UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

The aggregate market value of common stock held by non-affiliates of the Registrant on June 30, 2014 was $Nil based on a $Nil average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.

DOCUMENTS INCORPORATED BY REFERENCE

None.

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TABLE OF CONTENTS

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PART I

Item 1.           Business

FORWARD-LOOKING STATEMENTS

This annual report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors”, that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.

In this annual report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to “US$” refer to United States dollars and all references to “common stock” refer to the common shares in our capital stock.

As used in this annual report, the terms “we”, “us”, “our”, “our company” and “Nudg” mean Nudg Media Inc., unless otherwise indicated.

Company Overview

We were incorporated in the State of Nevada as a for-profit company on May 5, 2011 and established a then fiscal year end of May 31. We were incorporated with the intent to develop, produce and distribute an automated home locking system. Our product, when fully developed, was intended to allow the user to lock all the doors in the house and activate the alarm system simply by pressing one button. Unfortunately, we were not able to raise sufficient capital to fund our business development and consequently our management began considering alternative strategies, such as business combinations or acquisitions to create value for our shareholders.

On January 16, 2013, we entered into a share exchange agreement with Eclipse Identity Recognition Corp., a Delaware company, and its shareholders. Pursuant to the terms of the share exchange agreement, we agreed to acquire all 93,745,000 of the issued and outstanding shares of Eclipse Delaware’s common stock in exchange for the issuance by our company of 196,000,008 shares of our common stock to the shareholders of Eclipse Delaware.

Effective December 10, 2012, the Nevada Secretary of State accepted for filing of a Certificate of Amendment to our company’s Articles of Incorporation to change our name from Auto Home Lock, Inc. to Eclipse Identity Recognition Corporation and to increase our authorized capital from 75,000,000 to 5,200,000,000 shares of common stock, par value of $0.001.

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Effective January 17, 2013, in accordance with approval from the Financial Industry Regulatory Authority (“FINRA”), we changed our name from Auto Home Lock, Inc. to Eclipse Identity Recognition Corporation and increased our authorized capital from 75,000,000 to 5,200,000,000 shares of common stock, par value, $0.001. In addition, our company’s issued and outstanding shares of common stock increased from 5,168,000 to 5,168,000,000 common shares, par value of $0.001, on the basis of a 1,000:1 forward split of our company’s issued and outstanding shares of common stock.

The name change and forward split became effective with the Over-the-Counter Bulletin Board at the opening of trading on January 17, 2013.

On April 4, 2013, we closed the share exchange with Eclipse Delaware by issuing the required 196,000,008 common shares to the Eclipse Delaware shareholders. As a result of the share exchange, Eclipse Delaware became a subsidiary of our company. Concurrently, and as a condition to closing the share exchange agreement, we cancelled 5,000,000,000 shares of our common stock. Further, in connection with the closing of the share exchange agreement, we closed a private placement of 4,000,000 shares at $0.025 per share for an aggregate total of $100,000. As a result of these transactions, we had 368,000,008 issued and outstanding common shares.

Additionally, effective April 4, 2013, we changed our fiscal year end to December 31.

As a result of the closing of the share exchange agreement with Eclipse Delaware, Eclipse Delaware became our wholly owned subsidiary and we intended to carry on business in the creation of facial recognition identity software.Our company is in the development stage and has generated only nominal /insignificant revenues.

Effective January 31, 2014, we entered into an agreement with Eclipse Delaware, our wholly-owned subsidiary, and the former shareholders of Eclipse Delaware. Pursuant to this agreement, we agreed to unwind the share exchange transactions which were made in connection with a share exchange agreement dated January 16, 2013 among the same parties. The decision to unwind and rescind the transaction was in large part as a result of an inability to provide the financing required pursuant to the terms of the share exchange agreement with Eclipse Delaware. As a result, the parties mutually concluded that rescinding the transaction was warranted in the circumstances.

As a result of unwinding the transactions, Eclipse Delaware is no longer our subsidiary as we agreed to return an aggregate of 93,745,000 common shares of Eclipse Delaware to the former shareholders of Eclipse Delaware. Further, the former shareholders of Eclipse Delaware agreed to return to us an aggregate of 196,000,008 of our common shares for cancellation and Eclipse Delaware will retain all assets necessary to effectuate its business and operations as currently conducted. Finally, Eclipse Delaware has issued a promissory note to our company in the amount of $66,000, due four years from the date of issuance, in consideration for the financing proceeds that we had provided to Eclipse Delaware.

In connection with the unwinding transactions above, we also entered into a settlement agreement and general release dated January 31, 2014 with Eclipse Delaware and the former shareholders of Eclipse Delaware. Pursuant to this agreement, all parties agreed to release each other from any liabilities that may arise from unwinding the share exchange agreement.

On February 26, 2014, we received written consent from our board of directors and a holder of 94.74% of our company’s voting securities, to change the name of our company to “Nudg Media Inc.”. A Certificate of Amendment to effect the change of name was filed on March 3, 2014 and became effective with the Nevada Secretary of State on March 12, 2014. The amendment was approved by the FINRA with an effective date of March 14, 2014 under the ticker symbol “NDDG”. Our CUSIP number is 67035V 109.

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Any overdue payments will bear interest at the rate of 1.5% per month until such payment is received by Nudg Delaware. The parties further agree that the license agreement may be terminated by the licensor with 15 days’ notice. Should the license agreement be terminated for any reason, our company will be required to submit a terminal report and pay Nudg Delaware for any remaining unpaid balance through any due date that has not been reached.

Our Company will also have the right to sublicense the patents, technical information and trademarks and will be required to provide Nudg Delaware with copies of all executed sublicense agreements it enters into within 5 business days of execution.

Emerging Growth Company

We are an Emerging Growth Company as defined in the Jumpstart Our Business Startups (JOBS) Act.

We shall continue to be deemed an emerging growth company until the earliest of

(a)     the last day of the fiscal year of our company during which we had total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more;

(b)     the last day of the fiscal year of our company following the fifth anniversary of the date of the first sale of common equity securities of our company pursuant to an effective registration statement under this title;

(c)     the date on which our company has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or

(d)     the date on which our company is deemed to be a ‘large accelerated filer’, as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto.

