
|
2.43
|
|
|
|
–
|
|
Warrants exercised
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
Warrants expired, cancelled, forfeited
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
Outstanding and exercisable at December 31, 2015
|
|
|
3,871,591
|
|
|
$
|
0.37
|
|
|
|
2.52
|
|
|
$
|
–
|
|
The warrants did not have any intrinsic
value as of December 31, 2015 and 2014 and were fully vested. Of the outstanding warrants, 862,500 are contingently exercisable
only in the event that other equity-linked instruments are exercised.
Options
In August 2015, outstanding options and
warrants with an aggregate fair value of $493,161 were reclassified from equity to derivative liability.
As of December 31, 2015 and 2014 the Company
had 568,182 stock options outstanding. During the periods presented there were no options granted, exercised, cancelled, or forfeited,
correspondingly, no additional compensation expense was recognized for the periods presented. All options outstanding are exercisable
and do not have any intrinsic value as of December 31, 2015 and 2014 and are set to expire in October of 2017. At December 31,
2015 the weighted average exercise price of the outstanding options was $6.60 with a weighted average remaining term of 1.84 years.
NOTE 5 – CONVERTIBLE NOTES PAYABLE
The Company has entered into various convertible
debt financing transactions with third party investors (“Investors”). As of December 31, 2015 the Company issued convertible
notes to Investors in the aggregate principal amount of $309,000. The notes are unsecured, and provide for the conversion of all
principal and interest outstanding under the notes into shares of the Company’s common stock beginning six months after
the issuance date of the respective notes (“conversion date”) at conversion rates of 55%-60% of the lowest listed
market price of the Company’s common stock for the previous twenty to twenty-five trading days immediately prior to the
conversion date.
The conversion price of the notes are
subject to adjustment in the event of stock splits, dividends, distributions and similar adjustments to our capital stock. The
number of shares of common stock subject to the Notes may be adjusted in the event of mergers, distributions, sale of substantially
all of the Company’s assets, tender offers and dilutive issuances.
The Company has determined the resetting
terms of the conversion rates are separable into two elements:
i) Fixed Conversion Rate element –
since a fixed minimum
discount to the listed market price ranging from forty to forty-five percent of any listed market price has been determined to
be a predominant element of the conversion feature, we determined the fixed conversion element results in a fixed value of common
stock to the Investor at any conversion date; and
ii) Variable Conversion Rate element –
the volatility in our listed
market prices and wide ranging bid and ask spreads on a daily basis results in an additional variable amount of common stock value
being received by the Investors upon conversion. The fixed conversion element, resulting in the determination of stock settled
debt, is recognized as a debt discount at intrinsic value on the issuance date and is not re-valued in the subsequent periods.
The variable conversion element is classified as a derivative liability and is revalued on an on-going basis.
Convertible notes payable consist of the
following:
|
|
As
of December 31, 2015
|
|
|
|
Face Value of Note
|
|
|
Intrinsic Value of Fixed
Conversion Element
|
|
|
Unamortized Discount
|
|
|
Net Balance
|
|
JMJ Financial: 12% Convertible note due August 24, 2017
|
|
$
|
27,500
|
|
|
$
|
20,833
|
|
|
$
|
(17,804
|
)
|
|
$
|
30,529
|
|
Auctus Fund, LLC; 8% Convertible note due May 28, 2016
|
|
|
56,250
|
|
|
|
46,023
|
|
|
|
(27,766
|
)
|
|
|
74,507
|
|
LG Capital Funding, LLC; 8% Convertible note due August 21, 2016
|
|
|
27,000
|
|
|
|
22,091
|
|
|
|
(15,594
|
)
|
|
|
33,497
|
|
St George Investment, LLC; 8% Convertible note due September 9, 2016
|
|
|
32,000
|
|
|
|
26,182
|
|
|
|
(19,737
|
)
|
|
|
38,445
|
|
Carebourn Capital, LP; 12% Convertible note due July 5, 2016
|
|
|
87,500
|
|
|
|
87,500
|
|
|
|
(65,846
|
)
|
|
|
109,154
|
|
LG Capital Funding, LLC; 8% Convertible note due October 9, 2016
|
|
|
78,750
|
|
|
|
78,750
|
|
|
|
(65,427
|
)
|
|
|
92,073
|
|
Total Convertible Notes
|
|
$
|
309,000
|
|
|
$
|
281,379
|
|
|
$
|
(212,174
|
)
|
|
$
|
378,205
|
|
The Company did not have any convertible
notes outstanding as of December 31, 2014.
