Debut Broadcasting Corporation, Inc. - FORM 10-Q

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EX-31.2 - Debut Broadcasting Corporation, Inc.	v202720_ex31-2.htm
EX-32.1 - Debut Broadcasting Corporation, Inc.	v202720_ex32-1.htm
EX-31.1 - Debut Broadcasting Corporation, Inc.	v202720_ex31-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


(Mark One)
þ		QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the quarterly period ended September 30, 2010

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

For the transition period from to

Commission file number 0-50762

DEBUT BROADCASTING CORPORATION, INC.

(Exact name of registrant as specified in its charter)


Nevada	88-0417389
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1011 Cherry Avenue, Suite B Nashville, TN	37203
(Address of principal executive offices)	(Zip Code)

(615) 301-0001

(Registrant’s telephone number, including area code)

(Former name, former address, and formal fiscal year if changed since last report)

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 þ No o

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

Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller Reporting Company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

As of November 13, 2010, there were 27,179,407 shares of common stock issued and outstanding.

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		21

Item 4T.	Controls and Procedures		25

PART II - OTHER INFORMATION

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		27

Item 4.	Submission of Matters to a Vote of Security Holders		29

Item 6.	Exhibits		29

-2-

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Our unaudited financial statements included in this Form 10-Q are as follows:

F-1	Condensed Consolidated Balance Sheets as of September 30, 2010 (unaudited) and December 31, 2009 (audited)

F-2	Condensed Consolidated Statements of Operations and Accumulated Deficit for the three months and nine months ended September 30, 2010 and 2009 (unaudited)

F-3	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2010 and 2009 (unaudited

These unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended September 30, 2010 are not necessarily indicative of the results that can be expected for the full year. Balance sheet information as of December 31, 2009 was derived from the Company’s audited financial statements for the year ended December 31, 2009.

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DEBUT BROADCASTING CORPORATION, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2010			December 31, 2009
ASSETS	(Unaudited)
Current assets
Cash and cash equivalents	$	37,863		$	62,471
Accounts receivable, net		987,789			835,302
Stock warrant receivable		-			-
Prepaid expenses		23,860			23,777
Unexercized stock warrants		1,004,658			1,004,658
Total current assets		2,054,170			1,926,208

Property and equipment, net		619,987			636,130
Deposits		3,529			8,628
Goodwill		459,280			459,280
FCC licenses		1,509,500			1,509,500
Total other assets		1,972,309			1,977,408

Total assets	$	4,646,466		$	4,539,746

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable	$	939,294		$	932,121
Accrued expenses and taxes		436,811			148,533
Notes payable to shareholders		375,000			750,000
Lines of credit		268,460			716,407
Current portion of long-term debt		347,510			586,167
Unrecognized stock warrant loss		1,035,523			1,035,523
Total current liabilities		3,402,598			4,168,751

Long term liabilities
Leases payable		-			2,445
Long-term debt		1,413,683			820,767
Total long term liabilities		1,413,683			823,212

Total liabilities		4,816,281			4,991,963

Stockholders' deficit
Common stock - $.003 par value, 100,000,000 shares authorized		81,538			64,101
Additional paid in capital		3,485,621			3,137,621
Accumulated deficit		(3,736,975	)		(3,653,939	)
Total stockholders' deficit		(169,816	)		(452,217	)
Total liabilities and stockholders' deficit	$	4,646,466		$	4,539,746

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,

	2010			2009			2010			2009

Net Revenue	$	566,743		$	525,802		$	1,506,546		$	1,584,197

Operating Expenses
Advertising		2,681			3,052			17,420			12,722
Operating Expense		386,793			601,581			1,382,201			1,786,526
Depreciation Expense		30,123			46,835			71,406			134,109
(Gain) on Settlement of Debt		-			(340,539	)		(1,200	)		(340,539	)
Merger and Acquisition Related Expenses		-			-			-			-

Total Operating Expenses		419,596			310,929			1,469,828			1,592,818

Operating Income (Loss)		147,146			214,873			36,718			(8,621	)

Other Income and Expense
Interest Income		(1,472	)		(5,136	)		(5,659	)		(9,837	)
Interest Expense		48,292			53,499			139,612			206,410
Income Tax		-			-			1,300			960
Total Other (Income) and Expense		46,820			48,363			135,253			197,533

Net Income (Loss)	$	100,326		$	166,510		$	(98,535	)	$	(206,154	)

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

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended September 30,
	2010			2009

Operating Activities:
Net Loss	$	(98,535	)	$	(206,154	)

Adjustments to reconcile net loss to net cash
provided by/used in operating activities:
Depreciation and amortization		71,406			157,443
Changes in operating assets and liabilities, net effects
of acquisitions

(Increase) decrease in accounts receivable		(152,488	)		39,400
(Increase) decrease in other current assets		5,018			1,000
Increase (decrease) in accounts payable		7,173			231,180
Increase (decrease) in accrued expenses and taxes		299,278			(165,117	)

Net cash provided by (used in) operating activities		131,852			57,572

Investing Activities:
Purchases of property and equipment		(55,264	)		(9,872	)
Net cash used in investing activities		(55,264	)		(9,872	)

Financing Activities:
Proceeds from issuance of stock warrants		-			-
Proceeds from bank credit facility		4,780			350,000
Proceeds from stockholder notes		-			-
Repayment of long-term debt		(475,913	)		(421,981	)
Proceeds from issuance of common stock		369,937			-
		.
Net cash provided by financing activities		(101,196	)		(71,981	)

Net (decrease) increase in cash and cash equivalents		(24,607	)		(24,101	)

Cash and cash equivalents at beginning of period		62,471			59,143

Cash and cash equivalents at end of period	$	37,863		$	35,042

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

-6-

DEBUT BROADCASTING CORPORATION, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2010

Note 1 - Organization

Debut Broadcasting Corporation, Inc. (the “Company”) is located in Nashville, Tennessee and conducts business from its principal executive office at 1011 Cherry Avenue, Suite B, Nashville, TN 37203. The Company relocated to the current office location on March 31, 2010. The Company produces and distributes syndicated radio programs to radio stations across the United States and Canada. In addition, the Company owns and operates seven radio stations in Mississippi.

The Company maintains radio syndication in Nashville and produces and distributes 14 radio programs, which are broadcast over approximately 1,400 radio station affiliates. These radio programs have an estimated 40 million U.S. listeners per week. In addition to its syndication services, the Company owns and operates a multi-media studio with audio, video and on-line content production capabilities. This facility is located on Music Row in Nashville, Tennessee. The Company also provides marketing, consulting and media buying (advertising) for its radio broadcast station customers in the United States.

Note 2 - Basis of Presentation and Interim Results

The condensed consolidated financial statements include the accounts of the Company, and its subsidiaries. The interim financial statements of the Company have been prepared without audit.

Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. We believe that the disclosures are adequate to make the financial information presented not misleading. These condensed financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2009. All adjustments were of a normal recurring nature unless otherwise disclosed. In the opinion of management, all adjustments necessary in order to make the financial statements not misleading have been included. The results of operations for such interim periods are not necessarily indicative of the results for the full year.

