maniaTV 10-Q 2013 Q3 Quarterly report

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2013

¨   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _________

Commission File No. 333-185270

maniaTV Inc.

(Name of registrant in its charter)

Colorado	26-4627178
(State or other jurisdiction of incorporation or formation)	(I.R.S. employer identification number)

8335 Sunset Boulevard

West Hollywood, California 90069  

(Address of principal executive offices)

(855) 886-2642

(Registrant’s telephone number, including area code) 

Not Applicable

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

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

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

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

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

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Number of Shares Outstanding
Class A Common Stock, No Par Value	1,127,779 outstanding as of October 10, 2013
Class B Common Stock, No Par Value	7,205,555 outstanding as of October 10, 2013

maniaTV INC.

FORM 10-Q

TABLE OF CONTENTS

PART I.  FINANCIAL INFORMATION		Page
Item 1.	Financial Statements	3
	Balance sheets	3
	Statements of operations	4-5
	Statements of cash flows	6
	Notes to unaudited consolidated financial statements	7-9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	10
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	11
Item 4.	Controls and Procedures	11
PART II.  OTHER INFORMATION		12
Item 1.	Legal Proceedings	12
Item 1A.	Risk Factors	12
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	12
Item 3.	Defaults Upon Senior Securities	12
Item 4.	Mine Safety Disclosures	12
Item 5.	Other Information	12
Item 6.	Exhibits	12
	Signatures	13

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PART I—FINANCIAL INFORMATION

Item 1.  Financial Statements.

maniaTV INC.

BALANCE SHEETS

		(Unaudited)
		September 30,	December 31,
		2013	2012
ASSETS
	Current assets
	Cash	$         120,394	$           94,730
	Accounts receivable	251,459	196,419
	Total current assets	371,853	291,149
	Fixed assets	80,392	80,392
	Less accumulated depreciation	(24,086)	(12,026)
		56,306	68,366
	Total Assets	$         428,159	$         359,515
LIABILITIES & STOCKHOLDERS' EQUITY
	Current liabilities
	Accounts payable	$         102,995	$           89,424
	Payroll tax liabilities	5,323	62,952
	Notes payable	100,000	100,000
	Accrued interest payable	15,826	11,326
	Income tax payable	45,932	18,545
	Accrued compensation	-	12,500
	Total current liabilities	270,076	294,747
	Total Liabilities	$         270,076	$         294,747
	Stockholders' Equity
	Preferred stock, no par value;
	5,000,000 shares authorized;
	No shares issued & outstanding	-	-
	Common stock,  Class A, no par value;
	100,000,000 shares authorized;
	1,127,779 shares issued and outstanding	1	1
	Common stock,  Class B, no par value;
	convertible; 10,000,000 shares authorized;
	7,205,555 shares issued and outstanding	9	9
	Additional paid in capital	20,819	20,819
	Deferred compensation expense	(3,904)	(5,704)
	Retained earnings (deficit)	141,158	49,643
	Total Stockholders' Equity	158,083	64,768
	Total Liabilities and Stockholders' Equity	$         428,159	$         359,515

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

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maniaTV INC.

STATEMENTS OF OPERATIONS

(Unaudited)

	(Unaudited)	(Unaudited)
	Three Months	Three Months
	Ended	Ended
	September 30, 2013	September 30, 2012
Sales (net of returns)	$           277,825	$           227,264
Cost of sales	102,977	88,984
Gross profit	174,848	138,280
Operating expenses:
Depreciation and Amortization	4,020	1,673
Stock option expense	600	600
General and administrative	3,274	48,680
Payroll Expenses	58,334	45,812
Professional Fees	2,715	10,465
Travel Expense	2,789	1,870
	71,732	109,100
Income (loss) from operations	103,116	29,180
Other income (expense):
Interest expense	(1,500)	(1,529)
	(1,500)	(1,529)
Income (loss) before
provision for income taxes	101,616	27,651
Provision for income tax	-	13,129
Net income (loss)	$          101,616	$            14,522
Net income (loss) per share
(Basic)	$                0.09	$                0.00
(Fully Diluted)	$                0.01	$                0.00
Weighted average number of
common shares outstanding
(Basic)	1,127,779	5,852,470
(Fully Diluted)	8,333,334	8,333,334

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

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maniaTV INC.

