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EX-32.2 - CERTIFICATION - SoOum Corp.ex322.htm
EX-32.1 - CERTIFICATION - SoOum Corp.ex321.htm
EX-31.2 - CERTIFICATION - SoOum Corp.ex312.htm
EX-31.1 - CERTIFICATION - SoOum Corp.ex311.htm

U.S. SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended September 30, 2016

 

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934

 

For the transition period from _________ to _________

 

Commission File Number:  000-7475

____________________________

 

SOOUM CORP.

 (Exact name of registrant as specified in its charter)          

 

                                 Minnesota                                                                        41-0831186

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

           

590 Madison Avenue, Suite 1800, New York, New York 10022

(Address of principal executive offices)

 

(646) 801-3772

(Registrant’s telephone number)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the 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 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes [   ]  No [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See 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 [X]  No

 

The number of shares of issuer’s common stock, par value $0.0001 per share, outstanding as of October 15, 2016 was approximately 972,600,000.



1

 


PART I - FINANCIAL INFORMATION


Item 1:

Financial Statements

3

Consolidated Balance Sheets – September 30, 2016 (Unaudited) and December 31, 2015

4

Unaudited Consolidated Statements of Operations – Three and Nine Months Ended September 30, 2016 and 2015

5

Unaudited Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2016 and 2015 (Unaudited)

6

Notes to Unaudited Consolidated Financial Statements

7

Item 2:

Management’s Discussion and Analysis of Financial Condition and Results of Operations

15

Item 3:

Quantitative and Qualitative Disclosures About Market Risks

15

Item 4:

Controls and Procedures

15


PART II - OTHER INFORMATION

 

Item 1:

Legal Proceedings

16

Item 1A:

 Risk Factors

16

Item 2:

Unregistered Sales of Equity Securities and Use of Proceeds

16

Item 3:

Defaults Upon Senior Securities

16

Item 4:

Mine Safety Disclosures

16

Item 5:

Other Information

16

Item 6:

Exhibits

16

      

Signatures

17


2



SOOUM CORP.

New York, New York


FINANCIAL REPORTS

AT

SEPTEMBER 30, 2016


SoOum Corp.

New York, New York

UNAUDITED CONSOLIDATED BALANCE SHEETS


 

September 30,

December 31,

 

2016

 

2015

 

ASSETS

Cash and Cash Equivalents

 $           7,102

 $               41

Prepaid Expenses

            10,000

                  —

Note Receivable - Related Party

                  —

 

                297

 

Total Assets

 $         17,102

 

 $              338

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

Liabilities

Term Notes Payable

 $                —

 $       441,421

Notes Payable - Affiliates

            12,467

       1,102,785

Judgements Payable

                  —

       1,138,264

Convertible Notes Payable, Net of Discounts of $36,667 and $5,371, respectively

          131,058

          120,187

Derivative Liability

          491,173

          256,273

Deferred Retirement Benefits

                  —

          438,782

Accounts Payable

            22,360

          844,542

Advances from Shareholders

                  —

          149,185

Accrued Expenses

          566,040

 

       2,866,180

 

Total Liabilities

       1,223,098

 

       7,357,619

 

Stockholders' Deficit

Common Stock - $.0001 Par; 5,000,000,000 Shares Authorized,  

                   106,817,927 and 60,788,382 Issued and Outstanding, Respectively

            10,682

              6,079

Preferred Stock: $0.0001 Par; 50,000,000 Shares Authorized,

                   25,000,000 Issued and Outstanding, Respectively

              2,500

              2,500

Preferred Stock  Class B: $0.0001 Par; 10,000,000 Shares Authorized,  

                    9,100,000 Issued and Outstanding, Respectively

                910

                910

Preferred Stock Class C: $0.0001 Par; 10,000,000 Shares Authorized,

                    1,690,000 Issued and Outstanding, Respectively

                169

                169

Additional Paid-In-Capital

       7,850,291

       7,743,891

Accumulated Deficit

      (9,070,548)

 

     (15,110,830)

 

Total Stockholders' Deficit

      (1,205,996)

 

      (7,357,281)

 

Total Liabilities and Stockholders' Deficit

 $         17,102

 

 $              338

 

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

3



SoOum Corp.

