UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

  X . QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2014

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

For the transition period from __________ to __________

Commission File Number 000-52323

DEAL A DAY GROUP CORP.

(Name of small business issuer in its charter)

Nevada		90-0731925
(State of incorporation)		(I.R.S. Employer Identification No.)

5150 E. Pacific Coast Highway, Suite 200

Long Beach, CA 90804

(Address of principal executive offices)

(800) 349-6095

(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 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  X . No      .

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

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

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

As of May 20, 2014, there were 50,380,399 shares of the registrant’s $0.001 par value common stock issued and outstanding.

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DEAL A DAY GROUP CORP.*

TABLE OF CONTENTS		Page
PART I.                 FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS	3
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	13
ITEM 3.	QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK	14
ITEM 4.	CONTROLS AND PROCEDURES	15
PART II.               OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	15
ITEM 1A.	RISK FACTORS	15
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	15
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	16
ITEM 4.	MINE SAFETY DISCLOSURES	16
ITEM 5.	OTHER INFORMATION	16
ITEM 6.	EXHIBITS	16

Special Note Regarding Forward-Looking Statements

Information included in this Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). This information may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Deal a Day Group Corp. (the “Company”), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

*Please note that throughout this Quarterly Report, except as otherwise indicated by the context, references in this report to “Company”, “DEEL”, “we”, “us” and “our” are references to Deal a Day Group Corp. 

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PART I - FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

Deal a Day Group Corp.

(A Development Stage Company)

Balance Sheets (Unaudited)

As of March 31, 2014 and December 31, 2013

		March 31,			December 31,
		2014			2013
Assets
Current:
Cash and cash equivalents		$	-		$	-
Prepaids and other assets			-			-
Total current assets			-			-
Total Assets		$	-		$	-
Liabilities and Stockholders’ Deficit
Liabilities
Current:
Accounts payable		$	245,503		$	230,118
Due to director			34,217			30,725
Accrued interest			445,874			404,715
Derivative liability			423,129			304,189
Notes payable			1,645,034			1,645,034
Total Liabilities			2,793,757			2,614,781
Stockholders` Deficit
Common stock (par value $0.001) –
Authorized, 1,800,000,000 common shares; issued and
outstanding, 50,380,399 shares at March 31, 2014 and
December 31, 2013			50,380			50,380
Additional paid-in capital			7,237,029			7,237,029
Accumulated deficit			(10,081,166)			(9,902,190)
Total Stockholders’ Deficit			(2,793,757)			(2,614,781)
Total Liabilities and Stockholders’ Deficit		$	-		$	-

The accompanying notes are an integral part of these financial statements

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Deal a Day Group Corp.

(A Development Stage Company)

Statements of Operations (Unaudited)

For the Three Months Ended March 31, 2014 and 2013 and the

Period from January 1, 2009 (Inception of development stage) to March 31, 2014

		Three Months Ended March 31, 2014			(Restated) Three Months Ended March 31, 2013			From January 1, 2009 (Inception of development stage) to March 31, 2014
Operating expense:
General and administrative		$	18,877		$	25,343		$	869,860
Stock based compensation			-			9,951			1,998,842
Operating loss			(18,877)			(35,294)			(2,868,702)
Non-operating income (expenses):
Interest expense			(41,159)			(41,160)			(1,209,985)
Forgiveness of debt			-			-			17,653
Derivative expense			-			-			(4,241)
Amortization of debt discount			-			(9,541)			(382,128)
Change in fair market value of derivative			(118,940)			62,075			(36,760)
Loss from continuing operations			(178,976)			(23,920)			(4,484,163)
Loss from discontinued operations			-			-			(147,544)
Net Loss			(178,976)			(23,920)			(4,631,707)
Less: net income attributable to non-controlling interests			-			-			46,582
Net Loss attributable to common stockholders		$	(178,976)		$	(23,920)		$	(4,585,125)
Net Loss per share, basic and diluted, before discontinued
Operations		$	(0.00)		$	(0.00)
Net Loss per share, basic and diluted, from discontinued
Operations			-			-
Net loss per share, basic and diluted		$	(0.00)		$	(0.00)
Weighted average shares outstanding			50,380,399			49,218,805

The accompanying notes are an integral part of these financial statements

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Deal a Day Group Corp.

