10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

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

For the quarterly period ended December 31, 2019

or

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

For the transition period from _____________ to ______________

Commission File Number 000-55403

APPYEA, INC.
(Exact name of registrant as specified in its charter)
South Dakota	46-1496846
---	---
(State or other jurisdiction of<br><br>incorporation or organization)	(IRS Employer<br><br>Identification No.)
777 Main Street, Suite 600, Fort Worth TX	76102
(Address of principal executive offices)	(Zip Code)
(800) 674-3561
---
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
---	---	---
None	None	None

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     ☐ NO

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). ☒ YES     ☐ NO

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) ☐ YES     ☒ NO

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

5,376,140,774 common shares issued and outstanding as of February 12, 2020

FORM 10-Q

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements	F-1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	6
Item 4.	Controls and Procedures	6
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	7
Item 1A.	Risk Factors	7
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	7
Item 3.	Defaults Upon Senior Securities	7
Item 4.	Mine Safety Disclosures	7
Item 5.	Other Information	7
Item 6.	Exhibits	8
SIGNATURES		9
2
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Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

	Page
Consolidated Balance Sheets as of December 31, 2019 and June 30, 2019 (Unaudited)	F-2
Consolidated Statements of Operations for the Three and Six Months Ended December 31, 2019 and 2018 (Unaudited)	F-3
Consolidated Statements of Changes in Stockholders' Deficit for the Six Months Ended December 31, 2019 and 2018 (Unaudited)	F-4
Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2019 and 2018 (Unaudited)	F-5
Notes to the Consolidated Financial Statements (Unaudited)	F-6
F-1
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APPYEA, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

			June 30,
			2019
ASSETS
Current Assets:
Cash	311		$	45,056
Prepaid expense	2,000			9,500
Total Current Assets	2,311			54,556
TOTAL ASSETS	2,311		$	54,556
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable and accrued liabilities	54,896			44,393
Accrued salary	45,506			3,506
Convertible loans and accrued interest, net of unamortized discounts of 2,397 and 15,000, respectively	332,229			315,232
Due to related party and accrued interest	104,249			88,224
Derivative liabilities	621,935			578,812
Total Current Liabilities	1,158,815			1,030,167
Total Liabilities	1,158,815			1,030,167
Stockholders' Deficit:
Convertible preferred stock, 0.0001 par value, 60,000,000 shares authorized, 9,750,000 shares issued and outstanding, respectively	975			975
Common stock, 0.0001 par value, 6,000,000,000 shares authorized, 5,376,140,774 and 5,095,935,524 shares issued and outstanding, respectively	537,614			509,593
Additional paid-in capital	6,432,131			6,308,023
Stock payable	47,727			47,727
Accumulated deficit	(8,174,951	)		(7,841,929	)
Total Stockholders' Deficit	(1,156,504	)		(975,611	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	2,311		$	54,556

All values are in US Dollars.

See accompanying notes to the unaudited consolidated financial statements.

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APPYEA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2019			2018			2019			2018
Revenues	$	68		$	119		$	203		$	197
Operating Expenses
Professional fees		24,340			18,610			53,219			28,171
General and administrative		25,337			26,412			51,757			54,669
Depreciation		-			-			-			6,500
Total Operating Expenses		49,677			45,022			104,976			89,340
Loss from operations		(49,609	)		(44,903	)		(104,773	)		(89,143	)
Other Income (Expense)
Change in fair value of derivative liabilities		(158,901	)		486,086			(171,144	)		355,325
Interest expense		(37,053	)		(34,128	)		(57,105	)		(76,703	)
Net Other Income (Expense)		(195,954	)		451,958			(228,249	)		278,622
Net Income (Loss)	$	(245,563	)	$	407,055		$	(333,022	)	$	189,479
Net Income (Loss) Per Common Share: Basic and Diluted
Basic	$	(0.00	)	$	0.00		$	(0.00	)	$	0.00
Diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)
Weighted Average Number of Common Shares Outstanding: Basic and Diluted
Basic		5,269,778,274			1,330,983,536			5,229,093,201			1,285,730,298
Diluted		5,269,778,274			7,173,042,878			5,229,093,201			7,148,481,669

See accompanying notes to the unaudited consolidated financial statements.