New York, New York

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS


  

For the Three Months Ended

 

For the Nine Months Ended

  

September 30,

 

September 30,

 

 

2016

 

2015

 

2016

 

2015

         

Sales

 

 $                    669

 $                      —

 $                 3,756

 $               45,900

  

Cost of Sales

 

                      498

 

                        —

 

                      935

 

                  43,040

  

Gross Profit

 

                      171

 

                        —

 

                    2,821

 

                    2,860

  

Expenses

 

General and Administrative

 

                165,543

                  69,504

                279,280

                201,285

Interest Expense

 

                540,833

 

                  66,153

 

                596,205

 

                226,376

  

Total Expenses

 

                706,376

 

                135,657

 

                875,485

 

                427,661

  

Other (Income) and Expenses

 

Gain on Conversion Feature of Preferred Shares

 

                        —

            (2,573,744)

                        —

           (12,845,480)

(Gain) Loss on Derivative

 

               (355,408)

                  85,933

               (362,330)

                116,485

Write Off of Liabilities

 

                        —

 

                        —

 

            (6,550,616)

 

                        —

  

Total Other (Income) and Expenses

 

 $            (355,408)

 

 $          (2,487,811)

 

 $          (6,912,946)

 

 $        (12,728,995)

  

Income (Loss) from Operations Before

 

  Provision for Taxes

 

               (350,797)

             2,352,154

             6,040,282

            12,304,194

  

Provision for Taxes

 

                        —

 

                        —

 

                        —

 

                        —

  

Net Income (Loss) for the Period

 

 $            (350,797)

 

 $           2,352,154

 

 $           6,040,282

 

 $         12,304,194

  

Weighted Average Number of Common Shares Outstanding-

 

  Basic and Diluted

 

            74,317,927

             4,487,438

            66,367,786

             4,483,693

  

Net (Income) Loss for the Period Per Common Share -

 

  Basic and Diluted

 

 $                  (0.00)

 

 $                   0.52

 

 $                   0.09

 

 $                   2.74

  

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

4


SoOum Corp.

New York, New York

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS


For the Nine Months Ended September 30,

 

2016

 

2015

     

Cash Flows from Operating Activities

    
     

Net Income for the Period

 

 $       6,040,282

 $12,304,194

  

Non-Cash Adjustments:

 

Amortization of Debt Discount

 

            546,204

         33,278

(Gain) Loss on Derivative

 

           (362,330)

       116,485

Gain on Conversion Feature of Preferred Stock

 

                    —

 (12,845,480)

Interest on Convertible Notes Paid with Stock

 

                    —

             139

Common Stock Issued in Exchange for Services Rendered

 

            129,400

               —

Write Off of Liabilities

 

        (6,550,616)

               —

Changes in Assets and Liabilities:

 

Prepaid Expenses

 

             (10,000)

               —

Judgements Payable

 

                8,939

         26,816

Accounts Payable

 

                    —

         22,361

Accrued Expenses

 

            156,703

 

       332,890

  

Net Cash Flows Used In Operating Activities

 

             (41,418)

 

         (9,317)

  

Cash Flows from Investing Activities

 

Cash Proceeds - Note Receivable Related Party

 

                  297

 

            (297)

  

Cash Flows from Financing Activities

 

Bank Overdraft

 

                    —

               44

Cash Proceeds from Notes Payable Affiliates

 

                4,682

          4,566

Proceeds from Convertible Notes Payable

 

              44,000

          5,000

Repayment of Convertible Notes Payable

 

                 (500)

 

               —

  

Net Cash Flows Used In Financing Activities

 

              48,182

 

          9,610

  

Net Change in Cash and Cash Equivalents

 

                7,061

                (4)

  

Cash and Cash Equivalents - Beginning of Period

 

                    41

 

                 4

  

Cash and Cash Equivalents - End of Period

 

 $             7,102

 

 $            —

  
  

Cash Paid During the Period for:

 

Interest

 

 $                  —

 $            —

Income Taxes

 

 $                  —

 

 $            —

  
  

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

 

Common Stock Issued for Prepaid Services

 

 $           10,000

 $            —

 

Common Stock Exchanged for Debt

 

 $             1,333

 

 $       2,185

 
      

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

5



SOOUM CORP.