Accounts Receivable

We use the allowance method for determining the collectability of our accounts receivable. The allowance method recognizes bad debt expense following a review of the individual accounts outstanding in light of the surrounding facts. Accounts receivable are reported at their outstanding unpaid principal balances reduced by an allowance for doubtful accounts based on historical bad debts, factors related to specific customers’ ability to pay and economic trends. We write off accounts receivable against the allowance when a balance is determined to be uncollectible. Accounts receivable on the consolidated balance sheet is stated net of our allowance for doubtful accounts.

Revenue and Cost Recognition

The Company recognizes its advertising and programming revenues for syndicated programming when the Company’s radio shows air on its contracted radio station affiliates. Generally, the Company is paid by a national advertising agency, which sells the commercial time provided by the affiliate.

As the Company earns its revenue from the national advertising agency, it also recognizes any amounts due to the individual shows, which are based on the audience level generated by the specific program. Expenses are accrued at the time the shows are run.

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DEBUT BROADCASTING CORPORATION, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2010

Note 2 - Basis of Presentation and Interim Results (continued)

Consulting projects are generally negotiated at a fixed price per project; however, if the Company utilizes its advertising capacity as part of the consulting project, it will charge the consulting client in the same manner as the affiliated stations described more fully above. Consulting fee income is recognized as time is incurred under the terms of the contract. The Company recognizes its advertising and programming revenues for its owned and operated radio broadcast stations when the advertising airs. Generally, the Company is paid by the local advertiser for advertising coordinated and contracted through a local employee sales representative or sales manager.

Advertising

The Company expenses advertising costs as they are incurred. Total advertising costs of $2,681 and $3,052 are included in the financial statements for the three months ended September 30, 2010 and September 30, 2009, respectively. Total advertising costs of $17,420 and $12,722 are including in the financial statements for the nine months ended September 30, 2010 and September 30, 2009, respectively.

Financing

We will require additional capital to execute on our plan to grow through the acquisition of radio stations and radio station clusters. We do not presently have sufficient capital to make additional acquisitions. We intend to raise additional capital over the next twelve months through additional equity offerings.

Although we are and will be unable to predict the precise terms of any financing until the time that such financing is actually obtained, it is likely that any such financing will fit within the following parameters:

None of the indebtedness to which the Properties would be subject will be recourse to the shareholders, although some or all of the indebtedness may be recourse to us. However, each obligation will be secured by a first lien and/or second lien security interest in the financed Property. It is probable that all of our Properties will be subject to substantial security interests.

We expect any indebtedness will be first repaid with the operating revenues of the Properties. Operating revenues will first be applied to the payment of interest, principal amortization (if any), and principal on primary indebtedness. Next, operating revenues will be applied to interest on and principal of any subordinate financing.

Each of these financing arrangements may be subject to acceleration in the event of default, including non-payment, insolvency, or the sale of a Property. Upon an acceleration, if we are unable to effect an immediate refinancing, we may lose one or more of our Properties by foreclosure.

While financing may initially be available only on a radio station by radio station basis, we may eventually seek to refinance all of our Properties in one non-recourse loan which will, in all likelihood, be secured by all of our Properties.

In connection with acquisitions, dispositions and financing, we will incur appropriate accounting and legal fees.

-8-

DEBUT BROADCASTING CORPORATION, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2010

Note 2 - Basis of Presentation and Interim Results (continued)

Governmental Regulation of Radio Broadcasting

The following is a brief summary of certain provisions of the Communications Act, the Telecom Act, and related FCC rules and policies (collectively, the "Communications Laws"). This description does not purport to be comprehensive, and reference should be made to the Communications Laws, public notices, and decisions issued by the FCC for further information concerning the nature and extent of federal regulation of radio broadcast stations. Failure to observe the provisions of the Communications Laws can result in the imposition of various sanctions, including monetary forfeitures and the grant of a "short-term" (less than the maximum term) license renewal. For particularly egregious violations, the FCC may deny a station's license renewal application, revoke a station's license, or deny applications in which an applicant seeks to acquire additional broadcast properties.

License Grant and Renewal. Radio broadcast licenses are granted and renewed for maximum terms of eight years. Licenses are renewed by filing an application with the FCC. Petitions to deny license renewal applications may be filed by interested parties, including members of the public.

Service Areas. The area served by AM stations is determined by a combination of frequency, transmitter power, antenna orientation, and soil conductivity. To determine the effective service area of an AM station, the station’s power, operating frequency, antenna patterns and its day/night operating modes are required. The area served by an FM station is determined by a combination of transmitter power and antenna height, with stations divided into classes according to these technical parameters.

Class C FM stations operate with the equivalent of 100 kilowatts of effective radiated power (“ERP”) at an antenna height of up to 1,968 feet above average terrain. They are the most powerful FM stations, providing service to a large area, typically covering one or more counties within a state. Class B FM stations operate with the equivalent of 50 kilowatts ERP at an antenna height of up to 492 feet above average terrain. Class B FM stations typically serve large metropolitan areas as well as their associated suburbs. Class A FM stations operate with the equivalent of 6 kilowatts ERP at an antenna height of up to 328 feet above average terrain, and generally serve smaller cities and towns or suburbs of larger cities.

The minimum and maximum facilities requirements for an FM station are determined by its class. FM class designations depend upon the geographic zone in which the transmitter of the FM station is located. In general, commercial FM stations are classified as follows, in order of increasing power and antenna height: Class A, B1, C3, B, C2, C1, C0, and C.

The following table sets forth the market, call letters, FCC license classification, antenna elevation above average terrain (for FM stations only), power and frequency of all of our owned and operated stations as of September 30, 2010

Market

Stations

City of License

Frequency

Expiration Date of License

FCC Class

Height Above Average Terrain (in feet)

Power

(in Watts)

G Mississippi

WNLA FM

Indianola, MS

105.5

June 1, 2012

190

4400

WBAQ FM

Greenville, MS

97.9

June 1, 2012

502

48000

WIQQ FM

Leland, MS

102.3

June 1, 2012

446

1650

WNLA AM

Indianola, MS

1380

June 1, 2012

500

WNIX AM

Greenville, MS

1330

June 1, 2012

1000

WBBV FM

Vicksburg, MS

101.1

June 1, 2012

394

13000

KLSM FM

Tallulah, LA

104.9

June 1, 2012

299

3000

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DEBUT BROADCASTING CORPORATION, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2010

Note 2 - Basis of Presentation and Interim Results (continued)

Compliance with Environmental Laws

We have not incurred and do not anticipate incurring any expenses associated with environmental laws.

Note 3. Going Concern

These financial statements have been prepared on a going concern basis, which implies Debut Broadcasting will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of Debut Broadcasting as a going concern is dependent upon the continued financial support from its shareholders, the ability of Debut Broadcasting to obtain necessary equity financing to continue operations, and the attainment of profitable operations. As of September 30, 2010, Debut Broadcasting has accumulated losses since inception. These factors raise substantial doubt regarding Debut Broadcasting’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should Debut Broadcasting be unable to continue as a going concern.

Note 4 - Initial Adoption of FIN 48

We adopted the provisions of Financial Accounting Standards Board (“FASB”) Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109 (“FIN 48”)(“ASC 740-10”)(“ASC 810-10”), on May 17, 2007. As required by the provisions for the topic of Accounting for Uncertainty in Income Taxes of FASB ASC, our interpretation increases the relevancy and comparability of financial reporting by clarifying the way companies account for uncertainty in income taxes. FIN 48 prescribes a consistent recognition threshold and measurement attribute, as well as clear criteria for subsequently recognizing, derecognizing and measuring such tax positions for financial statement purposes. The interpretation also requires expanded disclosure with respect to the uncertainty in income taxes. We do not believe that the timing of the adoption of FIN 46 has created any material differences in comparability between the nine months ended September 30, 2009, and the nine months ended September 30, 2010.