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APPYEA, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT

(Unaudited)

For the Six Months Ended December 31, 2019

	Convertible								Additional
	Preferred Stock				Common stock				paid-in		Stock		Accumulated
	Shares		Amount		Shares		Amount		capital		payable		Deficit			Total
Balance, June 30, 2019		9,750,000	$	975		5,095,935,524	$	509,593	$	6,308,023	$	47,727	$	(7,841,929	)	$	(975,611	)
Common stock issued for conversion of debt and resolution of derivative liabilities		-		-		65,205,250		6,521		2,608		-		-			9,129
Net loss for the period		-		-		-		-		-		-		(87,459	)		(87,459	)
Balance, September 30, 2019		9,750,000		975		5,161,140,774		516,114		6,310,631		47,727		(7,929,388	)		(1,053,941	)
Common stock issued for conversion of debt and resolution of derivative liabilities		-		-		215,000,000		21,500		121,500		-		-			143,000
Net loss for the period		-		-		-		-		-		-		(245,563	)		(245,563	)
Balance, December 31, 2019		9,750,000	$	975		5,376,140,774	$	537,614	$	6,432,131	$	47,727	$	(8,174,951	)	$	(1,156,504	)

For the Six Months Ended December 31, 2018

	Convertible								Additional
	Preferred Stock				Common stock				paid-in		Stock		Accumulated
	Shares		Amount		Shares		Amount		capital		payable		Deficit			Total
Balance, June 30, 2018		5,000,000	$	500		1,240,477,060	$	124,047	$	4,740,277	$	62,727	$	(6,777,119	)	$	(1,849,568	)
Net loss for the period		-		-		-		-		-		-		(217,576	)		(217,576	)
Balance, September 30, 2018		5,000,000		500		1,240,477,060		124,047		4,740,277		62,727		(6,994,695	)		(2,067,144	)
Common stock issued for conversion of debt and resolution of derivative liabilities		-		-		382,664,200		38,266		85,728		-		-			123,994
Net income for the period		-		-		-		-		-		-		407,055			407,055
Balance, December 31, 2018		5,000,000	$	500		1,623,141,260	$	162,313	$	4,826,005	$	62,727	$	(6,587,640	)	$	(1,536,095	)

See accompanying notes to the unaudited consolidated financial statements.

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APPYEA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended
	December 31,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(333,022	)	$	189,479
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation expense		-			6,500
Amortization of debt discounts		12,603			44,873
Change in fair value of derivative liabilities		171,144			(355,325	)
Changes in operating assets and liabilities:
Prepaid expenses		7,500			-
Accounts payable and accrued liabilities		10,503			(1,272	)
Accrued salary		42,000			38,706
Accrued interest		44,502			31,830
Net Cash Used in Operating Activities		(44,770	)		(45,209	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loan form related party		25			377
Repayment of loan from related party		-			(300	)
Net cash provided by Financing Activities		25			77
Net change in cash for period		(44,745	)		(45,132	)
Cash at beginning of period		45,056			47,196
Cash at end of period	$	311		$	2,064
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for income taxes	$	-		$	-
Cash paid for interest	$	-		$	-
NON CASH INVESTING AND FINANCING ACTIVITIES
Issuance of common stock for conversion of debt and accrued interest	$	24,108		$	28,973
Resolution of derivative liability upon conversion of debt	$	128,021		$	95,021

See accompanying notes to the unaudited consolidated financial statements.

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APPYEA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2019

(Unaudited)

1. NATURE OF OPERATIONS

AppYea, Inc. (“AppYea”, “the Company”, “we” or “us”) was incorporated in the State of South Dakota on November 26, 2012 to engage in the acquisition, purchase, maintenance and creation of mobile software applications. The Company is in the development stage with no significant revenues and a limited operating history.

The Company incorporated a wholly-owned subsidiary, “AppYea Holdings, Inc.” in state of South Dakota on January 13, 2017 and “The Diagnostic Centers Inc.” in State of South Dakota on August 2, 2017.

Through its wholly owned subsidiary, The Diagnostic Centers, Inc., AppYea markets comprehensive diagnostic testing services to physician offices, clinics, hospitals, long term care facilities, healthcare groups, and other healthcare providers.

During the quarter ended March 31, 2019 the Company entered into a 2-year management and advisory agreement with Hempori, Inc. to assist the Company in identifying and managing the Company’s overall business strategy and opportunities to enter the hemp based Cannabidiol (CBD) industry. Additionally, the Company entered into an exclusive CBD infused beverage licensing agreement with the Prouty Company to market flavored and non-flavored beverages in various formulas infused with CBD to achieve the following “mood enhancing” affects: Energy, Calm, Focus, and Sleep.

