Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant To Section 13 or 15(D) Of The Securities Exchange
Act Of 1934
For the quarterly period ended September 30, 2010
[X] Transition Report Under Section 13 or 15(D) Of The Securities Exchange
Act Of 1934
For the transition period from __________ to __________
Commission File Number: 000-84223
IMAGINE MEDIA, LTD.
(Exact name of registrant as specified in its charter)
Delaware 26-0731818
------------------------------- -------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or
organization)
7750 N. Union Blvd., # 201
Colorado Springs, CO 80920
(Address of principal executive offices, including Zip Code)
- ------------------------------------------------------------
719-266-4554
------------
(Issuer's telephone number, including area code)
(Former name or former address if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [x] No [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes [ ] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a small reporting company. See
the definitions of "large accelerated filer," "accelerated filer,"
"non-accelerated filer," and "smaller reporting company" in Rule 12b-2 of the
Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [x]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes? [X] No [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 1,410,650 shares of common stock as
of November 15, 2010.
Imagine Media, Ltd. And Subsidiary
CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Quarter Ended September 30, 2010
Imagine Media, Ltd. And Subsidiary
Consolidated Financial Statements
(Unaudited)
TABLE OF CONTENTS
Page
CONSOLIDATED FINANCIAL STATEMENTS
Condensed consolidated balance sheets 1
Condensed consolidated statements of operation 2-3
Condensed consolidated statement of Shareholders' equity 3
Condensed consolidated statements of cash flows 4
Notes to consolidated financial statements 6-8
Imagine Media, Ltd. and Subsidiary
Condensed Consolidated Balance Sheets
December 31,
September 30, 2009
2010 ---------------------
------------- (Derived from audited
(unaudited) financial statements)
Assets
Current assets:
Cash and cash equivalents $ 75 $ 94
----------- ----------
Total current assets 75 94
----------- ----------
Total assets $ 75 $ 94
=========== ==========
Liabilities and Shareholders' (Deficit)
Current liabilities:
Accounts payable:
Trade creditors $ 76,815 $ 53,479
Related party 3,000 3,000
Short term advance 17,300 6,000
Indebtedness to related parties 39,140 32,100
Convertible debenture 30,000 30,000
Accrued interest payable 6,600 3,900
Other accrued expenses 3,081 33,081
---------- ---------
Total current liabilities 175,936 161,560
---------- ---------
Commitments - -
Shareholders' deficit
Common stock , $.00001 par value.
Authorized 100,000,000 shares,
1,410,650 and 1,380,650 shares
issued and outstanding 14 14
Additional paid-in capital 487,276 457,276
Retained deficit (663,151) (618,756)
--------- ---------
Total shareholders' deficit (175,861) (161,466)
--------- ---------
Total liabilities and
shareholders' deficit $ 75 $ 94
========= =========
See accompanying notes to the consolidated financial statements
1
Imagine Media, Ltd. and Subsidiary
Condensed Consolidated Statements of Operations
(unaudited)
For the Three Months Ended
September 30,
-----------------------------
2010 2009
----------- -----------
Net sales and gross revenues:
Advertising sales, net of
discount of $0, and $0,
respectively $ - $ -
----------- -----------
Total sales and
revenues - -
----------- -----------
Operating expenses:
Editorial, production and
circulation - -
Selling, general and
administrative 21,421 1,064
----------- -----------
Total operating
expenses 21,421 1,064
----------- -----------
Loss from
operations (21,421) (1,064)
Other income (expense):
Interest expense (900) (900)
----------- -----------
Loss before income
taxes (22,321) (1,964)
Income tax provision - -
----------- -----------
Net loss $ (22,321) $ (1,964)
=========== ===========
Basic and diluted loss per share $ (0.02) $ (0.00)
=========== ===========
Weighted average common shares
outstanding 1,410,650 1,380,650
=========== ===========
See accompanying notes to the consolidated financial statements
2
Imagine Media, Ltd. and Subsidiary
Condensed Consolidated Statements of Operations
(unaudited)
For the Nine Months Ended
September 30,
-----------------------------
2010 2009
----------- -----------
Net sales and gross revenues:
Advertising sales, net of
discount of $0, and $66,930,
respectively $ - $ 400
----------- -----------
Total sales and revenues - 400
----------- -----------
Operating expenses:
Editorial, production and
circulation - 748
