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GAWK > SEC Filings for GAWK > Form 10-Q on 20-Sep-2013All Recent SEC Filings

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Form 10-Q for GAWK INC.


20-Sep-2013

Quarterly Report


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

The following discussion provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto contained elsewhere in this Report. The following discussion and analysis contains forward-looking statements, which involve risks and uncertainties. Our actual results may differ significantly from the results, expectations and plans discussed in these forward-looking statements.

Overview

We were incorporated in the State of Nevada as a for-profit Company on January 6, 2011 and established a fiscal year end of January 31. On August 13, 2013, Gawk Incorporated (f/k/a Media Mechanics, Inc.), Scott Kettle (the "Purchaser"), Matthew Zipchen and Violetta Pioro (together with Matthew Zipchen, the "Sellers") closed on a stock purchase agreement, dated July 31, 2013 (the "Stock Purchase Agreement"), whereby the Purchaser purchased from the Sellers 7,500,000 shares of common stock, par value $0.001 per share, of the Company (the "Shares"), representing approximately 75% of the issued and outstanding shares of the Company, for an aggregate purchase price of $250,000 (the "Purchase Price") (the "Stock Purchase"). Prior to the closing of the Stock Purchase Agreement, the Sellers were our majority shareholders, Matthew Zipchen was our President, Chief Executive Officer, Secretary, Treasurer, Chief Financial Officer, and member of the board of directors of the Company (the "Board"), and Violetta Pioro was our Vice President and member of the Board.

Pursuant to the Stock Purchase Agreement, on July 31, 2012, the Sellers resigned from their positions as officers and directors of the Company, and the Board of Directors and the stockholders of the Company appointed Scott Kettle to serve as the President, Chief Executive Officer, Secretary, Treasurer, Chief Financial Officer and director of the Company upon closing of the Stock Purchase. Biographical information for Mr. Kettle has been disclosed on the Company's Current Report on Form 8-K filed with the SEC on August 18, 2013.

In connection with the Stock Purchase, the Company has changed its focus to engage in the business of online distribution of all digital content including but not limited to full length feature films, television series, sports, documentaries, live events via our proprietary content distribution network (CDN).
To reflect the change in business strategy of the company, on August 22, 2013, the Board of Directors unanimously approved a change in the Company's name from Media Mechanics, Inc. to Gawk Incorporated.

Also on August 22, 2013, the Company affected a 30-for-1 forward split of our Common Stock, where each stockholder will receive 30 additional shares for each share owned as of the record date. All share amounts in this report have been adjusted to reflect this forward split.

Plan of Operations

We are a development stage corporation and have not started operations and have not yet generated or realized any revenues.

Gawk Incorporated anticipates launching gawk.com in Q1 2014, as an online streaming provider of digital content, including but not limited to full- length feature films, television series, sporting events, documentaries, original programming, and live events via our proprietary content distribution network (CDN). Our content will be exclusively available via the website gawk.com and Gawk-incorporated enabled devices. We are in the development phase of our technology. Gawk will be capable of delivering High Definition quality content on a global basis.

We have only one officer and director. He is responsible for our managerial and organizational structure which will include preparation of disclosure and accounting controls under the Sarbanes Oxley Act of 2002. When these controls are implemented, he will be responsible for the administration of the controls. Should he not have sufficient experience, he may be incapable of creating and implementing the controls which may cause us to be subject to sanctions and fines by the SEC which ultimately could cause you to lose your investment.

The Company anticipates bringing on experienced members to our management team in the coming months. In addition to building out our management team we will also be adding in house developers in order to complete the development of gawk.com and our applications (app) for the many different devices and internet enabled televisions currently on the market.

In order to complete our plan Gawk Incorporated is currently pursuing various forms of financing within the available equity markets.

If we are unable to complete any phase of our software development or marketing efforts because we do not have enough resources, we believe that we will have to cease our development and or marketing operations until we raise money. Attempting to raise capital after failing in any phase of our software development plan would be difficult. As such, if we cannot secure additional proceeds we may have to cease marketing our software which may negatively affect investors' investment.

Results of Operation for the Three and Six Months Ended July 31, 2013 and 2012

Revenues. Revenue for the three and six month periods ended July 31, 2013 were $0 and $1,572, respectively, as compared with $4,738 and $10,269 for the three and six month periods, respectively, ended July 31, 2012. The decrease in revenue was a result the Stock Purchase and the change in the Company's business focus.


Operating Expenses. Operating expenses for the three and six month periods ended July 31, 2013 were $5,204 and $41,028, as compared with $4,776 and $7,755 for the three and six month periods, respectively, ended July 31, 2012. The change was a result the Stock Purchase and the change in the Company's business focus.

Net Profit (Loss). Our net profit (loss) for the three and six month periods ended July 31, 2013 were $(5,204) and $(39,456), as compared with $(919) and $721 for the three and six month periods, respectively, ended July 31, 2012.

Liquidity and Capital Resources

Our cash and cash equivalents totaled approximately $65,617 at July 31, 2013.

In order to meet our operational goals, including developing the software for our website, we will need funds for website development costs. If we do not develop the software, we believe that we can currently satisfy our public company reporting costs for the next twelve months with our current cash and expected revenues.

Net Cash Provided by (Used in) Operating Activities. Net cash of $(40,611) was used in operating activities in the six month period ended July 31, 2013, as opposed to $4,359 provided by operating activities in the six month period ended July 31, 2012. From January 6, 2011 (inception) to July 31, 2013, net cash of $(59,110) was used in operating activities.

Net Cash Provided By Financing Activities. Net cash of $0 was provided from financing activities in the six month period ended July 31, 2013, as opposed to $0 in the six month period ended July 31, 2012. From January 6, 2011 (inception) to July 31, 2012, net cash of $125,000 was generated from financing activities.

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, capital expenditures or capital resources that are material to stockholders.

Critical Accounting Policies

Development Stage

The Company's financial statements are presented as those of a development stage enterprise. Activities during the development stage primarily include equity based financing and further implementation of the business plan.

Risks and Uncertainties

The Company intends to operate in an industry that is subject to rapid change. The Company's operations will be subject to significant risk and uncertainties including financial, operational, technological, regulatory and other risks associated with a development stage company, including the potential risk of business failure.

Use of Estimates

The preparation of unaudited interim financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the unaudited interim financial statements and accompanying notes. Such estimates and assumptions impact, among others, the fair value of share based payments.

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from estimates.


Recent Accounting Pronouncements

There are no recent accounting pronouncements that are expected to have an effect on the Company's financial statements.

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