Statement of Stockholders’ Deficit (Unaudited)

As of March 31, 2014

	Common Stock		Additional	Non-controlling
	Shares	Amount ($)	Paid-In Capital ($)	Interest in Subsidiaries ($)	Accumulated Deficit ($)	Total ($)
Balance, January 1, 2009	47,756,278	47,756	8,246,425	-	(13,614,996)	(5,320,815)
Conversion of Notes Payable	6,575,072	6,575	1,052,757	-	-	1,059,332
Stock based compensation	-	-	579,028	-	-	579,028
Net Loss	-	-	-	-	(1,263,181)	(1,263,181)
Balance, December 31, 2009	54,331,350	54,331	9,878,210	-	(14,878,177)	(4,945,636)
Conversion of Notes Payable	14,493,441	14,493	861,395	-	-	875,888
Conversion of Accounts Payable	2,075,087	2,075	94,561	-	-	96,636
Private Placement in Subsidiaries	365,021	365	6,137	269,892	-	276,394
Private Placement	312,500	313	24,687	-	-	25,000
Stock based compensation	-	-	903,746	-	-	903,746
Net Loss	-	-	-	(46,582)	(1,199,271)	(1,245,853)
Balance, December 31, 2010	71,577,399	71,577	11,768,736	223,310	(16,077,448)	(4,013,825)
Settlement of  notes payable-related party	-	-	66,933	-	-	66,933
Conversion of notes payable	-	-	27,285	-	-	27,285
Sale of subsidiaries	-	-	(6,400,538)	(223,310)	8,118,955	1,495,107
1 for 2 stock split	(35,277,281)	(35,277)	35,277	-	-	-
Returned shares	(581,313)	(581)	581	-	-	-
Purchase of assets	1,500,000	1,500	-	-	-	1,500
Conversion of  notes payable	12,000,000	12,000	1,188,000	-	-	1,200,000
Issuance of options	-	-	309,400	-	-	309,400
Net Loss	-	-	-	-	(720,177)	(720,177)
Restated, Balance, December 31, 2011	49,218,805	49,219	6,995,674	-	(8,678,670)	(1,633,777)
Issuance of options	-	-	196,717	-	-	196,717
Net Loss	-	-	-	-	(1,008,628)	(1,008,628)
Restated, Balance, December 31, 2012	49,218,805	49,219	7,192,391	-	(9,687,298)	(2,445,688)

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Deal a Day Group Corp.

Statement of Stockholders’ Deficit (Unaudited)

As of March 31, 2014

(continued)

Restated, Balance, December 31, 2012 (continued)	49,218,805	49,219	7,192,391	-	(9,687,298)	(2,445,688)
Shares for debt	1,061,594	1,061	30,787	-	-	31,848
Shares for settlement	100,000	100	3,900	-	-	4,000
Issuance of options	-	-	9,951	-	-	9,951
Net Loss	-	-	-	-	(214,892)	(214,892)
Balance, December 31, 2013	50,380,399	50,380	7,237,029	-	(9,902,190)	(2,614,781)
Net Loss	-	-	-	-	(178,976)	(178,976)
Balance, March 31, 2014	50,380,399	50,380	7,237,029	-	(10,081,166)	(2,793,757)

The accompanying notes are an integral part of these financial statements

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Deal a Day Group Corp.

(A Development Stage Company)

Statements of Cash Flows (Unaudited)

