UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2015

 

☐   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT

For the transition period from N/A to N/A

 

Commission File No. 333-180611

 

Gawk Incorporated

(Name of small business issuer as specified in its charter)

 

Nevada		33-1220317
( State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

 

5300 Melrose Avenue Suite 42

Los Angeles, CA 90038

(Address of principal executive offices) (Zip Code)

 

(888) 754-6190

Registrant’s telephone number, including area code

 

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

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 o     No x

 

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

 

Large accelerated filer	¨	Accelerated filer	¨
Non–Accelerated filer	¨	Smaller reporting company	x

 

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

 

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

 

Class		Outstanding at  July 27, 2015
Common stock, $0.001 par value		180,079,156

 

 

 

GAWK INCORPORATED

INDEX TO FORM 10-Q FILING

FOR THE THREE AND NINE MONTHS ENDED OCTOBER 31, 2014 AND 2013

 

TABLE OF CONTENTS

 

		PAGE
PART I - FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	3
	Condensed Balance Sheets	3
	Condensed Statements of Operations	4
	Condensed Statement of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management Discussion & Analysis of Financial Condition and Results of Operations	10
Item 3	Quantitative and Qualitative Disclosures About Market Risk	13
Item 4.	Controls and Procedures	13
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	14
Item 1A.	Risk Factors	14
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	14
Item 3.	Defaults Upon Senior Securities	14
Item 4.	Mining Safety Disclosures	14
Item 5	Other information	14
Item 6.	Exhibits	14
CERTIFICATIONS
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act.
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act.
32.2	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act.
32.2	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act.

 

 

PART I

FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

The accompanying interim consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q.  Therefore, they do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders' equity in conformity with generally accepted accounting principles.  Except as disclosed herein, there has been no material change in the information disclosed in the notes to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended January 31, 2015.  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 months ended April 30, 2015 are not necessarily indicative of the results that can be expected for the year ending January 31, 2016.

 

GAWK INCORPORATED

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

		April 30,				January 31,
		2015				2015
ASSETS:
CURRENT ASSETS
Cash		$	125,899			$	255,455
Marketable securities - available for sale			135,000				28,950
Accounts receivable			5,809				10,862
Deposit - Cipherloc			1,125,000				1,125,000
Total current assets			1,391,708				1,420,267
Web equipment, net of depreciation of $29,496 and $14,748			147,479				162,227
Intangible assets and proprietary technology, net of amortization $73,498 and $36,749			367,489				404,238
Goodwill			1,310,908				1,310,908
TOTAL ASSETS		$	3,217,584			$	3,297,640
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
CURRENT LIABILITIES:
Accounts payable and accrued liabilities		$	374,984			$	330,384
Note payable RND Media			10,000				10,000
Convertible note payable net of discount $119,400 and $208,950			1,680,600				1,591,050
Investor payable - common shares			1,154,000				1,154,000
Preferred shares payable for acquisition			-				1,000,000
Due to related party			188,854				188,854
TOTAL LIABILITIES			3,408,438				4,274,288
CONTINGENCIES AND COMMITMENTS			-				-
STOCKHOLDERS' EQUITY (DEFICIT)
A Preferred stock, $0.001 par value, 1,000 shares authorized; 1,000 issued and outstanding			1				1
B Preferred stock, $0.001 par value, 50,000,000 shares authorized; none  issued and outstanding			-				-
C Preferred stock, $0.001 par value, 100 shares authorized; 8 and none  issued and outstanding			-				-
Common stock, $0.001 par value, 650,000,000 shares authorized; 178,019,156  and 161,732,000 issued and outstanding			178,019				161,732
Additional paid-in capital			7,271,394				6,176,599
Accumulated other comprehensive income (loss)			(442	)			(442	)
Accumulated deficit			(7,639,826	)			(7,314,538	)
TOTAL STOCKHOLDERS' (DEFICIT)			(190,854	)			(976,648	)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	3,217,584			$	3,297,640

 

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

 

 

GAWK INCORPORATED

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

 

