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UNITED STATES
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 quarter period ended June 30, 2014

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

 
For the transition period form             to
   
 
  Commission File number 000-53502
 
  Gamzio Mobile, Inc.
  (Exact name of registrant as specified in its charter)

Nevada
 
47-1056063
(State of other jurisdiction of
 
(I.R.S. Employer Identification No.)
incorporation or organization)
   

                    7260 W. Azure Dr., Ste 140-911, Las Vegas , NV 89130
                   (Address of principal executive offices)
 
         (415) 839-1055
                         (Registrant’s telephone number, including area code)

              123 West NYE Ln., Ste. 129, Carson City, NV 89706
                     (Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 
Yes [X]
 
No [ ]
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
 
 
Yes [  ]
 
No [X]
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See definition of “large accelerated filer”, “accelerated filer” and “small reporting company” Rule 12b-2 of the Exchange Act.

Large accelerated filer
[  ]
Accelerated filer
[  ]
       
Non-accelerated filer
[  ]
Smaller reporting company
[X]
(Do not check if a smaller reporting company)
     
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

 
Yes [  ]
 
No [X]

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 after the distribution of securities subsequent to the distribution of securities under a plan confirmed by a court.  

 
Yes [  ]
 
No [X]
 
APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
August 18, 2014: 58,180,130 common shares
 
 
 

 
Gamzio Mobile Inc. and Subsidiary
TABLE OF CONTENTS
   
Page Number
PART I.
FINANCIAL INFORMATION
 
     
Financial Statements (unaudited)
3
     
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations  4
     
Quantitative and Qualitative Disclosures about Market Risk
6
     
Controls and Procedures
6
     
PART II.
OTHER INFORMATION
8
     
Legal Proceedings
8
     
Risk Factors
8
     
Unregistered Sales of Equity Securities and Use of Proceeds
8
     
Defaults Upon Senior Securities
8
     
Mine Safety Disclosures
8
     
Other Information
8
     
Exhibits
9
     
 
10
 
 
2

 
PART I – FINANCIAL INFORMATION
 
ITEM 1.     FINANCIAL STATEMENTS

 
Page
Condensed Consolidated Balance Sheets as at June 30, 2014 and December 31, 2013
F-1
Condensed Consolidated Statement of Operations for the three months and six months ended June 30, 2014 and 2013
F-2
Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2014 and 2013
F-3
F-4 to F-7
 
The accompanying balance sheets of Gamzio Mobile, Inc. (the “Company”) at June 30, 2014 (with comparative figures as at December 31, 2013) and the statement of operations for the three and six months ended June 30, 2014 and 2013 have been prepared by the Company’s management in conformity with accounting principles generally accepted in the United States of America.  In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature.

Operating results for the three and six months ended June 30, 2014 are not necessarily indicative of the results that can be expected for the year ending December 31, 2014.
 
 
3

Gamzio Mobile Inc. and Subsidiary
Condensed Consolidated Balance Sheets

   
June 30, 2014
(Unaudited)
   
December 31,
 2013
 
             
ASSETS
           
             
Current assets
           
  Cash
  $ 17,091     $ 25,856  
                             Total current assets
    17,091       25,856  
                 
Property & Equipment
               
   Furniture and equipment - net of accumulated depreciation of $3,825
    and$2,975, respectively
    1,275       2,125  
  Computer equipment - net of accumulated depreciation of $4,792
    and$3,727, respectively
    1,597       2,662  
  Computer software - net of accumulated depreciation of $942 and $0, respectively
    10,358       -  
Total Property and Equipment
    13,230       4,787  
                 
Total Assets
  $ 30,321     $ 30,643  
                 
                 
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
               
                 
Current liabilities
               
  Accounts payable
  $ 71,159     $ 47,653  
  Accrued interest
    4,254       232,534  
  Advance from third party
    -       59,000  
  Line of credit
    159,318       -  
  Advances from related parties
    27,523       27,523  
  Convertible notes payable
    -       363,162  
Total current liabilities
    262,254       729,872  
                 