During the year-ended December 31, 2015
the Company recognized discount accretion totaling $69,205 included in interest expense in the accompanying results of operations.
Since the Company has determined the convertible notes will be stock settled, beginning six months after the date of each issuance,
all of the convertible notes payable have been classified as current in the accompanying balance sheet.
NOTE 6 – EMBEDDED DEBT CONVERSION FEATURES AND OTHER
EQUITY-LINKED INSTRUMNETS
The Company accounts for variable conversion
elements embedded in its convertible instruments that meet the definition of a derivative as liabilities. The variable conversion
elements are re-measured at fair value with the changes in the value reported as a component of other income (expense) in the
accompanying results of operations. The Company estimates the fair value of the variable conversion element using a Black-Scholes
Merton Pricing model based on the variable number of additional shares of common stock the Company is required to issue upon conversion.
The Company periodically, or when specific
transactions occur that may have material impacts on the presentation of the financial statements, reviews it outstanding equity
and equity-linked instruments to determine the appropriate classification in the accompanying balance sheet, equity or liability
(asset). During the year ended December 31, 2015 the company reclassified all of its previously outstanding options and warrants
from equity to liability. The determination to reclassify the previously outstanding options and warrants resulted from the issuance
of convertible notes payable that are potentially convertible into an unlimited number shares of common stock.
The Company measures and re-measures the
fair value of the instruments not classified as permanent equity using a Black Scholes Merton pricing model. The following assumptions
were used to estimate the fair value of the Company’s derivative liabilities:
Expected volatility
|
445.55%
|
Expected term (years)
|
.040 to 2.50
|
Dividend yield
|
0.0%
|
Discount Rate
|
0.16%
|
During the year-ended December 31, 2015
the Company recognized a derivative liability, and corresponding finance fee, with an initial fair value totaling $148,755 associated
with the variable conversion element embedded in the convertible notes payable. Finance fees are included as a component of interest
expense in the accompanying results of operations.
In August 2015, outstanding options and
warrants with an aggregate fair value of $493,161 were reclassified from equity to derivative liability.
As of December 31, 2015 the Company had
derivative liability obligations with an aggregate fair value totaling $664,426. During the year-ended December 31, 2015 the Company
recognized a gain on the change in the fair value of derivative liabilities totaling $22,510 included as a component of other
income (expense) in the accompanying statements of operations.
Financial liabilities measured at fair
value on a recurring basis are summarized below:
|
|
Fair value measurements
|
|
|
|
|
|
|
Quoted price in active markets for unobservable identical assets
|
|
|
Significant other inputs
|
|
|
Significant observable inputs
|
|
|
|
December 31, 2015
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Derivative liability
|
|
$
|
664,426
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
664,426
|
|
The derivative liabilities are measured
at fair value using a Black Sholes Merton Pricing Model. The model is based on assumptions including quoted market prices and
estimated volatility factors based on historical quoted market prices for the Company’s common stock, and are classified
within Level 3 of the valuation hierarchy
The following table sets forth a summary
of the changes in the fair value of the Company’s Level 3 financial liabilities that are measured at fair value on a recurring
basis:
|
|
December 31, 2015
|
|
|
December 31, 2014
|
|
Beginning Balance
|
|
$
|
–
|
|
|
$
|
–
|
|
Aggregate fair value of derivative issued
|
|
|
148,755
|
|
|
|
–
|
|
Liability reclassification for other equity linked instruments
|
|
|
493,161
|
|
|
|
–
|
|
Change in fair value of derivative included in results of operations (gain) loss
|
|
|
22,510
|
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
Ending Balance
|
|
$
|
664,426
|
|
|
$
|
–
|
|
NOTE 7 – ACCRUED EXPENSES
During the year-ended December 31, 2015
our management, with the assistance of our defense attorney, analyzed the merit and likelihood of an unfavorable outcome in the
matter of
Congoo, LLC v. HDIMAX Max Media, Inc. Civ. Action No. 3:15-cv-01423
. Based on the facts and circumstances, we
determined the likelihood of an unfavorable outcome to be remote. Correspondingly, we reversed the previously accrued obligation
of $422,448, as presented in sales and marketing expense, in the accompanying statement of operations.