		For the Three Months Ended
		April 30,
		2015				2014
REVENUE		$	58,582			$	-
OPERATING EXPENSES:
General and administrative			304,276				199,074
Research and development			-				478,735
Related party payments			-				385,035
Depreciation and Amortization expense			51,497				-
Total operating expenses		$	355,773			$	1,062,844
OTHER (INCOME) AND EXPENSES
Interest income		$	(3	)			-
Interest expense			134,150				-
Unrealized (gain) loss on marketable securities			(106,050	)			-
Total other (income) and expenses		$	28,097			$	-
NET LOSS		$	(325,288	)		$	(1,062,844	)
Comprehensive income (loss):
NET LOSS		$	(325,288	)		$	(1,062,844	)
NET LOSS PER COMMON SHARE:
Basic and diluted		$	(0.00	)		$	(0.01	)
Weighted average common shares outstanding, basic and diluted			172,555,864				210,333,333

 

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

 

 

GAWK INCORPORATED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

		For the Three Months Ended
		April 30,
		2015				2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(325,288	)		$	(1,062,844	)
Adjustments to reconcile net loss to net cash used in operating activities:
Common stock issued for services			57,083				-
Common stock issued for legal settlement			54,000				-
Amoritization of Debt Discount			89,550				-
Unrealized (gain) loss on marketable securities			(106,050	)			-
Depreciation and Amortization			51,497				-
Changes in operating assets and liabilities:
Accounts receivable			5,053				-
Accounts payable  and accrued liabilities			44,599				(31,787	)
Preferred Stock Payable			-				-
Due to related party			-				59,000
Net cash used in operating activities			(129,556	)			(1,035,631	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds (Refund) of subscription payable			-				(150,000	)
Proceeds for investor payable			-				699,200
Proceeds from the sale of Preferred C stock			-				3,300,000
Net cash provided by financing activities			-				3,849,200
Effect of exchange rate changes			-				-
INCREASE (DECREASE) IN CASH			(129,556	)			2,813,569
CASH, BEGINNING OF PERIOD			255,455				1,034,210
CASH, END OF PERIOD		$	125,899			$	3,847,779
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid		$	-			$	-
Income taxes paid		$	-			$	-
SUPPLEMENTAL DISCLOSURE OF NONCASH OPERATING AND FINANCING ACTIVITIES:
Common stock exchanged for Preferred A		$	-			$	150,000
Issuance of preferred shares payable for acquisition		$	1,000,000			$	-

 

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

 

 

GAWK INCORPORATED

NOTES TO UNAUDITED CONDENSED CONSOLIDATEDFINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED OCTOBER 31, 2014 AND 2013

 

NOTE 1 - DESCRIPTION OF BUSINESS

 

We were incorporated in the state of Nevada on January 6, 2011 and our principal business address is 5300 Melrose Avenue, Suite 42, Los Angeles, CA 90038 telephone number 888-754-6190. We have a January 31 fiscal year end. Gawk is focused on becoming our business customers’ single source for leveraging the increasing power of the cloud, providing essential services that form the foundation for successful migration to, and efficient use of, the cloud. Our cloud computing and Infrastructure as a Service (“IaaS”) solutions are designed to provide our customers with a platform on which additional cloud services can be layered. Complemented by Software as a Service (“SaaS”) solutions such as storage, security and business continuity, our advanced cloud offerings allow our customers to experience the increased efficiencies and agility delivered by the cloud. Gawk's cloud-based services are flexible, scalable and rapidly deployed, reducing our customers’ cost of ownership while increasing their productivity.

 

NOTE 2 – BASIS OF PRESENTATION OF INTERIM FINANCIAL STATEMENTS

 

Basis of Presentation of Interim Financial Statements

 

The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America.  The accompanying interim unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information in accordance with the instructions to Form 10-Q/A and Article 8 of Regulation S-X. In our opinion, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months ended April 30, 2015 are not necessarily indicative of the results that may be expected for the year ending January 31, 2016. Notes to the unaudited interim consolidated financial statements that would substantially duplicate the disclosures contained in the audited consolidated financial statements for fiscal year 2015 have been omitted; this report should be read in conjunction with the audited consolidated financial statements and the footnotes thereto for the fiscal year ended January 31, 2015 included within its Form 10-K as filed with the Securities and Exchange Commission.

 

Fair Value of Financial Instruments

 

The Company's financial instruments consist primarily of cash, accounts payable and accrued expenses, and debt.  The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments.  

 

The Company adopted ASC Topic 820, Fair Value Measurements (“ASC Topic 820”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.  The standard provides a consistent definition of fair value which focuses on an exit price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  The standard also prioritizes, within the measurement of fair value, the use of market-based information over entity specific information and establishes a three-level hierarchy for fair value measurements based on the nature of inputs used in the valuation of an asset or liability as of the measurement date.