Total Liabilities
    262,254       729,872  
                 
                             Commitments and contingencies
               
                 
STOCKHOLDERS' DEFICIENCY
               
  Common stock
      250,000,000 shares authorized, at $0.001 par value
     58,180,130 and 55,658,252 shares issued and outstanding, respectively
    58,180       55,658  
  Additional paid-in capital
    193,627       (435,870 )
  Accumulated deficit
    (483,740 )     (319,017 )
Total stockholders' deficiency
    (231,933 )     (699,229 )
                 
Total liabilities and stockholders' deficiency
  $ 30,321     $ 30,643  
                 

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

 
F-1

 
Gamzio Mobile Inc. and Subsidiary
Condensed Consolidated Statements of Operations
For the Three and Six Months Ended June 30, 2014 and 2013
(Unaudited)

   
Three Months Ended
   
Six Months Ended
 
   
June 30,
   
June 30,
 
   
2014
   
2013
   
2014
   
2013
 
                         
Revenues
  $ 1,463     $ -     $ 4,206     $ -  
                                 
Expenses
                               
Selling, general and administrative
    84,885       25,106       134,652       54,711  
Total operating costs and expenses
    84,885       25,106       134,652       54,711  
                                 
Other (income) expense
                               
Interest expense
    15,143       -       34,277       -  
Total (income) expense
    15,143       -       34,277       -  
                                 
Net income (loss)
  $ (98,565 )   $ (25,106 )   $ (164,723 )   $ (54,711 )
                                 
Net income (loss per common share – basic and diluted
  $ (0.00 )   $ (0.00 )   $ (0.00 )   $ (0.00 )
                                 
Weighted average common shares outstanding – basic and diluted
    56,434,543       30,000,000       56,048,542       30,000,000  
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
F-2

 
Gamzio Mobile Inc. and Subsidiary
Condensed Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2014 and 2013
(Unaudited)
 
   
June 30,
2014
   
June 30,
2013
 
             
Operating Activities
         
           
Net loss
  $ (164,723 )   $ (54,711 )
Adjustments to reconcile net loss to net cash used in operating activities:
               
   Depreciation and amortization
    2,857       -  
   Services paid by related party
    70,318       54,943  
                 
Changes in balances of assets and liabilities:
               
   - Changes in accounts payable
    23,506       -  
   - Change in accrued interest
    34,277       -  
                 
Net cash provided by (used) in operating activities
    (33,765 )     232  
                 
Investing Activities
               
  Purchase of software
    (5,000 )     -  
                 
Net cash provided by investing activities
    (5,000 )     -  
                 
Financing Activities
               
  Proceeds from line of credit
    30,000       -  
                 
Net cash provided by (used in) financing activities
    30,000       -  
                 
Net decrease in cash
    (8,765 )     232  
                 
Cash, beginning of year
    25,856       -  
                 
Cash, end of year
  $ 17,091     $ 232  
                 
SUPPLEMENTAL CASH FLOW DISCLOSURES
               
Cash paid for:
               
  Income taxes
  $ -     $ -  
  Interest
  $ -     $ -  
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES
               
  Stock issued for notes payable
  $ 625,720     $ -  
  Stock issued for acquisition of software
  $ 6,300     $ -  
                 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
F-3

 
Gamzio Mobile, Inc. and Subsidiary
Notes to Condensed Consolidated Financial Statements
June 30, 2014
 
 1.  BASIS OF PRESENTATION, DESCRIPTION OF THE BUSINESS

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Gamzio Mobile, Inc. and Subsidiary have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission, or the SEC, including the instructions to Form 10-Q and Regulation S-X. Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been condensed or omitted from these statements pursuant to such rules and regulations and, accordingly, they do not include all the information and notes necessary for comprehensive consolidated financial statements and should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2013, included in our Report on Form 10-K filed with the SEC on April 15, 2014.