As an emerging growth company we are exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures.

Section 404(b) requires that the registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting.

As an emerging growth company we are exempt from Section 14A and B of the Securities Exchange Act of 1934 which require the shareholder approval of executive compensation and golden parachutes.

We have elected not to opt out of the extended transition period for complying with any new or revised accounting standards pursuant to Section 107(b) of the JOBS Act.

Plan of Operation

Combining the favorable elements of other social media sites into one streamlined platform, Nudg has created a brand that emphasizes simplicity above all else to connect businesses with prospective buyers online. As the new age of social media listings culminate in our company’s vision, Nudg’s online and mobile platform redefines what is possible on the Internet and allows for greater virtual interaction between users. To increase brand awareness and encourage adoption of our platform, our company will continue implementing its advertising strategy through avenues including print media, television advertising, public relations, and cross-marketing with other Internet video platforms.

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With its guiding principles established, our company will continue to send a clear message about its mission and what it stands for, thereby building customer loyalty and persuading potential users to patronize the site. Our company will communicate our mission through careful cultivation of our vast promotional campaign to attract members of the online community and the general public. As a result, Nudg will earn mass allegiance from businesses and buyers at the same time.

Our company intends to achieve the following objectives:

·         Grow its base of users;

·         Build the brand into a household name;

·         Establish itself as a trusted resource for businesses and consumers;

·         Attract enough business users in major metro markets before expanding nationwide.

In order to reach these operational goals, our company will build on our strengths and advantages, as outlined in the following section.

Marketing

Our company will continue to generate interest in our online marketplace concept by utilizing a direct sales approach and a variety of advertising channels that will increase our company’s exposure to industry businesses and consumers. Nudg will benefit from numerous techniques, ranging from traditional methods to online methods, peppered with supplemental techniques to complete its promotional campaign. The details of the Nudg marketing strategy are illustrated in greater detail below.

Online Methods:

·         Website: Our company will search engine optimize our website in order to draw traffic.

·         Viral marketing: Nudg will rely on online viral marketing to spread our message of convenience, simplicity, and value. Viral marketing efforts will include cross marketing with other websites and video platforms, YouTube videos, a presence on social networking sites, and regular postings on Twitter. According to Amy Webb, a digital and product business consultant to online media companies, “Through services such as Twitter and Facebook, anyone with a mobile phone or laptop can easily move beyond chit-chatting with a circle of friends to spreading information on a worldwide network of millions.”

·         Internet advertising: Our company will use a combination of Internet advertising, including Cost-per-Click, Google AdWords, Tags, and banner ads as appropriate. This multi-pronged effort will help generate interest in our company from the online community and general public. Additionally, our company will coordinate marketing efforts with websites such as Google and Craigslist.  

·         CPA Networks: Our company’s commitment of building a superior member base to become a dominant force in the social media realm relies on building a broad member base economically. For this reason using CPA networks is a great way to fix Nudg’s marketing cost to strategically calculate growth. Nudg will use http://www.monetise.co.uk andhttp://www.matomy.com for their CPA services.  

·         PPI Network: Pay per install is another way to fix your marketing costs as you pay a fixed rate for installs. Nudg is developing a relationship with TapJoy to acquire their PPI services.  

Traditional Methods:

·         Public relations: Today, businesses are spending more on public relations than traditional advertising methods. For this reason, our company intends to build a strong public relations campaign via appropriate media outlets. Public relations efforts will include advertising, community support and approval, customer relations, print articles, press releases, and events.

·         Television advertising: Our company recognizes that television advertising is still an effective means of reaching a large target population. For this reason our company will advertise on cable channels or area affiliates of major networks such as CBS, NBC, ABC, and Fox.

Supplementary Methods:

·         Word of mouth: Our company’s commitment to offering a superior online experience will generate a solid and positive reputation within the industry. Nudg’s users will recommend our company’s services to their friends, family members, and professional peers. Consumers have reported that “a person like me” has become the most credible source of information about a company or a product. Through this simple marketing tactic, Nudg will become recognized as the industry’s online marketplace leader.

Competition

Our company faces competition from other online social media and local deals sites, including LinkedIn and Citysearch. However, these sites either lack the mobile capabilities or fail to offer a video-focused user platform, virtually robbing its business participants of valuable face time with prospective customers. Therefore, Nudg will capitalize on our competitors’ weaknesses by building on the following strengths:

·         Free for users and businesses;

·         Social media incorporation;

·         Complex technology made simple;

·         Integrates with mobile applications;

·         Extensive, categorical searchability;

·         Sleek, user-friendly site design;

·         Affiliated with trusted websites;

·         Focused on local, individual communities.

However, there can be no assurance that even if we do these things we will be able to compete effectively with the other companies in our industry.

As we are a newly-established company, we face the same problems as other new companies starting up in an industry, such as lack of available funds. Our competitors may be substantially larger and better funded than us, and have significantly longer histories of research, operation and development than us. In addition, they may develop similar technologies to ours and use the same methods as we do and generally be able to respond more quickly to new or emerging technologies and changes in legislation and regulations relating to the industry. Additionally, our competitors may devote greater resources to the development, promotion and sales of their products or services than we do. Increased competition could also result in loss of key personnel, reduced margins or loss of market share, any of which could harm our business.

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REPORTS TO SECURITY HOLDERS

We are required to file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission and our filings are available to the public over the internet at the Securities and Exchange Commission’s website at http://www.sec.gov. The public may read and copy any materials filed by us with the Securities and Exchange Commission at the Securities and Exchange Commission’s Public Reference Room at 100 F Street N.E. Washington D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the Securities and Exchange Commission at 1-800-732-0330. The SEC also maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, at http://www.sec.gov.

Item 1A.        Risk Factors

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 1B.        Unresolved Staff Comments

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 2.           Properties

We do not own interests in any real property. Our executive office is located at 711 S. Carson Street, Ste. 4, Carson City, Nevada 89701, telephone number 888-332-3660.

Item 3.           Legal Proceedings

We know of no material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our company.

Item 4.           Mine Safety Disclosures

Not applicable.