 

 

The three-level hierarchy for fair value measurements is defined as follows:

 

●

Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets; liabilities in active markets;

 

●

Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability other than quoted prices, either directly or indirectly, including inputs in markets that are not considered to be active; or directly or indirectly including inputs in markets that are not considered to be active;

 

●

Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement

 

The following table summarizes fair value measurements by level at April 30, 2015 and January 31, 2015 for assets measured at fair value on a recurring basis:

 

at April 30, 2015
		Level 1				Level 2				Level 3				Total
Marketable securities- available for sale			135,000				-				-				135,000
Total assets			135,000				-				-				135,000
at January 31, 2015
			Level 1			Level 2				Level 3				Total
Marketable securities- available for sale			28,950				-				-				28,950
Total assets			28,950				-				-				28,950

 

NOTE 3 - GOING CONCERN ISSUES

 

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. However, the Company has a net loss for the three months ended April 30, 2015 of $325,288, an accumulated deficit of $7,639,826 cash flows used by operating activities of $129,556 and needs additional cash to maintain its operations.

 

These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company’s continued existence is dependent upon management’s ability to develop profitable operations, continued contributions from the Company’s executive officers to finance its operations and the ability to obtain additional funding sources to explore potential strategic relationships and to provide capital and other resources for the further development and marketing of the Company’s products and business.

 

NOTE 4 – MARKETABLE SECURIITES

 

On September 4, 2014 Cloud issued 3,000,000 common shares through a consulting agreement with Gawk, Inc. valued at $105,000 at the trading price of $.035 per share and the common stock issued to Gawk for consulting has been accounted as a marketable securities valued at $105,000. The services have been earned and completed in accordance with the agreement.

 

The Company fair valued the marketable security available for sale at April 30, 2015 and recorded a gain on change in fair value of the asset of $106,050. Total available security available for sale at April 30, 2015 is $135,000.

 

 

NOTE 5 – LICENSING AGREEMENT / DEPOSIT

 

On June 11, 2014 we entered into a license and subscription agreement with Cloud Medical Doctor Software Corporation (NSCT) (“Cloud”) for $1,125,000. The agreement grants to us a non-exclusive encryption license agreement which entitles us to utilize Cloud’s encryption software solution within the Customer’s business. We purchased a 48 months encryption licensing agreement to incorporate into our existing web based software. The licensing agreement will protect members of our platform from hackers and other privacy intrusion vehicles. CipherLoc has various features that will further protect our members and end users of our web developed platform. As of July 28, 2015 the software has not been delivered to the Company, as such the cash paid for the encryption licensing agreement has been accounted as a deposit for $1,125,000.

 

NOTE 6 - EQUITY

 

On November 4, 2014 a verified complaint was filed in Clark County, Nevada being case number A-14-709328-C against the Company by an investor known as James McCrink on behalf of the James E. McCrink Trust. The company and James E McCrink Trust reached a settlement on January 19, 2015 and issued 2,700,000 shares of common stock at a fair market value of $54,000 on February 17, 2015 in accordance with the settlement agreement.

 

On February 13, 2015 the Company issued 4,587,156 shares for legal services rendered for $20,183.

 

On March 20, 2015 the Company issued 9,000,000 shares with 3,000,000 shares going to each board member as compensation for serving on the board for a total of $36,900.

 

NOTE 7 – BUSINESS COMBINATION

 

October 30, 2014 the Company through a comprehensive agreement with Webrunner, LLC, has purchased a complete data center.

 

The fair value of the consideration and the assets acquired is based on the aggregate value of the common stock issued in exchange for the software as shown below:

 

The acquisition consisted primarily of the purchase of a data center and all of its business, which are considered to meet the definition of a business in accordance with FASB codification Topic 805, "Business Combinations", As such, the Company accounted for the acquisition as a business combination.

 

During the 2 months ended April 30, 2015 the issued $1,000,000 of preferred shares payable for the acquisition of Webrunner, Inc.

 

  

See Note – 8 of our January 31, 2015 10K for more information.

 

The following (unaudited) Proforma consolidated results of operations have been prepared as if the acquisition had occurred at February 1, 2014.