Selling, general and
administrative 41,695 39,855
----------- -----------
Total operating expenses 41,695 40,603
----------- -----------
Loss from operations (41,695) (40,203)
Other income (expense):
Interest expense (2,700) (2,600)
----------- -----------
Loss before income taxes
(44,395) (42,803)
Income tax provision - -
----------- -----------
Net loss (44,395) (42,803)
=========== ===========
Basic and diluted loss per share $ (0.03) $ (0.03)
=========== ===========
Weighted average common shares
outstanding 1,407,317 1,329,991
=========== ===========
See accompanying notes to the consolidated financial statements
3
Imagine Media, Ltd. and Subsidiary
Condensed Consolidated Statement of Changes in Shareholders' Equity (Deficit)
Common Stock Additional Paid- Retained
Shares Par Value in Capital Deficit Total
--------- --------- ---------------- ----------- ----------
Balance at December 31, 2008 1,122,650 $ 11 $ 392,779 $ (541,051) $ (148,261)
Conversions of accounts payable to
common stock 104,000 1 25,999 - 26,000
Conversions of short term advances
and accrued interest to common
stock 111,400 1 27,849 - 27,850
Conversions of indebtedness to
related parties to common stock 42,600 1 10,649 - 10,650
Net loss - - - (77,705) (77,705)
--------- --------- ---------------- ----------- ----------
Balance at December 31, 2009 1,380,650 14 457,276 (618,756) (161,466)
Stock issued for services valued
at $1.00 per share (Unaudited) 30,000 - 30,000 - 30,000
Net loss (Unaudited) - - - (44,395) (44,395)
--------- --------- ---------------- ----------- ----------
Balance at September 30, 2010
(unaudited) 1,410,650 $ 14 $ 487,276 $ (663,151) $ (175,861)
========= ========= ================ =========== ==========
See accompanying notes to the consolidated financial statements
4
Imagine Media, Ltd. and Subsidiary
Condensed Consolidated Statements of Cash Flows
(unaudited)
For the Nine Months Ended
September 30,
-------------------------
2010 2009
--------- ---------
Cash flows from operating activities:
Net Loss $ (44,395) $ (42,803)
Adjustments to reconcile net loss to net
cash used by operating activities:
Changes in assets and liabilities:
Receivables - 11,469
Other assets - 400
Accounts payable 23,336 (9,274)
Accrued expenses 2,700 3,074
--------- ---------
Net cash used in operating
activities (18,359) (37,134)
--------- ---------
Cash flows from financing activities:
Proceeds from related party short term
advances 7,040 24,400
Repayments on related party short term
advances - (5,500)
Proceeds from other short term advances 11,300 20,850
Repayments on other short term advances - (2,200)
--------- ---------
Net cash provided by
financing activities 18,340 37,550
--------- ---------
Net change in cash and cash
equivalents (19) 416
Cash and equivalents:
Beginning of period 94 68
--------- ---------
End of period $ 75 $ 484
========= =========
Supplemental disclosure of cash flow
information:
Cash paid during the year for:
Income taxes $ - $ -
========= =========
Interest $ - $ -
========= =========
Supplemental disclosure of non-cash
financing activities:
Stock issued for accrued services $ 30,000 $ -
========= =========
Conversions of indebtedness to related
parties to common stock $ - $ 10,650
========= =========
Conversions of short term advance and
accrued interest to common stock $ - $ 27,850
========= =========
Conversion of accounts payable to common
stock $ - $ 26,000
========= =========
See accompanying notes to the consolidated financial statements
5
IMAGINE MEDIA, LTD.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
(1) Unaudited Financial Information
The accompanying condensed financial statements of Imagine Media, Ltd. (the
"Company") have been prepared in accordance with the instructions to quarterly
reports on Form 10-Q. In the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
financial position, results of operations and changes in financial position at
September 30, 2010, and for all periods presented, have been made. Certain
information and footnote data necessary for a fair presentation of financial
position and results of operations in conformity with accounting principles
generally accepted in the United States of America have been condensed or
omitted. It is therefore suggested that these financial statements be read in
conjunction with the summary of significant accounting policies and notes to
financial statements included in the Company's Annual Report on Form 10-K filed
with the Securities and Exchange Commission (the "SEC") for the year ended
December 31, 2009. The results of operations for the period ended September 30,
2010 are not necessarily an indication of operating results for the full year.