PART II

Item 5.           Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common shares were originally quoted on the OTC Bulletin Board under the symbol “AHLK”. Effective February 15, 2013, our stock symbol changed to “EIRC”. Effective March 14, 2014, our stock symbol changed to “NDDG”. 

The following quotations, obtained from Stockwatch, reflect the high and low bids for our common shares based on inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

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The high and low bid prices of our common stock for the periods indicated below are as follows:

(1)     Over-the-counter market quotations reflect inter-dealer prices without retail mark-up, mark-down or commission, and may not represent actual transactions.

(2)     The first trade of our common shares was on April 10, 2013.

Our common shares are issued in registered form. Columbia Stock Transfer Company, 601 E. Seltice Way, Suite 202, Post Falls, Idaho, 83854 (Telephone: (208) 664-3544) is the registrar and transfer agent for our common shares.

Holders

As of March 30, 2015, our company had 6 holders of record of our common stock. As of such date, 172,000,000common shares were issued and outstanding.

Dividends

We have not paid any cash dividends on our common stock and have no present intention of paying any dividends on the shares of our common stock. Our current policy is to retain earnings, if any, for use in our operations and in the development of our business. Our future dividend policy will be determined from time to time by our board of directors.

Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

We did not sell any equity securities which were not registered under the Securities Act during the year ended December 31, 2014 that were not otherwise disclosed on our quarterly reports on Form 10-Q or our current reports on Form 8-K filed during the year ended December 31, 2014.

Equity Compensation Plan Information

We do not have a stock option plan in favor of any director, officer, consultant or employee of our company.

Purchase of Equity Securities by the Issuer and Affiliated Purchasers

We did not purchase any of our shares of common stock or other securities during our fourth quarter of our fiscal year ended December 31, 2014.

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Item 6.           Selected Financial Data

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 7.           Management Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes included elsewhere in this report.

This annual report contains forward looking statements relating to our company’s future economic performance, plans and objectives of management for future operations, projections of revenue mix and other financial items that are based on the beliefs of, as well as assumptions made by and information currently known to, our management. The words “expects”, “intends”, “believes”, “anticipates”, “may”, “could”, “should” and similar expressions and variations thereof are intended to identify forward-looking statements. The cautionary statements set forth in this section are intended to emphasize that actual results may differ materially from those contained in any forward looking statement.

Results of Operations for the Years Ended December 31, 2014 and 2013

The following summary of our results of operations should be read in conjunction with our audited financial statements for the years ended December 31, 2014 and 2013 which are included herein.

Our operating results for the years ended December 31, 2014 and 2013 are summarized as follows:

Our operating expenses during the year ended December 31, 2014 were $198,678 compared to $791,399 during the year ended December 31, 2013. Operating expenses for the year ended December 31, 2014 consisted primarily of general and administrative expenses and amortization of intangible assets.

We recorded a net loss of $286,269 for the year ended December 31, 2014, as compared with $791,399 for the year ended December 31, 2013. In addition to the changes to operating expenses noted above, our company also incurred interest expense of $88,218 which was offset by interest income of $627. During the year ended December 31, 2013, our company did not have any other income or expenses.

We anticipate our operating expenses will increase as we implement our business plan. The increase will be attributable to expenses to implement our business plan, and the professional fees to be incurred in connection with our ongoing operating expenses as a reporting company under the Securities Exchange Act of 1934.

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Liquidity and Capital Resources

Working Capital

Cash Flows

As of December 31, 2014, we had total current assets of $41,669 and current liabilities of $614,128. We had a working capital deficit of $572,459 as of December 31, 2014.

We used $103,835 in cash for operating activities for the year ended December 31, 2014 compared with $135,155 used in operating activities for the year ended December 31, 2013. The decrease in use of cash of $31,320 in operating activities is mainly attributed to the decrease in the net loss for the current year offset by a change in the level of cash provided by accounts payable and accrued liabilities.

For the year ended December 31, 2014, we used $1,286 in cash flows from investing activities compared with $709 provided by cash flows from investing activities for the year ended December 31, 2013.

Cash provided by financing activities for the year ended December 31, 2014 was $142,915 compared to $137,271 for the year ended December 31, 2013. The increase in cash provided by financing activities was mainly attributed to proceeds from loans payable whereas our company received proceeds from loans payable and issuance of common stock during the year ended December 31, 2013.

Cash Requirements

Over the next 12 months we intend to carry on business as an Internet portal and next generation social media website. We anticipate that we will incur the following operating expenses during this period:

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We will require additional funds of approximately $235,000 over the next twelve months to implement our growth strategy. These funds may be raised through equity financing, debt financing, or other sources, which may result in further dilution in the equity ownership of our shares. There is no assurance that we will be able to maintain operations at a level sufficient for an investor to obtain a return on their investment in our common stock. Further, we may continue to be unprofitable.

Purchase of Significant Equipment

We do not anticipate the purchase or sale of any plant or significant equipment during the next 12 months.
   

Going Concern

Our company’s financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern. This contemplates the realization of assets and the liquidation of liabilities in the normal course of business. Our company does not have a source of revenue sufficient to cover its operation costs giving substantial doubt for it to continue as a going concern. Our company will be dependent upon the raising of additional capital through placement of our common stock in order to implement its business plan, or merge with an operating company. There can be no assurance that our company will be successful in either situation in order to continue as a going concern. Our company is funding its initial operations by way of issuing founder’s shares.

Our officers and directors have committed to advancing certain operating costs of our company, including legal, audit, transfer agency and edgarizing costs.

In order to continue as a going concern, our company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for our company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that our company will be successful in accomplishing any of its plans.

The ability of our company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if our company is unable to continue as a going concern.

Contractual Obligations

As a “smaller reporting company”, we are not required to provide tabular disclosure obligations.

Inflation

Inflation and changing prices have not had a material effect on our business and we do not expect that inflation or changing prices will materially affect our business in the foreseeable future.

Off-Balance Sheet Arrangements

We do not have any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity or capital expenditures or capital resources that is material to an investor in our securities.

Seasonality

Our operating results and operating cash flows historically have not been subject to seasonal variations. This pattern may change, however, in the event that we succeed in bringing our planned products to market.

