PITOOEY!, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2013MARCH 31, 2014

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial reporting and pursuant to the rules and regulations of the Securities and Exchange Commission ("Commission"). While these statements reflect all normal recurring adjustments which are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the financial statements and footnotes thereto, which are included in the Company's December 31, 2012,2013, Annual Report on Form 10-K, previously filed with the Commission on April 1, 2013.14, 2014.

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PITOOEY!, Inc.

Condensed Consolidated Balance Sheets

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

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PITOOEY!, Inc.

Condensed Consolidated Balance Sheets-continued

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PITOOEY!, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

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

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PITOOEY!, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

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

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PITOOEY!, INC.

Notes to Condensed Consolidated Financial Statements

Note 1 - History and Organization

The Company was organized March 29, 2006 (Date of Inception) under the laws of the State of Nevada, as White Dental Supply, Inc. The Company is authorized to issue 100,000,000 shares of its $0.001 par value common stock and 100,000,000 shares of its $0.001 par value preferred stock.

On December 27, 2012, the Company formed a wholly-ownedwholly owned subsidiary, Choice One Mobile, Inc., under the laws of the State of Nevada.

On December 27, 2012, the Company formed a wholly-ownedwholly owned subsidiary, Pitooey!PITOOEY! Mobile, Inc., under the laws of the State of Nevada.

On January 7, 2013, the Board of Directors of the Company authorized and a majority of the stockholders of the Company ratified, by written consent, resolutions to change the name of the Company to Pitooey!PITOOEY!, Inc. and to increase the authorized number of shares of the Company to 400,000,000 shares of $0.001 par value common stock and 100,000,000 shares of $0.001 par value preferred stock. The name change and increase in authorized capital was effective with the State of Nevada February 7, 2013.

On February 6, 2013, the Company formed a wholly-ownedwholly owned subsidiary, Rockstar Digital, Inc., under the laws of the State of Nevada.

Note 2 - Basis of Presentation

The interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared byOn October 31, 2013, the Company, without audit, however, in the opinionas part of the Company’s management, all adjustments necessary for a fair statement of the Company’s interim financial results have been included. These adjustments were of a normal recurring nature. The results for the interim periods are not necessarily indicative of results to be expected for any other interim period or for the entire year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with US generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these interim financial statements be read in conjunctionits settlement agreement with the financial statementsemployees of the Company for the year ended December 31, 2012Rockstar Digital (See Footnote 9 - Commitments and notes thereto included in the Company's Form 10-K annual report. The Company follows the same accounting policies in the preparationContingencies), ceased operations of interim reports.its wholly owned subsidiary, Rockstar Digital, Inc.

Note 32 - Summary of Significant Accounting Policies

Principles of consolidation

For the nine monthsperiods ended September 30,in 2014, the consolidated financial statements include the accounts of PITOOEY! Inc., Choice One Mobile, Inc., and PITOOEY! Mobile, Inc. For the periods ended in 2013, the consolidated financial statements include the accounts of Pitooey!,PITOOEY! Inc., Choice One Mobile, Inc., Pitooey!PITOOEY! Mobile, Inc. and Rockstar Digital, Inc. All significant intercompany balances and transactions have been eliminated. Pitooey!For 2014, PITOOEY!, Inc., Choice One Mobile, Inc., Pitooey!and PITOOEY! Mobile, Inc. will be collectively referred herein to as the “Company”. For 2013, PITOOEY!, Inc., Choice One Mobile, Inc., PITOOEY! Mobile, Inc. and Rockstar Digital, Inc. will be collectively referred herein to as the “Company”.

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ significantly from those estimates.

PITOOEY!, INC.

Notes to Condensed Consolidated Financial Statements

Note 3 - Summary of Significant Accounting Policies (Continued)

Cash and cash equivalents

For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. The carrying value of these investments approximates fair value.

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PITOOEY!, INC.

Notes to Condensed Consolidated Financial Statements

Note 2 - Summary of Significant Accounting Policies (continued)

Accounts receivable

Accounts receivable are stated at the amount the Company expects to collect from outstanding balances and do not bear interest. The Company provides for probable uncollectible amounts through an allowance for doubtful accounts, if an allowance is deemed necessary. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable, however, changes in circumstances relating to accounts receivable may result in a requirement for additional allowances in the future. On a periodic basis, management evaluates its accounts receivable and determines the requirement for an allowance for doubtful accounts based on its assessment of the current and collectible status of individual accounts with past due balances over 90 days. Account balances are charged against the allowance after all collection efforts have been exhausted and the potential for recovery is considered remote.

Subscriptions receivable

Once the Company receives a firm commitment from an investor to provide either a loan or an equity investment the Company records that commitment as a subscription receivable and a credit to the related liability or equity account. Subscription receivables for stock purchases are carried in the equity section. Subscription for Debentures are carried as Notes Receivable – current. Commitments are evidenced by signed Note or Stock Subscription agreements.

Intangible assets

Management regularly reviews property, equipment, intangibles and other long-lived assets for possible impairment. This review occurs quarterly, or more frequently if events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. If there is indication of impairment, then management prepares an estimate of future cash flows expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. Management believes that the accounting estimate related to impairment of its property and equipment, is a “critical accounting estimate” because: (1) it is highly susceptible to change from period to period because it requires management to estimate fair value, which is based on assumptions about cash flows and discount rates; and (2) the impact that recognizing an impairment would have on the assets reported on our balance sheet, as well as net income, could be material. Management’s assumptions about cash flows and discount rates require significant judgment because actual revenues and expenses have fluctuated in the past and are expected to continue to do so.

The Company capitalizes the costs associated with the development of the Company’s website pursuant to ASC Topic 350. Other costs related to the maintenance of the website are expensed as incurred. Amortization is provided over the estimated useful lives of 3 years using the straight-line method for financial statement purposes. The Company will commence amortization once the economic benefits of the assets began to be consumed.

The Company reviews the carrying value of intangible assets for impairment whenever events and circumstances indicate that the carrying value may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to the amount by which the carrying value exceeds the fair value. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition and other economic factors. During the nine monthsyears ended September 30,December 31, 2013 and 2012, there was no impairment necessary.

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Notes to Condensed Consolidated Financial Statements

Note 32 - Summary of Significant Accounting Policies (Continued)(continued)

Property and equipment

Property and equipment is recorded at cost. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When property and equipment is retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The Company uses other depreciation methods (generally accelerated) for tax purposes where appropriate. The estimated useful lives for significant property and equipment categories are as follows:

The Company reviews the carrying value of property and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition and other economic factors. Based on this assessment there was no impairment as of September 30,December 31, 2013 and 2012. Depreciation expense for the nine monthsyears ended September 30,December 31, 2013 and 2012 totaled $10,976$14,148 and $0, respectively.