For the Three Months Ended March 31, 2014 and 2013

Period from January 1, 2009 (Inception of development stage) to March 31, 2014

		Three Months Ended March 31, 2014			(Restated) Three Months Ended March 31, 2013			From January 1, 2009 (Inception of development stage) to March 31, 2014
Cash Flows From Operating Activities
Net loss		$	(178,976)		$	(23,920)		$	(4,585,125)
Loss from discontinued operations			-			-			(5,496,041)
Loss from continuing operations			(178,976)			(23,920)			(10,081,166)
Adjustments to reconcile net loss from continuing operations to net cash used in operating activities:
Stock based compensation			-			9,951			1,998,842
Forgiveness of debt			-			-			(17,653)
Shares issued as settlement			-			-			4,000
Derivative expense			-			-			4,241
Amortization of debt discount			-			9,541			382,128
Change in fair market value of derivative			118,940			(62,075)			36,760
Changes in assets and liabilities:
Accounts payable			15,385			10,900			263,156
Due to related party			3,492			-			101,150
Accrued expenses			41,159			41,160			445,874
Net Cash used in operating activities			-			(14,443)			(6,862,668)
Cash Flows From Financing Activities Borrowings on note payable			-			15,000			4,807,539
Proceeds from private placement			-			-			2,055,129
Net Cash provided by financing activities			-			15,000			6,862,668
Net increase in cash and cash equivalents			-			557			-
Cash and cash equivalents, opening			-			95			-
Cash and cash equivalents, closing		$	-		$	652		$	-
Supplemental cash flow information
Cash paid during the year for:
Interest		$	-		$	-		$	-
Income taxes		$	-		$	-		$	800
Non-cash investing and financing activities
Conversion of notes payable to equity		$	-		$	-		$	2,250,174

The accompanying notes are an integral part of these financial statements

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Deal a Day Group Corp.

Notes to Financial Statements

March 31, 2014

1.   ORGANIZATION AND PRINCIPAL ACTIVITIES

Deal a Day Group Corp. (“DADG” or “the Company”) is a corporation organized under the laws of the State of Nevada.  

DADG changed its business direction in the wake of the massive growth and evolution of the multi-billion dollar daily deal market space.  We have redirected our company with the vision of creating balance between merchants and their customers and to create platforms that will help merchants grow their businesses through cost effective promotional resources. Our business units will focus on the Daily Deals/Group buying arena, print media, and software and applications development.

On November 3, 2011, the Company completed a 1-for-2 reverse stock split.  As of March 31, 2014, 50,380,399 shares of common stock are outstanding.

 

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Accounting

The financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”).  The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates. The Company has adopted a December 31 year end.

 

Development Stage Company

The accompanying financial statements have been prepared in accordance with generally accepted accounting principles related to development stage companies. A development stage company is one in which planned principal operations have not commenced or if its operations have commenced, there has been no significant revenues there from.

 

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles 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. Actual results could differ from those estimates.

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash and cash equivalents, prepaid expenses and other assets, accounts payable, due to director, accrued interest, and notes payable. The carrying amounts of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on deposit. As of March 31, 2014 and December 31, 2013, the Company had no cash on deposit.

Related Parties

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence.

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Stock-Based Compensation

The Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation-Stock Compensation, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values.

The Company follows ASC Topic 505-50, formerly EITF 96-18, “Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling Goods and Services,” for stock options and warrants issued to consultants and other non-employees. In accordance with ASC Topic 505-50, these stock options and warrants issued as compensation for services provided to the Company are accounted for based upon the fair value of services provided or the estimated fair market value of the option or warrant, whichever can be more clearly determined. The fair value of the equity instrument is charged directly to compensation expense or prepaid expense and additional paid-in capital over the period during which services are rendered.

Basic and Diluted Net Loss per Share

Basic net loss per common share is computed by dividing net loss applicable to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted net loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents, consisting of shares that might be issued upon exercise of common stock options. In periods where losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive.

Income Taxes

The Company records deferred tax assets and liabilities based on the net tax effects of tax credits, operating loss carryforwards and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and the Company establishes a valuation allowance to reduce deferred tax assets to an amount which it believes to be more likely than not realizable. The valuation allowance is based on the Company`s estimates of taxable income by jurisdiction in which it operates and the period over which its deferred tax assets will be recoverable.  

Going Concern

The accompanying financial statements have been prepared assuming that the company will continue to operate as a going concern.  Through March 31, 2104, the Company has not generated any revenue, has a negative working capital and has losses since inception.  As of March 31, 2014, the accumulated deficit is $10,081,166 and the working capital deficiency is $2,793,757.

Recently Issued Accounting Standards

There are no accounting standards or interpretations issued or recently adopted that are expected to have a material impact on the Company’s financial position, operations or cash flows.  

3.   DUE TO DIRECTOR

A director loaned the Company money during the period for cash flow needs. The balance due to the director of $34,217 as of March 31, 2014 (December 31, 2013: $30,725) is unsecured, non-interest bearing and has no specific terms of repayment.