Note 5 - Loss Per Share

We present basic loss per share on the face of the condensed consolidated balance sheets. As provided by FASB ASC Topic 260, “Earnings Per Share,” (Formerly SFAS No. 128, “Earnings Per Share”) basic loss per share is calculated as income available to common stockholders divided by the weighted average number of shares outstanding during the period.

On January 2, 2008, the Company awarded options to purchase 342,055 shares of its common stock to employees and valued contractors. These options were awarded at a strike price of $0.86 per share and vest ratably over five years. The options will be accounted for utilizing the Black-Scholes method of valuation.

On January 21, 2008, the Company issued to Remington Partners, Inc. a warrant to purchase 62,500 shares of Company common stock at an exercise price of $1.00 per share, with an expiration date three years after the date of issuance.

On February 26, 2008, the Company issued to Remington Partners, Inc. a warrant to purchase 125,000 shares of Company common stock at an exercise price of $1.00 per share, with an expiration date three years after the date of issuance.

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DEBUT BROADCASTING CORPORATION, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2010

Note 5 - Loss Per Share (continued)

On March 16, 2008, the Company issued to Holladay Broadcasting of Louisiana, LLC a warrant to purchase 200,000 shares of Company common stock at an exercise price of $1.00 per share, with an expiration date 10 years after the date of issuance.

On June 18, 2008 the Company issued to Wolcott Squared a warrant to purchase 18,408 shares of our common stock at an exercise price of $0.3925 per share, with an expiration date of December 17, 2017. The consideration received for this warrant was services rendered in December of 2007 valued at $7,225.

On June 18, 2008, the Company issued to Wolcott Squared a warrant to purchase 22,279 shares of our common stock at an exercise price of $0.51 per share with an expiration date of January 31, 2018. The consideration received for this warrant was services rendered in January of 2008 valued at $11,362.

On June 18, 2008, the Company issued to Wolcott Squared a warrant to purchase 5,686 shares of our common stock at an exercise price of $0.51 per share with an expiration date of February 29, 2018. The consideration received for this warrant was services rendered in February of 2008 valued at $2,899.

On June 30, 2008, the Company issued to Politis Communications a warrant to purchase 10,254 shares of our common stock at an exercise price of $0.01 per share, with an expiration date of June 29, 2018. The consideration received for this warrant was services rendered by Politis Communications.

On September 22, 2008, the Company issued to Stephen Ross, a third party, a warrant to purchase 18,000 shares of Company common stock at an exercise price of $0.50 per share, with an expiration date of January 31, 2011. The consideration we received for this warrant was legal services rendered by Stephen Ross, Esq,

On September 22, 2008, the Company issued to Stephen Ross, a third party, a warrant to purchase 27,000 shares of Company common stock at an exercise price of $0.50 per share, with an expiration date of September 30, 2011. The consideration we received for this warrant was legal services rendered by Stephen Ross, Esq,

On September 30, 2008, the Company issued to Politis Communications a warrant to purchase 5,495 shares of Company common stock at an exercise price of $0.01 per share, with an expiration date of September 29, 2018. The consideration received for this warrant was public relations services rendered by Politis Communications.

On December 31, 2008, the Company issued to Stephen Ross, a third party, a warrant to purchase 27,000 shares of Company common stock at an exercise price of $0.50 per share, with an expiration date of December 31, 2011. The consideration we received for this warrant was legal services rendered by Stephen Ross, Esq.

On December 31, 2008, the Company issued to Politis Communications a warrant to purchase 5,495 shares of Company common stock at an exercise price of $0.01 per share, with an expiration date December 31, 2018. The consideration received for this warrant was public relations services rendered by Politis Communications.

On April 1, 2009, the Company issued to Stephen Ross, a third party, a warrant to purchase 27,000 shares of Company common stock at an exercise price of $0.50 per share, with an expiration date of April 1, 2012. The consideration we received for this warrant was legal services rendered by Stephen Ross, Esq.

On June 30, 2009, the Company issued to Stephen Ross, a third party, a warrant to purchase 27,000 shares of Company common stock at an exercise price of $0.50 per share, with an expiration date of June 30, 2012. The consideration we received for this warrant was legal services rendered by Stephen Ross, Esq.

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DEBUT BROADCASTING CORPORATION, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2010

Note 5 - Loss Per Share (continued)

On September 30, 2009, the Company issued to Stephen Ross, a third party, a warrant to purchase 27,000 shares of Company common stock at an exercise price of $0.50 per share, with an expiration date of April 1, 2012. The consideration we received for this warrant was legal services rendered by Stephen Ross, Esq.

On December 31, 2009, the Company issued to Stephen Ross, a third party, a warrant to purchase 27,000 shares of Company common stock at an exercise price of $0.50 per share, with an expiration date of June 30, 2012. The consideration we received for this warrant was legal services rendered by Stephen Ross, Esq.

On September 21, 2009, the Company issued to Riverfalls Financial Partners, LLC, an option to purchase 30,000,000 shares of Company common stock at an exercise price of $0.05 per share, with an expiration date of July 31, 2011. This option was excluded from valuation as the volatility associated with the stock price and the

percentage of ownership this option represents prevented an accurate valuation. Should Riverfalls Financial Partners, LLC execute this option their ownership would represent a 60% controlling interest in the company for an investment of $1,500,000

The Company revalues all warrants quarterly utilizing the Black-Scholes method.

All of these warrants were issued in reliance upon the exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), as set forth in Section 4(2) under the Securities Act and Rule 506 of Regulation D promulgated thereunder relating to sales by an issuer not involving any public offering, to the extent an exemption from such registration was required.

On December 5, 2008, Politis Communications exercised a warrant to purchase 8,500 shares of Company common stock at $0.01 per share. The shares were authorized by Politis Communications as compensatory gifts to a number of employees of Politis Communications. No underwriters were involved in this warrant exercise. The underlying shares are restricted and carry piggy-back registration rights.

On December 5, 2008, The Company issued a stock certificate to Mohammed Rahman for 22,026 shares of our common stock at $0.07 per share. We issued the shares of common stock to Mohammed Rahman in exchange for services rendered. No underwriters were involved in this sale of securities. Outside of the existing vendor client relationship the investor has no prior relationship to the company. The underlying shares are restricted and carry piggy-back registration rights.

On December 3, 2008, The Company issued a stock certificate to an officer for 42,000 shares of our common stock at $0.07 per share. We issued the shares of common stock to the officer as a compensatory bonus for services rendered in the role of Chief Financial Officer. The underlying shares are restricted and carry piggy-back registration rights.

-12-

DEBUT BROADCASTING CORPORATION, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2010

Note 5 - Loss Per Share (continued)

On January 7, 2010, we issued stock certificates to various members of Remington Partners for 3,750,000 shares of common stock of the company at $0.10 per share as conversion of $375,000 of long term debt of the company.