Revenue recognition

The Company recognizes revenue when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the service has been provided to the customer; (3) the amount of fees to be paid by the customer is fixed or determinable; and (4) the collection of our fees is probable.

Sales related to long-term contracts for services (such as programming, website development and maintenance) extending over several years are accounted for under the percentage-of-completion method of accounting. Sales and earnings under these contracts are recorded based on the ratio of actual costs incurred to total estimated costs expected to be incurred related to the contract under the cost-to-cost method based budgeted milestones or tasks as designated per each contract. Anticipated losses on contracts are recognized in full in the period in which losses become probable and estimable.

For all other sales of product or services the Company recognizes revenues based on the terms of the customer agreement. The customer agreement takes the form of either a contract or a customer purchase order and each provides information with respect to the product or service being sold and the sales price. If the customer agreement does not have specific delivery or customer acceptance terms, revenue is recognized on the date of the customer agreement, invoice or purchase order.

Merchant Reserves

The Company processes sales through a third-party credit card merchant processor. A percentage of all sales is deducted and held by the merchant in a reserve account in the event of chargeback, refunds or customer voids. As of September 30,December 31, 2013 and 2012, there was $48,487$0 and $0 held in the merchant reserve account, respectively.

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Notes to Condensed Consolidated Financial Statements

Note 2 - Summary of Significant Accounting Policies (continued)

Cost of Revenue

The Company’s cost of revenue primarily consists of credit card processing fees, direct labor installation costs and client-specific dedicated Internet service costs.

PITOOEY!, INC.

Notes to Condensed Consolidated Financial Statements

Note 3 - Summary of Significant Accounting Policies (Continued)

Stock-based compensation

The Company records stock based compensation in accordance with the guidance in ASC Topic 505 and 718 which requires the Company to recognize expenses related to the fair value of its employee stock option awards. This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based awards on a graded vesting basis over the vesting period of the award.

The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with FASB ASC 718-10 and the conclusions reached by the FASB ASC 505-50. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by FASB ASC 505-50.

Advertising and marketing costs

The Company expenses all costs of advertising as incurred. During the nine monthsyear ended September 30,December 31, 2013 and 2012, advertising and marketing costs were $507,354$366,541 and $0, respectively.

Loss per common share

Net loss per share is provided in accordance with ASC Subtopic 260-10. We presentThe Company presents basic loss per share (“EPS”) and diluted EPS on the face of statements of operations. Basic EPS is computed by dividing reported losses by the weighted average shares outstanding. Except where the result would be anti-dilutive to income from continuing operations, diluted earnings per share has been computed assuming the conversion of the convertible long-term debt and the elimination of the related interest expense, and the exercise of stock warrants. Loss per common share has been computed using the weighted average number of common shares outstanding during the year.

Fair Value of Financial Instruments

The carrying amounts reflected in the balance sheets for cash, accounts payable and accrued expenses approximate the respective fair values due to the short maturities of these items. The Company does not hold any investments that are available-for-sale.

As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

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Notes to Condensed Consolidated Financial Statements

Note 2 - Summary of Significant Accounting Policies (continued)

The three levels of the fair value hierarchy are described below:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

All values for the Company are based on Level 1 observations.

PITOOEY!, INC.

Notes to Condensed Consolidated Financial Statements

Note 3 - Summary of Significant Accounting Policies (Continued)

Income Taxes

The Company follows FASB Codification Topic 740-10-25 (ASC 740-10-25) for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change.

Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse.

Dividends

The Company has not yet adopted any policy regarding payment of dividends. No dividends have been paid or declared since inception

Recent pronouncements

The Company has evaluated the recent accounting pronouncements through November 25, 2013,March 31, 2014, and believes that none of them will have a material effect on the company’sCompany’s financial position, results of operations or cash flows.

Note 43 - Going Concern

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As shown in the accompanying financial statements, the Company has an accumulated deficit of ($2,947,727)$4,194,197 as of September 30, 2013,March 31, 2014, and had net sales of $355,033$37,349 during the nine month periodthree months ended September 30, 2013.  March 31, 2014.

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Notes to Condensed Consolidated Financial Statements

In order to continue as a going concern, the Company will need, among other things, additional capital resources. The Company is significantly dependent upon its ability, and will continue to attempt, to secure equity and/or additional debt financing. The Company is currently conducting a private placement of its preferred stock to raise proceeds to finance its plan of operation. There are no assurances that the Company will be successful and without sufficient financing it would be unlikely for the Company to continue as a going concern.

The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence. These conditions raise substantial doubt about the Company's ability to continue as a going concern. These financial statements do not include any adjustments that might arise from this uncertainty.

Note 4 - Notes Receivable

PITOOEY!, INC.

Notes receivable consist of receivables for commitments to Condensed Consolidated Financial Statementsinvest for one Debenture purchase which had been committed to but not paid for as of December 31, 2013.

Detail on notes receivable is as follows:

This Note was non-interest bearing.

Note 5 - Fixed Assets

Fixed assets consisted of the following at:

Depreciation expenses for the ninethree months ended September 30,March 31, 2014 and 2013 and 2012 were $10,976$1,086 and $0, respectively.

Note 6 - Deferred Revenue

As of September 30, 2013March 31, 2014 and December 31, 2012,2013, the Company had $46,240$0 and $0 in deferred revenue related to projects paid in advance of fulfillment.

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Note 7 - Prepaid expenses and deposits

On December 27, 2012, the Company entered into a professional service agreement with a related entity for use of client services staff, administrative support and office space and equipment, for which the Company paid a retainer of $30,000. The retainer will be expensed at the sole discretion of the service firm and all ongoing expenses will be billed to the Company as incurred. As of September 30, 2013 and December 31, 2012, the balance in prepaid expenses was $0 and $30,000.

On January 29, 2013, the Company entered into an advertising arrangement with a radio network, for which the Company paid a deposit of $8,186 for two months of advertising and marketing services. As of September 30, 2013, total prepaid expenses remaining related to this service provider was $0.

On February 24, 2013, the Company entered into a contract with a third party consulting firm. As a portion of the compensation therefor, the Company issued warrants to purchase up to 100,000 shares of the Company’s common stock at an exercise price of $1.75 per share. The Company recorded Prepaid Stock Compensation in the amount of $56,494 related to the warrants issued to the consulting firm. As of September 30, 2013, the balance in prepaid stock compensation was $0.  See Note 10 - Warrants and Options for additional discussion regarding the warrants. See Note 11 - Agreements for additional discussion regarding the Letter of Agreement.

On February 26, 2013, the Company entered into a Letter of Agreement with a third party consulting firm. In exchange for certain consulting services, the Company is obligated to pay a total of $42,500, of which $30,000 was prepaid for services to be rendered and balance of $12,500 will be due upon completion of such services to be rendered. As of September 30, 2013, the balance in prepaid expenses related to this Agreement was $30,000. As additional compensation therefor, the Company issued warrants to purchase up to 1,000,000 shares of the Company’s common stock at an exercise price of $1.30 per share. The Company recorded Prepaid Stock Compensation in the amount of $640,551 related to the warrants issued to the consulting firm. As of September 30, 2013, the balance in prepaid stock compensation was $243,469.  See Note 10 - Warrants and Options for additional discussion regarding the warrants.  See Note 11 - Agreements for additional discussion regarding the Letter of Agreement.