In the opinion of the management of the Company, all adjustments, which are of a normal recurring nature, necessary for a fair statement of the results for the six month periods have been made. Results for the interim periods presented are not necessarily indicative of the results that might be expected for the entire fiscal year.

Description of Business

The Company, Gamzio Inc., began activity on January 13, 2012 and was formally incorporated under the laws of the State of Nevada on July 2, 2012 to innovate social casino games.

On October 23, 2013, Gamzio, Inc., (the “Company”) entered into and consummated a voluntary share exchange transaction with , Marine Drive Mobile Corp., a Nevada corporation (“MDMC”) pursuant to a Share Exchange Agreement by and among the MDMC, Gamzio and the Selling Stockholder (the “Exchange Agreement”).  Marine Drive Mobile Corp. is involved in technology to do with customer loyalty programs.

Effective November 15, 2013, the Company amended its Articles of Incorporation to change its name from “Marine Drive Mobile Corp.” to “Gamzio Mobile, Inc.”

The Company operates in the technology industry with two products: (1) social casino gaming, and (2) customer loyalty technology.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting Methods

The Company recognizes income and expenses based on the accrual method of accounting.

Principles of Consolidation

The consolidated financial statements include the accounts of Gamzio Mobile, Inc. and I Like A Deal, LLC (ILAD). All significant intercompany balances and transactions have been eliminated in consolidation.

Dividend Policy

The Company has not yet adopted a policy regarding payment of dividends.
 
F-4

 
Gamzio Mobile, Inc. and Subsidiary
Notes to Condensed Consolidated Financial Statements
June 30, 2014
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Basic and Diluted Net Loss Per Share

Basic net loss per share amounts are computed based on the weighted average number of shares actually outstanding. Diluted net loss per share amounts are computed using the weighted average number of common and common equivalent shares outstanding as if shares had been issued on the exercise of the common share rights unless the exercise becomes antidilutive and then the basic and diluted per share amounts are the same. At June 30, 2014 and 2013, we had no common stock equivalents outstanding.
Evaluation of Long-Lived Assets

The Company periodically reviews its long term assets for impairment and makes adjustments, if the carrying value exceeds fair value.

Property and Equipment
 
Property and equipment is stated at historical cost and depreciated over its estimated useful life.
 
Furniture and Equipment
 
Furniture and equipment is depreciated on a straight line basis over 3 years. Total depreciation expense for the six months ended June 30, 2014 and 2013 was $850 and $0, respectively.
 
Computer Equipment
 
Computer equipment is depreciated on a straight line basis over 3 years. Total depreciation expense for the six months ended June 30, 2014 and 2013 was $1,065 and $0, respectively.

Computer Software
 
Computer software is depreciated on a straight line basis over 3 years. Total depreciation expense for the six months ended June 30, 2014 and 2013 was $942 and $0, respectively.

Income Taxes

The Company utilizes the liability method of accounting for income taxes. Under the liability method deferred tax assets and liabilities are determined based on differences between financial reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates and laws that will be in effect, when the differences are expected to be reversed. An allowance against deferred tax assets is recorded, when it is more likely than not, that such tax benefits will not be realized.

Foreign Currency

The books of the Company are maintained in United States dollars and this is the Company’s functional and reporting currency.  Translations denominated in other than the United States dollar are translated as follows with the related transaction gains and losses being recorded in the Statement of Operations:
 
(i)
Monetary items are recorded at the rate of exchange prevailing as at the balance sheet date; 
 
(ii)
Non-Monetary items including equity are recorded at the historical rate of exchange; and 
 
(iii)
Revenues and expenses are recorded at the period average in which the transaction occurred.

 
F-5

Gamzio Mobile, Inc. and Subsidiary
Notes to Condensed Consolidated Financial Statements
June 30, 2014
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 
Revenue Recognition
 
The Company earns revenue through consulting fees and from transaction fees it charges customers. Consulting fees are recorded in revenue when the service is completed. Transaction fees are recorded in revenue when a customer completes a purchase on the Company’s website and the related transaction fee is charged to the customer’s credit card.