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Critical Accounting Policies

Basis of Presentation and Principles of Consolidations

The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”) and present the consolidated financial statements of our company and our wholly-owned subsidiary as of December 31, 2013. All significant intercompany accounts and transactions have been eliminated in the consolidation.

Cash and Cash Equivalents

Our company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. As of December 31, 2014 and 2013, our company had no cash equivalents.

Intangible Assets

Intangible assets are stated at cost less accumulated amortization and are comprised of license rights to patents, trademarks, and other technical information. The license rights are amortized straight-line over ten years over the estimated useful life.

Impairment of Long-Lived Assets

Our company reviews long-lived assets such as property and equipment and intangible assets with finite useful lives for impairment whenever events or changes in circumstance indicate that the carrying amount may not be recoverable. If the total of the expected undiscounted future cash flows is less than the carrying amount of the asset, a loss is recognized for the excess of the carrying amount over the fair value of the asset. No events or circumstances occurred for which an evaluation of the recoverability of long-lived assets was required.

Revenue Recognition

Our company is in the development stage and has yet to realize significant revenues from operations. Once our company has commenced operations, it will recognize revenues when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable. Software licenses fees will be recognized over the term of the agreement on a straight line basis.

Share-based Compensation

Our company follows the provisions of FASB Accounting Standards Codification (“ASC”) 718, “Share-Based Payment.” which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values.

Equity instruments issued to non-employees for goods or services are accounted for at either the fair market value of the goods and services rendered or on the instruments issued in exchange for such services, whichever is more readily determinable, using the measurement date guidelines enumerated in ASC 505-50-30.

Loss per Common Share

Basic loss per share is computed by dividing the net loss attributable to the common stockholders by the weighted average number of shares of common stock outstanding during the year. Fully diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional

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common shares were dilutive. As our company has a loss for the period the potentially dilutive shares are anti-dilutive and therefore they are not added into the earnings per share calculation.

Income Taxes

Our company accounts for income taxes pursuant to ASC 740. Deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.

Our company maintains a valuation allowance with respect to deferred tax assets. Our company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration our company’s financial position and results of operations for the current year. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carry forward year under the Federal tax laws.

Changes in circumstances, such as our company generating taxable income, could cause a change in judgment about the realization of the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate.

Fair Value of Financial Instruments

Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820 “Fair Value Measurements and Disclosures” (ASC 820) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) a reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). 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 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 - Inputs that are both significant to the fair value measurement and unobservable.

Our company’s financial instruments consist principally of cash, amounts receivable, promissory note receivable, accounts payable and accrued liabilities, loans payable, and amounts due to related parties. Pursuant to ASC 820, the fair value of cash is determined based on “Level 1” inputs and the fair value of the loan payable issued for acquisition of the intangible assets is determined based on “Level 3”. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

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Lease Obligations

All non-cancellable leases with an initial term greater than one year are categorized as either capital leases or operating leases. Assets recorded under capital leases are amortized according to the methods employed for property and equipment or over the term of the related lease, if shorter. For the years ended December 31, 2014 and 2013, no capital lease obligations were incurred; therefore, no amortization of lease expense was required. Our company had a month to month lease. Rent expense was $300 and $3,600, respectively, for each of the years ended December 31, 2014 and 2013.

Estimates

The financial statements are prepared on the basis of accounting principles generally accepted in the United States (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses. Actual results could differ from those estimates made by management.

Recent Accounting Pronouncements

Our company has limited operations and is considered to be in the development stage. During the year ended December 31, 2014, our company has elected to early adopt Accounting Standard Update No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. The adoption of this ASU allows our company to remove the inception to date information and all references to development stage.

There were various recent accounting pronouncements issued, most of which represented technical corrections to the accounting literature or application to specific industries. None of the updates are expected to a have a material impact on our company’s financial position, results of operations or cash flows.

Item 7A.        Quantitative and Qualitative Disclosures About Market Risk

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 8.           Financial Statements and Supplementary Data

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NUDG MEDIA INC.

Consolidated Financial Statements

For the Years Ended December 31, 2014 and 2013

(Expressed in US dollars)

                                                                                                                                                                      Index

Report of Independent Registered Public Accounting Firm.................................................................................... 1

Consolidated Balance Sheets....................................................................................................................................... 2

Consolidated Statements of Operations..................................................................................................................... 3

Consolidated Statement of Stockholders’ Deficit...................................................................................................... 4

Consolidated Statements of Cash Flows................................................................................................................... 5 

Notes to the Consolidated Financial Statements...................................................................................................... 6

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REPORT OF REGISTERED INDEPENDENT AUDITORS

To the Board of Directors and Stockholders

 of Nudg Media Inc.:

We have audited the accompanying balance sheets of Nudg Media Inc. as of December 31, 2014 and 2013, and the related statements of operations, stockholders’ deficit, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Nudg Media Inc. as of December 31, 2014 and 2013, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company is in the development stage, and has not established any source of revenue to cover its operating costs. As such, it has incurred an operating loss since inception. Further, as of as December 31, 2014, the cash resources of the Company were insufficient to meet its planned business objectives. These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plan regarding these matters is also described in Note 2 to the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Respectfully submitted,

Weinberg & Baer LLC

Baltimore, Maryland

April 15, 2015

F-1

Nudg Media Inc.

Consolidated Balance Sheets

(Expressed in US dollars)

(The accompanying notes are an integral part of these consolidated financial statements)

Nudg Media Inc.

Consolidated Statements of Operations

(Expressed in US dollars)

Nudg Media Inc.

Consolidated Statement of Stockholders’ Deficit

For the Years Ended December 31, 2014 and 2013

(expressed in U.S. dollars)

(The accompanying notes are an integral part of these consolidated financial statements)

Nudg Media Inc.

Consolidated Statements of Cash Flows

(Expressed in US dollars)

Nudg Media Inc.

Notes to the Consolidated Financial Statements

December 31, 2014

(Expressed in US dollars)

1.     Nature of Operations and Continuance of Business

Nudg Media Inc. (the “Company”), formerly Auto Home Lock Incorporated and Eclipse Identity Recognition Corporation, was incorporated in the State of Nevada on May 5, 2011 and was incorporated with the intent to develop, produce and distribute an automated home locking system. The Company’s product, when fully developed, was intended to allow the user to lock all the doors in the house and activate the alarm system simply by pressing one button. On January 31, 2014, the Company approved of a name change to Nudg Media Inc., which became effective with the Nevada Secretary of State on March 12, 2014. The Company intends to enter into the social media and e-commerce business. During the period ended September 30, 2014, the Company acquired the license rights to various patents, trademarks, and intellectual property relating to social media technologies. The Company is also in the process of raising additional equity capital to support the completion of its development activities.