On February 7, 2020 the Company’s Board of Directors reached and approved terms of a separation agreement with our former CEO Doug McKinnon.

On February 7, 2020 the Company’s Board of Directors approved the employment contract of Todd Violette as the new CEO and the appointment of Todd Violette as a new Director and elected him to the position of Chairmen of the Board of Directors.

The Company’s common stock is traded on the OTC Markets (www.otcmarkets.com) under the symbol “APYP”.

2. SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements.

In the opinion of the company’s management, the accompanying unaudited interim financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the company as of December 31, 2019 and the results of operations and cash flows for the periods presented. The results of operations for the six months ended December 31, 2019 are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited financial statements should be read in conjunction with the financial statements and related notes thereto included in the company’s Annual Report on Form 10-K for the year ended June 30, 2019 filed with the SEC on October 18, 2019. On July 1, 2019, the Company adopted Accounting Standards Update (ASU) 2016-02, Leases (as amended by ASU 2018-01, 2018-10, 2018-11, 2018-20, and 2019-01, collectively, including ASU 2016-02, “ASC 842”), using the modified retrospective method. The Company elected the transition method which allows entities to initially apply the requirements by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. As a result of electing this transition method, previously reported financial information has not been restated to reflect the application of the new standard to the comparative periods presented. The Company elected the package of practical expedients permitted under the transition guidance within ASC 842, which among other things, allows the Company to carry forward certain historical conclusions reached under ASC Topic 840 regarding lease identification, classification, and the accounting treatment of initial direct costs. The Company elected not to record assets and liabilities on its consolidated balance sheet for new or existing lease arrangements with terms of 12 months or less. The Company recognizes lease expenses for such leases on a straight-line basis over the lease term. In addition, the Company elected the land easement transition practical expedient and did not reassess whether an existing or expired land easement is a lease or contains a lease if it has not historically been accounted for as a lease. The adoption of ASC 842 did not have a material impact on the consolidated financial statements. See Note 6 for further discussion.

Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures 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. Significant estimates include assumptions about the valuation and recognition of stock-based compensation expense, the valuation and recognition of derivative liability, valuation allowance for deferred tax assets and useful life of fixed assets.

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Principles of Consolidation

The consolidated financial statements include the accounts of AppYea and its subsidiaries. Intercompany transactions and balances have been eliminated.

Fair Value of Financial Instruments

As defined in ASC 820” Fair Value Measurements,” fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).

The following table summarizes fair value measurements by level at December 31, 2019 and June 30, 2019, measured at fair value on a recurring basis:

December 31, 2019	Level 1		Level 2		Level 3		Total
Assets
None	$	-	$	-	$	-	$	-
Liabilities
Derivative liabilities	$	-	$	-	$	621,935	$	621,935
June 30, 2019	Level 1		Level 2		Level 3		Total
---	---	---	---	---	---	---	---	---
Assets
None	$	-	$	-	$	-	$	-
Liabilities
Derivative liabilities	$	-	$	-	$	578,812	$	578,812

Reclassification

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

3. GOING CONCERN AND LIQUIDITY

At December 31, 2019, the Company had cash of $311 and current liabilities of $1,158,815 and a working capital deficit of $1,156,504. The Company has generated net losses from operations since inception. The Company anticipates future losses in its business. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

The Company’s ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. There is no assurance that this series of events will be satisfactorily completed.

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4. CONVERTIBLE LOANS

At December 31, 2019 and June 30, 2019, convertible loans consisted of the following:

	December 31,			June 30,
	2019			2019
March 2015 Note	$	-		$	-
November 2016 Note -1		147,000			147,000
Convertible notes - Issued in fiscal year 2018		47,330			49,438
Convertible notes - Issued in fiscal year 2019		105,000			105,000
Total convertible notes payable		299,330			301,438
Accrued interest		35,296			28,794
Less: Unamortized debt discount		(2,397	)		(15,000	)
Total convertible notes		332,229			315,232
Less: current portion of convertible notes		332,229			315,232
Long-term convertible notes	$	-		$	-

During the six months ended December 31, 2019 and 2018, the Company recognized amortization of discount, included in interest expense, of $12,603 and $44,873, respectively.