NOTE 8 – LICENSED CONTENT
The Company entered into a content licensing
and distribution agreement with an entertainment company in which we will distribute, on our available platforms, the following:
|
i.
|
Fifty-two
(52) twenty three minute (0:23) episodes of a series known as “Behind the Velvet Rope”
|
|
ii.
|
Ancillary
content including a minimum of ten to twenty event compilations approximately five to seven minutes in length each; and
|
|
iii.
|
Thirty
to forty individual interviews approximately one to three minutes in length each.
|
The agreement calls for us to advance
$480,000 to the entertainment company to be used for production of the series. After paying the advance, we are entitled to recoup
the advanced amount plus an additional $10,000 (a total of $490,000) after which time the gross revenue generated under the agreement
will be split on a 50/50 basis. The non-refundable advance obligation and capitalized licensed content are presented in accounts
payable and current assets, respectively, in the accompanying balance sheet.
NOTE 9 – COMMITMENTS, CONTINGENCIES
AND UNCERTAINTIES
Operating Lease
The Company is currently obligated under
an operating lease for office space and associated building expenses. The lease expires in January 2017. As of December
31, 2015, future minimum payments for all lease obligations are as follows:
Year
|
Amount
|
2016
|
$ 4,950
|
2017
|
450
|
|
$ 5,400
|
NOTE 10 – LEGAL
The Company is currently under negotiations
to pay a vendor claim. The possible exposure of the claim ranges from $95,000 to $150,000, the company has accrued $129,306, as
of December 31, 2015.
NOTE 11 – SUBSEQUENT EVENTS
ASC 855-16-50-4 establishes accounting
and disclosure requirements for subsequent events. ASC 855 details the period after the balance sheet date during which we should
evaluate events or transactions that occur for potential recognition or disclosure in the financial statements, the circumstances
under which we should recognize events or transactions occurring after the balance sheet date in its financial statements and
the required disclosures for such events. We have evaluated all subsequent events through the date these consolidated financial
statements were issued, and determined the following are material to disclose:
In January 2016 we issued 500,000 shares
of restricted and unregistered shares of common stock for cash proceed of $15,000.
In January 2016 we entered into a lease
agreement for office space with a 12 month term. Company pays $450 a month for space rented.
In January 2016 we issued a total of 2,500,000
shares of restricted and unregistered shares of common stock as compensation to our officers, valued at $142,250.
In February 2016, a convertible note holder
converted $4,275 of principal for 250,000 shares of the Company’s common stock.
In February 2016, a convertible note holder
converted $58,482, total principal and interest for 3,744,015 of the Company’s common stock.
In February 2016, a convertible promissory
note was modified to remove the conversion feature while the remaining note terms stayed the same.
In February 2016 we issued 75,000 shares
of restricted and unregistered shares of common stock to a Director for services totaling $14,250.
In February 2016 we entered in a $50,000
web development services agreement that included the issuance of 603,449 shares of restricted and unregistered shares of common
stock for website development services totaling $35,000.
In February 2016 we issued 100,000 shares
of restricted and unregistered shares of common stock for consulting services totaling $5,690.
In February 2016 we issued 150,000 shares
of restricted and unregistered shares of common stock for consulting services totaling $8,535.
In February 2016 we issued 35,000 shares
of restricted and unregistered shares of common stock for consulting services totaling $1,992.
In February 2016 we settled $3,850 payment
related to legal claim conducted via Quitclaim.
In February 2016 we issued 2,898,551 shares
of restricted and unregistered shares of common stock for cash totaling $100,000.