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Notes to Condensed Consolidated Financial Statements

Note 7 - Prepaid expenses and deposits (continued)– Accrued Liabilities

On June 11, 2013, the Company issued 340,000 sharesAccrued liabilities as of its common stock to various employees of the Company, as incentive compensation valued at $136,000.  The shares vest quarterly over a period of one year.  The Company recorded Prepaid Stock Compensation in the amount of $136,000 related to the common stock issued to the employees.  As of September 30, 2013, the Company recorded $39,278 as salaries expense and the balance in prepaid stock compensation was $96,722.

On June 24, 2013, the Company issued 250,000 shares of its common stock to one entity, in exchange for prepaid advertising and marketing services valued at $100,000.  The services are to be performed for a period of 6 months from the date of issuance.  The Company recorded Prepaid Stock Compensation in the amount of $100,000 related to the common stock issued for prepaid services.  As of September 30, 2013, the Company recorded $100,000 as advertising and marketing expense and the balance in prepaid stock compensation was $0.

On July 8, 2013, the Company issued 1,000,000 shares of its common stock to one entity, in exchange for prepaid advertising and marketing services valued at $400,000. The services are to be performed for a period of 6 months from the date of issuance. The Company recorded Prepaid Stock Compensation in the amount of $400,000 related to the common stock issued for prepaid services. As of September 30, 2013, the Company recorded $186,667 as advertising and marketing expense and the balance in prepaid stock compensation was $213,333.

As of September 30, 2013March 31, 2014 and December 31, 2012, the Company had $2,779 and $0 in undeposited Funds related specifically to funds charged to customers through merchant accounts, but have not yet settled to the Company’s cash accounts.2013 consisted of:

Note 8 - Debt and Interest Expense

Through September 30, 2012, a non-affiliated third-party loaned the Company an aggregate of $7,250 in cash.  The note bears no interest and is due upon demand.  

On April 10, 2012, the Company issued a Promissory Note to one non-affiliated entity in the amount of $15,254. The loan is due and payable in full on the earlier of April 9, 2013 or at the closing of a private placement offering that nets us a minimum of $2,000,000 in financing. The loan bears an interest rate of 10% per annum, payable on maturity. During the year ended December 31, 2012, the lender agreed to convert the entire principal balance of $15,254, as well as $1,107 of interest accrued thereupon, to date, into 40,904 shares of common stock. As of December 31, 2012, the principle balance owed on this loan is $0. See Note 9 - Stockholders’ Equity for additional information.

On April 10, 2012, the Company issued a Promissory Note to one non-affiliated entity in the amount of $82,373. The loan is due and payable in full on the earlier of April 9, 2013 or at the closing of a private placement offering that nets us a minimum of $2,000,000 in financing. The loan bears an interest rate of 10% per annum, payable on maturity. During the year ended December 31, 2012, the lender agreed to convert a portion of the principal balance in the amount of $20,000, as well as $5,981 of interest accrued thereupon, to date, into 64,952 shares of common stock.  In January 2013, the Company repaid the note, in full. As of September 30, 2013 and December 31, 2012, the principle balance owed on this loan was $0 and $62,373, respectively. See Note 9 - Stockholders’ Equity for additional information.

On April 10, 2012, the Company issued a Promissory Note to one non-affiliated entity in the amount of $74,746. The loan is due and payable in full on the earlier of April 9, 2013 or at the closing of a private placement offering that nets us a minimum of $2,000,000 in financing. The loan bears an interest rate of 10% per annum, payable on maturity. During the year ended December 31, 2012, the lender agreed to convert $5,427 of interest accrued thereupon, to date, into 13,567 shares of common stock. In January 2013, the Company repaid the note, in full.  As of September 30, 2013 and December 31, 2012, the principle balance owed on this loan was $0 and $74,746, respectively. See Note 9 - Stockholders’ Equity for additional information.

PITOOEY!, INC.

Notes to Condensed Consolidated Financial Statements

Note 8 - Debt and Interest Expense (continued)

On July 25, 2012, the Company entered into an Intellectual Property Assignment Agreement.  (See note 11 to the financial statements for details concerning the Agreement).  In accordance with the terms and conditions contained therein, the Company has agreed to pay the Seller $8,000 in two installments:

1. The first payment of $4,000 is due July 25, 2013, the first anniversary date of the Agreement, and is considered a current note payable.  

2. The second and final payment of $4,000 is due July 25, 2014, the second anniversary date of the Agreement and is considered a current note payable.  

On March 18, 2013, the Company issued a Promissory Note in the amount of $15,000 to one non-affiliated entity.  The loan was due and payable in full on May 15, 2013.  The loan bears an interest rate of 8% per annum, payable on maturity.  On April 29, 2013, the entire principal balance of $15,000 and interest accrued thereupon of $138 was repaid.  As of September 30, 2013, the principle balance owed on this loan was $0.  

On March 21, 2013, the Company issued a Promissory Note to an entity owned and controlled by a shareholder in the amount of $12,500.  The loan was due and payable in full on April 21, 2013.  The loan bears an interest rate of 8% per annum, payable on maturity.  On March 28, 2013, the entire principal balance and $19 of interest accrued thereupon was paid by an officer and director on behalf of the company.  As of September 30, 2013, the principle balance owed on this loan is $0.  During the nine months ended September 30, 2013, a total of $19 has been recorded as interest expense.  

On April 8, 2013, the Company issued a Promissory Note in the amount of $50,000, which is due and payable on or before May 31, 2014.  The loan bears an interest rate of 10% per annum, with payments due on the last day of each month.  As of September 30, 2013, the principle balance owed on this loan is $42,972.  During the nine months ended September 30, 2013, a total of $2,417 has been recorded as interest expense.  

On April 29, 2013, the Company entered into an Investment Agreement, in which an investor agreed to purchase debentures up to a total principal amount of $1,100,000. This commitment was increased to $2,000,000 based on an agreement modification entered into on December 2, 2013. Each debenture will accrue interest on the unpaid principal of each individual debenture at the rate of 8% per year from the date each Debenture is issued until paid. As of September 30,December 31, 2013, the principleprincipal balance owed on this loan is $364,058.$443,441 plus accrued interest. As of March 31, 2014, the principal balance owed on this loan is $472,441 plus accrued interest. During the nine monthsquarter ended September 30, 2013,March 31, 2014, a total of $8,811$10,023 has been recorded as interest expense. In connection with the April 29, 2013 Agreement and as modified by the December 2, 2013 Agreement, the Company also agreed to issue and sell to the investor, from time to time and subject to certain terms and conditions set forth in the Agreement, up to $15,000,000$25,000,000 of the Company’Company’s common stock. As of the date of these financial statements, no shares of common stock have been issued pursuant to the Agreement.