Conversion

During the six months ended December 31, 2019, the Company converted notes with principal amounts and accrued interest of $24,108 into 280,205,250 shares of common stock. The corresponding derivative liability at the date of conversion of $128,021, was settled through additional paid in capital.

March 2015 Note

As of December 31, 2019, and June 30, 2019, the outstanding principal balance of the note was $0, the note had accrued interest of $454.

November 2016 Note

On November 15, 2016, the Company entered into four separate agreements with Greentree Financial Group, Inc., consisting of a Financial Advisory Agreement, a Loan Agreement, a Convertible Promissory Note, and a Warrant.

The Loan Agreement allows for the Company to borrow up to $250,000 from Greentree, which will be evidenced by various promissory notes, which will automatically mature 12 months from the date of applicable Note, will accrue interest at a rate of 12% per annum, and will include an original issuance discount (“OID”) of 10%. In addition, the promissory notes will be convertible at a price equal to 55% of the lowest trading price during the 10 trading days immediately prior to a conversion date. The conversion price shall not be lower than $0.0001. Note may not be converted prior to 6 months from its issuance. There is a 10% prepayment penalty associated with each of the promissory notes. An initial promissory note of $100,000 was issued on November 15, 2016. On January 26, 2017 and June 30, 2017, the Company issued convertible note of $75,000 and $75,000 according to the loan agreement on November 15, 2016. Note is currently in default.

The warrant issued to Greentree allows for the purchase of up to 5,000,000 shares of the Company’s common stock for a three-year period, expiring on November 15, 2019, with an exercise price of $0.03 per share. The warrants also contain a cashless exercise feature, based on a cashless exercise formula.

Promissory Notes - Issued in fiscal year 2018

During the year ended June 30, 2018, the Company issued a total of $180,614 note with the following terms:

·	Terms ranging from 6 months to 12 months.
·	Annual interest rates of 5% - 12%.
·	Convertible at the option of the holders at issuance.
·	Conversion prices are typically based on the discounted (35% to 45% discount) average closing prices or lowest trading prices of the Company’s shares during various periods prior to conversion. Certain notes allow for the conversion price to be a floor of $0.0002 per share.
·	Certain note allows the principal amount will increase by $15,000 and the discount rate of conversion price will decrease by 15% if the conversion price is less than $$0.01. As a result, the discount rate of conversion price changed from 45% to 60% and the Company recognized the penalty of $15,000 and recorded principal amount of $15,000.
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Certain notes allow the Company to redeem the notes at rates ranging from 115% to 150% depending on the redemption date provided that no redemption is allowed after the 180th day. Likewise, the note includes original issue discounts and financing costs totaling to $38,447 and the Company received cash of $142,167. Convertible notes issued in fiscal year 2018 are currently in default.

Promissory Notes - Issued in fiscal year 2019

During the year ended June 30, 2019, the Company issued a total of $105,000 of notes with the following terms:

·	Terms ranging from 3 months to 12 months.
·	Annual interest rates of 5% - 8%.
·	Convertible at the option of the holders at issuance.
·	Conversion prices are typically based on the discounted (45% discount) average closing prices or lowest trading prices of the Company’s shares during various periods prior to conversion.
·	The note of $80,000 is the tranche of Note issued on June 25, 2018.

Certain notes allow the Company to redeem the notes at rates ranging from 115% to 125% depending on the redemption date provided that no redemption is allowed after the 180th day. Likewise, the note includes original issue discounts and financing costs totaling to $5,000 and the Company received cash of $100,000. Certain convertible note was also provided with a total of 50,000,000 common shares and 800,000,000 warrants.

Derivative liabilities

The Company determined that the exercise feature of the warrants met the definition of a liability in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity’s Own Stock. The Company will bifurcate the embedded conversion option in the note once the note becomes convertible and account for it as a derivative liability. The fair value of the warrants was recorded as a debt discount being amortized to interest expense over the term of the note.

The fair value of the derivative liability for all the notes that became convertible for the year ended June 30, 2019 amounted to $387,038. $85,000 of the value assigned to the derivative liability was recognized as a debt discount to the notes while the balance of $302,038 was recognized as a “day 1” derivative loss.