In February 2016 we obtained a $250,000
promissory note with a 15% interest rate due on June 2016 and this transaction also included issuance of 100,000 shares of restricted
and unregistered shares of common stock as in incentive totaling $5,800.
In February 2016 the board of directors
presented an option to the Company’s chairman to convert his cash compensation accrual for year ended December 31, 2015
to stock and the offered is extended until the end of the 1
st
Quarter of 2016.
In February 2016 we issued 1,428,575 shares
of restricted and unregistered shares of common stock as a $50,000 payment for a $209,000 balance owed to one of our service providers.
In February 2016 we entered into a contract
agreement for communications and formulate capital strategies in global markets, the term of the agreement is 12 months and cost
associated with it ranges from $3,500 to $5,000 per month.
In February 2016 we issued 340,136 shares
of restricted and unregistered shares of common stock for cash totaling $25,000.
In February 2016 we issued 136,054 shares
of restricted and unregistered shares of common stock for cash totaling $10,000.
In March 2016, a convertible note holder
converted $5,000 of principal and interest for 193,010 of the Company’s common stock.
In March 2016, a convertible note holder
converted $9,000 of principal and $414 of interest for 570,560 shares of the Company’s common stock.
In March 2016, a convertible note holder converted $5,400 of
principal for 300,000 shares of the Company’s common stock.
In March 2016 we obtained a $44,000 convertible
promissory note with a 12% interest rate due on December 2016.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The actual and estimated expenses in connection
with this offering, all of which will be borne by us, are as follows:
SEC Registration Fee
|
|
$
|
387
|
|
Accounting Fees
|
|
|
7,500
|
*
|
Legal Fees and Expenses
|
|
|
12,000
|
*
|
Transfer Agent Fee
|
|
|
1,000
|
*
|
Miscellaneous
|
|
|
3,000
|
*
|
|
|
|
|
|
Total
|
|
$
|
23,887
|
*
|
*estimated
Item 14. Indemnification of Directors and Officers
Section 78.7502 of the Nevada Revised Statutes
provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses including
attorneys' fees, judgments, fines and amounts paid in settlement in connection with various actions, suits or proceedings, whether
civil, criminal, administrative or investigative other than an action by or in the right of the corporation, a derivative action,
if they acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, if they had no reasonable cause to believe their conduct was unlawful.
A similar standard is applicable in the case of derivative actions, except that indemnification only extends to expenses including
attorneys' fees incurred in connection with the defense or settlement of such actions and the statute requires court approval before
there can be any indemnification where the person seeking indemnification has been found liable to the corporation. The statute
provides that it is not exclusive of other indemnification that may be granted by a corporation's Amended and Restated Articles
of Incorporation, Bylaws, agreement, a vote of stockholders or disinterested directors or otherwise.
The Company’s Amended and Restated Articles
of Incorporation provides that it will indemnify and hold harmless, to the fullest extent permitted by Chapter 78 of the Nevada
Revised Statutes, as amended from time to time, each person that such section grants us the power to indemnify.
The Nevada Revised Statutes permit a corporation
to provide in its Amended and Restated Articles of Incorporation that a director of the corporation shall not be personally liable
to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability for:
|
·
|
any breach of the director's duty of loyalty
to the corporation or its stockholders;
|
|
·
|
acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law;
|
|
·
|
payments of unlawful dividends or unlawful
stock repurchases or redemptions; or
|
|
·
|
any transaction from
which the director derived an improper personal benefit.
|
The Company’s Amended and Restated
Articles of Incorporation provides that, to the fullest extent permitted by applicable law, none of our directors will be personally
liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director. Any repeal or modification of
this provision will be prospective only and will not adversely affect any limitation, right or protection of a director of our
Company existing at the time of such repeal or modification.
Item 15. Recent Sale of Unregistered
Securities
On November 21, 2014, we issued 712,121,205
shares of common stock in exchange for the all of the issued and outstanding stock of HDIMAX, Inc. There was no underwriter, no
underwriting discounts or commissions, no general solicitation, no advertisement, and resale restrictions are being imposed by
placing a Rule 144 legend on the certificate(s). The one person who received securities, Rajinder Brar, had such knowledge in business
and financial matters that he is capable of evaluating the merits and risks of the transaction. This transaction was exempt from
registration under the Securities Act of 1933, based on Section 4(a)(2) for transactions by the issuer not involving any public
offering. All of these shares were subsequently canceled pursuant to the terms of a Settlement Agreement dated January 22, 2015.