The Company’s activities are subject to significant risks and uncertainties, including failing to secure additional funding to operationalize the Company’s current technology before another company develops similar technology. 

On January 16, 2013, the Company entered into a share exchange agreement (“Share Exchange Agreement”) with Eclipse Identity Recognition Corporation, a Delaware company (“Eclipse Delaware”) and its shareholders.  Eclipse Delaware is a corporation in the development stage and has not commenced operations. Eclipse Delaware was incorporated under the laws of the State of Delaware on August 3, 2010. Eclipse Delaware designs, develops, and sells video analytics technologies that incorporate advanced facial detection, biometric search, and identity recognition techniques to detect and identify individuals from live and stored video streams. Eclipse Delaware expects to target its technology to law enforcement, public safety, commercial and private security, as well as entertainment and social media.  Pursuant to the terms of the share exchange agreement, the Company agreed to acquire all 93,745,000 of the issued and outstanding shares of Eclipse Delaware’s common stock in exchange for the issuance by the Company of 196,000,008 shares of its common stock to the shareholders of Eclipse Delaware.

Effective February 8, 2013, and in connection with the share exchange agreement, the Company entered into a bridge loan agreement with Eclipse Delaware wherein the Company agreed to provide a loan of $35,000 to Eclipse Delaware. The principal amount of the loan was satisfied by the closing of the definitive share exchange agreement between the Company and Eclipse Delaware. The loan was credited against the private placement of 4,000,000 shares of the Company for $0.025 described below. Subsequent to the bridge loan, additional funds were advanced such that a total of $58,480 had been provided and was credited against the private placement. On April 4, 2013, the Company closed the share exchange by issuing the required 196,000,008 common shares to the Eclipse Delaware shareholders.  As a result of the share exchange, Eclipse Delaware became a subsidiary of the Company. Concurrently, and as a condition to closing the share exchange agreement, the Company cancelled 5,000,000,000 shares of common stock. The Company concurrently closed a private placement of 4,000,000 shares at $0.025 per share for an aggregate total of $100,000. The Company consequently had 368,000,008 issued and outstanding common shares.

On January 31, 2014, the Company entered into a settlement agreement and general release with Eclipse Delaware, Steven Miller, and the former shareholders of Eclipse Delaware. The agreement and release intends to unwind and rescind the transactions made in connection with in the share exchange agreement dated January 31, 2013 and closed on April 4, 2013 and return the parties to their respective positions prior to the agreement. This resulted in the net liabilities of Eclipse Delaware as at January 31, 2014 being adjusted to additional paid-in capital.

F-6

Nudg Media Inc.

Notes to the Consolidated Financial Statements

December 31, 2014

(Expressed in US dollars)

1.     Nature of Operations and Continuance of Business

These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As at December 31, 2014, the Company has a working capital deficiency of $572,459 and an accumulated deficit of $2,394,374. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue to develop its business and ultimately on the attainment of profitable operations. These factors continue to raise substantial doubt regarding the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

2.   Summary of Significant Accounting Policies

a)   Basis of Presentation and Principles of Consolidation

      These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States (“US GAAP”), and are expressed in US dollars. These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Eclipse Delaware. All inter-company balances and transactions have been eliminated on consolidation. On January 31, 2014, the Company and Eclipse Delaware entered into a settlement and release agreement whereby both parties have agreed to unwind the transactions relating to the January 31, 2013 share exchange agreement resulting in the accounts of Eclipse Delaware being removed as of January 31, 2014 with the net liabilities being adjusted to additional paid-in capital. The Company’s fiscal year-end is December 31.

b)     Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States 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 revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the fair values of convertible debentures, derivative liability, stock-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

b)   Cash and Cash Equivalents

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. As of December 31, 2014 and 2013, the Company had no cash equivalents.

c)   Intangible Assets

Intangible assets are stated at cost less accumulated amortization and are comprised of license rights to patents, trademarks, and other technical information. The license rights are amortized straight-line over ten years over the estimated useful life.

2.   Summary of Significant Accounting Policies (continued) 

d)   Impairment of Long-Lived Assets

The Company reviews long-lived assets such as property and equipment and intangible assets with finite useful lives for impairment whenever events or changes in circumstance indicate that the carrying amount may not be recoverable. If the total of the expected undiscounted future cash flows is less than the carrying amount of the asset, a loss is recognized for the excess of the carrying amount over the fair value of the asset. No events or circumstances occurred for which an evaluation of the recoverability of long-lived assets was required.

e)     Lease Obligations

All non-cancellable leases with an initial term greater than one year are categorized as either capital leases or operating leases. Assets recorded under capital leases are amortized according to the methods employed for property and equipment or over the term of the related lease, if shorter. For the periods ended June 30, 2014 and December 31, 2013, no capital lease obligations were incurred; therefore, no amortization of lease expense was required. The Company had a month to month lease.  Rent expense for the year ended December 31, 2014 was $300 (December 31, 2013 - $3,600).

f)     Revenue Recognition

The Company is in the development stage and has yet to realize significant revenues from operations. Once the Company has commenced operations, it will recognize revenues when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptable has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable. Software licenses fees will be recognized over the term of the agreement on a straight-line basis.

g)    Share-based Compensation

The Company follows the provisions of FASB Accounting Standards Codification ("ASC") 718, “Share-Based Payment.” which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values.

Equity instruments issued to non-employees for goods or services are accounted for at either the fair market value of the goods and services rendered or on the instruments issued in exchange for such services, whichever is more readily determinable, using the measurement date guidelines enumerated in ASC 505-50-30.

h)   Financial Instruments

ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”), requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

2.   Summary of Significant Accounting Policies (continued) 

h)   Financial Instruments (continued)

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are no observable inputs to the valuation methodology that are relevant to the measurement of the fair value of the assets or liabilities.