Warrants

A summary of activity during the six months ended December 31, 2019 follows:

	Warrants Outstanding
				Weighted Average
	Shares			Exercise Price
Outstanding, June 30, 2019		1,586,098,636		$	0.0002
Granted		-			-
Reset feature		-			-
Exercised		-			-
Forfeited/canceled		(5,000,000	)		(0.03	)
Outstanding, December 31, 2019		1,581,098,636		$	0.0001
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The following table summarizes information relating to outstanding and exercisable warrants as of December 31, 2019:

Warrants Outstanding						Warrants Exercisable
		Weighted Average Remaining		Weighted<br><br>Average				Weighted<br><br>Average
Number of Shares		Contractual life <br>(in years)		Exercise<br><br>Price		Number of<br><br>Shares		Exercise<br><br>Price
	386,363,636		2.79	$	0.000055		386,363,636	$	0.000055
	1,194,735,000		1.48	$	0.0001		1,194,735,000	$	0.0001
	1,581,098,636		1.80	$	0.0001		1,581,098,636	$	0.0001

5. DERIVATIVE LIABILITIES

The Company analyzed the conversion option for derivative accounting consideration under ASC 815, Derivatives and Hedging, and hedging, and determined that the instrument should be classified as a liability since the conversion option becomes effective at issuance resulting in there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.

Fair Value Assumptions Used in Accounting for Derivative Liabilities.

ASC 815 requires we assess the fair market value of derivative liability at the end of each reporting period and recognize any change in the fair market value as other income or expense item.

The Company determined our derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes pricing model to calculate the fair value as of December 31, 2019. The Black-Scholes model requires six basic data inputs: the exercise or strike price, time to expiration, the risk free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each convertible note is estimated using the Black-Scholes valuation model.

At December 31, 2019, the estimated fair values of the liabilities measured on a recurring basis are as follows:

	Six Months Ended			Year Ended
	December 31,			June 30,
	2019			2019
Expected term	0.10 - 3.04 years			0.17 - 4.04 years
Expected average volatility	359% - 425		%	270% - 683		%
Expected dividend yield		-			-
Risk-free interest rate	1.48% - 1.91		%	1.75% - 2.94		%

The following table summarizes the changes in the derivative liabilities during the six months ended December 31, 2019:

Fair Value Measurements Using Significant Observable Inputs (Level 3)
Balance - June 30, 2019	$	578,812
Settled due to conversion of debt		(128,021	)
Loss on change in fair value of the derivative		171,144
Balance - December 31, 2019	$	621,935

The aggregate gain (loss) on derivatives during the six months ended December 31, 2019 and 2018 was ($171,144) and $355,325, respectively.

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6. COMMITMENTS AND CONTINGENCIES

Agreements

On October 2, 2017, the Company entered into an agreement with Pacific Pain & Regenerative Medicine. The Company was required to pay $3,000 per month for a collector in exchange for a minimum of 5 PGX tests per week or 20 per month. During the year ended June 30, 2018, the Company terminated the services and stopped making the monthly payments. As of December 31, 2019 and June 30, 2019, the Company has accrued expense of $21,000 and $21,000, respectively.

On October 17, 2017, the Company entered into an agreement of the acquisition financing of up to $30,000,000 (“the “Placement’) with Wellington Shields & Co. The Company shall pay (i) a success fee equal to 8% of the gross proceeds of the Placement, (ii) 3% of the total Company’s shares outstanding at the time of closing the placement, and (iii) was required to pay $15,000 at the time of signing and $10,000 per month. This engagement agreement was terminated at the close of business April 30, 2018. During the year ended June 30, 2019, the Company recognized gain on settlement of debt of $50,000. As of December 31, 2019 and June 30, 2019, the Company has accrued expense of $10,000 and $10,000, respectively.

Rent

As of January 30, 2013, the Company leases office space at $200 per month with three-month terms, which shall be automatically extended for successive three-month periods unless there is the notice to cancel. The lease can be cancelled at any time by either party with 30 days’ notice prior to expiration of an applicable term. For the six months ended December 31, 2019 and 2018, the Company incurred $1,259 and $1,246, respectively.

7. SHAREHOLDERS' DEFICIT

Convertible Series A Preferred Stock

The Company is authorized to issue 60,000,000 shares of Series A Preferred Stock at a par value of $0.0001.

Each Series A preferred share is convertible into 1,500 shares of common stock and has the voting rights of 1,000 shares of common stock.

As of December 31, 2019 and June 30, 2019, 9,750,000 shares of the Company's Series A Preferred Stock were issued and outstanding.