On March, 31, 2010 we issued a stock certificate to an officer for 250,000 shares of common stock at $0.003 per share. We issued the shares of common stock to the officer as consideration for his personal guaranties of company debt according to the terms of his executive employment agreement dated May 7, 2009. The underlying shares are restricted and carry piggy-back registration rights.

debt according to the terms of her executive employment agreement dated May 7, 2009. The underlying shares are restricted and carry piggy-back registration rights.

On March 31, 2010, we issued a stock certificate to an officer for 62,500 shares of common stock at $0.003 per share. We issued the shares of common stock to the officer as consideration for his personal guaranties of company debt according to the terms of his executive employment agreement dated May 7, 2009. The underlying shares are restricted and carry piggy-back registration rights.

On March 31, 2010, we issued a stock certificate to an officer for 62,500 shares of common stock at $0.003 per share. We issued the shares of common stock to the officer as compensation for his services as Chief Executive Officer. The underlying shares are restricted and carry piggy-back registration rights

On June 30, 2010 we issued a stock certificate to an officer for 250,000 shares of common stock at $0.003 per share. We issued the shares of common stock to the officer as consideration for his personal guaranties of company debt according to the terms of his executive employment agreement dated May 7, 2009. The underlying shares are restricted and carry piggy-back registration rights.

On June 30, 2010, we issued a stock certificate to an officer for 250,000 shares of common stock at $0.003 per share. We issued the shares of common stock to the officer as consideration for her personal guaranties of company debt according to the terms of her executive employment agreement dated May 7, 2009. The underlying shares are restricted and carry piggy-back registration rights.

On September 30, 2010 we issued a stock certificate to an officer for 250,000 shares of common stock at $0.003 per share. We issued the shares of common stock to the officer as consideration for his personal guaranties of company debt according to the terms of his executive employment agreement dated May 7, 2009. The underlying shares are restricted and carry piggy-back registration rights.

On September 30, 2010, we issued a stock certificate to an officer for 250,000 shares of common stock at $0.003 per share. We issued the shares of common stock to the officer as consideration for her personal guaranties of company debt according to the terms of her executive employment agreement dated May 7, 2009. The underlying shares are restricted and carry piggy-back registration rights.

On September 30, 2010, we issued a stock certificate to an officer for 250,000 shares of common stock at $0.003 per share. We issued the shares of common stock to the officer as compensation for his services as Chief Executive Officer. The underlying shares are restricted and carry piggy-back registration rights

-13-

DEBUT BROADCASTING CORPORATION, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2010

The Company issued the above-described shares of our common stock in reliance upon the exemption from the registration requirements of the Securities Act of 1933, as amended, as set forth in Section 4(2) under the Securities Act and Rule 506 of Regulation D promulgated thereunder relating to sales by an issuer not involving any public offering, to the extent an exemption from such registration was required. The purchasers represented to us that they were accredited investors as defined in Rule 501(a) of the Securities Act and that the securities issued pursuant thereto were being acquired for investment purposes. The sales of these securities were made without general solicitation or advertising.

Note 6 - Property and equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation of property and equipment are computed using the straight-line method based upon estimated lives of assets ranging between three to thirty years. Property and equipment are summarized as follows:

	Estimated Useful Life	September 30, 2010			December 31, 2009
Land		$	49,500		$	49,500
Buildings and building improvements	5 – 10 years		153,817			138,780
Towers and studio equipment	5 – 30 years		415,076			412,176
Furniture, fixtures and equipment	3 – 7 years		322,815			282,563
Automotive	3 – 5 years		153,583			153,583

Accumulated depreciation			(474,804	)		(403,397	)
Property and equipment, net		$	619,987		$	636,130

Of the $619,987 in Net Property and Equipment as of September 30, 2010, $35,000 was added through the acquisition of the radio broadcast station WBBV FM during the third quarter of 2008 including equipment purchases to support the acquired stations. In April of 2009, the Company disposed of a 2007 Chevrolet HHR and a 2007 Nissan XTerra through sales to third parties for $12,000 and $13,300 respectively.

Note 7 - Lines of Credit

In May 3, 2002 and amended on April 26, 2004, the Company entered into an unsecured promissory note establishing a revolving line of credit with the Bank of America for $75,000. The note requires monthly interest payments and the interest rate is based on the bank’s prime rate, which was 7.5% at June 30, 2009. The balance was paid off in full on December 18, 2009. The balance of the line of credit at September 30, 2010 and 2009 was $0 and $75,000, respectively.

The Company signed a promissory note and established a revolving line of credit on February 27, 2004 for $200,000 with Regions Bank to refinance existing debt. The note matured on August 31, 2009, and required monthly interest payments accruing at an initial rate of 7.58% and a current rate of 4.35938% at March 31, 2009. The rate is subject to monthly changes based on an independent index plus 2.25%.

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DEBUT BROADCASTING CORPORATION, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2010

Note 7 - Lines of Credit (continued)

The note was secured by personal guarantee of certain officers of the Company and all inventory, chattel paper, accounts, equipment and general intangibles existing or purchased after the signing of the related agreement. The balance was paid off in full on December 18, 2009. The principal balance of the note at September 30, 2010 and 2009 was $0 and $199,297, respectively.

The Company signed a promissory note and established a revolving line of credit on August 22, 2008 for $500,000 with SunTrust Bank to facilitate the acquisition of WBBV. The note matured on August 22, 2009 and was converted to a term loan.

The note was secured by personal guarantee of certain officers of the Company and all inventory, chattel paper, accounts, equipment and general intangibles existing or purchased by the wholly-owned subsidiary entity, Debut Broadcasting Mississippi, after the signing of the related agreement. The balance of the loan at September 30, 2010 and 2009 was $0 and $0, respectively.

On December 18, 2009, the Company signed a promissory note with Crestmark Bank for $400,000. The loan is secured by all inventory, chattel paper, accounts, equipment and general intangibles of the Company. The loan matures August 30, 2011 and is payable in variable monthly installments at a rate of prime plus 2.75% for the applicable index period. The balance of the loan at September 30, 2010 and 2009 was $180,845 and $0 respectively

Note 8 - Notes Payable to Stockholders

Debut Broadcasting Stockholder Notes

On January 21, 2008 the Company issued to Remington Partners, Inc. warrants to purchase 62,500 shares of Company common stock in exchange for a loan in the amount of $250,000 with a $2,000 loan origination fee and interest of 18% per annum due monthly. The promissory note plus any accrued interest is payable on July 31, 2009.

On February 26, 2008 the Company issued to Remington Partners, Inc. warrants to purchase 125,000 shares of Company common stock in exchange for a loan in the amount of $500,000, with a $2,000 loan origination fee and interest of 18% per annum due monthly. The promissory note plus any accrued interest is payable on July 31, 2009.

On January 7, 2010 the company converted $375,000 of the outstanding balance of the Remington Capital Partners loan to shares of common stock of the company. The remaining $375,000 balance is to be paid interest only at a rate of 12% per year through 2010, at which time it will automatically convert to a term loan.

Total interest expense associated with the stockholder loans for the three months ended September 30, 2010 and 2009 was $12,145 and $11,250 respectively. Accrued interest due to stockholders was $0 and $0 as of June 30, 2010 and 2009, respectively.