STATEMENTS OF OPERATIONS

(Unaudited - Continued)

	(Unaudited)	(Unaudited)
	Nine Months	Nine Months
	Ended	Ended
	September 30, 2013	September 30, 2012
Sales (net of returns)	$           593,503	$           485,797
Cost of sales	215,186	186,092
Gross profit	378,317	299,705
Operating expenses:
Depreciation and Amortization	12,060	2,673
Stock option expense	1,800	1,800
General and administrative	10,886	28,393
Payroll Expenses	209,685	100,000
Professional Fees	13,696	13,940
Travel Expense	6,788	7,851
	254,915	154,657
Income (loss) from operations	123,402	145,048
Other income (expense):
Interest expense	(4,500)	(4,521)
	(4,500)	(4,521)
Income (loss) before
provision for income taxes	118,902	140,527
Provision for income tax	-	36,345
Net income (loss)	$          118,902	$           104,182
Net income (loss) per share
(Basic)	$                0.11	$                0.01
(Fully Diluted)	$                0.01	$                0.01
Weighted average number of
common shares outstanding
(Basic)	1,127,779	7,477,058
(Fully Diluted)	8,333,334	8,333,334

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

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maniaTV INC.

STATEMENTS OF CASH FLOWS

(Unaudited)

	(Unaudited)	(Unaudited)
	Nine Months	Nine Months Ended
	September 30, 2013	September 30, 2012
Cash Flows From Operating Activities:
Net income (loss)	$         118,902	$          104,182
Adjustments to reconcile net loss to
net cash provided by (used for)
operating activities:
Depreciation and Amortization	12,060	2,673
Compensatory equity issuances	1,800	1,800
Accounts receivable	(55,040)	(146,224)
Accounts payable	13,571	68,654
Payroll tax liability	(57,629)	-
Accrued interest payable	4,500	4,521
Accrued compensation	(12,500)	-
Taxes payable	-	35,301
Net cash provided by (used for)
operating activities	25,664	70,907
Cash Flows From Investing Activities:
	-	-
Net cash provided by (used for)
investing activities	-	-
Cash Flows From Financing Activities:
	-	-
Net cash provided by (used for)
financing activities	-	-
Net Increase (Decrease) In Cash	25,664	515
Cash At The Beginning Of The Period	94,730	102,896
Cash At The End Of The Period	$          120,394	$          103,411
Schedule Of Non-Cash Investing And Financing Activities
None
Supplemental Disclosure
Cash paid for interest	$                     -	$                     -
Cash paid for income taxes	$                     -	$                     -

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

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maniaTV INC.

Notes To Unaudited Financial Statements

For The Nine Month Interim Period Ended September 30, 2013

NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ManiaTV Inc. (the “Company”), was incorporated in the state of Colorado in April 2009. The Company provides a library of shows for online and application based viewing by consumers. The Company delivers its library of entertainment programming directly to consumers via the internet.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect 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 revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and cash equivalents

The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents.

NOTE 2. UNAUDITED FINANCIAL INFORMATION

The unaudited financial information included for the three and nine monthinterimperiods ended September 30, 2013 was taken from the books and records without audit. However, such information reflects all adjustments, consisting only of normal recurring adjustments, which in the opinion of management are necessary to reflect properly the results of the interim periods presented. The results of operations for the three and nine month interimperiods ended September 30, 2013 are not necessarily indicative of the results expected for the fiscal year ending December 31, 2013.

NOTE 3. NOTE PAYABLE

At September 30, 2013 and December 31, 2012 the Company owed a creditor $100,000 under a convertible note payable, unsecured, bearing interest at 6% per annum. The note principal and interest are to be repaid in common stock of the Company, and the due date is the earlier of (i) December 31, 2013 or (ii) the closing of a “qualified offering”, defined as any sale of shares of stock of the Company with aggregate gross proceeds (including conversion of any outstanding shares) in an amount not less than five hundred thousand dollars ($500,000). If the note is converted pursuant to a qualified offering having taken place, then the amount of interest accrued and converted shall be the greater of (i) the amount of interest accrued through the conversion date or (ii) 20% of the principal amount of the note, being $20,000.

According to the terms of the note, the conversion price of the note shall be (i) if the note is converted pursuant to a qualified offering having taken place, then the conversion price is the price per share of the qualified offering, or (ii) if the note is converted pursuant to the maturity date being reached, the note shall automatically be converted into such number of shares of

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maniaTV INC.