Common Stock

During the six months ended December 31, 2019, the Company issued 280,205,250 shares of common stock for conversion of debt and accrued interest of $24,108.

As at December 31, 2019 and June 30, 2019, 5,376,140,774 and 5,095,935,524 shares of the Company's common stock were issued and outstanding.

Stock Payable

As of December 31, 2019, the Company had $47,727 in stock payable for which it is obligated to issue 25,000,000 shares of common stock for consulting services.

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8. RELATED PARTY TRANSACTIONS

In March 2016, the Company appointed the former CEO and approved a base compensation package of $8,000 per month. During the six months ended December 31, 2019 and 2018, the Company recorded management fees of $48,000 and $48,000, respectively. As of December 31, 2019, and June 30, 2019, the Company recorded accrued salary of $45,506 and $3,506, respectively.

During the six months ended December 31, 2019 and 2018, the Company borrowed a total amount of $25 and $377 from Evergreen Venture Partners LLC (“EVP”), which the former CEO is the majority owner, and repaid $0 and $300, respectively. This loan was a non-interest bearing and due on demand. On February 7, 2020, a separation agreement was entered into between the Company and the former CEO, pursuant to which, the Company shall amend the loan from interest free to 6% per annum and to recognize all prior unaccrued interest at 6% per annum. In addition, this loan became convertible upon execution of this separation agreement, at a 45% discount to market. For the six months ended December 31, 2019, the Company recorded an interest expense of $16,000, representing the cumulative interest for the period this loan has been outstanding, as a result of signing the agreement. As of December 31, 2019, and June 30, 2019, the Company owed EVP $104,249 and $88,224, respectively.

9. SUBSEQUENT EVENTS

On February 7, 2020, the Company’s Board of Directors approved the employment contract of Todd Violette as the new CEO and the appointment of Todd Violette as a new Director and elected him to the position of Chairmen of the Board of Directors. Mr. Violette’s base salary shall be $240,000 per annum and he received 50,250,000 shares of Class A Preferred stock. In addition, Mr. Violette was granted an option to purchase up to10% of the common stock outstanding at prevailing market price, within twenty-four months.

On February 7, 2020, the former CEO agreed to reduce the salary payable to him to $26,750.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD LOOKING STATEMENTS

Except for historical information, this report contains forward-looking statements. Such forward-looking statements involve risks and uncertainties, including, among other things, statements regarding our business strategy, future revenues and anticipated costs and expenses. Such forward-looking statements include, among others, those statements including the words “expects,” “anticipates,” “intends,” “believes” and similar language. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed herein as well as in the “Description of Business” section in our Form 10-K, as filed with the SEC on October 18, 2019. You should carefully review the risks described in our Annual Report and in other documents we file from time to time with the Securities and Exchange Commission. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document.

Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.

As used in this quarterly report and unless otherwise indicated, the terms “we”, “us”, “our” and “AppYea” mean AppYea, Inc., and our wholly owned subsidiaries, AppYea Holdings, Inc., a South Dakota corporation and The Diagnostic Centers, Inc., a South Dakota corporation unless otherwise indicated.

Corporate Overview

We were incorporated in the State of South Dakota on November 26, 2012. We are engaged in the acquisition, purchase, maintenance and creation of mobile software applications.

Our administrative office is located at 777 Main Street, Suite 600, Fort Worth, TX 76102, Telephone: (817)-887-8142. Our corporate website is located at www.appyea.com.

Our fiscal year end is June 30. We have not been subject to any bankruptcy, receivership or similar proceeding.

We have two wholly owned subsidiaries, AppYea Holdings, Inc., a South Dakota corporation and The Diagnostic Centers, Inc., a South Dakota corporation.

Our Current Business

We are a development stage company that was initially only engaged in the acquisition, purchase, and maintenance of mobile software applications (“apps”). Although we are still active in the mobile applications industry, we began investigating healthcare markets to augment the apps business in early 2017 and subsequently formed a wholly owned subsidiary The Diagnostic Centers, Inc. to focus on marketing certain products and services to healthcare providers.