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4.   NOTES PAYABLE

Description		March 31, 2014			December 31, 2013
On October 27, 2009, the Company entered into a note payable for $74,202.72 at 10% interest per annum due December 31, 2010. The note also calls for 5% additional interest per annum in the event of default. As of March 31, 2014 and December 31, 2013, the note has accrued interest of $53,396 and $51,146, respectively. The note is currently in default.		$	60,000		$	60,000
On October 26, 2009, the Company entered into a note payable for $141,623.23 at 10% interest per annum due December 31, 2010. The note also calls for 5% additional interest per annum in the event of default. As of March 31, 2014 and December 31, 2013, the note has accrued interest of $81,765 and $76,454, respectively. The note is currently in default.			141,632			141,632
On November 4, 2011, the Company entered into an amended note payable for $945,962 at 10% interest per annum due December 31, 2012. As of March 31, 2014 and December 31, 2013, the note has accrued interest of $228,607 and $204,958, respectively. The note is currently in default.			945,962			945,962
On October 11, 2011, the Company entered into a convertible line of credit note up to $500,000 at 8% interest per annum due December 31, 2012. The Company has received extensions to date that move the maturity date up to October 1, 2014.  As of March 31, 2014 and December 31, 2013, the note has accrued interest of $82,106 and $72,157, respectively. See note 5.			497,440			497,440
		$	1,645,034		$	1,645,034

All of the outstanding principal debt of $1,645,034 is due within one year.

5.   CONVERTIBLE DEBT

On October 1, 2011, the Company issued a convertible credit line of $500,000 with a 10% interest rate per annum. The amount drawn plus any accrued interest is convertible into shares of the Company’s common stock at a rate of 85% multiplied by the average market price of the previous 30 days trading prior to the conversion. As of March 31, 2014 and December 31, 2013, the amount drawn is $497,440 and $497,440, respectively. The total accrued interest as of March 31, 2014 and December 31, 2013 is $82,355 and $72,157, respectively. See note 4.

In accordance with ASC 815, the Company has bifurcated the conversion feature of the note and recorded a derivative liability.

The Company uses the Black-Scholes option pricing model to value the separate derivative liabilities for each of the draws against the credit line.  Included in the model are the following assumptions: stock price at valuation date of $0.01-$0.04 (2013: $0.01-$0.30), exercise price of $0.02-$0.05 (2013: $0.03-$0.27), dividend yield of zero (2013: zero), years to maturity of 0.33-0.75 (2013: 0.08-1 year), a risk free rate of 0.13%-0.16% (2013: 0.12%-0.16%), and annualized volatility of 330%-498% (2013: 93%-325%). The Company recognized a derivative expense of $0 and $0 during the three months ended March 31, 2014 and 2013, respectively.

ASC 815 requires Company management to assess the fair market value of certain derivatives at each reporting period and recognize any change in the fair market value as another income or expense item.  The Company’s only asset or liability measured at fair value on a recurring basis is its derivative liability associated with the above convertible debt.  During the three months ended March 31, 2014 and 2013, the Company recorded a change in fair market value of the derivative liability of $118,940 of expense and $62,075 of income, respectively, in relation to the aforementioned credit line. During the three months ended March 31, 2014 and 2013, $0 and $9,541, respectively, of debt discount was amortized.

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6.   CAPITAL STOCK

The Company is authorized to issue 1,800,000 shares of its $0.001 par value common stock.

Common Stock

During the year ended December 31, 2013, the Company retired $31,848 of debt by issuing 1,061,594 shares of common stock.

During the year ended December 31, 2013, the Company issued 100,000 shares of common stock as settlement for a dispute. The cumulative fair value of the shares issued is $4,000.

Stock-Based Compensation

During the three months ended March 31, 2014 and 2013, the Company recognized stock-based compensation of $0 and $9,951, respectively, related to stock options issued between June 1, 2009 and April 19, 2010.

The following table summarizes the stock options outstanding at March 31, 2014:

Issue Date	Number	Price	Expiry Date	Outstanding at December 31, 2013
June 1, 2009	800,000	$0.20	June 1, 2019	800,000
April 19, 2010	350,000	$0.20	April 19, 2020	350,000
April 19, 2010	350,000	$0.13	April 19, 2020	350,000
June 10, 2010	76,000	$0.13	June 10, 2020	76,000
December 31, 2010	266,000	$0.07	December 31, 2020	266,000
July 19, 2011	8,068,000	$0.50	July 31, 2016	1,442,000
Total	9,910,000			9,910,000

On October 31, 2013, 360,000 options with an exercise price of $0.20 expired.