Advertising and Market Development

The company expenses advertising and market development costs as incurred.

Financial Instruments

The carrying amounts of financial instruments are considered by management to be their fair value due to their short term maturities.

Estimates and Assumptions

Management uses estimates and assumptions in preparing financial statements in accordance with general accepted accounting principles.  Those estimates and assumptions affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses.   Actual results could vary from the estimates that were assumed in preparing these financial statements.
 
Statement of Cash Flows

For the purposes of the statement of cash flows, the Company considers all highly liquid investments with a maturity of three months or less to be cash equivalents.
 
Reclassification

Certain prior period amounts have been reclassified to conform to current period presentation.

Recent Accounting Pronouncements

In June 2014, the FASB issued ASU 2014-10, “Development Stage Entities (Topic 915):  Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation”. The guidance eliminates the definition of a development stage entity thereby removing the incremental financial reporting requirements from U.S. GAAP for development stage entities, primarily presentation of inception to date financial information. The provisions of the amendments are effective for annual reporting periods beginning after December 15, 2014, and the interim periods therein. However, early adoption is permitted. Accordingly, the Company has adopted this standard as of June 30, 2014.

The Company does not expect the adoption of any other recent accounting pronouncements will have a material impact on its financial statements.
 
F-6

Gamzio Mobile, Inc. and Subsidiary
Notes to Condensed Consolidated Financial Statements
June 30, 2014
 
3. LINE OF CREDIT

During the six months ended June 30, 2014 the Company entered into a line of credit agreement with a third party for up to $500,000 with interest at 10% per year. The balance owing at June 30, 2014 was $159,318.

The Company accrued related interest expense of $4,254 during the six months ended June 30, 2014.
 
4. NOTE PAYABLE

On October 23, 2013, as part of the share exchange agreement the Company acquired a convertible note payable of $363,162, plus accrued interest of $219,403. This note payable is convertible into stock at $0.05 per share and bears interest at 12% per year.

During the six months ended June 30, 2014 the lender converted the balance of the debt and interest into shares of common stock of the Company at $0.25 per share.  Due to the change in the exercise price, we evaluated this for debt modification and debt extinguishment accounting, pursuant to ASC 470.  As the change in fair value of the conversion option was not greater than 10% of the carrying value of the debt, immediately before the modification, debt extinguishment accounting rules do not apply.  Also, as the value of the conversion option actually decreased, there are no additional accounting entries required for this modification.

The Company accrued related interest expense of $30,023 during the six months ended June 30, 2014.

5. CAPITAL STOCK

On July 2, 2012, the Company issued 100,000 common shares to its CEO for $100 in services rendered. The December 31, 2012 capital accounts of the Company have been retroactively restated to reflect the equivalent number of common shares based on the exchange ratio of the merger transaction. See Note 3.

On October 23, 2013, the Company issued 30,000,000 shares of common stock to the shareholders of Gamzio Mobile, Inc. in exchange for their 25,658,000 shares as part of the share exchange agreement.
 
On May 28, 2014 the Company issued 2,000,000 shares of common stock to the holder of the convertible debt upon conversion of $500,000 of outstanding debt.

On June 27, 2014 the Company issued 506,878 shares of common stock to the holder of the convertible debt upon conversion of the balance of the debt and interest owed, in the amount of $125,720.