In November 2014 the Company issued 113,636
shares of restricted and unregistered common stock for consulting services valued at $45,454.
In November 2014 the Company issued 712,121,205
shares of restricted and unregistered common stock to effectuate the merger with HDIMAX, Inc. Subsequently, in January 2015, the
712,121,205 shares to complete the merger with HDIMAX, Inc. were cancelled as part of a Settlement Agreement resulting in the disposition
of a majority of the previously acquired assets of HDIMAX, Inc.
In December 2014, the Company issued 375,733
shares of restricted and unregistered common stock for the settlement of discounted convertible notes and accrued interest totaling
$123,463.
In January 2015 we issued 75,000 shares of
restricted and unregistered common stock for consulting services valued at $25,000.
In January 2015 we issued 57,971 shares restricted
and unregistered shares of common stock for cash totaling $10,000.
In January 2015 we issued a total of 145,200,000
shares of restricted and unregistered shares of common stock as compensation to our officers, directors, and other consultants
valued at $54,054,409.
In January 2015 we issued 5,000,000 shares
of restricted and unregistered shares of common stock to a former employee of HDIMAX, Inc. valued at $1,900,000.
In January 2015, in accordance with the terms
of our Settlement Agreement with our former Chairman and Chief Executive Officer, we cancelled 712,121,205 shares of unregisters
and restricted common stock.
In February 2015 we issued 142,500 shares of
restricted and unregistered common stock for accounting and legal services valued at $20,000.
In February 2015 we issued a total of 200,000
shares of restricted and unregistered shares of common stock as compensation valued at $38,348.
In February 2015 we issued 3,750,000 shares
of restricted and unregistered common stock for consulting services valued at $719,021.
In February 2015 we issued 177,777 restricted
and unregistered shares of common stock for cash totaling $32,800.
In February 2015 we issued 7,500,000 shares
of restricted and unregistered common stock in settlement of previously accrued related party liabilities totaling $340,163.
In March 2015 we issued 100,000 restricted
and unregistered shares of common stock for cash totaling $28,050.
In April 2015 we issued 440,000 shares
of restricted and unregistered common stock in conjunction with the issuance of notes payable for total consideration of $70,000.
In April 2015 we issued 4,500,000 shares of
restricted and unregistered common stock for consulting services valued at $927,054.
In April 2015 we issued a total of 5,000,000
shares of restricted and unregistered shares of common stock as compensation to our officers valued at $1,500,000.
In April 2015 we issued 25,445 shares of restricted
and unregistered shares of common stock for cash totaling $5,000.
In May 2015 we issued a total of 3,200,000
shares of restricted and unregistered shares of common stock as compensation to our officers and directors valued at $968,000.
In May 2015 we issued 509,524 shares of restricted
and unregistered common stock for consulting services valued at $112,621.
In May 2015 we issued 1,641,929 shares of restricted
and unregistered shares of common stock for cash totaling $170,000.
In May 2015 we issued Warrants for the Purchase
of 1,500,000 shares of restricted and unregistered shares of common stock as additional incentive for a $150,000 cash investment
in the company that was part of the $170,000 in the previous footnote.
In May 2015 we issued 250,000 shares of restricted
and unregistered shares of common stock for interest on outstanding notes and payables valued at $45,582.
In June 2015 we issued a total of 150,000 shares
of restricted and unregistered shares of common stock as compensation to our officers and directors valued at $49,500.
In June 2015 we issued 250,000 shares of restricted
and unregistered common stock for settlement of an obligation valued at $50,000.
In June 2015 we issued 476,915 shares of restricted
and unregistered shares of common stock for cash totaling $85,000.
In July 2015 we issued 1,050,000 shares
of restricted and unregistered shares of common stock for cash totaling $60,000.