The Company’s financial instruments consist principally of cash, amounts receivable, promissory note receivable, accounts payable and accrued liabilities, loans payable, and amounts due to related parties. Pursuant to ASC 820, the fair value of cash is determined based on “Level 1” inputs and the fair value of the loan payable issued for acquisition of the intangible assets is determined based on “Level 3”. Refer to Note 7(e). The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

i)      Loss Per Share

The Company computes net loss per share in accordance with ASC 260, Earnings Per Share, which requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options, warrants or convertible loans. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. At December 31, 2014, the Company had 20,000,000,000 (December 31, 2013 – 50,000) potentially dilutive shares from outstanding stock options and convertible loans. The potentially dilutive shares exceed the authorized shares of the Company at December 31, 2014.

j)    Comprehensive Loss

      ASC 220, “Comprehensive Income”, establishes standards for the reporting and presentation of comprehensive income (loss) and its components in the financial statements. As at December 31, 2014 and 2013, the Company had no items representing comprehensive income or loss.

k)   Income Taxes

The Company accounts for income taxes pursuant to ASC 740. Deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.

F-9

2.     Summary of Significant Accounting Policies (continued)

k)  Income Taxes (continued)

The Company maintains a valuation allowance with respect to deferred tax assets. The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations for the current year. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carry forward year under the Federal tax laws.

Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the realization of the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate.

l)      Recent Accounting Pronouncements

The Company has limited operations and is considered to be in the development stage. During the year ended December 31, 2014, the Company has elected to early adopt Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. The adoption of this ASU allows the Company to remove the inception to date information and all references to development stage.

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

3.    Promissory Note Receivable

On January 31, 2014, the Company received a promissory note receivable for $66,000. The note is unsecured, matures on January 31, 2018, and bears interest at the minimum rate imputed by the IRS. As at December 31, 2014, the Company has accrued interest receivable of $627 (2013 - $nil).

4.    Intangible Assets

On April 24, 2014, the Company acquired license rights to certain patents, trademarks and technical information relating to an internet portal coupled with a next-generation social media website that incorporates voice and text messaging, video email and mobile technologies. Refer to Note 7.

5.    Accounts Payable

6.    Related Party Transactions

As at December 31, 2014, a total of $nil (2013 - $82,325) is owed to officers and shareholders of the Company, which is non-interest bearing, unsecured, and due on demand.

7.    Loans Payable

a)     On September 19, 2012, the Company entered into a loan agreement for $15,000 with a non-related party.  The loan is unsecured, non-interest bearing, and due in six months from the date of the loan. The due date was extended to March 19, 2014 by mutual consent of the parties. The Company granted the lender an option to purchase 30,000 shares of the Company’s common stock at par value. This loan was unwound pursuant to the settlement agreement and general release dated January 31, 2014. Refer to Note 1.

b)    On November 20, 2012, the Company entered into a loan agreement for $20,000 with a non-related party. The loan is unsecured, bears interest of 10% per annum, and due at the point where the Company receives $100,000 in funding. This loan was unwound pursuant to the settlement agreement and general release dated January 31, 2014. Refer to Note 1.

c)     On April 29, 2013, the Company entered into a loan agreement for $10,000 with a non-related party.  The loan is unsecured, non-interest bearing, and due in six months from the date of the loan. The due date was extended to March 11, 2014 by mutual consent of the parties. The Company granted the lender an option to purchase 20,000 shares of the Company’s common stock at par value. This loan was unwound pursuant to the settlement agreement and general release dated January 31, 2014. Refer to Note 1.

d)    During the year ended December 31, 2014, the Company received funds totaling $81,210 from a non-related party. The amount owing is unsecured, non-interest bearing and due on demand.

e)     On April 24, 2014, the Company entered into license agreement for the exclusive right to use certain patents, technical information and trademarks. Refer to Note 4. Pursuant to the agreement, the Company will pay a 5% royalty on all net sales derived from the use of the patents, technical information and trademarks, to be paid quarterly on the 15^th day following the quarter. The Company has also agreed to pay a total of $1,200,000 over a 60 month period in cash or the equivalent value of restricted common shares of the Company as follows:

·         $200,000 on or before October 24, 2014;

·         $200,000 on or before April 24, 2015;

·         $200,000 on or before April 24, 2016;

·         $200,000 on or before April 24, 2017;

·         $200,000 on or before April 24, 2018; and

·         $200,000 on or before April 24, 2019.

F-11

7.    Loans Payable (continued) 

Pursuant to the agreement, any overdue payments will bear interest at a rate of 1.5% per month until such payment is received. The Company will also have the right to sublicense the patents, technical information and trademarks.

The loan payable has been discounted at a market rate of 20% to arrive at the net present value of $798,123.  At December 31, 2014, the Company has recorded $677,773 (December 31, 2013 - $nil) for the present value of the note payable. During the year ended December 31, 2014, the Company has recorded accretion expense of $79,650 (2013 - $nil), which has been included in interest expense. As at December 31, 2014, the Company has accrued interest of $6,677 (203 - $nil) on the unpaid amount due on October 24, 2014. This amount has been recorded in accounts payable and accrued liabilities.

f)     On September 30, 2014, the Company entered into a loan agreement with a non-related party for proceeds of $75,000. The loan is unsecured, bears interest at 10% per annum, and is due on demand. As at December 31, 2014, the Company has accrued interest of $1,890 (2013 - $nil) which has been recorded in accounts payable and accrued liabilities.

8.    Common Stock

        Share Transactions for the Year Ended December 31, 2014: 

On January 31, 2014, the Company closed the settlement agreement and general release with Eclipse Delaware whereby the two companies mutually agreed to unwind the transactions related to the share exchange agreement dated January 31, 2013. This settlement agreement resulted in the Company cancelling the 196,000,008 common shares previously issued to the Eclipse Delaware shareholders and returning them to the treasury.  As a result of this transaction, the Company had 172,000,000 issued and outstanding common shares.