Warrants

There are no warrants outstanding for the Company.

7.   SUBSEQUENT EVENTS

The Company has analyzed its operations subsequent to March 31, 2014 through the date these financial statements were filed with the OTC Disclosure and News Service and has determined that it does not have any material subsequent events to disclose.

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8.   RESTATEMENTS

The Company has restated its financial statements for the three months ended March 31, 2013 to reflect the following adjustments:

(i)   Fair value of conversion feature included in notes payable

In connection with a convertible line of credit, the Company has recorded an expense for the fair value of the conversion feature using Black Scholes Option Pricing Model and re-valued the conversion feature at year end.  This has resulted in the inclusion of “Derivative Liability”, “Debt Discount”, “Derivative Expense”,

“Amortization of Debt Discount” and “Change in Fair Market Value of Derivative” accounts and a change to “Interest Expense” as demonstrated above.

(ii)   Loan payable

A re-examination of the Company’s loan documents revealed the Company was calculating interest expense and payable based upon an understated loan payable balance as there was a re-allocation between accrued interest payable and loan payable.  In addition, it was noted that the Company failed to accrue default interest and penalties on certain loans payable.  The net result of the above misstatements was a decrease to “Interest Payable”, an increase to “Loan Payable” and an increase to “Interest expense”.

	For the Three Months Ended March 31, 2013
	As Originally Reported	Adjustments	As Restated
Statement of Operations and	$	$	$
Deficit
Interest expense	22,543	18,617	41,160
Amortization of debt discount	-	9,541	9,541
Change in fair market value of derivative	-	(62,075)	(62,075)
Net Loss	(57,837)	(33,917)	(23,920)

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ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION

FORWARD-LOOKING STATEMENTS

This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our 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 those forward-looking statements.  You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms.  These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements.  We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

RESULTS OF OPERATIONS

Comparison of the three month period ended March 31, 2014 and the three month period ended March 31, 2013

The Company is a development stage company with no sales or revenue as of the date of this report.

Operating Expenses

Our operating expenses for the three months ended March 31, 2014 compared to the three months ended March 31, 2013 consisted primarily of general and administrative expenses and stock based compensation.

General and administrative expenses for the three months ended March 31, 2014 were $18,877 compared to the three months ended March 31, 2013 which were $25,343.  The decrease of $6,466 is a result of the Company reducing operations during fiscal 2014 as it seeks additional financing.  

Stock based compensation for the three months ended March 31, 2014 was $nil compared to the three months ended March 31, 2013 which were $9,951.  The decrease of $9,951 is a result of all options completing their vesting periods the first quarter of 2013.

Interest expense for the three months ended March 31, 2014 totaled $41,159 compared to $41,160 for the three months ended March 31, 2013.

Change in the fair market value of the derivative liability was an expense of $118,940 for the three months ended March 31, 2014 compared to a gain of $62,075 during the three months ended March 31, 2013.  The Company also recorded an amortization of debt discount of $9,541 in 2013 which did not occur in 2014 as there was no remaining debt discount to amortize.

Net Loss

As a result of the foregoing, we reported a net loss attributable to common shareholders for the three months ended March 31, 2014 and 2013 of $178,976 and $23,920, respectively.  

Liquidity and Capital Resources

There is substantial doubt about our ability to continue as a going concern as the continuation of our business is dependent upon obtaining further long-term financing, successful and sufficient market acceptance of our products and achieving a profitable level of operations. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, would provide liquidity and increase our liabilities and future cash commitments. Presently, our revenues are not sufficient to meet our operating and capital expenses. Management projects that we will require additional funding to maintain our current operations

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Operating Activities: Net cash used in operating activities for the three months ended March 31, 2014 was $0 as compared to $14,443 used in operating activities for the three months ended March 31, 2013. The decrease is primarily due to the Company being able to finance operations through debt in the comparable period whereas operations decreased drastically in the most recently completed financial period.  

Financing Activities: The Company did not receive cash from financing activities for the three months ended March 31, 2014. During the three months ended March 31, 2013, the Company raised $15,000 through debt.