New York, New York

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE A – Basis of Presentation

 

The condensed consolidated financial statements of SoOum Corp. (the “Company”) included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).  Certain information and footnote disclosures normally included in financial statements prepared in conjunction with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These condensed consolidated financial statements should be read in conjunction with the annual audited financial statements and the notes thereto included in the Company’s Form 10-K, and other reports filed with the SEC.

 

The accompanying unaudited interim financial statements reflect all adjustments of a normal and recurring nature which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows of the Company for the interim periods presented.  The results of operations for these periods are not necessarily comparable to, or indicative of, results of any other interim period or for the fiscal year taken as a whole.  Certain information that is not required for interim financial reporting purposes has been omitted.

 

Principles of Consolidation

The consolidated financial statements include the accounts of SoOum Corp., and its wholly owned subsidiaries; Nature Vision, Inc. and SoOum (the “Company”).  All significant inter-company balances have been eliminated in consolidation.

 

NOTE B – Summary of Significant Accounting Policies

 

                All significant accounting policies can be viewed on the Company’s annual report filed with the Securities and Exchange Commission.

 

NOTE C – Recently Issued Accounting Standards

 

The Company has implemented all new accounting pronouncements that are in effect and that may impact its consolidated financial statements and 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.




6


SOOUM CORP.

New York, New York

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE D – Acquisition – iPoint Television

 

On January 15, 2014, the Company completed the acquisition of 90% of the issued and outstanding membership interest of iPoint.  Pursuant to the Securities and Exchange Agreement the Company issued Clark Ortiz, the Company’s CEO and Chairman, 25,000,000 shares of Swordfish’s Series A Preferred Stock, which has voting rights equal to 100 shares of the Company’s common stock and is convertible into the Company’s common stock at the rate of 10 shares of common stock for each share of Series A Preferred Stock.  In addition to issuance of the Series A Preferred Stock, the Company agreed as part of the purchase price to issue 50,000,000 shares of its common stock to Mr. Ortiz.  At the date of the transaction, the Company didn’t have any authorized and unissued shares available to issue to Mr. Ortiz, however in order to close the transaction, Mr. Ortiz agreed to close the transaction pending the Company increasing the authorized shares of common stock, which the Company did on March 25, 2014.  As a result of the transaction, the Company owns 90% of issued and outstanding membership interests in iPoint Television LLC and is therefore a majority owned subsidiary of the Company and the Company will be able to report the results of iPoint on a consolidated basis in the Company’s financial statements.  iPoint Television, also known as iPoint TV, is a Smart media and entertainment company, which holds development licenses from Apple, Android, Google, Roku, Kindle and most every smart device.  iPoint is  a full service Internet Protocol Television (IPTV), media entertainment company which develops applications for mobile and TV smart devices. As an acquisition of common control we are recording the assets acquired at their cost which is $0. The Company incurred $2,500 of acquisition expense which was expensed. iPoint did not have any results from operations from the date of acquisition through September 30, 2016.




7


SOOUM CORP.

New York, New York

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE E – Going Concern 

 

The Company’s consolidated financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has reported recurring losses from operations.  As a result, there is an accumulated deficit of at September 30, 2016.

 

The Company’s continued existence is dependent upon its ability to raise capital or acquire a marketable company.  The consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

 

NOTE F – Term Notes Payable

 

 The following unsecured term notes payable were written off as of March 31, 2016.

 

 

September 30,

December 31,

 

2016

2015

   

Jeff Zernov (Former Chief Executive Officer)

  

Payable August 17, 2010 at 15% Interest.

$        ––

$   290,000

   

Castaic

  

Installment note payable annually at $17,171 including interest at 8.0% from January 2009 through January 2011.

––

30,620

   

Installment note payable monthly at $1,175 including interest at 8.0% from February 2008 through January 2011.  

––

20,246

   

Innovative Outdoors

  

Installment note payable monthly at $4,632 including interest at 7.0% from August 2008 through July 2011.  

––

100,555

   

Total Notes Payable

$       ––

$  441,421

   

8


SOOUM CORP.