6. GOING CONCERN

The Company will need additional working capital to service its debt and for its planned activity, which raises substantial doubt about its ability to continue as a going concern.   Continuation of the Company as a going concern is dependent upon obtaining additional working capital and the management of the Company has developed a strategy, which it believes will accomplish this objective through additional equity funding, and long term financing, which will enable the Company to operate for the coming year.
F-7

 
ITEM 2.     MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
 
This Form 10-Q contains statements that constitute forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. The words “expect,” “estimate,” “anticipate,” “predict,” “believe,” and similar expressions and variations thereof are intended to identify forward-looking statements. Such forward-looking statements include statements regarding, among other things, (a) our projected sales and profitability, (b) our growth strategies, including the potential results of any acquisition or similar transaction, (c) anticipated trends in our industry, (d) our future financing plans, (e) our anticipated needs for working capital, and (f) the benefits related to ownership of our common stock. This information may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking statements for the reasons, among others, described within the various sections of this Form 10-Q, specifically the section entitled “Risk Factors” in our Annual Report on Form 10K..   In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this Form 10-Q will in fact occur as projected. We undertake no obligation to release publicly any updated information about forward-looking statements to reflect events or circumstances occurring after the date of this Form 10-Q or to reflect the occurrence of unanticipated events.
 
The risks described below are the ones we believe are most important for you to consider. These risks are not the only ones that we face. If events anticipated by any of the following risks actually occur, our business, operating results or financial condition could suffer and the future price of our common stock could decline.
 
The following discussion should be read in conjunction with the information contained in the financial statements of Gamzio Mobile, Inc. (“we”, “us”, “our”, or the ‘Company’) and the notes which form an integral part of the financial statements which are attached hereto.
 
The financial statements mentioned above have been prepared in conformity with accounting principles generally accepted in the United States of America and are stated in United States dollars.
 
Our Business
 
We were incorporated under the laws of the State of Nevada on January 18, 2007, under the name “Sona Resources, Inc.”, with authorized capital stock of 250,000,000 shares at $0.001 par value.  We were originally organized for the purpose of acquiring and developing mineral properties.
 
On June 6, 2011, we entered into the Exchange Agreement to acquire Marine Drive Technologies Inc., a corporation organized under the laws of Canada (“MDT”), a developer of scalable m-Commerce applications and services, and on July 6, 2011, we changed our name to “Marine Drive Mobile Corp.”  On August 26, 2011, we entered into a Membership Interests Purchase Agreement for the acquisition of the outstanding membership interests of I Like A Deal, LLC (“ILAD”), a developer of group buying web based software (the “ILAD Transaction”).  On September 12, 2011 we closed the Exchange Agreement with MDT and on October 3, 2011 we closed the Membership Interests Purchase Agreement with ILAD.
   
On September 11, 2013, the Company effected a one-for-one hundred reverse stock split of all of its issued and outstanding shares of common stock. 

On October 23, 2013, we entered into and consummated a voluntary share exchange transaction with Gamzio, Inc., a Nevada corporation and the sole stockholder of Gamzio, Inc. (the “Selling Stockholder”), pursuant to a Share Exchange Agreement by and among the Company, Gamzio, Inc. and the Selling Stockholder (the “Exchange Agreement”).

In accordance with the terms of the Exchange Agreement, the Company issued 30,000,000 shares of its common stock, par value $0.001 (the “Shares”) to the Selling Stockholder in exchange for 100% of the issued and outstanding capital stock of Gamzio, Inc. (the “Exchange Transaction”). As a result of the Exchange Transaction, the Selling Stockholder acquired 54% of the Company’s issued and outstanding shares of common stock, Gamzio, Inc. became the Company’s wholly-owned subsidiary, and the Company acquired the business and operations of Gamzio.
 
4

 
On November 15, 2013, the Company changed its name from "Marine Drive Mobile Corp." to "Gamzio Mobile, Inc.” and was assigned a new stock symbol, “GAMZ” by FINRA. On February 4, 2014, we changed our fiscal year to begin on January 1 and end on December 31.
 
Critical Accounting Policies
 
Our discussion and analysis of our financial condition and results of operations, including the discussion on liquidity and capital resources, is based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, management re-evaluates its estimates and judgments.
 
The going concern basis of presentation assumes we will continue in operation throughout the next fiscal year and into the foreseeable future and will be able to realize our assets and discharge our liabilities and commitments in the normal course of business.  Certain conditions, discussed below, currently exists which raise substantial doubt upon the validity of this assumption.  The financial statements do not include any adjustments that might result from the outcome of the uncertainty.
 