On June 19, 2013, the Company entered into a Notes issued under this Investment Agreement are:

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Notes to Condensed Consolidated Financial Statements

Note 8 - Debt and Interest Expense (continued)

Convertible Promissory Note, whereby the Company borrowed $42,500 from apromissory notes issued to third party entity.  parties:

The loan isconvertible loans and accrued interest are due and payable in full on March 21, 2014 and bears an interest rate of 8% per annum, payable on maturity.  As of September 30, 2013, the principle balance owed on this loan is $42,500.  Interest expense through September 30, 2013 in relation to this note is $952.maturity date. The note isnotes are convertible into shares of the Company’s par value common stock at the later of (a) maturity or (b) prepayment prior to the maturity date at a variable conversion price calculated as 58% of the average of the lowest three trading prices during the ten trading days prior to the conversion date. Resultantly, a discount of $21,25042% of the face value of the Note was attributed to the beneficial conversion feature of the note, which amount isamounts are being amortized over a period of nine months.the maturity periods. As of September 30,December 31, 2013, a total of $7,949$28,720 has been amortized and recorded as interest expense, leaving a balance of $13,301$16,430 in discounts related to the beneficial conversion feature of this note.

On July 22, 2013 we issuedthese notes. As of March 31, 2014, a 8% debenturetotal of $39,132 has been amortized and recorded as interest expense, leaving a balance of $6,018 in the original principal amount of $10,000 payable on or before the 22nd day of July 2014 with attached warrants to purchase up to 20,000 shares of the Company’s common stock at a price of $.50 per share at any time priordiscounts related to the 22nd daybeneficial conversion feature of October 2016. On July 23, 2013 wethese notes.

Debentures with warrants attached issued a 8% debenture in the original principal amount of $30,000 payable on or before the 23rd day of July 2014 with attached warrants to purchase up to 60,000 shares of the Company’s common stock at a price of $.50 per share at any time prior to the 23rd day of October 2016. On July 29, 2013 we issued a 8% debenture in the original principal amount of $100,000 payable on or before the 29th day of July 2014 with attached warrants to purchase up to 200,000 shares of the Company’s common stock at a price of $.50 per share at any time prior to the 29th day of October 2016. On September 11, 2013 we issued a 15% debenture in the original principal amount of $10,000 payable on or before the 11th day of September 2014 with attached warrants to purchase up to 20,000 shares of the Company’s common stock at a price of $.50 per share at any time prior to the 11th day of October 2016. third parties:

As of September 30,March 31, 2014 and December 31, 2013, the principle balanceprincipal balances owed on these loans is $150,000. Resultantly,$347,664 and $305,000, respectively. Based on a discountvaluation of $62,959 wasthe warrants using the Black-Sholes method, as of March 31, 2014 and December 31, 2013, discounts of $309,410 and $275,499, respectively, were attributed to the warrants being given in return for loans, which amount is being amortized over a periodthe respective twelve month maturity periods of twelve months.the Notes. As of September 30,March 31, 2014 and December 31, 2013, a total of $10,493$129,870 and $57,743, respectively, has been amortized and recorded as interest expense, leaving a balance of $52,466$179,540 and $217,756, respectively, in discounts related to the beneficial conversion feature of this noteattached warrants.

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Notes to Condensed Consolidated Financial Statements

Note 8 - Debt and Interest Expense (continued)

On August 19,Noninterest-bearing promissory notes issued to related parties:

Debentures with warrants attached issued to related parties:

As of March 31, 2014 and December 31, 2013, the Company entered intoprincipal balances owed on these loans is $87,500 and $85,000, respectively. Based on a Convertible Promissory Note, wherebyvaluation of the Company borrowed $32,500 from a third party entity.  The loan is due and payable in full on May 21,warrants using the Black-Sholes method, as of March 31, 2014 and bears an interest rateDecember 31, 2013, discounts of 8% per annum, payable on maturity.  As of September 30, 2013, the principle balance owed on this loan is $32,500.  Interest expense through September 30, 2013 in relation to this note is $235.  The note is convertible into shares of the Company’s par value common stock at the later of (a) maturity or (b) prepayment prior to the maturity date at a variable conversion price calculated as 58% of the average of the lowest three trading prices during the ten trading days prior to the conversion date.  Resultantly, a discount of $16,250 was$107,048 and $105,055, respectively, were attributed to the beneficial conversion feature of the note,warrants being given in return for loans, which amount is being amortized over a periodthe respective twelve month maturity periods of nine months.the Notes. As of September 30,March 31, 2014 and December 31, 2013, a total of $3,173$30,028 and $3,573, respectively, has been amortized and recorded as interest expense, leaving a balance of $13,077$77,020 and $101,482, respectively, in discounts related to the beneficial conversion feature of this note.attached warrants.

Other promissory notes issued:

16

PITOOEY!, INC.

Notes to Condensed Consolidated Financial Statements

The securities were issued without registration in reliance on the exemption from registration in section 4(a)(2) of the Securities Act of 1933 because the offer and sale was made only to accredited investors as defined in Rule 501 of Regulation D without general solicitation or advertising; and the purchasers given access to information about our business and the opportunity to ask questions and receive answers about our business prior to making any investment decision.

For the quarter ended March 31, 2014 no executive salaries were deferred. During the nine monthsyear ended September 30, 2013, the Company issued Promissory Notes to a shareholder of the Company in the total of $6,231.  The notes are due on demand and bear no interest.  As of September 30, 2013, the remaining principal balance outstanding is $6,231.

During the nine months ended September 30, 2013, the Company issued Promissory Notes to two directors of the Company in the aggregate of $132,701.  The notes are due on demand and bear no interest.  As of September 30, 2013, the Company repaid $62,057 of the notes and the remaining principal balance outstanding is $70,644.

During the nine months ended September 30,December 31, 2013, two of the Company’s officers havehad been deferring salaries earned. As of September 30,March 31, 2014 and December 31, 2013, the Company has accrued executive compensation to these two officers totaling $14,000.$38,000.

Note 9 - Commitments and Contingencies

Office Facility Lease - The Company leases its office facility under an operating lease agreement that expires May 31, 2016. The Company recognizes rent expense on a straight-line basis over the lease period.

Equipment Lease - The Company has leases on two pieces of equipment under an operating lease that expires April 28, 2016. The Company recognizes rent expense on a straight-line basis over the lease period.

Rental expense was $17,753 for the three months ended March 31, 2014 and $25,765 for the same period ended March 31, 2013.