The Company had cash and cash equivalents of $0 as of March 31, 2014 and December 31, 2013.  The ability the Company to continue as a going concern is dependent on its success in obtaining additional financing.  

Going Concern

We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our audited consolidated financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing. 

Future Financings

We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our operations and other activities.

Off-Balance Sheet Arrangements

We have no significant 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, capital expenditures or capital resources that are material to stockholders.

Critical Accounting Policies

Our consolidated financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

We regularly evaluate the accounting policies and estimates that we use to prepare our consolidated financial statements. A complete summary of these policies is included in the notes to our consolidated financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

Recently Issued Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the consolidated 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.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

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ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management carried out an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act"). Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures were not effective as of September 30, 2013, due to the material weaknesses resulting from the Board of Directors not currently having any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K, and controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements.

Changes in Internal Control over Financial Reporting

Our management has also evaluated our internal control over financial reporting, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of our last evaluation.

The Company is not required by current SEC rules to include, and does not include, an auditor's attestation report. The Company's registered public accounting firm has not attested to Management's reports on the Company's internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS.

On April 1, 2010, the Company entered into a Stipulation for Entry of Judgment (“Settlement Agreement”) pursuant to which Aptus Games, Inc., (a former subsidiary of the Company) agreed to pay the sum of $12,000 in installments commencing March 2010 and ending July 2010. Payments were scheduled to be $600 for the first four months of the Settlement Agreement and a final payment in the amount of $9,600 in July 2010. As of March 31, 2013, the Company has not been able to make the final payment. The remaining balance to date is $4,100. Under this Settlement Agreement, the Company also agreed to deliver 75,000 restricted shares of its common stock of to certain affiliates of the plaintiff. The original demand was for $24,999.

On June 7, 2011 VFX Direct LLC, filed a complaint against Aptus Games, Inc. in Superior Court of the State of California, County of Riverside alleging vendor amounts due. The claim is for $88,000 with interest at 10% per annum from September 28, 2008, attorney fees, cost of litigation and general and equitable relief as the court deems just and proper. The Company has answered the claim and awaiting further court activity. The Company’s vendor account balance is $60,300.

ITEM 1A.

RISK FACTORS.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

1.

Quarterly Issuances:

During the quarter, we did not issue any unregistered securities other than as previously disclosed.

2.

Subsequent Issuances:

Subsequent to the quarter, we did not issue any unregistered securities other than as previously disclosed.

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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

Exhibit Number		Description of Exhibit		Filing
3.01		Articles of Incorporation		Filed with the SEC on November 2, 2005 as part of our Registration Statement on Form SB-2.
3.01a		Articles of Merger		Filed with the SEC on June 14, 2012 as part of our Registration Statement on Form 10-12G.
3.01b		Certificate of Amendment		Filed with the SEC on June 14, 2012 as part of our Registration Statement on Form 10-12G.
3.01c		Certificate of Amendment		Filed with the SEC on June 14, 2012 as part of our Registration Statement on Form 10-12G.
3.02		Bylaws		Filed with the SEC on November 2, 2005 as part of our Registration Statement on Form SB-2.
3.02a		Amended and Restated Bylaws		Filed with the SEC on November 19, 2008 as part of our Quarterly Report on Form 10-Q.
10.01		Asset Acquisition Agreement with Rich Media Corp.		Filed with the SEC on June 14, 2012 as part of our Registration Statement on Form 10-12G.
14.01		Code of Business Conduct and Ethics		Filed with the SEC on November 2, 2005 as part of our Registration Statement on Form SB-2.
21.01		List of Subsidiaries		Filed with the SEC on April 1, 2008 as part of our Annual Report on Form 10-K.
31.01		Certification of Principal Executive Officer Pursuant to Rule 13a-14		Filed herewith.
31.02		Certification of Principal Financial Officer Pursuant to Rule 13a-14		Filed herewith.
32.01		CEO and CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act		Filed herewith.
101.INS*		XBRL Instance Document		Filed herewith.
101.SCH*		XBRL Taxonomy Extension Schema Document		Filed herewith.
101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document		Filed herewith.
101.LAB*		XBRL Taxonomy Extension Labels Linkbase Document		Filed herewith.
101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document		Filed herewith.
101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document		Filed herewith.

*Pursuant to Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

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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.

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