New York, New York

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE G – Convertible Promissory Notes Payable

 

As of September 30, 2016, the Company has outstanding ten (10) security purchase agreements with accredited investors for the sale of convertible promissory notes bearing interest at 10% - 12%, per annum.  Pursuant to the convertible promissory notes the investor may convert the amount paid towards the Securities Purchase Agreements into common stock of the Company.  Conversion prices vary based on the agreements and have various discount rates and terms. Trading price means the closing bid price on the OTC Market Over-the-Counter Bulletin Board Pink Sheets.

 

The conversion rights embedded in the Notes are accounted for as derivative financial instruments because of the down round feature of the conversion price.  The beneficial conversion feature was valued at the date of issuance using the Black-Scholes-Merton options pricing model with the following assumptions:  risk free interest rates ranging from .07% to .45%, contractual expected life of six (6) to twelve (12) months, expected volatility of 185% to 931%, calculated using the historical closing price of the company’s common stock, and dividend yield of zero, resulting in fair market value.

 

   The Company had convertible debentures outstanding as follows:

 

September 30, 2016

 

Outstanding Balance of Convertible Debenture


Unamortized

Discount

Net of Principal and Unamortized Discount

     

Convertible Debentures

 

 

 

 

January 10, 2014 - Debenture

 

$      7,150

$           ––

$        7,150

February 28, 2014 – Debenture

 

          8,410

––

          8,410

April 2, 2014 – Debenture

 

17,815

––

17,815

June 18, 2014 – Settlement Agreement

 

58,420

––

58,420

October 05, 2015 - Debenture

 

3,000

––

3,000

October 21, 2015 - Debenture

 

6,275

––

6,275

November 23, 2015 - Debenture

 

9,655

––

9,655

December 3, 2015 - Debenture

 

13,000

––

13,000

August 29, 2016 - Debenture

 

20,000

(16,667)

3,333

August 29, 2016 - Debenture

 

24,000

(20,000)

4,000

     

Total Convertible Debentures

 

 $       167,725

$    (36,667)

$       131,058

     


9



SOOUM CORP.

New York, New York

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE G – Convertible Promissory Notes Payable - continued

 

December 31, 2015

 

Outstanding Balance of Convertible Debenture


Unamortized

Discount

Net of Principal and Unamortized Discount

     

Convertible Debentures

 

 

 

 

January 10, 2014 - Debenture

 

$      7,150

$           ––

$        7,150

February 28, 2014 – Debenture

 

          8,410

––

          8,410

April 2, 2014 – Debenture

 

17,815

––

17,815

June 18, 2014 – Settlement Agreement

 

58,420

––

58,420

October 05, 2015 - Debenture

 

3,500

––

3,500

October 21, 2015 - Debenture

 

6,275

––

6,275

November 23, 2015 - Debenture

 

10,988

––

10,988

December 3, 2015 - Debenture

 

13,000

(5,371)

7,629

     

Total Convertible Debentures

 

 $       125,558

$     (5,371)

$       120,187

     


NOTE H – Accrued Expenses

 

   Accrued Expenses consisted of the following at September 30, 2016 and December 31, 2015:


 

September 30,

December 31,

 

2016

2015

   

Consulting Fees – written off March 2016

$             ––

$    765,379

Interest – written off June 2016

––

1,639,949

Miscellaneous

556,040

460,852

 

Total Accrued Expenses

$    556,040

$ 2,866,180

   


NOTE I – Stockholders’ Equity

 

   Preferred Stock

 

   On August 12, 2015, the Company approved a reverse stock split of their common stock at 1,000 shares to 1.  In conjunction with this reverse, the rate at which preferred stock is convertible to common was also impacted by the same 1,000 rate.

 



10


SOOUM CORP.

New York, New York

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE I – Stockholders’ Equity - continued

 

Common Stock 

 

On August 12, 2015, the Company approved a reverse stock split of their common stock at 1,000 shares to 1.

 

On October 13, 2015, the Company resolved to adopt the Employees, Directors and Consultants Stock Plan for the Year 2015.  The purpose of this Plan is to enable the Company, to promote the interests of the Company and its stockholders by attracting and retaining employees, directors and consultants capable of furthering the future success of the Company and by aligning their economic interests more closely with those of the Company’s stockholders, by paying their fees or salaries in the form of shares of the Company’s common stock.  500,000,000 shares of common stock are registered to this plan at an offering price of $0.0001.  The Plan shall expire on January 1, 2017. 