In August 2015 we issued 102,564 shares of
restricted and unregistered shares of common stock for cash totaling $10,000.
In September, 2015, we issued 508,000 shares
of restricted and unregistered shares of common stock valued at $55,948, to seven investors for cash, settlement of debt and
services rendered.
In December, 2015, we issued 5,141,327 shares
of restricted and unregistered shares of common stock valued at $205,653, to six investors for cash, settlement of debt and
services rendered.
All of the securities issued above were issued
pursuant to an exemption provided by Section 4(a)(2) of the Securities Act of 1933, as amended, and/or Rule 506 of Regulation D
promulgated thereunder. Each of the investors represented to the Company that it (i) is an “accredited investor” as
defined in Rule 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended, (ii) is knowledgeable, sophisticated
and experienced in making investment decisions of this kind, and (iii) has had adequate access to information about the Company.
Item 16. Index To Exhibits
Exhibit Index
Exhibit Number
|
|
Description
|
|
|
|
Exhibit 2.1
|
|
Agreement and Plan of Merger dated September 2, 2014,
by and among Indigo-Energy, Inc., HDIMAX, Inc. and HDIMAX
Acquisition Corporation, Inc. (1)
|
Exhibit 2.2
|
|
Amendment to the Merger Agreement dated November 21, 2014 (2)
|
Exhibit 3.1
|
|
Amended and Restated Articles of Incorporation of Indigo-Energy, Inc. (3)
|
Exhibit 3.2
|
|
Amended and Restated Bylaws of Indigo-Energy, Inc. (4).
|
Exhibit 5.1*
|
|
Opinion of Barnett & Linn
|
Exhibit 10.1
|
|
Settlement Agreement dated January 22, 2015 (5)
|
Exhibit 10.2
|
|
Employment Agreement with Myles A. Pressey III (6)
|
Exhibit 10.3
|
|
Employment Agreement with Johnathan Adair (6)
|
Exhibit 10.4
|
|
Employment Agreement with Stanley L. Teeple (11)
|
Exhibit 10.5
|
|
Distribution Channel Agreement with simplyME dated February 9, 2015 (7)
|
Exhibit 10.6
|
|
Addendum to Distribution Channel Agreement with simplyME dated June 30, 2015 (8)
|
Exhibit 10.7
|
|
Master License and Professional Services Agreement between Kaltura, Inc and the Company dated August 4,
2015(13)
|
Exhibit 10.8
|
|
Submission/Insertion Order Agreement with Sonifi Solutions, Inc. dated July 9, 2015 (9)
|
Exhibit 10.9
|
|
Amendment to Employment Agreement with Myles A. Pressey (12)
|
Exhibit 10.11
|
|
Addendum #2 to Distribution Channel Agreement with simplyME dated July 31, 2015 (10)
|
Exhibit 10.12
|
|
License Agreement between the Company and
Sonifi Solutions, Inc. dated August 1, 2015 (10)
|
Exhibit 10.13
|
|
Equity Purchase Agreement dated February 10, 2016 between the Company and Kodiak Capital Group, LLC (14)
|
Exhibit 10.14
|
|
Registration Rights Agreement dated February 10, 2016 between the Company and Kodiak Capital Group, LLC. (14)
|
Exhibit 10.15
|
|
Replacement Note dated February 10, 2016 made by the Company in favor of Kodiak Capital Group, LLC (14)
|
Exhibit 10.16*
|
|
Replacement Promissory Note dated March 4,
2016 between the Company and Kodiak Capital Group, LLC
|
Exhibit 23.1*
|
|
Consent of Haynie & Company
|
Exhibit 23.2*
|
|
Consent of WSRP
|
Exhibit 23.3*
|
|
Consent of Barnett & Linn (included in Exhibit 5.1)*
|
101.INS
|
|
XBRL Instances 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
|
_______________
(1)
|
Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed September 4, 2014
|
(2)
|
Incorporated by reference to the applicable exhibit of the registrant’s Current Report on Form 8-K filed on November 26, 2014.
|
(3)
|
Incorporated by reference to the registrant’s definitive Information Statement on Schedule 14C filed on October 20, 2014.