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DEBUT BROADCASTING CORPORATION, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2010

Note 9 - Loans Payable

Regions Bank Loan

On August 15, 2006, the Company signed a promissory note with Regions Bank for $300,000 with an initial interest rate of 7.58% and a current rate of 2.58313% as of March 31, 2009. The loan was secured by all inventory, chattel paper, accounts, equipment and general intangibles of the Company. The loan was scheduled to have matured on August 30, 2011 and was payable in monthly installments of $6,058, including variable interest at 2.25% points per annum over the London Interbank Offered Rate for the applicable index period.

The balance was settled on December 18, 2009. Total interest expense on the Regions Bank loan for the three months ended September 30, 2010 and 2009 was $0 and $862, respectively. Total interest expense for the nine months ended September 30, 2010 and 2009 was $0 and $2,363, respectively. The balance of the loan at September 30, 2009 was $146,749, of which $35,565 was classified as current portion of long-term debt. The balance of the loan at September 30, 2010 was $0.

Citadel Communications Loan

On August 28, 2002, the Company signed an unsecured promissory note with Citadel Communications for $430,415. The loan has no maturity date and accrues interest at a rate of 12%. The note was amended in April, 2003 requiring interest only payments indefinitely. The company negotiated a settlement of $24,322 to be paid to Citadel Communications in one lump sum, which was accepted on September 21, 2009 by Citadel Communications. Total interest expense on the Citadel Communications loan for each of the three months ended September 30, 2010 and 2009 was $0 and $10,428, respectively. The balance of the loan at September 30, 2010 and 2009 was $0 and $0, respectively.

SunTrust Bank Loan

On August 28, 2009, the company converted an existing line of credit with SunTrust Bank into a new term loan. The note requires monthly interest payment accruing at an initial rate of 6.0% and a current rate of 6.0% at March 31, 2010. The rate is subject to monthly changes based on an independent index plus 1.00%, and matures on August 28, 2011.

The note is secured by personal guarantee of certain officers of the Company and all inventory, chattel paper, accounts, equipment and general intangibles existing or purchased by the wholly-owned subsidiary entity, Debut Broadcasting Mississippi, after the signing of the related agreement. Total interest expense on the SunTrust Bank loan for the three months ended September 30, 2010 and 2009 was $7,232 and $7,279 respectively. Total interest expense on the SunTrust Bank loan for the nine months ended September 30, 2010 and 2009 was $21,835 and $14,603 respectively. The balance of the loan at Setpember 30, 2010 and 2009 was $463,416 and $472,705, respectively.

Riverfalls Financial Services LLC

On September 21, 2009, the Company signed an unsecured convertible promissory note with Riverfalls Financial for $1,500,000. The loan matured on July 31, 2010.

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DEBUT BROADCASTING CORPORATION, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2010

Note 9 - Loans Payable (continued)

On September 15, 2010 the Note was modified. River Falls Financial Services issued a Promissory note to Diversified Support Systems, Inc., an Ohio Corporation for the benefit of River Falls Financial Services for the 50% of the balance of the matured River Falls Financial Services note, with an interest rate of 3% per annum. In conjunction with this Promissory note, River Falls Financial Services, Debut Broadcasting Corporation and Diversified Support Systems negotiated a participation agreement whereby the parties agree to share in the loan to Debut Broadcasting Corporation with a 50% participation percentage.

The balance of the loan at September 30, 2010 and 2009 was $639,000 and $600,000. The Riverfalls Financial loan additionally guaranties options to purchase 30,000,000 shares of common stock of the company on or before July 31, 2011 at a strike price of $0.05 per share.

Bank of America Loan

On May 3, 2002 and amended on April 26, 2004, the Company entered into an unsecured promissory note establishing a revolving line of credit with the Bank of America for $75,000. On September 21, 2009, the note was converted to a new five year term loan, which would have matured on September 30, 2014. The note required monthly principle and interest payments and the interest rate is based on the bank’s prime rate, which was 7.5% at September 30, 2009. The balance was paid off on December 18, 2009. The note was secured by personal guarantee of certain officers of the Company.

The balance of the loan at September 30, 2009 was $75,000 of which $0.00 was classified as current portion of long-term debt.

Vehicle Loans

On September 25, 2007, the Company signed a retail installment sale contract with GMAC for the purchase of two vehicles for $47,498 with an effective interest rate of 5.0%. The corresponding promissory note is to be paid over a three-year period with a monthly payment of $1,424. The purchased vehicles are used in conjunction with the radio broadcast operations.

On May 1, 2008, the Company signed a retail installment sale contract with Daimler Chrysler Financial Services for the purchase of a vehicle for $23,137 with an effective interest rate of 7.49%. The corresponding promissory note is to be paid over a five-year period with a monthly payment of $463. The purchased vehicle is used in conjunction with the radio broadcast operations.

On May 15, 2008, the Company signed a retail installment sale contract with Daimler Chrysler Financial Services for the purchase of a vehicle for $19,303 with an effective interest rate of 11.25%. The corresponding promissory note is to be paid over a five-year period with a monthly payment of $367. The purchased vehicle is used in conjunction with the radio broadcast operations.

On May 30, 2008, the Company signed a retail installment sale contract with GMAC for the purchase of a vehicle for $25,256 with an effective interest rate of 9.5%. The corresponding promissory note is to be paid over a five-year period with a monthly payment of $530. The purchased vehicle is used in conjunction with the radio broadcast operations.

Total interest expense on the vehicle loans for the quarter ended September 30, 2010 and 2009 was $1,087 and $1,571 , respectively. Total interest expense on the vehicle loans for the nine months ended September 30, 2010 and 2009 was $3,740 and $6,278, respectively. The principal balance of the vehicle loans as of September 30, 2010 and 2009 was $44,458 and $70,068, respectively. At September 30, 2010, $10,118 was classified as the current portion of the loans.

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DEBUT BROADCASTING CORPORATION, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2010

Note 9 - Loans Payable (continued)

Capital Lease

On December 5, 2007, the Company entered into a capital lease arrangement with National City Media Finance to acquire studio equipment for $15,009 with a fixed interest rate of 7.5%. The lease term is for three years with monthly payments of $464, with a $1 buyout option at the end of the lease term.

Total interest expense on studio equipment for the quarters ended September 30, 2010 and 2009 was $172 and $188, respectively. Total interest expense on studio equipment for the nine months ended September 30, 2010 and 2008 was $590 and $357, respectively. The principal balance of the capital lease as of September 30, 2010 and 2009 was $1,392 and $2,445, respectively. At September 30, 2010, $1,392 was classified as the current portion of the lease.

Note 10 - Stockholders’ Equity

In connection with the reverse merger on May 17, 2007, all shares of common stock of Debut Broadcasting (as hereinafter defined) outstanding prior to the merger were exchanged for 10,000,000 shares of Company common stock (See Note 10. Business Combinations).

In addition, in connection with the reverse merger, the Company completed a private placement of 6,000,000 shares of Company common stock at $0.50 per share. The transaction was recorded net of financing costs of $23,502.

Finally, in connection with the reverse merger, the Company converted notes payable to stockholders in the amount of $215,158 into 430,316 shares of Company common stock at $0.50 per share.

The pre-merger stockholders of the Company maintained 364,044 shares of Company common stock.

On May 21, 2007, $100,000 of convertible debentures issued on May 15, 2007 were converted into 3,000,000 shares of Company common stock.