        Share Transactions for the Year Ended December 31, 2013:

On April 4, 2013, the Company closed the share exchange by issuing the required 196,000,008 common shares to the Eclipse Delaware shareholders.  As a result of the share exchange, Eclipse Delaware became a subsidiary of the Company.  Concurrently, and as a condition to closing the share exchange agreement, the Company cancelled 5,000,000,000 shares of our common stock.  Further, in connection with the closing of the share exchange agreement, the Company concurrently closed a private placement of 4,000,000 shares at $0.025 per share for an aggregate total of $100,000, of which $20,000 was recorded as a subscription receivable.  As a result of these transactions, the Company had 368,000,008 issued and outstanding common shares.

9.    Stock Options

As at December 31, 2014, the aggregate intrinsic value of stock options outstanding is $nil (December 31, 2013 - $4,950).

10. Income Taxes

The Company has a net operating loss carried forward of $2,314,725 available to offset taxable income in future years.

The income tax benefit has been computed by applying the income tax rates of the United States (federal and state rates) of 34% to the net loss before income taxes. The tax effect of the significant temporary differences, which comprise future tax assets and liabilities, are as follows:

The significant components of deferred income tax assets and liabilities at December 31, 2014 and 2013 are as follows:

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for Federal income tax reporting purposes are subject to annual limitations.  When a change in ownership occurs, net operating loss carry forwards may be limited as to use in future years.

11. Subsequent Event

In accordance with ASC 855, we have evaluated subsequent events through the date of issuance of the financial statements, and did not have any material recognizable subsequent events.

F-13

Item 9.           Changes and Disagreements With Accountants on Accounting and Financial Disclosure

There were no disagreements related to accounting principles or practices, financial statement disclosure, internal controls or auditing scope or procedure during the two fiscal years and interim periods, including the interim period up through the date the relationship ended.

Item 9A.        Controls and Procedures

Management’s Report on Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 , as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our president (our principal executive officer, principal financial officer and principal accounting officer) to allow for timely decisions regarding required disclosure

As of December 31, 2014, the end of our fiscal year covered by this report, we carried out an evaluation, under the supervision and with the participation of our president (our principal executive officer, principal financial officer and principal accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our president (our principal executive officer, principal financial officer and principal accounting officer) concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this annual report.

The conclusion that our disclosure controls and procedures were not effective was due to the presence of material weaknesses in internal control over financial reporting as identified below under the heading “Management’s Report on Internal Control Over Financial Reporting.” Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated. Our company intends to remediate the material weaknesses as set out below.

Management’s Report on Internal Control over Financial Reporting

Our company’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) for our company. Our company’s internal control over financial reporting is designed to provide reasonable assurance, not absolute assurance, regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America. Internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our company’s assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles in the United States of America, and that our company’s receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and that the degree of compliance with the policies or procedures may deteriorate.

Our management, including our president (our principal executive officer, principal financial officer and principal accounting officer), conducted an evaluation of the design and operation of our internal control over financial reporting as of December 31, 2014 based on the criteria set forth in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. This evaluation included review of

19

the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. Based on this evaluation, our management concluded our internal control over financial reporting was not effective as at December 31, 2014 due to the following material weaknesses which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.

Our company plans to take steps to enhance and improve the design of our internal controls over financial reporting. During the period covered by this annual report on Form 10-K, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement the following changes during our fiscal year ending December 31, 2015: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out in (i) is largely dependent upon our company securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely effected in a material manner.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal controls over financial reporting that occurred during the year ended December 31, 2014 that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.

Item 9B.        Other Information

Effective April 25, 2014, Gregory Rotelli resigned as interim president, chief executive officer, chief financial officer, treasurer, secretary and director of our company. Mr. Rotelli’s resignation was not the result of any disagreement with our company regarding our operations, policies, practices or otherwise.

Effective April 25, 2014, Menachem Sofepr was appointed as president, chief executive officer, chief financial officer, treasurer, secretary and director of our company.

Effective October 7, 2014, Menachem Sofepr resigned as president, chief executive officer, chief financial officer, treasurer, secretary and director of our company. Mr. Sofepr’s resignation was not the result of any disagreement with our company regarding our operations, policies, practices or otherwise.

Effective October 7, 2014, Jade Hall was appointed as president, chief executive officer, chief financial officer, treasurer, secretary and director of our company.

PART III

Item 10.         Directors, Executive Officers and Corporate Governance

The following individuals serve as the directors and executive officers of our company as of the date of this annual report. All directors of our company hold office until the next annual meeting of our shareholders or until their successors have been elected and qualified. The executive officers of our company are appointed by our board of directors and hold office until their death, resignation or removal from office.

The board of directors has no nominating, audit or compensation committee at this time.

Business Experience

The following is a brief account of the education and business experience during at least the past five years of each director, executive officer and key employee of our company, indicating the person’s principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out.

Jade Hall, – President, Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary and Director

Jade Hall was appointed as our president, chief executive officer, chief financial officer, treasurer, secretary and director on October 7, 2014.  Ms. Hall has experience building mature sales and operations cultures, and developing product strategies and has proven experience in marketing and social media which will enhance the advancement of the technology.

We appointed Jade Hall as a member of the board of directors because of her experience and interest in advancing the Nudg technology.
   

Significant Employees

We have no significant employees, other than Jade Hall, our president, chief executive officer, chief financial officer, secretary, treasurer and director.

Involvement in Certain Legal Proceedings

To the best of our knowledge, none of our directors or executive officers has, during the past ten years:

1.       been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences);

2.       had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;

3.       been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;

4.       been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

5.       been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

6.       been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26)), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29)), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

Code of Ethics

Our board of directors has not adopted a code of ethics due to the fact that we presently only have one director and we are in the development stage of our operations. We anticipate that we will adopt a code of ethics when we increase either the number of our directors and officers or the number of our employees.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

Our common stock is not registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Accordingly, our officers, directors, and principal stockholders are not subject to the beneficial ownership reporting requirements of Section 16(a) of the Exchange Act.

Committees of the Board

All proceedings of our board of directors were conducted by resolutions consented to in writing by all the directors and filed with the minutes of the proceedings of the directors. Such resolutions consented to in writing by the directors entitled to vote on that resolution at a meeting of the directors are, according to the corporate laws of the state of Nevada and the bylaws of our company, as valid and effective as if they had been passed at a meeting of the directors duly called and held.

Our audit committee consists of our entire board of directors.