The Company’s minimum payments under non-cancelable operating leases for equipment and office space having initial terms in excess of one year are as follows at March 31, 2014:

On March 18, 2013, the Company received a lawsuit brought by a former employee who claimed wrongful discharge and requesting payment of $282,692 in base salary and payment for 3,975,000 shares of the Company’s common stock that he was awarded a part of his employment agreement. The Company is attempting to recover these shares based on its determination that the employee was terminated for cause. On December 23, 2013, the Company commenced litigation against the claimant for defamation, intentional interference with prospective business relations, misappropriation of trade secrets, civil conspiracy, and seeking an injunction against harassment. The claimant responded to the complaint by filing a motion to dismiss dated March 17, 2014. Although the claimant has made no formal, legal claims against the Company, it is anticipated that he may make one or more of his previously-threatened claims as a counterclaim in the case. To the extent the claims are based on his previous allegations, the Company views them as frivolous and unsupported and, therefore, has made no accrual provisions for potential losses.

17

PITOOEY!, INC.

Notes to Condensed Consolidated Financial Statements

On October 31, 2013, the Company entered into a settlement agreement with certain former employees to assume responsibility for certain payroll taxes of Rockstar Digital, Inc. (“Rockstar”) and assign its ownership of Mobile Application and Transition Services intellectual property rights to Rockstar. In addition, the Company agreed to not assert a claim against certain computer equipment (cost of $28,307) in use at Rockstar. . The Company agreed to assume liability for any payroll taxes owed on payroll paid by the Company on behalf of Rockstar’s employees. The Company estimated this liability at $30,000 which they have recorded in accrued liabilities.

Note 10 - Income Taxes

For the three months ended March 31, 2014 and 2013, the Company incurred net operating losses and, accordingly, no provision for income taxes has been recorded. In addition, no benefit for income taxes has been recorded due to the uncertainty of the realization of any tax assets. At March 31, 2014 and December 31, 2013, the Company had approximately $1,573,817 and $1,419,890 of federal net operating losses, respectively. At March 31, 2014 and December 31, 2013, the Company had approximately $4,022,156 and $3,589,530 of state net operating losses, respectively. The federal net operating loss carryforwards, if not utilized, will begin to expire in 2027. The state net operating loss carryforwards, have started to expire. The provision for income taxes consisted of the following components as of March31, 2014 and December 31, 2013:

In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible. Management considers the scheduled reversals of future deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. As a result, management determined it was more likely than not the deferred tax assets would not be realized as of March 31, 2014 and December 31, 2013, and recorded a full valuation allowance.

Reconciliation between the statutory and the effective rate is as follows:

Note 911 - Stockholders’ Equity

The Company is authorized to issue 100,000,000400,000,000 shares of its $0.001 par value common stock and 100,000,000 shares of its $0.001 par value preferred stock.

On June 18, 2008,In January, 2014, the Board of Directors authorized and declared a forward stock split to be affected in the form of a stock dividend, whereby eight newCompany issued 271,000 shares of common stock will be issued for each one existing share ofits common stock that is outstanding as of June 18, 2008, resulting in a total of nine post-split shares for each pre-split share outstanding, payable on July 17, 2008.  All references to share and per share information in the financial statements and related notes havehad been adjusted to reflect the stock split on a retroactive basis.   

On January 3, 2013, the Company filed a Certificate of Designation with the State of Nevada to designate up to 20,000,000 shares of preferred stock as “Series A.”  The Series A Preferred Stock holds no voting rights, but is automatically convertible into shares of the Company’s common stock immediately upon the effectiveness of a Certificate of Change filed by the Company to increase the number of shares of common stock the Company would become authorized to issue.

On January 7, 2013, the Board of Directors authorized and a majority of the stockholders of the Company ratified, by written consent, a resolution to increase the authorized number of shares of the Company to 400,000,000 shares of $0.001 par value common stock and 100,000,000 shares of $0.001 par value preferred stock (of which 20,000,000 have been designated as Series A Preferred Stock and 80,000,000 shares of preferred stock available for the Company to assign or designate such provisions or preferences as may be assigned by the Board of Directors).  The increase in authorized capital became effective with the State of Nevada on February 7, 2013.

Through the year ended December 31, 2012, the founding shareholder of the Company donated cash in the amount of $42,800.  The entire amount is considered donated capital and recorded as additional paid-in capital.

During the month of December, 2012, the Company conducted a private offering, in which it sold 927,500 shares of Series A Preferred Stock for $371,000 in cash.  The Series A Preferred Stock was subscribed and paid for as of December 31, 2012; however, the certificates representing the shares were not issued during the period and resultantly, there was $927 in Series A Preferred Stock Payable.  On January 9, 2013, the Company issued stock certificates to subscribers of 927,500 shares of the Company’s Series A Preferred Stock in satisfaction of the Company’s $927 Series A Preferred Stock Payable as of December 31, 2012.2013.

18

PITOOEY!, INC.

Notes to Condensed Consolidated Financial Statements

Note 911 - Stockholders’ Equity (continued)

OnIn January, 2014, the Company received $20,400 in Subscriptions Receivable for shares that were committed to be purchased as of December 31, 2012,2013. Those shares have not been issued as of March 31, 2014.

In March, 2014, the Company issued a total of 119,423sold 92,500 shares of common stock, at $0.40 per share, to four investors for the conversion of a total of $47,769 in principal and interest accrued thereupon.$37,000. The Common Stock was subscribed and paid forshares have not been issued as of December 31, 2012; however, the certificates representing the shares were not issued during the period and resultantly, there was $119 in Common Stock Payable.  January 9, 2013, the Company issued stock certificates to subscribers of 119,423 shares of the Company’s Common Stock in satisfaction of the Company’s $119 Common Stock Payable as of December 31, 2012.  See Note 8 - Debt and Interest Expense for additional information.

From January 1, 2013 through March 31, 2013, the Company sold 1,277,500 shares of its Series A Preferred Stock for total proceeds of $511,000.  2014.

On February 7, 2013, in connection with the effectiveness of the Company’s Certificate of Change to increase the authorized capital of the Company, all shares of the Company’s Series A Preferred Stock were automatically converted into 1,605,000 shares of the Company’s common stock.  

On April 4, 2013, the Company issued 30,000 shares of its common stock to two individuals for advertising and marketing services rendered, valued at $12,000.

On June 11, 2013, the Company issued 340,000 shares of its common stock to various employees of the Company, as incentive compensation valued at $136,000.  The shares vest quarterly over a period of one year.

On June 24, 2013, the Company issued 250,000 shares of its common stock to one entity, in exchange for prepaid advertising and marketing services valued at $100,000.

From April 1, 2013 to September 30, 2013, the Company sold 285,000 shares of its common stock for aggregate cash proceeds of $114,000.  As of September 30, 2013, 55,000 shares of common stock were subscribed and paid for, but not yet issued; resultantly, the Company recorded $55 as common stock owed but not issued.