(2) Going Concern
As shown in the accompanying financial statements, the Company has incurred
operating losses and, at September 30, 2010, had both a working capital deficit
and a net capital deficiency of $(175,861). These factors may indicate that the
Company will be unable to continue as a going concern.
The Company's ability to continue as a going concern is dependent upon its
ability to generate sufficient cash flow to meet obligations on a timely basis
and ultimately to attain profitability. To do this, the Company is seeking to
acquire another business which, as of September 30, 2010, had not occurred.
However, management plans, in the near-term, to (1) restructure debt and (2)
increase ownership equity in order to increase working capital. There is, of
course, no assurance that management will be successful in those efforts. The
Company's financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
In their report on the Company's financial statements for the year ended
December 31, 2009, the Company's independent auditors expressed substantial
doubt as to the Company's ability to continue as a going concern.
(3) Related Party Transactions
On February 10, 2010 the Company's board of directors authorized the issuance of
10,000 shares to each of the Company's three directors. The shares were valued
at $1.00 per share resulting in total compensation expense of $30,000 which was
accrued at December 31, 2009.
In October 2008, a company controlled by Greg Bloom, the Company's Chief
Executive Officer, advanced $5,500 to the Company for working capital purposes.
During the nine months ended September 30, 2009 the amount due to Mr. Bloom was
paid in full.
During the year ended December 31, 2008, The Rockies Fund advanced a total of
$16,000 to the Company for working capital purposes. As of December 31, 2008 the
6
Company had repaid a total of $4,000 of these cash advances. In addition, the
Rockies Fund made a direct advance to the Company of $650, which remained unpaid
at December 31, 2008. On March 1, 2009, $10,650 of the advances were converted
to 42,600 shares of common stock at a conversion price of $.25 per share, the
fair value of the stock on the conversion date. As of September 30, 2010 $2,000
of the working capital advances remain unpaid.
In May 2009, Mr. Steven Calandrella, the principal of the Rockies Fund advanced
$4,400 to the Company. In June 2009, Triumph Capital, a company controlled by a
shareholder, advanced the Company a total of $12,000. Also in June 2009, $6,000
was advanced to the Company by Ms. Dorothy Calandrella, a shareholder of the
Company, with an additional advance of $2,000 made in August 2009 and $7,040
during the nine month period ended September 30, 2010. All the advances were
provided for working capital purposes. None of these advances have been paid as
of September 30, 2010. None of the advances earn interest and are payable to the
creditor on demand.
(4) Convertible Debenture and Short Term Advances
On October 1, 2008 the Company issued an 8% Convertible Debenture to an attorney
in exchange for $30,000 owed to the attorney for prior services. The Debenture
is convertible by the holder into shares of the Company's common stock at a
conversion price of $0.25. The debenture was due and payable on April 1, 2009.
As a result of the failure to pay the debenture when due, the interest rate on
the debenture increased to 12% per year. As of November 15, 2010, the debenture,
together with $5,700 of accrued interest, has neither been converted nor paid.
During the year ended December 31, 2008 the Company received $15,000 from a
non-affiliate as a short term advance. During the first quarter of 2009 an
additional $150 was advanced to the Company by the same non-affiliate. On March
1, 2009 the total of $15,150 together with accrued interest of $200 was
converted to 61,400 shares of common stock at a conversion price of $.25 per
share, the fair value of the stock on the conversion date. During the nine
months ended September 2009 this non-affiliate advanced the Company an
additional $6,000 to be used for working capital purposes. During the nine
months ended September 30,2010, the non-affiliate advanced another $11,300 to
the Company. As of September 30, 2010 the $17,300 payable to the non-affiliate
was due on demand.
(5) Equity
Common stock
On February 10, 2010 the Company's Directors' were issued 30,000 shares of the
Company's common stock valued at $1.00 per share or $30,000.
(6) Other - Trademark
The Company has learned that a third party in PlaceNameplaceOrange County,
PlaceTypeCA publishes a regional magazine under the name "Image Magazine." The
publisher of the California-based Image Magazine has registered the trademark
"Image Magazine" with the United States Patent and Trademark Office, which
trademark registration was issued in 2006. The publisher of the magazine also
owns and uses the domain name "imagemagazine.com" Preliminary contact with the
7
principals of the California-based magazine has been made in an effort to
resolve the conflicting uses of the trademark. An agreement in principle has
been reached to resolve the matter through the execution of a trademark license;
however, no assurance can be given that such a license can be finalized.