 

		April 30, 2014
REVENUES			29,470
Net Loss			(1,033,374	)
Net loss per share basic and diluted		$	(0.01	)
Weighted average of shares outstanding			219,433,333

 

NOTE 8 – CONVERTIBLE NOTES PAYABLE

 

The Company had the following convertible notes payable outstanding as of April 30, 2015 and January 31, 2015:

 

		April 30, 2015				January 31, 2015
Note C-1
Dated – August 22, 2014			1,800,000				1,800,000
Total notes payable		$	1,800,000			$	1,800,000
Less: Discount			(119,400	)			(208,950	)
Less: current portion of convertible notes payable			1,680,600				1,591,050
Long-term convertible notes payable		$	-			$	-

 

The Company amortized the debt discount $89,550 for the 3 months ended April 30, 2015.

 

NOTE 9 –NOTES PAYABLE

 

		April 30, 2015				January 31, 2015
Note D-1			10,000				10,000
Dated – October 30, 2014
Total notes payable		$	10,000			$	10,000

 

NOTE 10 – RELATED PARTY TRANSACTIONS

 

As of April 30, 2015 and January 31, 2015, the current CEO had unpaid salaries of $136,500.

 

During the year ended January 31, 2015, the CEO advanced the Company cash of $52,354. As of April 30, 2015 and January 31, 2015 the amount owed to the prior CEO for advances was $52,354.

 

NOTE 11 – SUBSEQUENT EVENTS

 

On March 4, 2015 the Company approved the issuance of 2,060,000 in converting warrant purchaser shares. On May 23, 2015 the shares were issued.

 

* * * * * * * * * * * *

 

 

In this Quarterly Report on Form 10-Q, “Company,” “our company,” “us,” and “our” refer to Gawk Incorporated and its subsidiaries, unless the context requires otherwise.

 

ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Forward-Looking Statements

 

Management’s Discussion and Analysis contains various “forward looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, regarding future events or the future financial performance of the Company that involve risks and uncertainties. Certain statements included in this Form 10-Q, including, without limitation, statements related to anticipated cash flow sources and uses, and words including but not limited to “anticipates”, “believes”, “plans”, “expects”, “future” and similar statements or expressions, identify forward looking statements. Any forward-looking statements herein are subject to certain risks and uncertainties in the Company’s business, including but not limited to, reliance on key customers and competition in its markets, market demand, delayed payments of accounts receivables, technological developments, maintenance of relationships with key suppliers, difficulties of hiring or retaining key personnel and any changes in current accounting rules, all of which may be beyond the control of the Company. Management will elect additional changes to revenue recognition to comply with the most conservative SEC recognition on a forward going accrual basis as the model is replicated with other similar markets (i.e. SBDC). The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth therein.

Forward-looking statements involve risks, uncertainties and other factors, which may cause our actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. Factors and risks that could affect our results and achievements and cause them to materially differ from those contained in the forward-looking statements include those identified in the section titled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended January 31, 2015, as well as other factors that we are currently unable to identify or quantify, but that may exist in the future.

 

In addition, the foregoing factors may affect generally our business, results of operations and financial position. Forward-looking statements speak only as of the date the statement was made. We do not undertake and specifically decline any obligation to update any forward-looking statements.

 

Overview

 

We were incorporated in the state of Nevada on January 6, 2011 and our principal business address is 5300 Melrose Avenue, Suite 42, Los Angeles, CA 90038 telephone number 888-754-6190. We have a January 31 fiscal year end. In connection with the Stock Purchase, the company has changed its focus to engage in the business of online distribution of all digital content including but not limited to full length feature films, television series, sports, documentaries, live events via our proprietary content distribution network (CDN). On October 30, 2014 the Company acquired a company called Webrunner, LLC. As of October 30, 2014 Webrunner, LLC is a wholly owned subsidiary of the Company.

 

The Future of Gawk

 

Gawk is pursuing a three-tiered growth strategy: developing specialized solutions for key vertical markets, targeting cloud services companies for acquisition, and accelerating organic growth. Our continuing effort to deliver advanced cloud solutions to companies with more complex requirements is supported by our cloud solutions platform that allows us to rapidly respond to our customers and potential customers’ needs for customized or enhanced solutions. We also intend to continue to develop vertically oriented solutions to expand our revenue opportunities and further differentiate our service suite. We intend to acquire additional cloud services companies that can further expand our customer base, allow us to introduce additional cloud products and services, and gain scale. Our strategy to organically grow our Business Services revenue includes securing large strategic distribution partners, increasing our direct as well as indirect channel sales efforts, upselling solutions to our existing base and leveraging our management, Board of Directors and shareholder relationship network.