Note 11 - Business Combinations

WBBV FM

On August 27, 2008, the Company acquired a radio broadcast stations from Holladay Broadcasting of Louisiana, LLC identified as WBBV FM 101.3 MHz in Vicksburg, Mississippi, including all of the facilities, equipment, licenses and intellectual property necessary to operate this station, in exchange for $180,022.

The purchase price was allocated as follows:

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DEBUT BROADCASTING CORPORATION, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2010

Note 11 - Business Combinations (continued)

Description	Amount

Accounts receivable	$	57,522
Land		0.00
Buildings and structures		25,000
Equipment		10,000
FCC licenses		472,500
Non-compete agreement		35,000
Goodwill		380,000
Liabilities assumed		(800,000	)
Total	$	180,022

Holladay Broadcasting Company

WBBV FM (continued

On March 16, 2008, the Company entered into a Local Marketing Agreement for a radio broadcast station identified as KLSM FM 105.5 MHz in Tallulah, Louisiana with Holladay Broadcasting Company, including all of the facilities, equipment, licenses and intellectual property necessary to operate these stations. The Company maintains the station including all revenues and expenses. Holladay Broadcasting Company has retained ownership of all assets and liabilities of the station as of March 16, 2008.

Note 12 – Subsequent Events

On September 21, 2010 the company and Dial Global, a national advertising representation firm, and the largest account of the company, determined to end their contract on December 26, 2010. On October 13, 2010, the company signed a three year agreement with United Stations, a national advertising representation firm located in Chicago, Illinois, replacing the former contract with Dial Global.

On October 1, 2010, the company and the auditing firm Maddox Unger Silbertein, PLLC mutually determined to end their relationship. This decision was not the result of any disagreement with management.

On October 1, 2010 the company entered into an agreement for audit representation by Patrick Rodgers, CPA, a PCAOB accredited auditing firm. The company anticipates the change in auditor will result in an annual savings of approximately $15,000.

On October 29, 2010 Marcus Rowe, Vice President of Network Operations departed the company. The company believes that Rowe is engaging in tortious libel, and competition with the company using trade secrets and converted intellectual property. The company is seeking legal remedy to the fullest extent of the law.

On November 5, 2010, Chuck Hillier joined the company to fill the role of Vice President of Network Operations. Hillier is a significant employee.

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DEBUT BROADCASTING CORPORATION, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2010

Note 12 – Subsequent Events (continued)

On November 5, 2010, the company executed an Asset Purchase Agreement to acquire the assets of radio broadcast station KLSM FM in Tallulah, LA. The company has been operating the radio broadcast station KLSM FM under an LMA agreement since 2008. The company will continue to operate the station under the existing LMA agreement while filing is made with the FCC to transfer the license of the station.

On November 10, 2010, the company executed an Asset Purchase Agreement to acquire the assets of radio broadcast station WNBV in Grundy, Virginia The company will begin operating the station under an LMA agreement on December 1, 2010 while waiting for approval of the license transfer with the FCC.

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

Forward-Looking Statements

Certain statements contained in this report may not be based on historical facts and are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements may be identified by reference to a future-period(s) or by the use of forward-looking terminology, such as “anticipate,” “believe,” “estimate,” “expect,” “foresee,” “may,” “might,” “will,” “intend,” “could,” “would,” or “plan” or future or conditional verb tenses, and variations or negatives of such terms.

These forward-looking statements include, without limitation, the basis of presentation of our financial statements, charges to consulting clients, the impact of recent accounting pronouncements, the impact of radio station acquisitions, radio advertising growth, pending acquisitions, the future use of Black-Scholes method of valuation, market trends, our need for additional capital, our ability to raise capital through debt and equity financing, the terms of any financing the we may obtain, the incurrence of accounting and legal fees in connection with acquisitions and the effectiveness of our disclosure controls and procedures.

We caution you not to place undue reliance on the forward-looking statements contained in this report, in that actual results could differ materially from those indicated in such forward-looking statements as a result of a variety of factors. These factors include, but are not limited to, our ability to provide and market competitive service and products, our ability to diversify revenue, our ability to attract, train and retain qualified personnel, our ability to operate and integrate new technology, changes in consumer preference, changes in our operating or expansion strategy, changes in economic conditions, fluctuation in prevailing interest rates, our ability to identify and effectively integrate potential acquisitions, FCC and government approval of potential acquisition, our inability to renew one or more of our broadcast licenses, our ability to manage growth and effectively serve an expanding customer and market base, geographic concentrations of our assets and susceptibility to economic downturns in that area, availability of and costs associated with maintaining and/or obtaining adequate and timely sources of capital and liquidity, our ability to compete with other companies that produce and distribute syndicated radio programs and/or own radio stations, shifts in populations and other demographics, changes in governmental regulations, laws and regulations as the affect companies that produce and distribute syndicated radio programs and/or own radio stations, industry conditions, the popularity of radio as a broadcasting and advertising medium, cancellation, disruption or postponements of advertising schedules in response to national or world events, possible adverse ruling, judgments, settlements, and other outcomes of pending or threatened litigation, other factors generally understood to affect the financial condition or results of companies that produce and distribute syndicated radio programs and/or own radio stations and other factors detailed from time to time in our press releases and filings with the Securities and Exchange Commission. We undertake no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date of this report.

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Results of Operations

For the Three Months Ended September 30, 2010 and 2009

We generated $566,743 in net revenue for the quarter ended September 30, 2010, an increase of $40,941, or 7.2% compared to $525,802 for the quarter ended September 30, 2009. National sales have continued to recover from the economic collapse of 2009, largely accounting for the increase in revenue.

Advertising expense was $2,681 for the quarter ended September 30, 2010, a decrease of $371 or 12.16%, compared to $3,052 for the quarter ended September 30, 2009. The company has not utilized any public relations firms or investor relations firms, which has resulted in an overall decrease in advertising expense.

Operating expenses were $386,793 for the quarter ended September 30, 2010; a decrease of $214,788 or 35.7%, compared to $601,581 for the quarter ended September 30, 2009. Approximately$90,000 of this decrease is attributable to staffing and salary and other expense reductions in Debut Mississippi related to an LMA agreement that shifted the operating costs of three Greenville, MS stations to the lessee. Operational restructuring and cost elimination in areas such as telecommunications and other general and administrative expenses additionally contributed to the decrease in operating expense.

On August 22, 2002, the company signed an unsecured promissory note with Citadel Broadcasting to alleviate pass through bad debt due to the temporary collapse of the national advertising market in late 2001. Over the life of the agreement, the company made principle and interest payments to Citadel Broadcasting totaling $350,467. During the three months ended September 30, 2009 the company settled the agreement, resulting in a one time gain on settlement of $340,539.

Depreciation and amortization expense was $30,123 for the quarter ended September 30, 2010; a decrease of $16,712 or 35.6%, compared to $46,835 for the quarter ended September 30, 2009. The primary reason for the decrease relates to the total depreciation of several assets as well as delayed growth in asset acquisitions.

Interest expense was $48,292 for the quarter ended September 30, 2010; a slight decrease of $5,207 or 9.73% compared to $53,499 for the quarter ended September 30, 2009. The decrease is due to the steady pay down of all debts.

As a result of the foregoing revenue and expenses, our overall net income or (loss) for the three-month period ending September 30, 2010 and September 30, 2009 was $100,326 and $166,510, respectively.