Our company currently does not have nominating, compensation committees or committees performing similar functions nor does our company have a written nominating, compensation or audit committee charter. Our board of directors does not believe that it is necessary to have such committees because it believes that the functions of such committees can be adequately performed by our directors.

Our company does not have any defined policy or procedure requirements for shareholders to submit recommendations or nominations for directors. The directors believe that, given the early stage of our development, a specific nominating policy would be premature and of little assistance until our business operations develop to a more advanced level. Our company does not currently have any specific or minimum criteria for the election of nominees to the board of directors and we do not have any specific process or procedure for evaluating such nominees. Our directors assess all candidates, whether submitted by management or shareholders, and make recommendations for election or appointment.

A shareholder who wishes to communicate with our board of directors may do so by directing a written request addressed to our president, at the address appearing on the first page of this annual report.

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Audit Committee and Audit Committee Financial Expert

Our board of directors has determined that none of the members of our audit committee qualifies as an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K, and is “independent” as the term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of 1934, as amended.

We believe that the members of our board of directors are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. We believe that retaining an independent director who would qualify as an “audit committee financial expert” would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development and the fact that we have not generated any material revenues to date. In addition, we currently do not have nominating, compensation or audit committees or committees performing similar functions nor do we have a written nominating, compensation or audit committee charter. Our board of directors does not believe that it is necessary to have such committees because it believes the functions of such committees can be adequately performed by our board of directors.

Item 11.         Executive Compensation

The particulars of the compensation paid to the following persons:

(a)     principal executive officer;

(b)     each of our two most highly compensated executive officers who were serving as executive officers at the end of the years our ended December 31, 2014 and December 31, 2013; and

(c)     up to two additional individuals for whom disclosure would have been provided under (b) but for the fact that the individual was not serving as our executive officer at the end of the years ended December 31, 2014 and December 31, 2013,

who we will collectively refer to as the named executive officers of our company, are set out in the following summary compensation table, except that no disclosure is provided for any named executive officer, other than our principal executive officers, whose total compensation did not exceed $100,000 for the respective fiscal year:

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Narrative Disclosure to Summary Compensation Table

There are no employment contracts, compensatory plans or arrangements, including payments to be received from our company with respect to any executive officer, that would result in payments to such person because of his or her resignation, retirement or other termination of employment with our company, or its subsidiaries, any change in control, or a change in the person’s responsibilities following a change in control of our company.

Stock Option Plan

Currently, we do not have a stock option plan in favor of any director, officer, consultant or employee of our company.

Stock Options/SAR Grants

During our fiscal year ended December 31, 2014 there were no options granted to our named officers or directors.

Outstanding Equity Awards at Fiscal Year End

No equity awards were outstanding as of the year ended December 31, 2014.

Compensation of Directors

We do not have any agreements for compensating our directors for their services in their capacity as directors, although such directors are expected in the future to receive stock options to purchase shares of our common stock as awarded by our board of directors.

On October 6, 2014, we entered into a general service agreement with our sole officer and director, Jade Hall. Under the terms of the agreement we agreed to pay Ms. Hall total compensation of $3,000 per month exchange for services provided to us by Ms. Hall in her capacity as president and chief executive officer of our company. The term of the agreement was for four months and may be extended by mutual written agreement by both of the parties to the agreement. Either party may terminate the agreement by providing 30 days’ notice to the other party. The term of the general services agreement was through February 2015 and our company is currently engaged with Ms. Hall on a month to month basis.

We have determined that none of our directors are independent directors, as that term is used in Item 7(d)(3)(iv)(B) of Schedule 14A under the Securities Exchange Act of 1934, as amended, and as defined by Rule 4200(a)(15) of the NASDAQ Marketplace Rules.

Pension, Retirement or Similar Benefit Plans

There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the board of directors or a committee thereof.

Indebtedness of Directors, Senior Officers, Executive Officers and Other Management

None of our directors or executive officers or any associate or affiliate of our company during the last two fiscal years, is or has been indebted to our company by way of guarantee, support agreement, letter of credit or other similar agreement or understanding currently outstanding.

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Item 12.         Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Management

The following table sets forth certain information concerning the number of shares of our common stock owned beneficially as of March 30, 2015, by: (i) each of our directors; (ii) each of our named executive officers; and (iii) each person or group known by us to beneficially own more than 5% of our outstanding shares of common stock. Unless otherwise indicated, the shareholders listed below possess sole voting and investment power with respect to the shares they own.

  
Changes in Control

Other than as disclosed, we are unaware of any contract or other arrangement or provisions of our Articles or Bylaws the operation of which may at a subsequent date result in a change of control of our company. There are not any provisions in our Articles or Bylaws, the operation of which would delay, defer, or prevent a change in control of our company.

Item 13.         Certain Relationships and Related Transactions, and Director Independence

No director, executive officer, shareholder holding at least 5% of shares of our common stock, or any family member thereof, had any material interest, direct or indirect, in any transaction, or proposed transaction since the year ended December 31, 2014, in which the amount involved in the transaction exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at the year-end for the last three completed fiscal years.

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On October 6, 2014, we entered into a general service agreement with our sole officer and director, Jade Hall. Under the terms of the agreement we agreed to pay Ms. Hall total compensation of $3,000 per month exchange for services provided to us by Ms. Hall in her capacity as president and chief executive officer of our company. The term of the agreement was for four months and may be extended by mutual written agreement by both of the parties to the agreement. Either party may terminate the agreement by providing 30 days’ notice to the other party. The term of the general services agreement was through February 2015 and our company is currently engaged with Ms. Hall on a month to month basis.

Item 14.         Principal Accountant Fees and Services

The aggregate fees billed for the most recently completed fiscal years ended December 31, 2014 and 2013 for professional services rendered by the principal accountant for the audit of our annual financial statements and review of the financial statements included in our quarterly reports on Form 10-Q and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows:

Our board of directors pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by the board of directors either before or after the respective services were rendered.

Our board of directors has considered the nature and amount of fees billed by our independent auditors and believes that the provision of services for activities unrelated to the audit is compatible with maintaining our independent auditors’ independence.

PART IV

Item 15.         Exhibits, Financial Statement Schedules

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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

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