On November 15, 2017, we entered into a distribution agreement with Cedar Creek Labs Series Two LLC (“LLC”) for the term of 1 year. The agreement shall be automatically extended for successive 1 year unless there is the notice to terminate. Our Company shall use best efforts to market the Products for the LLC and will receive compensation ranging from 15% to 40% of profit. Our company owns membership interests of 5% in LLC and the transactions between our company and LLC which is an equity method investee are deemed to be between related parties. The Company reviewed Cedar Creek Labs Series Two LLC financial condition at June 30, 2018 and concluded that there is a 100% impairment loss related to the Company’s investment, and recorded an impairment loss of $24,524, for the year ended June 30, 2018. As of June 30, 2019 our company is no longer utilizing this lab.

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Results of Operations

Three months ended December 31, 2019 compared to three months ended December 31, 2018.

	Three Months Ended
	December 31,
	2019			2018
Revenue	$	68		$	119
Operating expenses	$	(49,677	)	$	(45,022	)
Other income (expense)	$	(195,954	)	$	451,958
Net income (loss)	$	(245,563	)	$	407,055

We generated revenues of $68 for the three months ended December 31, 2019, compared to revenues of $119 for the same period in 2018.

Our operating expenses, for the three months ended December 31, 2019 were $49,677 compared to $45,022 for the same period in 2018. The increase in operating expenses was primarily as a result of an increase in professional fees.

Other expense, for the three months ended December 31, 2019 was $195,954 compared to other income of $451,958 for the same period in 2018. The decrease in other income was primarily related to change in fair value of derivative liabilities.

We incurred a net income (loss) of ($245,563) and $407,055 for the three months ended December 31, 2019 and 2018, respectively.

Six months ended December 31, 2019 compared to six months ended December 31, 2018.

	Six Months Ended
	December 31,
	2019			2018
Revenue	$	203		$	197
Operating expenses	$	(104,976	)	$	(89,340	)
Other income (expense)	$	(228,249	)	$	278,622
Net income (loss)	$	(333,022	)	$	189,479

We generated revenues of $203 for the six months ended December 31, 2019, compared to revenues of $197 for the same period in 2018.

Our operating expenses, for the six months ended December 31, 2019 were $104,976 compared to $89,340 for the same period in 2018. The increase in operating expenses was primarily as a result of an increase in legal expenses.

Other expense, for the six months ended December 31, 2019 was $228,249 compared to other income of $278,622 for the same period in 2018. The decrease in other income was primarily related to change in fair value of derivative liabilities.

We incurred a net income (loss) of ($333,022) and $189,479 for the six months ended December 31, 2019 and 2018, respectively.

Liquidity and Capital Resources

The following table provides selected financial data about our company as of December 31, 2019 and June 30, 2019, respectively.

Working Capital

	December 31,			June 30,
	2019			2019
Cash	$	311		$	45,056
Current Assets	$	2,311		$	54,556
Current Liabilities	$	1,158,815		$	1,030,167
Working Capital (Deficiency)	$	(1,156,504	)	$	(975,611	)
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Cash Flows

	Six Months Ended
	December 31,
	2019			2018
Cash Flows Used in Operating Activities	$	(44,770	)	$	(45,209	)
Cash Flows Used in Investing Activities	$	-		$	-
Cash Flows from Financing Activities	$	25		$	77
Net Change in Cash During Period	$	(44,745	)	$	(45,132	)

As at December 31, 2019 our company’s cash balance was $311 and total assets were $2,311. As at June 30, 2019, our company’s cash balance was $45,056 and total assets were $54,556.

As at December 31, 2019, our company had total liabilities of $1,158,815, compared with total liabilities of $1,030,167 as at June 30, 2019.

As at December 31, 2019, our company had a working capital deficiency of $1,156,504 compared with working capital deficiency of $975,611 as at June 30, 2019. The increase in working capital deficiency was primarily attributed to a decrease in cash and an increase in derivative liabilities, accrued salary and due to related party.

Cash Flow from Operating Activities

During the six months ended December 31, 2019, our company used $44,770 in cash from operating activities, compared to $45,209 cash used in operating activities during the six months ended December 31, 2018. During the six months ended December 31, 2019, we incurred a net loss of $333,022 of which $183,747 arose from non-cash expenses and we generated cash flows of $104,505 from the operating assets and liabilities. During the six months ended December 31, 2018, we incurred a net income of $189,479 of which $355,325 arose from non-cash income from change in derivative valuations and $51,373 arose from non-cash expenses and we generated cash flows of $69,264 from the net increase in operating liabilities.