Results of Operations
 
The following discussion of the financial condition, results of operations, cash flows, and changes in our financial position should be read in conjunction with our audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal years ended December 31, 2013 and December 31, 2012, filed April 15, 2014. Such financial statements have been prepared in conformity with U.S. GAAP and are stated in United States dollars.
 
Comparison of the Three Month Periods Ended June 30, 2014 and June 30, 2013
 
For the three months ended June 30, 2014, we incurred a net loss of $98,565 compared to $25,106 for June 30, 2013.

Net revenue for the three months ended June 30, 2014 totaled $1,463 attributable to revenues from the social casino gaming as compared to no revenues for the three months ended June 30, 2013.
 
General and administrative expenses for the three months ended June 30, 2014 increased by $59,779 to $84,885 from $25,106, when compared to the same period last year. The increase was due primarily to an increase of $17,657 in audit and accounting expense, $45,000 in consultant fees and $6,275 in legal expense offset by a reduction in game development fees.
 
Interest expense for the three months ended June 30, 2014 increased by $15,143 when compared to the same period last year.  The increase was due to new debt and the loan assumed in the merger.     

Comparison of the Six Month Periods Ended June 30, 2014 and June 30, 2013
 
For the six months ended June 30, 2014, we incurred a net loss of $164,723 compared to $54,711 for June 30, 2013.

Net revenue for the six months ended June 30, 2014 totaled $4,206 attributable to revenues from the social casino gaming as compared to no revenues for the three months ended June 30, 2013.
 
General and administrative expenses for the six months ended June 30, 2014 increased by $79,941 to $134,652 from $54,711, when compared to the same period last year. The increase was due primarily to an increase of $40,075 in audit and accounting expense, $48,200 in consultant fees, $23,536 in legal expense and $7, 598 in filing fees offset by a reduction in game development fees of $50,711.
 
Interest expense for the six months ended June 30, 2014 increased by $34,277 when compared to the same period last year.  The increase was due to new debt and the loan assumed in the exchange agreement.     

Cash and Cash Equivalents
 
As of June 30, 2014, we had cash of $17,091 as compared to $25,856 as of December 31, 2013.  We anticipate that a substantial amount of cash will be used as working capital and to execute our strategy and business plan.  As such, we further anticipate that we will have to raise additional capital of approximately $500,000 to fund our operational and research and development needs over the next twelve months.
 
 
5

 
Liquidity and Capital Resources

As of June 30, 2014, we had cash of $17,091 and a working capital deficiency of $245,162 compared to a working capital deficiency of $704,016, at December 31, 2013.  During the six month period ended June 30, 2014, we funded our operations from loans from third parties.

 For the six month period ended June 30, 2014, we used net cash of $33,765 in operations

For the six month period ended June 30, 2014, we had an increase in investing activities for a purchase of software.

For the six month period ended June 30, 2014, we had an increase in financing activities of $30,000 from advances under the line of credit.
 
During the six months ended June 30, 2014, the outstanding principal balance and accrued interest of certain convertible notes in the aggregate amount of $582,565 were converted into 2,506,878 shares of our common stock.
 
Our current cash requirements are significant due to the planned development and expansion of our business.  Accordingly, we expect to continue to use debt and equity financing to fund operations for the next twelve months.  The Company has completed a line of credit agreement for $500,000 with Quarry Bay Capital Ltd. to assist in funding operations.

In order to execute on our business strategy, we will require additional working capital, commensurate with our operational needs.  Such working capital will most likely be obtained through equity or debt financings until such time as our operations are producing revenue in excess of operating expenses.  There are no assurances that we will be able to raise the required working capital on terms favorable, or that such working capital will be available on any terms when needed.

Off-Balance Sheet Arrangements
 
There are no off-balance sheet arrangements.
 
ITEM 3.      QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
 
At this time this is not applicable.
 