 

NOTE J – Commitments and Contingencies

 

Various creditors have brought legal proceedings for collections of their claims against the Company.  Judgments payable at September 30, 2016 and December 31, 2015 are $-0- and $1,138,264 respectively. At June 30, 2016 judgments payable were written off.

 

NOTE K – Related Party Transactions

 

The Company has borrowed $1,095,000 from a former member of the Board of Directors.   Two of the notes from the former Board of Directors total to $1,045,000 and are unsecured.  The third note in the amount of $50,000 is secured by a second lien on the Company’s assets.  The notes to the former member of the Board of Directors are in default and the Company has included approximately $1,347,828 of accrued interest in accrued expenses at March 31, 2016. At June 30, 2016 these loans and accrued interest were written off.    

   



Payments of Company expenses have been made by current members of the board of directors and other related parties in the amount of $12,467 and are included in notes payable affiliates at September 30, 2016.  



11


SOOUM CORP.

New York, New York

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE L – Fair Value 

 

The Company has categorized its assets and liabilities recorded at fair value based upon the fair value hierarchy specified by GAAP.  All assets and liabilities are recorded at historical cost which approximates fair value, and therefore, no items were valued according to these inputs.

 

The levels of fair value hierarchy are as follows:

 

·

Level 1 inputs utilize unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access;

 

·

Level 2 inputs utilize other-than-quoted prices that are observable, either directly or indirectly.  Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs such as interest rates and yield curves that are observable at commonly quoted intervals; and

 

·

Level 3 inputs are unobservable and are typically based on our own assumptions, including situations where there is little, if any, market activity.

 

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy.  In such cases, the Company categorizes such financial asset or liability based on the lowest level input that is significant to the fair value measurement in its entirety.  Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.


Both observable and unobservable inputs may be used to determine the fair value of positions that are classified within the Level 3 category.  All assets and liabilities are at cost which approximates fair value and there are not items that were required to be valued on a non-recurring basis.

 

The following liabilities were valued at fair value as of September 30, 2016 and December 31, 2015. No other items were valued at fair value on a recurring or non-recurring basis as of September 30, 2016 and December 31, 2015.


September 30, 2016

 

Fair Value Measurements Using

 

Carrying

    
 

Value

Level 1

Level 2

Level 3

Total

Derivative Liabilities

$      ––

$      ––

$      ––

$      491,173

$      491,173

      

Total

 

$      ––

$      ––

$      491,173

$      491,173

 

December 31, 2015

 

Fair Value Measurements Using

 

Carrying

    
 

Value

Level 1

Level 2

Level 3

Total

Derivative Liabilities

$      ––

$      ––

$      ––

$      256,273

$      256,273

      

Total

 

$      ––

$      ––

$      256,273

$      256,273


13



SOOUM CORP.

New York, New York

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE M – Other Matters

 

On August 25, 2016 the Company entered into an exchange agreement with Western Grade, LLC.  Under the terms of the exchange agreement, Western Grade members will exchange their ownership interest for 420,000,000 shares of the common stock of the Company, which represents 42% ownership in the Company.  Western Grade will therefore be a wholly owned subsidiary of the Company.

 

NOTE N – Subsequent Events

 

On October 6, 2016 the Company closed on the Western Grade acquisition and issued 445,000,000 shares of common stock in a share exchange.  



 

On October 10, 2016, the Company issued 441,600,000 shares of common stock in connection with the conversion of the Company’s outstanding shares of preferred stock.


14


Item 2:  Management’s Discussion and Analysis of Financial Condition and Results of Operation

 

Results of Operations

Three Months Ended September 30, 2016 Compared With Three Months Ended September 30, 2015

Net revenue for the three months ended September 30, 2016 and 2015 was $669 and $-0-, respectively. Net loss for the three months ended September 30, 2016 was ($350,797) compared to net income of $2,352,154 for the three months ended September 30, 2015.

 

Total operating expenses were $706,376 for the three months ended September 30, 2016 compared to $135,657 for the three months ended September 30, 2015.  The primary expenses for the three months ended September 30, 2016 were general and administrative expenses of $165,543 and interest expense of approximately $540,833 compared to general and administrative expenses of $69,504 and interest expense of approximately $66,153 for the three months ended September 30, 2015.