Cash Flow from Investing Activities

During the six months ended December 31, 2019 and 2018, our company did not have any investing activities

Cash Flow from Financing Activities

During the six months ended December 31, 2019, our company received $25 in financing activities compared to $77 received from financing activities during the six months ended December 31, 2018. During the six months ended December 31, 2019, we received $25 loan from a related party. During the six months ended December 31, 2018, we received $377 loan from a related party and repaid $300 to a related party.

Off-Balance Sheet Arrangements

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

Critical Accounting Policies

Use of Estimates

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

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Convertible Notes

Convertible notes are regarded as compound instruments, consisting of a liability component and an equity component. The component parts of compound instruments are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangement. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for a similar non-convertible instrument. This amount is recorded as a liability on an amortized cost basis until extinguished upon conversion or at the instrument’s maturity date. The equity component is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognized as additional paid-in capital and included in equity, net of income tax effects, and is not subsequently remeasured. After initial measurement, they are carried at amortized cost using the effective interest method.

Derivative Financial Instruments

The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. We evaluate all of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company used a Black Scholes valuation model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s management conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and Rule 15d-15(e) under the 1934 Act) pursuant to Rule 13a-15 under the 1934 Act. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports it files or submits under the 1934 Act is recorded, processed, summarized and reported on a timely basis and that such information is communicated to management and the Company’s board of directors to allow timely decisions regarding required disclosure.

Based on this evaluation, it has been concluded that the design and operation of our disclosure controls and procedures are not effective since the following material weaknesses exist:

•	Since inception our chief executive officer also functions as our chief financial officer. As a result, our officers may not be able to identify errors and irregularities in the financial statements and reports.
•	We were unable to maintain full segregation of duties within our financial operations due to our reliance on limited personnel in the finance function. While this control deficiency did not result in any material adjustments to our financial statements, it could have resulted in a material misstatement that might have been prevented or detected by a segregation of duties.
---	---
•	Documentation of all proper accounting procedures is not yet complete.
---	---

To the extent reasonably possible given our limited resources, as financial resources become available we intend to take measures to cure the aforementioned weaknesses, including, but not limited to, the following:

•	Increasing the capacity of our qualified financial personnel to ensure that accounting policies and procedures are consistent across the organization and that we have adequate control over financial statement disclosures.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

To the best of the Company’s knowledge and belief, no legal proceedings are currently pending or threatened.

Item 1A. Risk Factors

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

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

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

Exhibit Number	Description
(21)	Subsidiaries of Registrant
21.1	List of Subsidiaries, incorporated herein by reference to our Form 10-K filed on October 18, 2019
(31)	Rule 13a-14 (d)/15d-14d) Certifications
31.1*	Section 302 Certification by the Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer
(32)	Section 1350 Certifications
32.1**	Section 906 Certification by the Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer
101<br>*	Interactive Data File
101.INS<br><br>101.SCH<br><br>101.CAL<br><br>101.DEF<br><br>101.LAB<br><br>101.PRE	XBRL Instance Document<br><br>XBRL Taxonomy Extension Schema Document<br><br>XBRL Taxonomy Extension Calculation Linkbase Document<br><br>XBRL Taxonomy Extension Definition Linkbase Document<br><br>XBRL Taxonomy Extension Label Linkbase Document<br><br>XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith. ** Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	APPYEA, INC.
	(Registrant)
Dated: February 27, 2020	/s/ Todd Violette
	Todd Violette
	Chief Executive Officer
9
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apyp_ex311.htm EXHIBIT 31.1

CERTIFICATION PURSUANT TO 18 U.S.C. ss 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Todd Violette, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Appyea, Inc.;
2	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
---	---
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
---	---
(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
---	---
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 27, 2020

/s/ Todd Violette
Todd Violette
Chief Executive Officer and Chief Financial Officer<br><br>(Principal Executive Officer, Principal Financial Officer<br><br>and Principal Accounting Officer)

apyp_ex321.htm EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Todd Violette, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	the Quarterly Report on Form 10-Q of Appyea, Inc. for the period ended December 31, 2019 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Appyea, Inc.
Date: February 27, 2020	/s/<br><br>Todd Violette
---	---
	Todd Violette
	Chief Executive Officer and Chief Financial Officer
	(Principal Executive Officer, Principal Financial Officer<br><br>and Principal Accounting Officer)
	Appyea, Inc.

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Appyea, Inc. and will be retained by Appyea, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.