For the Nine Months Ended September 30, 2010 and 2009

We generated $1,506,546 in net revenue for the nine months ended September 30, 2010, a decrease of $77,651, or 4.9%, compared to $1,584,197 for the nine months ended September 30, 2009. In March of 2010, the company entered into an LMA agreement for three owned radio stations in Greenville, Mississippi. The company does not record revenue or attributable expenses from these stations. This agreement accounts for the full decline in revenue.

Advertising expense was $17,420 for the nine months ended September 30, 2010 an increase of $4,698 or 36.93% compared to $12,722 for the nine months ended September 30, 2009. This increase is due to staffing restructuring, and advertisements placed in 2010 to recruit high quality personnel to the company.

Operating expense was $1,382,201, a decrease of $404,325 or 29.3%, compared to $1,786,526 for the nine months ended September 30, 2009. Of the total decrease in operating expenses, approximately $270,000 is related to salary and expense reductions largely as a result of the leasing arrangement for three of our radio stations in Greenville, MS, executed at the beginning of the second quarter of 2010. Additional reasons for the decrease in operating expenses relate to a decrease in travel and entertainment expenditures of approximately $19,500. The balance of the reduction in operating expenses is attributable to general restructuring and elimination of general and administrative expenses.

-22-

On August 22, 2002, the company signed an unsecured promissory note with Citadel Broadcasting to alleviate pass through bad debt due to the temporary collapse of the national advertising market in late 2001. Over the life of the agreement, the company made principle and interest payments to Citadel Broadcasting totaling $350,467. During the nine months ended September 30, 2009 the company settled the agreement, resulting in a one time gain on settlement of $340,539.

Depreciation and amortization expense was $71,406 for the nine months ended September 30, 2010; a decrease of $62,703 or 46.7% compared to $134,109 for the nine months ended September 30, 2009. The primary reason for the decrease relates to the total depreciation of several assets as well as delayed growth in asset acquisitions.

Interest expense was $139,612 for the nine months ended September 30, 2010; a decrease of $66,798, or 32.4% compared to $206,410 for the nine months ended September 30, 2009. The reason for the decrease is the continued payment of current debt and the gradual amortization of the interest costs associated with the debt.

As a result of the foregoing revenue and expenses, our overall net loss for the nine month period ending September 30, 2010 and September 30, 2009 was $98,536 and $206,154, respectively.

Financial Condition

Accounts receivable, net of allowance for doubtful accounts was $987,789 at September 30, 2010, a increase of $152,487 or 15.5% compared to $835,302 at December 31, 2008. Seasonality, and the increase in sales revenue from the syndication business is largely attributable to the increase in the accounts receivable balance.

Unexercised Stock warrants was $1,052,523 at September 30, 2010, and December 31, 2009In accordance with FAS 133, we record an associated asset and liability for the issuance of warrants, which is adjusted quarterly using the Black-Scholes method of derivative valuation.

Accounts payable at September 30, 2010 was $939,294, an increase of $7,173 or .8% compared to $932,121 at December 31, 2009. We decreased our accounts payable balance in the third quarter as compared to the quarter ended June 30, 2009, utilizing cash flow from operations.

Accrued expenses and taxes at September 30, 2009 were $436,811, an increase of $288,278 from December 31, 2009. This increase is attributable to accrued contracts for radio advertising that are in the process of internal audit to test compliance.

In January and February of 2008, we exercised two loans with Remington Partners, Inc. for a total of $750,000 in notes payable to stockholders. In the first quarter of 2010 the note was restructured, and $375,000 was converted to stock. As a result, our notes payable to stockholders were $375,000 at September 30, 2010 and $750,000 at December 31, 2009.

-23-

Liquidity and Capital Resources

As of September 30, 2010, our current assets in the amount of $2,054,170, consisted of $37,863 in cash and cash equivalents, $987,789 in accounts receivable, $23,860 in prepaid expenses and $1,004,658 in unexercised stock warrants. As of September 30, 2010, our current liabilities in the amount of $3,402,598, consisted of $939,294 in accounts payable, $436,811 in accrued expenses and taxes, $375,000 in notes payable to stockholders, $268,460 in lines of credit and $347,510 in current portion of long term debt, and $1,035,523 in unexercised stock warrant loss. This combination of assets and liabilities resulted in a working capital deficit in the amount of $1,348,428.

Going Concern

Our financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. Our ability to continue as a going concern is dependent on obtaining adequate capital to fund operating losses until we become profitable. If we are unable to obtain adequate capital, we could be forced to cease operations. In order to continue as a going concern, we will need, among other things, additional capital resources. Our plan is to aggressively grow revenue in order to meet minimal operating expenses and seeking equity and/or debt financing. However we cannot provide any assurances that that we will be successful in accomplishing any of our plans.

Our ability to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

Recent Events

Pending Acquisitions

During the fourth quarter of 2010, we signed asset purchase agreements for two additional radio stations in two markets. One of these stations, KLSM FM, was placed under a local marketing agreement March 16, 2008. We filed for FCC license transfer for KLSM FM in Vicksburg, MS, and WNBV FM in Grundy Virginia during the fourth quarter of 2010.

Material Contracts

During the fourth quarter of 2010 the company and Dial Global, a national advertising representation firm, and the largest account of the company, determined to end their contract on December 26, 2010. On October 13, 2010, the company signed a three year agreement with United Stations, a national advertising representation firm located in Chicago, Illinois, replacing the former contract with Dial Global.

Significant Employees

During the fourth quarter of 2010 Marcus Rowe, Vice President of Network Operations departed the company. The company believes that Rowe is engaging in tortious libel, and competition with the company using trade secrets and converted intellectual property. The company is seeking legal remedy to the fullest extent of the law.

On November 5, 2010, Chuck Hillier joined the company to fill the role of Vice President of Network Operations. The company anticipates that the addition of Hillier will result in increased revenue beginning in the first quarter of 2011.

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Off Balance Sheet Arrangements

As of September 30, 2010, there were no off balance sheet arrangements.

Critical Accounting Policies

Revenue and Cost Recognition

We recognize advertising and programming revenues when our radio programs air with our contracted radio station affiliates. Generally, we are paid by a national advertising agency, which sells the commercial time provided by the affiliate.

We earn revenue from the national advertising agency, we also recognize any amounts attributable to the individual radio programs, which are based on the audience level generated by the specific program. Expenses are accrued at the time the radio programs are run.

Consulting projects are generally negotiated at a fixed price per project; however, if we utilize our advertising capacity as part of the consulting project, we will charge the consulting client in the same manner as the affiliated stations described more fully above. Consulting fee income is recognized as time is incurred under the terms of the contract.

Advertising

We expense advertising costs as they are incurred.

New Accounting Pronouncements

We adopted the provisions of Financial Accounting Standards Board (“FASB”) Interpretation No. 48, Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109 (“FIN 48”), on May 17, 2007. This interpretation increases the relevancy and comparability of financial reporting by clarifying the way companies account for uncertainty in income taxes. FIN 48 prescribes a consistent recognition threshold and measurement attribute, as well as clear criteria for subsequently recognizing, derecognizing and measuring such tax positions for financial statement purposes. The interpretation also requires expanded disclosure with respect to the uncertainty in income taxes.