|
(4)
|
Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed October 6, 2014.
|
(5)
|
Incorporated by reference to Exhibit 99.1 to our Current Report on Form 8-K filed on January 28, 2015.
|
(6)
|
Incorporated by reference to the applicable exhibit to our Current Report on Form 8-K filed on February 4, 2015.
|
(7)
|
Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on July 1, 2015.
|
(8)
|
Incorporated by reference to the applicable exhibit to our Current Report on Form 8-K filed on July 7, 2015.
|
(9)
|
Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on July 10, 2015.
|
(10)
|
Incorporated by reference to the applicable exhibit to our Current Report on Form 8-K filed on August 5, 2015.
|
(11)
|
Incorporated by reference to the applicable exhibit to our Form S-1 filed on May 29, 2015.
|
(12)
|
Incorporated by reference to the applicable exhibit to our Form S-1/A filed on July 10, 2015.
|
(13)
|
Incorporated by reference to the applicable exhibit to our Form S-1 filed on January 15, 2016.
|
(14)
|
Incorporated by reference to the applicable exhibit to our Form S-1 filed on February 12,
2016.
|
* Filed herewith
|
(B)
|
Financial Statement Schedules
|
The following financial statements of the registrant, along
with the notes thereto and the Report of Independent Registered Public Accounting Firm, are filed herewith.
Financial Statements
INDEX TO FINANCIAL STATEMENTS
Report
of Independent Registered Public Accounting Firm
|
|
F-2
|
Report
of Independent Registered Public Accounting Firm
|
|
F-3
|
Balance
Sheets
|
|
F-4
|
Statements
of Operations
|
|
F-5
|
Statements
of Stockholders’ Equity (Deficit)
|
|
F-6
|
Statements
of Cash Flows
|
|
F-7
|
Notes
to Financial Statements
|
|
F-8
|
All schedules have been omitted because the
information required to be presented in them is not applicable or is shown in the financial statements or related notes.
Item 17. Undertakings
Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to
the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Commission such indemnification
is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers
or sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts
or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement;
and
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information
in the registration statement.
(2) That, for the purpose of determining any
liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of
a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the city of Henderson, State of Nevada, on April 20, 2016.
|
Zonzia Media, Inc.
|
|
|
|
|
By:
|
/s/ Johnathan F. Adair
|
|
|
|
Johnathan F. Adair
|
|
|
|
Chief Executive Officer
(Principal Executive Officer)
|
|
Pursuant to the requirements of the Securities
Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated
SIGNATURE
|
|
TITLE
|
|
DATE
|
|
|
|
|
|
/s/ Myles A. Pressey III
|
|
Chairman of the Board of Directors
|
|
April 20, 2016
|
|
|
|
|
|
/s/ Johnathan F.
Adair
|
|
Chief Executive Officer
|
|
|
|
|
(Principal Executive Officer)
|
|
April 20, 2016
|
|
|
|
|
|
/s/ Myles A.
Pressey III
|
|
Interim Chief Financial Officer
|
|
April 20, 2016
|
|
|
(Principal Accounting and Financial Officer)
|
|
|
|
|
|
|
|
/s/ Stanley L. Teeple
|
|
Chief Compliance Officer
|
|
April 20, 2016
|
|
|
|
|
|
/s/ Philip Fraley
|
|
Director
|
|
April 20, 2016
|
|
|
|
|
|
/s/ Steven Sanders
|
|
Director
|
|
April 20, 2016
|
|
|
|
|
|
/s/ Joseph Martin
|
|
Director
|
|
April 20, 2016
|
|
|
|
|
|
|
Exhibit Index
Exhibit Number
|
|
Description
|
|
|
|
Exhibit 2.1
|
|
Agreement and Plan of Merger dated September 2, 2014,
by and among Indigo-Energy, Inc., HDIMAX, Inc. and HDIMAX
Acquisition Corporation, Inc. (1)
|
Exhibit 2.2
|
|
Amendment to the Merger Agreement dated November 21, 2014 (2)
|
Exhibit 3.1
|
|
Amended and Restated Articles of Incorporation of Indigo-Energy, Inc. (3)
|
Exhibit 3.2
|
|
Amended and Restated Bylaws of Indigo-Energy, Inc. (4).