Notes To Unaudited Financial Statements

For The Nine Month Interim Period Ended September 30, 2013

common stock that would equal a pre-money valuation of the Company equal to fifteen million dollars ($15,000,000). The Company recorded no beneficial conversion expense on the conversion feature as the specific conversion price is currently not determinable. Accrued interest on the note at September 30, 2013 and December 31, 2012 was $15,826 and $11,326 respectively, and interest expense for September 30, 2013 and 2012 was $4,500 and $4,521 respectively.

NOTE 4.  STOCKHOLDERS' EQUITY

Common stock

The Company has 100,000,000 authorized shares of no par value Class A common stock (“Class A”) and 10,000,000 authorized shares of no par value convertible Class B common stock (“Class B”). Each Class B share is entitled to ten votes per share and is convertible into one Class A share anytime at the holder’s option, and automatically converts upon its issuance, sale, assignment, gift or transfer to a person or entity other than the person to whom such share was initially issued. Prior to August 31, 2012 there was no Class A or Class B common, only common stock. As pre-August 31, 2012 common and post-August 31, 2012 Class A common are essentially the same, no distinction has been made in these financial statements between them. All common share figures in these financial statements including stock options have been retroactively restated for a 5 for 1 forward stock split in April 2010 and a 1 for 12 reverse stock split in August 2012.   

Preferred stock

The Company has 5,000,000 authorized shares of no par value  preferred stock, to have such preferences as the Board of Directors may set from time to time, with no shares issued and outstanding.

Stock options

The Company accounts for employee and non-employee stock options under ASC 718, whereby option costs are recorded based on the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.

At September 30, 2013 and December 31, 2012 the Company had stock options outstanding as described below.

Non-employee stock options

In November 2010 the Company adopted an incentive stock option plan and granted 363,333 options, allowing the holder to purchase one share of common stock per option, exercisable at $.12 per share with the option term expiring in November 2020. The fair value of the 363,333 options granted in 2010 was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions: risk free interest rate of 2.64%, dividend yield of 0%, expected life of ten years, volatility of 33%. Of the 363,333 options granted, 138,333 options vested immediately and are exercisable anytime at the holder’s discretion, 212,500

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maniaTV INC.

Notes To Unaudited Financial Statements

For The Nine Month Interim Period Ended September 30, 2013

options vested partially at 25% in April 2011 (53,125 options) with the remaining 159,375 options vesting over the subsequent 48 months, and 12,500 options vested partially at 20% in April 2011 (2,500 options) with the remaining 10,000 options vesting over the subsequent 60 months.

At the beginning of 2012 the Company had 363,333 non-employee stock options outstanding, with 221,854 options exercisable and 141,479 remaining to vest. Of the 141,479 deferred options, 41,844 options vested in year ended December 2012 leaving a remainder to vest of 99,635 options at December 31, 2012. During 2012 in connection with the vested options $1,800 was accreted to expense from deferred compensation, leaving a December 31, 2012 balance in deferred compensation of $6,304. During 2012 no options were exercised, expired or were canceled, leaving a September 30, 2013 and December 31, 2012 outstanding balance of 363,333 non-employee stock options.

NOTE 5.  FINANCIAL STATEMENTS

For a complete set of footnotes, reference is made to the Company’s Report on Form S-1 for the year ended December 31, 2012 as filed with the Securities and Exchange Commission and the audited financial statements included therein.

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read in conjunction with the Financial Statements (unaudited) and Notes to Financial Statements (unaudited) filed herein.

BUSINESS OVERVIEW

We were founded in 2009 by Drew Massey to build a leading pop-culture Internet, mobile and app-based video entertainment destination.  Mr. Massey has over 20 years of experience in the media and entertainment industries and has extensive experience working with leading advertising agencies and brands, producing online content, building a media business, and developing relationships with top talent agencies and celebrities.  We are currently in operations with the website www.maniaTV.com which has entertainment content and generates pageviews and advertising revenue.  We intend to leverage our founder’s experience in Internet television, brand advertising, and premium celebrity shows, to build a leading network of original pop-culture TV shows that will be available through our “maniaTV jukebox”.

RESULTS OF OPERATION FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2013 AS COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 2012.