ITEM 4.     CONTROLS AND PROCEDURES
 
Evaluation of Disclosure Controls and Procedures
 
We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer(Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), of the effectiveness of the design of our disclosure controls and procedures (as defined by Exchange Act Rules 13a-15(e) or 15d-15(e)) as of June 30, 2014 pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were not effective as of June 30, 2014 in ensuring that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s (the “SEC”) rules and forms.  This conclusion is based on findings that constituted material weaknesses.  A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s interim financial statements will not be prevented or detected on a timely basis.
 
In performing the above-referenced assessment, management had concluded that as of June 30, 2014, there were deficiencies in the design or operation of our internal control that adversely affected our internal controls which management considers to be material weaknesses including those described below:
 
 
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i)
Lack of Formal Policies and Procedures. The Company utilizes a third party independent contractor for the preparation of its financial statements. Although the financial statements and footnotes are reviewed by our management, we do not have a formal policy to review significant accounting transactions and the accounting treatment of such transactions. The third party independent contractor is not involved in the day to day operations of the Company and may not be provided information from management on a timely basis to allow for adequate reporting/consideration of certain transactions.
 
 
ii)
Audit Committee and Financial Expert. The Company does not have a formal audit committee with a financial expert, and thus the Company lacks the board oversight role within the financial reporting process.
 
 
iii)
Insufficient Resources. The Company has insufficient quantity of dedicated resources and experienced personnel involved in reviewing and designing internal controls. As a result, a material misstatement of the interim and annual financial statements could occur and not be prevented or detected on a timely basis.
 
Our management feels the weaknesses identified above have not had any material affect on our financial results. However, we are currently reviewing our disclosure controls and procedures related to these material weaknesses and expect to implement changes in the near term, including identifying specific areas within our governance, accounting and financial reporting processes to add adequate resources to potentially mitigate these material weaknesses.
 
Our management will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and is committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.
 
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
 
Changes in Internal Control Over Financial Reporting
 
There were no changes in our internal controls over financial reporting that occurred during the quarterly period ended June 30, 2014 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within any company have been detected.
 
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PART II – OTHER INFORMATION
 
ITEM 1.     LEGAL PROCEEDINGS
 
There are no legal proceedings to which we are a party, nor to the best of management’s knowledge are any material legal proceedings contemplated.
 
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
 
Not applicable
 
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ITEM 6.      EXHIBITS
 
The following exhibits are included as part of this report by reference:
 
Exhibit No.
Description
 
3.1(a)
Articles of Incorporation (incorporated by reference from registrant’s Registration Statement on Form SB-2 filed on January 31, 2008, Registration No. 333-148959)
 
3.1(b)
Amendment to Articles of Incorporation (incorporated by reference from registrant’s Current Report on Form 8-K/A filed on December 2, 2011)
 
3.1(c)
Amendment to Articles of Incorporation (incorporated by reference from registrant’s Current Report on Form 8-K filed on November 15, 2013)
 
3.3
By-laws (incorporated by reference from registrant’s Registration Statement on Form SB-2 filed on January 31, 2008, Registration No. 333-148959)
 
4
Specimen Stock Certificate (incorporated by reference from registrant’s Registration Statement on Form SB-2 filed on January 31, 2008, Registration No. 333-148959)
 
10.1
Cashbet Real Money Gaming Services Agreement, dated April 15, 2014, between Cashbet Alderney Limited, Mobile Gaming Technologies, Inc. and Gamzio Mobile, Inc. (incorporated by reference from the registrant’s Current Report on Form 8-K filed on April 24, 2014)
 
31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
 
31.2
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
 
32
Certification of Chief Executive Officer  and  Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
 
101
Interactive Data Files*
*Filed herewith

 
 
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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.

 
  GAMZIO MOBILE, INC.  
       
Date: August 19, 2014
 By:
/s/ JASON DEIBOLDT  
   Name:
Jason Deiboldt
 
   Title:
Chief Executive Officer and President
 
     (Principal Executive Officer)  
 
 
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