Item 4T. Controls and Procedures

As required by Rule 13a-15 of the Securities Exchange Act of 1934, our principal executive officer and principal financial officer evaluated our company's disclosure controls and procedures (as defined in Rules 13a-15(e) of the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded that as of the end of the period covered by this report, these disclosure controls and procedures were not effective to ensure that the information required to be disclosed by our company in reports it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities Exchange Commission and to ensure that such information is accumulated and communicated to our company's management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. The conclusion that our disclosure controls and procedures were not effective was due to the presence of the following material weaknesses in internal control over financial reporting which are indicative of many small companies with small staff: inadequate segregation of duties and effective risk assessment. Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated.

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We plan to take steps to enhance and improve the design of our internal controls over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. We will be unable to remediate these material weaknesses until we achieve a growth level sufficient to support financial and accounting staff to adequately segregate duties. We do not anticipate remediating this weakness in 2010.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.

Changes in Internal Control over Financial Reporting

There has been no change in the internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of ss.240.13a -15 or ss.240.15d -15 of the Exchange Act that occurred during the Company's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

None

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

On May 17, 2007, we completed a private placement of 6,430,316 shares of our common stock at $0.50 per share. 430,316 shares were sold to existing shareholders in exchange for conversion of their notes to the Predecessor Company. The remaining 6,000,000 shares were sold to a number of investors with no prior relationship to the company. No underwriters were involved in this sale of securities. We issued the shares of common stock to the investors in exchange for a combination of cash and debt reduction. The transaction was recorded net of financing costs of $23,503. We used the net proceeds from the private offering for the acquisition of Shamrock Broadcasting and River Broadcasting Group.

On June 18, 2008, we issued to Wolcott Squared a warrant to purchase 18,408 shares of our common stock at an exercise price of $0.3925 per share, with an expiration date of December 17, 2017. The consideration received for this warrant was services rendered in December of 2007 valued at $7,225.

On June 18, 2008, we issued to Wolcott Squared a warrant to purchase 22,279 shares of our common stock at an exercise price of $0.51 per share with an expiration date of January 31, 2018. The consideration received for this warrant was services rendered in January of 2008 valued at $11,362.

On June 18, 2008, we issued to Wolcott Squared a warrant to purchase 5,686 shares of our common stock at an exercise price of $0.51 per share with an expiration date of February 29, 2018. The consideration received for this warrant was services rendered in February of 2008 valued at $2,899.

On June 30, 2008, we issued to Politis Communications a warrant to purchase 10,254 shares of our common stock at an exercise price of $0.01 per share, with an expiration date of June 29, 2018. The consideration received for this warrant was services rendered by Politis Communications.

On September 22, 2008, we issued to Stephen Ross, a third party, a warrant to purchase 18,000 shares of Company common stock at an exercise price of $0.50 per share, with an expiration date of January 31, 2011. The consideration we received for this warrant was legal services rendered by Stephen Ross, Esq,

On September 22, 2008, we issued to Stephen Ross, a third party, a warrant to purchase 27,000 shares of Company common stock at an exercise price of $0.50 per share, with an expiration date of September 30, 2011. The consideration we received for this warrant was legal services rendered by Stephen Ross, Esq,

On September 30, 2008, we issued to Politis Communications a warrant to purchase 5,495 shares of Company common stock at an exercise price of $0.01 per share, with an expiration date of September 29, 2018. The consideration received for this warrant was public relations services rendered by Politis Communications.

On December 31, 2008, we issued to Stephen Ross, a third party, a warrant to purchase 27,000 shares of Company common stock at an exercise price of $0.50 per share, with an expiration date of December 31, 2011. The consideration we received for this warrant was legal services rendered by Stephen Ross, Esq,

On December 31, 2008, we issued to Politis Communications a warrant to purchase 5,495 shares of Company common stock at an exercise price of $0.01 per share, with an expiration date December 31, 2018. The consideration received for this warrant was public relations services rendered by Politis Communications.

On April 1, 2009, we issued to Stephen Ross, a third party, a warrant to purchase 27,000 shares of Company common stock at an exercise price of $0.50 per share, with an expiration date of March 31, 2012.The consideration we received for this warrant was legal services rendered by Stephen Ross, Esq,

On September 30, 2009, we issued to Stephen Ross, a third party, a warrant to purchase 27,000 shares of Company common stock at an exercise price of $0.50 per share, with an expiration date of June 29, 2012.The consideration we received for this warrant was legal services rendered by Stephen Ross, Esq,

We revalue warrants quarterly utilizing the Black-Scholes method.

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On December 5, 2008, Politis Communications exercised a warrant to purchase 8,500 shares of our common stock at $0.01 per share. The shares were authorized by Politis Communications as compensatory gifts to a number of employees of Politis Communications. No underwriters were involved in this warrant exercise. The underlying shares are restricted and carry piggy-back registration rights.

On December 5, 2008, we issued a stock certificate to Mohammed Rahman for 22,026 shares of our common stock at $0.07 per share. We issued the shares of common stock to Mohammed Rahman in exchange for services rendered. No underwriters were involved in this sale of securities. Outside of the existing vendor client relationship the investor has no prior relationship to the company. The underlying shares are restricted and carry piggy-back registration rights.

On December 3, 2008, we issued a stock certificate to Sariah Hopkins for 42,000 shares of our common stock at $0.07 per share. We issued the shares of common stock to Sariah Hopkins as a compensatory bonus for services rendered in the role of Chief Financial Officer. The underlying shares are restricted and carry piggy-back registration rights.

On December 31, 2009, we issued a stock certificate to an officer for 500,000 shares of common stock at $0.003 per share. We issued the shares of common stock to the officer as consideration for her personal guaranties of company debt according to the terms of her executive employment agreement dated May 7, 2009. The underlying shares are restricted and carry piggy-back registration rights. On January 7, 2010, we issued stock certificates to various members of Remington Partners for 3,750,000 shares of common stock of the company at $0.10 per share as conversion of $375,000 of long term debt of the company.

On March 31, 2010, we issued a stock certificate to an officer for 250,000 shares of common stock at $0.003 per share. We issued the shares of common stock to the officer as consideration for her personal guaranties of company debt according to the terms of her executive employment agreement dated May 7, 2009. The underlying shares are restricted and carry piggy-back registration rights.

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We issued the above-described shares of our common stock in reliance upon the exemption from the registration requirements of the Securities Act of 1933, as amended, as set forth in Section 4(2) under the Securities Act and Rule 506 of Regulation D promulgated thereunder relating to sales by an issuer not involving any public offering, to the extent an exemption from such registration was required. The purchasers represented to us that they were accredited investors as defined in Rule 501(a) of the Securities Act and that the securities issued pursuant thereto were being acquired for investment purposes. The sales of these securities were made without general solicitation or advertising.

Item 4. Submission of Matters to a Vote of Security Holders

None.

Item 6. Exhibits

Exhibit Number	Description of Exhibit

31.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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SIGNATURES

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

	DEBUT BROADCASTING CORPORATION, INC.

November 11, 2010	/s/ Sariah Hopkins
	Sariah Hopkins Chief Financial Officer

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Debut Broadcasting Corporation, Inc. - FORM 10-Q - November 15, 2010

Attached files

Debut Broadcasting Corporation, Inc. Reports