 

 

Three Months Ended April 30, 2015, Compared to Three Months Ended April 30, 2014

 

RESULTS OF OPERATIONS

 

Revenue increased to $58,582 from $0.00 for the three months ended April 30, 2015 and 2014, respectively. We changed management and expanded the focus beyond streaming media to also include the business of cloud communications, cloud connectivity, cloud computing, and managed cloud-based applications solutions to small, medium and large businesses.

 

General and administrative expenses increased to $304,276 from $199,074 for the three months ended April 30, 2015 and 2014, respectively. The increase in general and administrative expenses are primarily related to consulting of $74,646, Legal $94, 000, Computers and Internet of $35,757, rent of $17,303, and telephone expenses of $14,640.

 

Research and development costs decreased to $0.00 from $478,735 for the three months ended April 30, 2015 and 2014, respectively. Our research and development decrease is related to the expanded focus beyond streaming media to also include the business of cloud communications, cloud connectivity, cloud computing, and managed cloud-based applications solutions to small, medium and large businesses.

 

Related party transactions decreased to $0.00 from $385,035 three months ended April 30, 2015 and 2014, respectively. Our related party transactions decreased because of the change in management that occurred on May 12, 2014.

 

Depreciation expense increased to $51,497 from $0.00 for three months ended April 30, 2015 and 2014, respectively. Our depreciation expenses increased due to our acquisition of Webrunners and the associated equipment thereof.

 

Liquidity and Capital Resources

 

We expect to incur substantial expenses and generate significant operating losses as we continue to grow our operations, as well as incur expenses related to operating as a public company and compliance with regulatory requirements.

 

The independent auditor’s report on our financial statements contains explanatory language that substantial doubt exists about our ability to continue as a going concern. We have an accumulated deficit at April 30, 2015 of $7,639,826 and need additional cash flows to maintain our operations. We depend on the continued need to raise financing to finance our operations and need to obtain additional funding sources to explore potential strategic relationships and to provide capital and other resources for the further development and marketing of our products and business. We expect our cash needs for the next 12 months to be $750,000 to fund our operations. The ability of the Company to continue its operations is dependent on the successful execution of management’s plans, which include expectations of raiding debt or equity based capital until such time that funds from operations are sufficient to fund working capital requirements. The Company may need to incur additional liabilities with related parties to sustain the Company’s existence. There is no assurance that such funding, if required will be available to us or, if available, will be available upon terms favorable to us.

 

 

Cash flows from operations. Our cash (used in) provided by operating activities were ($129,556) and ($1,035,631) for the three months ended April 30, 2015 and 2014, respectively. The decrease in cash flows provided by operations was primarily attributable to the acquisition of one cloud services business during the past year.

 

Cash flows from financing activities. Cash provided by financing activities were $0.00 and $3,849,200 for the three months ended April 30, 2015 and 2014, respectively.

 

These factors raise doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company’s continued existence is dependent upon management’s ability to develop profitable operations, continued contributions from the Company’s executive officers to finance its operations and the ability to obtain additional funding sources to explore potential strategic relationships and to provide capital and other resources for the further development and marketing of the Company’s products and business.

 

Critical Accounting Policies

 

Accounts Receivable and Allowance for Uncollectible Accounts

 

Substantially all of the Company’s accounts receivable balance is related to trade receivables. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. The Company will maintain allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments for services. Accounts with known financial issues are first reviewed and specific estimates are recorded. The remaining accounts receivable balances are then grouped in categories by the number of days the balance is past due, and the estimated loss is calculated as a percentage of the total category based upon past history. Account balances are charged against the allowance when it is probable the receivable will not be recovered.

 

Long-lived Assets

 

The Company reviews its fixed assets and certain identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted operating cash flow expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell.

 

We have no off-balance sheet arrangements including arrangements that would affect the liquidity, capital resources, market risk support and credit risk support or other benefits.