|
Exhibit 5.1*
|
|
Opinion of Barnett & Linn
|
Exhibit 10.1
|
|
Settlement Agreement dated January 22, 2015 (5)
|
Exhibit 10.2
|
|
Employment Agreement with Myles A. Pressey III (6)
|
Exhibit 10.3
|
|
Employment Agreement with Johnathan Adair (6)
|
Exhibit 10.4
|
|
Employment Agreement with Stanley L. Teeple (11)
|
Exhibit 10.5
|
|
Distribution Channel Agreement with simplyME dated February 9, 2015 (7)
|
Exhibit 10.6
|
|
Addendum to Distribution Channel Agreement with simplyME dated June 30, 2015 (8)
|
Exhibit 10.7
|
|
Master License and Professional Services
Agreement between Kaltura, Inc and the Company dated August 4, 2015 (13)
|
Exhibit 10.8
|
|
Submission/Insertion Order Agreement with Sonifi Solutions, Inc. dated July 9, 2015 (9)
|
Exhibit 10.9
|
|
Amendment to Employment Agreement with Myles A. Pressey (12)
|
Exhibit 10.11
|
|
Addendum #2 to Distribution Channel Agreement with simplyME dated July 31, 2015 (10)
|
Exhibit 10.12
|
|
License Agreement between the Company and Sonifi Solutions, Inc. dated August 1, 2015 (10)
|
Exhibit 10.13
|
|
Equity Purchase Agreement dated February
10, 2016 between the Company and Kodiak Capital Group, LLC (14)
|
Exhibit 10.14
|
|
Registration Rights Agreement dated
February 10, 2016 between the Company and Kodiak Capital Group, LLC.
(14)
|
Exhibit 10.15
|
|
Replacement Note dated February 10,
2016 made by the Company in favor of Kodiak Capital Group, LLC
(14)
|
Exhibit 10.16*
|
|
Replacement Promissory Note dated March 4, 2016 between the Company and Kodiak Capital Group, LLC
|
Exhibit 23.1*
|
|
Consent of Haynie & Company
|
Exhibit 23.2*
|
|
Consent of WSRP
|
Exhibit 23.3*
|
|
Consent of Barnett & Linn (included in Exhibit 5.1)*
|
101.INS
|
|
XBRL Instances 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
|
_______________
(1)
|
Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed September 4, 2014
|
(2)
|
Incorporated by reference to the applicable exhibit of the registrant’s Current Report on Form 8-K filed on November 26, 2014.
|
(3)
|
Incorporated by reference to the registrant’s definitive Information Statement on Schedule 14C filed on October 20, 2014.
|
(4)
|
Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed October 6, 2014.
|
(5)
|
Incorporated by reference to Exhibit 99.1 to our Current Report on Form 8-K filed on January 28, 2015.
|
(6)
|
Incorporated by reference to the applicable exhibit to our Current Report on Form 8-K filed on February 4, 2015.
|
(7)
|
Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on July 1, 2015.
|
(8)
|
Incorporated by reference to the applicable exhibit to our Current Report on Form 8-K filed on July 7, 2015.
|
(9)
|
Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on July 10, 2015.
|
(10)
|
Incorporated by reference to the applicable exhibit to our Current Report on Form 8-K filed on August 5, 2015.
|
(11)
|
Incorporated by reference to the applicable exhibit to our Form S-1 filed on May 29, 2015.
|
(12)
|
Incorporated by reference to the applicable exhibit to our Form S-1/A filed on July 10, 2015.
|
(13)
|
Incorporated by reference to the applicable exhibit to our Form S-1 filed on January 15, 2016.
|
(14)
|
Incorporated by reference to the applicable exhibit to our Form
S-1 filed on February 12, 2016.
|
* Filed herewith
Zonzia Media (CE) (USOTC:ZONX)
過去 株価チャート
から 11 2024 まで 12 2024
Zonzia Media (CE) (USOTC:ZONX)
過去 株価チャート
から 12 2023 まで 12 2024