(7) Letter of Intent
In June 2010 the Company reached a tentative agreement to acquire JAKK'D
Holdings, LLC, and a related entity, for 17,245,000 shares of the Company's
common stock.
JAKK'D is a producer of alcoholic beverages. The beverage, which is called
JAKK'D, is a distilled natural grain spirit that contains natural flavors,
certified colors, pure cane sugar and caffeine. Unlike its competitors, JAKK'D
does not contain high fructose corn syrup or stimulants such as Taurine, Ginseng
and Guarana. The beverages are bottled in 375ml black aluminum "beer bottles"
that are distinguishable from other alcoholic beverage products. Each bottle
contains 6.6% alcohol by volume and 75mg of caffeine. Initially JAKK'D plans to
launch four flavors which will include "Lunatic Lemon", "Black Tea Lemon Honey",
"Punched Out Pomegranate Berry", and "Raging Orange". JAKK'D holds the
registered trademarks for the these flavors as well as the word "JAKK'D".
Completion of the acquisition is subject to the satisfaction of several
conditions including, without limitation, the execution of a definitive
agreement, the satisfactory completion of due diligence by both parties, and the
completion of audited financial statements by JAKK'D.
8
Item 2. Management's Discussion and Analysis of Financial Condition and Plan
of Operation
The Company was formed in August 2007 to publish and distribute Image
Magazine, a monthly guide and entertainment source for the Denver, Colorado
area. The Company generated only limited revenue and essentially abandoned its
business plan in January 2009.
In June 2010 the Company reached a tentative agreement to acquire JAKK'D
Holdings, LLC, and a related entity, for 17,245,000 shares of the Company's
common stock.
JAKK'D is a producer of alcoholic beverages. The beverage, which is called
JAKK'D, is a distilled natural grain spirit that contains natural flavors,
certified colors, pure cane sugar and caffeine. Unlike its competitors, JAKK'D
does not contain high fructose corn syrup or stimulants such as Taurine, Ginseng
and Guarana. The beverages are bottled in 375ml black aluminum "beer bottles"
that are distinguishable from other alcoholic beverage products. Each bottle
contains 6.6% alcohol by volume and 75mg of caffeine. Initially JAKK'D plans to
launch four flavors which will include "Lunatic Lemon", "Black Tea Lemon Honey",
"Punched Out Pomegranate Berry", and "Raging Orange". JAKK'D holds the
registered trademarks for the these flavors as well as the word "JAKK'D".
Completion of the acquisition is subject to the satisfaction of several
conditions including, without limitation, the execution of a definitive
agreement, the satisfactory completion of due diligence by both parties, and the
completion of audited financial statements by JAKK'D. There can be no assurance
that the transaction will be consummated.
As of September 30, 2010 the Company had liabilities of approximately
$176,000. The Company plans to pay its liabilities with cash, shares of its
common stock, or a combination of both. The Company does not have any agreements
or commitments from any third party to provide the Company with any capital.
Item 4. Controls and Procedures.
(a) The Company maintains a system of controls and procedures designed to
ensure that information required to be disclosed in reports filed or submitted
under the Securities Exchange Act of 1934, as amended ("1934 Act"), is recorded,
processed, summarized and reported, within time periods specified in the SEC's
rules and forms and to ensure that information required to be disclosed by the
Company in the reports that it files or submits under the 1934 Act, is
accumulated and communicated to the Company's management, including its
Principal Executive and Financial Officer, as appropriate to allow timely
decisions regarding required disclosure. As of September 30, 2010, the Company's
Principal Executive and Financial Officer evaluated the effectiveness of the
design and operation of the Company's disclosure controls and procedures. Based
on that evaluation, the Principal Executive and Financial Officer concluded that
the Company's disclosure controls and procedures were effective.
9
(b) Changes in Internal Controls. There were no changes in the Company's
internal control over financial reporting during the quarter ended September 30,
2010, that materially affected, or are reasonably likely to materially affect,
its internal control over financial reporting.
PART II
Item 6. Exhibits
Exhibits
31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32 Certification pursuant to Section 906 of the Sarbanes-Oxley Act.
10
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.
IMAGINE MEDIA, LTD.
November 18, 2010 By: /s/ Gregory A. Bloom
------------------------------------
Gregory A. Bloom, Principal Executive
and Financial Officer