 

WHERE YOU CAN FIND MORE INFORMATION

 

You are advised to read this Quarterly Report on Form 10-Q in conjunction with other reports and documents that we file from time to time with the SEC. In particular, please read our Quarterly Reports on Form 10-Q, Annual Report on Form 10-K, and Current Reports on Form 8-K that we file from time to time. You may obtain copies of these reports directly from us or from the SEC at the SEC’s Public Reference Room at 100 F. Street, N.E. Washington, D.C. 20549, and you may obtain information about obtaining access to the Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains information for electronic filers at its website http://www.sec.gov.

 

  

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Our business is currently conducted principally in the United States. As a result, our financial results are not affected by factors such as changes in foreign currency exchange rates or economic conditions in foreign markets. We do not engage in hedging transactions to reduce our exposure to changes in currency exchange rates, although if the geographical scope of our business broadens, we may do so in the future.

 

We do not hold any derivative instruments and do not engage in any hedging activities.

 

ITEM 4. CONTROLS AND PROCEDURES

 

(a)

Evaluation of Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports 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 Chief Executive Officer and Principal Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures were designed to provide reasonable assurance that the controls and procedures would meet their objectives. As required by SEC Rule 13a-15(b), our Chief Executive Officer and Principal Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, our Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were not effective.

 

Our Chief Executive Officer and Principal Financial Officer are responsible for establishing and maintaining adequate internal control over our financial reporting. In order to evaluate the effectiveness of internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act, management has conducted an assessment, including testing, using the criteria in Internal Control — Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Our system of internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Management has used the framework set forth in the report entitled Internal Control-Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission, known as COSO, to evaluate the effectiveness of our internal control over financial reporting. Based on this assessment, our Chief Executive Officer and Principal Financial Officer have concluded that our internal control over financial reporting were not effective as of October 31, 2014. There has been no change in our internal controls over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

 

The Company’s material weaknesses in financial reporting were:

 

a.

There is no segregation of duties as our CEO is also our CFO.

 

b.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable and not absolute assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of certain events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

 

c.

There were no changes in our internal control over financial reporting that occurred during the nine months ended September 30, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 

PART II

OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

On November 4, 2014 a verified complaint was filed in Clark County, Nevada being case number A-14-709328-C against the Company by an investor known as James McCrink on behalf of the James E. McCrink Trust. The company and James E McCrink Trust reached a settlement on January 19, 2015 and issued 2,700,000 shares of common stock on February 17, 2015 in accordance with the settlement agreement.

 

ITEM 1A - RISK FACTORS

 

There were no material changes from the risk factors previously disclosed in Part II, Item 1A, “Risk Factors” in our  Annual Report on Form 10-K for the year ended January 31, 2015 during our three months ended April 30, 2015.

 

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS SECURITIES

 

No activity during this period.

 

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

  

There were no defaults upon senior securities during the period ended April 30, 2015.

 

ITEM 4. MINING SAFETY DISCLOSURES 

 

N/A

  

ITEM 5.  OTHER INFORMATION

 

There is no information with respect to which information is not otherwise called for by this form.

 

ITEM 6.  EXHIBITS

 

Exhibits filed herein for April 30,2015

 

Exhibits

 

Exhibit Number		Description of Exhibits
3.1		Articles of Incorporation (1)
3.2		Bylaws (1)
14.1		Code of Ethics (2)
31.1		Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C Section 1350, as adopted Section 302 of the Sarbanes-Oxley Act of 2002. (4)
32.1		Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (4)
101.INS *		XBRL Instance Document
101.SCH *		XBRL Taxonomy Schema
101.CAL *		XBRL Taxonomy Calculation Linkbase
101.DEF *		XBRL Taxonomy Definition Linkbase
101.LAB *		XBRL Taxonomy Label Linkbase
101.PRE *		XBRL Taxonomy Presentation Linkbase

 

(1)	Filed as an Exhibit on Form S-1 with the SEC on April 6, 2012. (2) 10-SB/12g filed on February 13, 2008
(2)	10-SB/12g filed on February 13, 2008

 

*XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of this annual report or purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) 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.

 

Registrant	Gawk Incorporated
Date: July 30, 2015	By:	/s/ Scott Kettle
		Scott Kettle
		Chief Executive Officer (Principal Executive Officer) Secretary Treasurer

 

Registrant	Gawk, Incorporated
Date: July 30, 2015	By:	/s/ Scott Kettle
		Scott Kettle
		Chief Financial Officer (Principal Financial Officer)

 

 

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