 

Total Other (Income) and Expenses were ($355,408) for the three months ended September 30, 2016 compared to ($2,487,811) for the three months ended September 30, 2015.   The primary other income and expenses for the three months ended September 30, 2016 were gain on derivative of ($355,408) compared to gain on conversion feature of preferred shares of ($2,573,744) and loss on derivative of $85,933 for the three months ended September 30, 2015.

 

Nine Months Ended September 30, 2016 Compared With Nine Months Ended September 30, 2015

Net revenue for the nine months ended September 30, 2016 and 2015 was $3,756 and $45,900, respectively.  Net income for the nine months ended September 30, 2016 was $6,040,282 compared to net income of $12,304,194 for the nine months ended September 30, 2015.

 

Total operating expenses were $875,485 for the nine months ended September 30, 2016 compared to $427,661 for the nine months ended September 30, 2015.  The primary expenses for the nine months ended September 30, 2016 were general and administrative expenses of $279,280 and interest expense of approximately $596,205 compared to general and administrative expenses of $201,285 and interest expense of $226,376, for the nine months ended September 30, 2015.

 

Total Other (Income) and Expenses were ($6,912,946) for the nine months ended September 30, 2016 compared to ($12,728,995) for the nine months ended September 30, 2015.   The primary other income for the nine months ended September 30, 2016 were gain on derivative of ($362,330) and write off of liabilities of ($6,550,616) compared to gain on conversion feature of preferred shares of ($12,845,480) and loss on derivative of $116,485 for the nine months ended September 30, 2015.

 

Liquidity and Capital Resources

Our operations used approximately $41,418 in cash for the nine months ended September 30, 2016. Cash required during the nine months ended September 30, 2016 came principally from cash proceeds from notes payable affiliates of $4,682 and proceeds from convertible notes payable of $44,000 for the nine months ended September 30, 2016.

Our operations used approximately $9,317 in cash for the nine months ended September 30, 2015. Cash required during the nine months ended September 30, 2015, came principally from cash proceeds from notes payable affiliates of $4,566 and proceeds from convertible notes payable of $5,000 for the nine months ended September 30, 2015.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business.  We incurred net income of $6,040,282 and $12,304,194, respectively, for the nine months ended September 30, 2016 and 2015 and had an accumulated deficit of $ 9,070,548 as of September 30, 2016.  We have managed our liquidity during the first, second and third quarters of 2016 through revenues and issuance of notes.  These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Item 3:  Quantitative and Qualitative Disclosure about Market Risk

 

Not applicable.



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Item 4:   Controls and Procedures

 

(a) Evaluation of Disclosure Controls and Procedures

 



Our management, with the participation of our Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q. 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. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. 

 

Based on our evaluation, our Principal Executive Officer and Principal Financial Officer, after considering the existence of material weaknesses identified, determined that our disclosure controls and procedures were not effective as of September 30, 2016, primarily due to the fact that there is no effective separation of duties, which includes monitoring controls between the management.

 



(b) Changes in internal controls.

 



There have been no significant changes in our internal controls or other factors that would significantly affect such controls and procedures subsequent to the date we completed our evaluation. Therefore, no corrective actions were taken.

 

PART II - OTHER INFORMATION

Item 1. Legal Proceedings .

To the best knowledge of the Company’s officers and directors, the Company is currently not a party to any material pending legal proceeding.

Item 1A. Risk Factors.

Not applicable as a smaller reporting company.

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

None.


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Item 3. Defaults Upon Senior Securities .

None.

Item 4. Mine Safety Disclosures .

Not applicable.

 

Item 5. Other Information .

None.

Item 6. Exhibits

 

(a)

Exhibits

31.1  Certification pursuant to Section 302 of Sarbanes Oxley Act of 2002

32.1 Certification pursuant to Section 906 of Sarbanes Oxley Act of 2002

101 XBRL Exhibts

(b)

Reports of Form 8-K

None.



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Signatures

 

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


SOOUM CORP.


Date:

November 14, 2016

By:/s/ William Westbrook                    

        William Westbrook

 

Its:  Chief Executive Officer and President


Date:

November 14, 2016

By: /s/ Ronald Vega                                                

       Ronald Vega

 

Its:  Treasurer and Chief Financial Officer



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