On July 8, 2013, the Company issued 1,000,000 shares of its common stock to one entity, in exchange for prepaid advertising and marketing services valued at $400,000.  The services are to be performed for a period of 6 months from the date of issuance.  The Company recorded Prepaid Stock Compensation in the amount of $400,000 related to the common stock issued for prepaid services.  As of September 30, 2013, the Company recorded $186,667 as advertising and marketing expense and the balance in prepaid stock compensation was $213,333.

From July 1, 2013 to September 30, 2013, the Company sold 7,500 shares of its common stock for aggregate cash proceeds of $3,000.

As of September 30, 2013, there have been no other issuances of common stock.

Note 1012 - Warrants and Options

As of December

Warrants issued in the quarter ended March 31, 2012, there were no warrants or options outstanding to acquire any additional shares of common stock.2014:

On February 24, 2013, the Company entered into a contract with a third party consulting firm.  As a portion of the compensation therefor, the Company issued warrants to purchase up to 100,000 shares of the Company’s common stock at an exercise price of $1.75 per share.  The warrants carry a life of 2 years.  

See Note 11“Note 8 - AgreementsDebt and Interest Expense” for additional discussion regarding the Letter of Agreement.

On February 26, 2013, the Company entered into a Letter of Agreement with a third party consulting firm.  As a portion of the compensation therefor, the Companywarrants issued warrants to purchase up to 1,000,000 shares of the Company’s common stock at an exercise price of $1.30 per share.  The warrants carry a life of 2 years.  See Note 11 - Agreements for additional discussion regarding the Letter of Agreement.

On July 22, 2013 in connection with a debenture issuance we issued warrants to purchase up to 20,000 shares of the Company’s common stock at a price of $.50 per share at any time prior to the 22nd day of October 2016.issuances.

On July 23, 2013 in connection with a debenture issuance we issued warrants to purchase up to 60,000 shares of the Company’s common stock at a price of $.50 per share at any time prior to the 23rd day of October 2016.

PITOOEY!, INC.

Notes to Condensed Consolidated Financial Statements

Note 10 - Warrants and Options (continued)

On July 29, 2013 in connection with a debenture issuance we issued warrants to purchase up to 200,000 shares of the Company’s common stock at a price of $.50 per share at any time prior to the 29th day of October 2016.

On September 11, 2013 in connection with a debenture issuance we issued warrants to purchase up to 20,000 shares of the Company’s common stock at a price of $.50 per share at any time prior to the 11th day of October 2016.

The securities were issued without registration in reliance on the exemption from registration in section 4(a)(2) of the Securities Act of 1933 because the offer and sale was made only to accredited investors as defined in Rule 501 of Regulation D without general solicitation or advertising; and the purchasers given access to information about our business and the opportunity to ask questions and receive answers about our business prior to making any investment decision.

The following is a summary of the status of all of the Company’s stock warrants as of September 30, 2013 and 2012 and changes during the nine months ended on those dates:March 31, 2014.

The following tables summarize information about warrants outstanding and exercisable at September 30, 2013:March 31, 2014:

19

PITOOEY!, INC.

Notes to Condensed Consolidated Financial Statements

Note 1113 - Agreements

On July 25, 2012, the Company entered into and closed an Intellectual Property Assignment Agreement (“July IP Agreement”) by and between the Company and Mr. Sebastian Barr, an individual (“Seller”). In accordance with the July IP Agreement, the Company acquired certain patents, prototypes and technical information from the Seller (“Assets”), pertaining to child safety devices. In exchange for the Assets, the Company agreed to pay the Seller an aggregate of $42,500, pursuant to the following schedule:

1.

An initial payment of $10,000 paid to Sunbeam Packing Services, LLC upon execution of the July IP Agreement;

2.

$24,500 $24,500 paid to the Seller upon execution of the July IP Agreement;

3.

The balance of $8,000 shallwas to be paid in two installments: $4,000 upon the first anniversary date of the July IP Agreement and $4,000 upon the second anniversary date of the July IP Agreement.

4.

Additionally, theThe Company has agreedsince decided to pay tocomplete the Seller royaltiespurchase of 2.5%this intellectual property and but has not yet made payments against this Note. The Company does not yet own this intellectual property and is delinquent on payment of gross sales of products based on or directly derived from the Assets.  In the event the Company sells, assigns of otherwise transfers the Assets, the Company has agreed to pay the Seller 2.5% of the gross amount of the sale of the Assets.this Note.

On December 24, 2012, the Company entered into and closed an Intellectual Property Assignment Agreement (“COS Agreement”) by and between the Company and Choice One Solutions, Inc., a Nevada corporation (“COS”).  In accordance with the Agreement, the Company acquired research and development expenses related to certain information, ideas, know-how, concepts, techniques, systems, processes, procedures, methods and Internet domain addresses involving or relating to social media marketing.  In exchange for the Assets, the Company agreed to pay the Seller an aggregate of $5,000 in cash.

On December 24, 2012, the Company entered into and closed an Intellectual Property Assignment Agreement (“MC Agreement”) by and between the Company and Mobile Caviar, LLC, an Arizona limited liability corporation (“MC”).  In accordance with the Agreement, the Company acquired research and development expenses related to certain information, ideas, know-how, concepts, techniques, systems, processes, procedures, methods and Internet domain addresses involving or relating to mobile media marketing.  In exchange for the Assets, the Company agreed to pay the Seller an aggregate of $5,000 in cash.

On December 24, 2012, the Company entered into and closed an Intellectual Property Assignment Agreement (“LCC Agreement”) by and between the Company and Lynn Cole Capital Corp., an Arizona corporation (“LCC”).  In accordance with the Agreement, the Company acquired research and development expenses related to certain rights, title and interest in and to all intellectual property related to the text messaging platform called “Pitooey!”  In exchange for the Assets, the Company agreed to pay the Seller an aggregate of $5,000 in cash.

On December 27, 2012, the Company entered into a professional service agreement with a related entity for use of client services staff, administrative support and office space and equipment, for which the Company paid a retainer of $30,000.  The retainer will be expensed at the sole discretion of the service firm and all ongoing expenses will be billed to the Company as incurred.  As of September 30, 2013 and December 31, 2012, the balance in prepaid expenses was $0 and $30,000.

On January 29, 2013,April 17, 2014 effective May 1, 2014, the Company entered into an advertising arrangementagreement with Innovative Holdings to design and develop the Company’s RAADR mobile app, the purpose of which is to provide customers a radio network,mobile application system to allow monitoring of various forms of social media. Compensation for which the Company paid a depositthis project is comprised of $8,186 for two months$25,000 in cash and issuance of advertising and marketing services.  As of September 30, 2013 and December 31, 2012, total prepaid expenses remaining related to this service provider was $0 ad $0.