Revenues for the three months ended September 30, 2013 were $277,825 as compared to the revenues of $227,264 for the three months ended September 30, 2012.  The increase in sales in the third quarter of 2013 was due to the fact that we updated our software and made other upgrades to our website during the first six months of 2013 which improved the performance of the website.

Cost of sales for the three months ended September 30, 2013 were $102,977 as compared to cost of sales for the three months ended September 30, 2012 of $88,984.  The cost of sales went up in the third quarter of 2013 because sales were up but the cost of shares as a percentage of sales dropped from 39.2% to 37.1%.

Operating expenses for the three months ended September 30, 2013 were $71,732 as compared to operating expenses of $109,100 for the three months ended September 30, 2012.  The principal reason for the decrease in expenses was the $45,406 drop in general and administrative expenses.

The net income for the three months ended September 30, 2013 was $80,907 as compared to a net income of $14,522 for the three months ended September 30, 2012.  The primary reasons for the increase in net income were the $50,561 increase in sales and the $37,368 decrease in operating expenses.

RESULTS OF OPERATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013 AS COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 2012.

Revenues for the nine months ended September 30, 2013 were $593,503 as compared to the revenues of $485,797 for the nine months ended September 30, 2012.  The reason for the increase in sales in the nine months ended September 30, 2013 was due to an increase in video inventory and sales in the third quarter of 2013 over the same period in 2012.

Cost of sales for the nine months ended September 30, 2013 were $215,186 as compared to cost of sales for the nine months ended September 30, 2012 of $186,092.  The cost of sales went up in the nine months ended in September 30, 2013 because the sales increased.  The cost of sales as a percentage of sales was approximately the same in both nine month periods.

Operating expenses for the nine months ended September 30, 2013 were $254,915 as compared to operating expenses of $154,657 for the nine months ended September 30, 2012.  The principal reason for the increase in expenses was the $109,685 increase in payroll expenses for the nine months ended September 30, 2013.  These payroll expenses related to salary and bonus payments made to Mr. Massey,

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our President and CEO.  As we disclosed in our IPO Prospectus, we are paying Mr. Massey a significant part of our free cash flow until such time as we close our initial public offering.  

The net income for the nine months ended September 30, 2013 was $91,515 as compared to a net income of $104,182 for the nine months ended September 30, 2012.  The primary reason for the decline in our net income was the $109,685 increase in payroll expenses in the nine months ended September 30, 2013.  This was offset in part by the $78,612 increase in gross profit during the most recent nine month period.

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2013, we had working capital of $101,777 compared to negative working capital of ($3,598) as of December 31, 2012.

Net cash provided by operating activities during the nine months ended September 30, 2013 was $25,664 as compared to net cash provided by operating activities in the nine months ended September 30, 2012 of $70,907.  Net cash provided by operating activities decreased by $45,243 primarily due to a decrease in accounts payable and a payment of a payroll tax liability which were offset in part by an increase in accounts receivable.

CONTRACTUAL OBLIGATIONS

None.

OFF-BALANCE SHEET ARRANGEMENTS

We do not have any off-balance sheet arrangements (as that term is defined in Item 303 of Regulation S-K) that are reasonably likely to have a current or future material effect on our financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk. 

Not applicable.

Item 4.  Controls and Procedures.

(a)  Evaluation of Disclosure Controls and Procedures.

Our Chief Executive Officer and Principal Financial Officer has evaluated the effectiveness of the design and operations of our disclosure controls and procedures as of the end of the period covered by this quarterly report, and have concluded that our disclosure controls and procedures are adequate.

(b)  Changes in Internal Control over Financial Reporting.

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1.    Legal Proceedings.

None.

Item 1A.  Risk Factors.

Not applicable.

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

None.

Item 3.    Defaults Upon Senior Securities.

None.

Item 4.    Mine Safety Disclosures.

Not applicable.

Item 5.    Other Information.

None.

Item 6.    Exhibits.

(a)  Exhibits required by Item 601 of Regulation S-K.

Exhibit	Description
31.1	Certification of CEO/CFO pursuant to Rule 13a-14(a) or Rule 15d-14(a) - Filed herewith electronically
32.1	Certification of CEO/CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Filed herewith electronically
101.1	Interactive Data File

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SIGNATURES

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

		maniaTV INC.
Date:  October 30, 2013	By:	/s/ Drew Massey
		Drew Massey, President, CEO, Acting CFO and Secretary (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

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