On February 24, 2013, the Company entered into a contract with a third party consulting firm.  As compensation therefor, the Company paid an initial fee of $4,750 for services rendered and is obligated to pay $3,000 per month for the next 11 months thereafter.  In addition, the Company issued warrants to purchase up to 100,000300,000 shares of the Company’s common stock at an exercise price of $1.75 per share.  See Note 7 - Prepaid Expenses and Deposits for additional discussion regarding the Prepaid Stock Compensation.  See Note 10 - Warrants and Options for additional discussion regarding the warrants.  stock.

PITOOEY!, INC.

Notes to Condensed Consolidated Financial Statements

Note 11 - Agreements (continued)

On February 26, 2013, the Company entered into a Letter of Agreement with a third party consulting firm.  In exchange for certain consulting services, the Company is obligated to pay a total of $42,500, of which $30,000 was prepaid for services to be rendered and balance of $12,500 will be due upon completion of such services to be rendered.  As additional compensation, the Company issued warrants to purchase up to 1,000,000 shares of the Company’s common stock at an exercise price of $1.30 per share.  See Note 7 - Prepaid Expenses and Deposits for additional discussion regarding the Prepaid Stock Compensation.  See Note 10 - Warrants and Options for additional discussion regarding the warrants.

Note 1214 - Related Party Transactions

Since the inception of the Company, a shareholder, officer and director of the Company donated cash to the Company in the aggregate amount of $42,800.  This amount has been donated to the Company and is not expected to be repaid and is considered additional paid-in capital.

On December 24, 2012, the Company entered into and closed an Intellectual Property Assignment Agreement by and between the Company and Choice One Solutions, Inc., a Nevada corporation owned and controlled by a related-party, whereby the Company acquired research and development expenses related to social media marketing.  In exchange, the Company agreed to pay the Seller an aggregate of $5,000 in cash.  See Note 11 - Agreements for additional information.  

On December 24, 2012, the Company entered into and closed an Intellectual Property Assignment Agreement by and between the Company and Mobile Caviar, LLC, an Arizona limited liability corporation owned and controlled by a related-party, whereby the Company acquired research and development expenses related to mobile media marketing.  In exchange, the Company agreed to pay the Seller an aggregate of $5,000 in cash.  See Note 11 - Agreements for additional information.  

On December 24, 2012, the Company entered into and closed an Intellectual Property Assignment Agreement by and between the Company and Lynn Cole Capital Corp., an Arizona corporation owned and controlled by a related-party, whereby the Company acquired research and development expenses related to the text messaging platform called “Pitooey!”  In exchange, the Company agreed to pay the Seller an aggregate of $5,000 in cash.  See Note 11 - Agreements for additional information.  

On December 27, 2012, the Company entered into a professional service agreement with a related entity for use of client services staff, administrative support and office space and equipment, for which the Company paid a retainer of $30,000.  The retainer will be expensed at the sole discretion of the service firm and all ongoing expenses will be billed to the Company as incurred.  As of September 30, 2013 and December 31, 2012, the balance in prepaid expenses was $0 and $30,000.

On March 21, 2013, the Company issued a Promissory Note to an entity owned and controlled by a shareholder in the amount of $12,500.  The loan is due and payable in full on April 21, 2013.  The loan bears an interest rate of 8% per annum, payable on maturity.  On March 28, 2013, the entire principal balance and $19 of interest accrued thereupon was paid by an officer and director on behalf of the company.  As of September 30, 2013, the principle balance owed on this loan is $0.

During the nine monthsyear ended September 30, 2013, the Company issued Promissory Notes to a shareholder of the Company in the aggregate of $6,231.  The notes are due on demand and bear no interest.  As of September 30, 2013, the remaining principal balance outstanding is $6,231.

During the nine months ended September 30, 2013, the Company issued Promissory Notes to two directors of the Company in the aggregate of $132,701.  The notes are due on demand and bear no interest.  As of September 30, 2013, the Company repaid $62,057 of the notes and the remaining principal balance outstanding is $70,644.

During the nine months ended September 30,December 31, 2013, two of the Company’s officers have been deferring salaries earned. As of September 30,December 31, 2013, the Company has accrued executive compensation to these two officers totaling $14,000.$38,000. This amount remains outstanding as of March 31, 2014.

PITOOEY!, INC.

NotesOn February 24, 2014, the Company issued a debenture to Condensed Consolidated Financial Statementsa related party for $2,500, paying 8% interest. The debenture included 5,000 warrants exercisable until February 24, 2017 at an exercise price of $0.50 per share.

Note 1315 - Subsequent Events

On October 7, 2013, the Company entered into a Convertible Promissory Note, whereby the Company borrowed $32,500 fromThe following debenture, with warrants attached, were issued to a third party entity.  The loan is due and payable in full on July 9th, 2014 and bears an interest rate of 8% per annum, payable on maturity. The note is convertible into shares of the Company’s par value common stock at the later of (a) maturity or (b) prepayment priorparty:

20

PITOOEY!, INC.

Notes to the maturity date at a variable conversion price calculated as 58% of the average of the lowest three trading prices during the ten trading days prior to the conversion date.Condensed Consolidated Financial Statements

On October 24, 2013 we issued a 20% debenture in the original principal amount of $20,000 payable on or before the 24nd day of March 2014 with attached warrants to purchase up to 40,000 shares of the Company’s common stock at a price of $.50 per share at any time prior to the 24nd day of October 2016.Note 15 - Subsequent Events (continued)

On October 24, 2013 we issued a 20% debenture in the original principal amount of $20,000 payable on or before the 24nd day of March 2014 with attached warrants to purchase up to 40,000 shares of the Company’s common stock at a price of $.50 per share at any time prior to the 24nd day of October 2016.

On October 24, 2013 we issued a 20% debenture in the original principal amount of $10,000 payable on or before the 24nd day of March 2014 with attached warrants to purchase up to 20,000 shares of the Company’s common stock at a price of $.50 per share at any time prior to the 24nd day of October 2016.

On October 24, 2013 we issued a 20% debenture in the original principal amount of $20,000 payable on or before the 21st day of October 2014 with attached warrants to purchase up to 40,000 shares of the Company’s common stock at a price of $.50 per share at any time prior to the 21nd day of October 2016.

On November 1, 2013, the Company issued 300,000 shares of its common stock to one entity for services to be rendered over a period ending January 31, 2014.

On November 20, 2013 we issued a 20% debenture in the original principal amount of $10,000 payable on or before the 24nd day of March 2014 with attached warrants to purchase up to 20,000 shares of the Company’s common stock at a price of $.50 per share at any time prior to the 24nd day of October 2016.

The securities were issued without registration in reliance on the exemption from registration in section 4(a)(2) of the Securities Act of 1933 because the offer and sale was made only to accredited investors as defined in Rule 501 of Regulation D without general solicitation or advertising; and the purchasers given access to information about our business and the opportunity to ask questions and receive answers about our business prior to making any investment decision.

The Company’s Management has reviewed all other material events through the date of this report in accordance with ASC 855-10, and believes there are no further material subsequent events to report.

On April 17, 2014, effective May 1, 2014, the Company entered into an agreement with Innovative Holdings to design and develop the Company’s RAADR mobile app, the purpose of which is to provide customers a mobile application system to allow monitoring of various forms of social media. Compensation for this project is comprised of $25,000 in cash and issuance of 300,000 shares of the Company’s common stock.

On April 22, 2014, Richard Hybner was appointed Chief Executive Officer of the Company. Jacob DiMartino, Founder, will remain with the Company as President, Chief Financial Officer, and Principal Accounting Officer.

21

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

Forward-Looking Statements

The statements contained in all parts of this document that are not historical facts are, or may be deemed to be, "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements include, but are not limited to, those relating to the following: the Company's ability to secure necessary financing; expected growth; future operating expenses; future margins; fluctuations in interest rates; ability to continue to grow and implement growth, and regarding future growth, cash needs, operations, business plans and financial results and any other statements that are not historical facts.

When used in this document, the words "anticipate," "estimate," "expect," "may," "plans," "project," and similar expressions are intended to be among the statements that identify forward-looking statements. PITOOEY!, Inc.’s results may differ significantly from the results discussed in the forward-looking statements. Such statements involve risks and uncertainties, including, but not limited to, those relating to costs, delays and difficulties related to the Company’s dependence on its ability to attract and retain skilled managers and other personnel; the uncertainty of the Company's ability to manage and continue its growth and implement its business strategy; its vulnerability to general economic conditions; accuracy of accounting and other estimates; the Company's future financial and operating results, cash needs and demand for services; and the Company's ability to maintain and comply with permits and licenses; as well as other risk factors described in this Annual Report. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those projected.

Management’s Discussion and Analysis

We were originally incorporated in the State of Nevada on March 29, 2006, under the name “White Dental Supply, Inc.” We were authorized to issue 100,000,000 shares of itsour $0.001 par value common stock and 100,000,000 shares of itsour $0.001 par value preferred stock. On February 7, 2013, we changed our corporate name to PITOOEY!, Inc. and increased the number of shares we are authorized to issue to 400,000,000 shares of $0.001 par value common stock and 100,000,000 shares of $0.001 par value preferred stock.

PITOOEY!, Inc., is a complete digital marketing agency offering an array of products and services that will enhance communication between our clients and their target audience. Through our unique service packages, we offer businesses a comprehensive set of tools that focuses on engaging with the rapidly growing number of social and mobile-centric consumers. These social and mobile marketing products and services are served up via our three wholly-ownedtwo wholly -owned subsidiaries:

1.

 Choice One Mobile, Inc., which provides mobile and social media marketing and advertising solutions.

2.

PITOOEY! Mobile, Inc., which retains all intellectual property related to our PITOOEY! ^TM iPhone ^® app, including patents, trademarks, software and trade processes.  

3.

Rockstar Digital, Inc., which specializes in internet branding through social media marketing, mobile marketing and iPhone ^® app development.

Results of Operations

Due to the recent addition of new business operations and service lines, comparisons of operating results between the three and six month periods ended September 30,March 31, 2014 and 2013 and 2012 may not be materially reflective of our continuing and future operations.

23 

Revenue

How we generate revenues

During the current fiscal year, 2013,2014, we began to generategenerated sales from our wholly-ownedwholly owned subsidiary, Choice One Mobile, Inc., a provider of mobile and social media marketing and advertising services. Choice One Mobile assists clients build a strategy to attract and engage with customers using social media outlets including, but not limited to, Facebook, Twitter and YouTube. In addition to social media marketing, we offer complementary services customized to meet the needs of each client, including mobile and desktop website development, search engine optimization, text message marketing, content writing and video creation.

Through the periods covered in this report, our PITOOEY! Mobile and Rockstar Digital subsidiaries havesubsidiary has not generated any revenues.

Three months ended September 30, 2013March 31, 2014 compared to the three months ended September 30, 2012March 31, 2013

Revenue was comprised, as follows:

In the normal course of our business, the bulk of our sales are paid and rendered either immediately or on a monthly basis. These sales are recognized as revenue at the time of the transaction. Periodically, we enter into longer-term arrangements with clients, whereby they pay for three to 12 months of service up-front. These sales are recorded as deferred revenue and recognized as revenue over the actual life of the arrangement. During the three months ended September 30, 2013,March 31, 2014, we recorded $0 in deferred revenue and recognized $22,794$0 as revenue earned during the period.

Costs of sales consist primarily of credit card merchant fees, commissions paid to sales staff and fees paid to contractors directly attributable to specific clients. A vast majority of our services incur few direct, unique and immediately identifiable costs per client. During the quarter ended September 30, 2013,March 31, 2014, costs of sales totaled $44,577.$38,511 as compared to $34,043 for the same period ended March 31, 2013. After accounting for costs of sales, we realized a gross profit of $193,769$5,562 during the three months ended September 30,March 31, 2014 as compared to $46,887 for the same period ended March 31, 2013.

Nine months ended September 30, 2013 compared to the Nine months ended September 30, 2012

Revenue was comprised, as follows:

During the nine months ended September 30, 2013, we recorded $91,828 in deferred revenue and recognized $45,588 as revenue earned during the period.

Costs of sales during the nine months ended September 30, 2013 amounted to $70,808.  After accounting for costs of sales, we realized a gross profit of $284,225 in the nine month period ended September 30, 2013.

Factors Affecting Future Growth

We are continuously refining our services to maximize revenue, while providing a rate of return to business customers greater than they would be able to obtain advertising or marketing through traditional media outlets. Blending the two disparate objectives is an art form that we are attempting to master and slight dips in revenue may occur in future periods, as a result. We are actively pursuing the following operational objectives:

1.       Choice One Mobile recently launched the C1M affiliate program to allow credit card processing companies to provide its agents an additional revenue stream by selling C1M's mobile and social media services to existing merchant clientele. The benefits for Choice One Mobile include greater market penetration, with lower overhead and customer acquisition costs. We began negotiations with several large credit card processing companies and independent sales organizations. As of the date of this quarterly report, we have not entered into any contractual relationships.

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2. The PITOOEY!^TM iPhone^® app is a preference based, searchable ad network. The PITOOEY! app provides businesses with a unique engagement tool while serving consumers deals, valuable content, and location-based information. Our Rockstarthird party development team has been engaged in refining the consumer experience, as well as the back-end mechanics, to ensure adoption of Version 2 of the app. We have experienced delays in the release of our app and are currently working internally to assure a timely launch of the best software product we can possibly construct. As a result, we are currently unable to disclose a specific time frame the release of Version 2.

Costs and Operating Expenses

Three months ended September 30, 2013March 31, 2014 compared to the three months ended September 30, 2012March 31, 2013

For the three months ended September 30,March 31, 2014 and 2013, and 2012, the components of our operating expenses were, as follows: