THC Farmaceuticals, Inc. - FORM 10-Q

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EXCEL - IDEA: XBRL DOCUMENT - THC Farmaceuticals, Inc.	Financial_Report.xls
EX-31.1 - CITY MEDIA, INC. - 10Q MARCH 31, 2012 - EX 31 T HOWELLS - THC Farmaceuticals, Inc.	citymedia10qmar12ex31.htm
EX-32 - CITY MEDIA, INC. - 10Q MARCH 31, 2012 - EX 32 - THC Farmaceuticals, Inc.	citymedia10qmar12ex32.htm

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 March 31, 2012

[ ] 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: 333-171488

CITY MEDIA, INC.

(Exact Name of Registrant as specified in its charter)

Utah		26-1805170
(State or other jurisdiction of incorporation)		(I.R.S. Employer I.D. No.)

4685 S. Highland Drive, Suite 202

Salt Lake City, UT 84117

(Address of Principal Executive Office)

(801) 278-9424

(Registrant’s Telephone Number, including Area Code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes [X] No [ ] (The Registrant does not maintain a website.)

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 definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]

Accelerated filer [ ]

Non-accelerated filer [ ]

Smaller reporting company [X]

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

APPLICABLE ONLY TO CORPORATE ISSUERS

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

The number of shares outstanding of each of the Registrant’s classes of common equity, as of the latest practicable date:



Class		Outstanding as of May 14, 2012
Common Capital Voting Stock, $0.001 par value per share		8,968,000 shares

FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, Financial Statements and Notes to Financial Statements contains forward-looking statements that discuss, among other things, future expectations and projections regarding future developments, operations and financial conditions. All forward-looking statements are based on management’s existing beliefs about present and future events outside of management’s control and on assumptions that may prove to be incorrect. If any underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, estimated, projected or intended.

PART I - FINANCIAL STATEMENTS

Item 1. Financial Statements.

March 31, 2012

C O N T E N T S

Condensed Consolidated Balance Sheets	3
Condensed Consolidated Statements of Operations	4
Condensed Consolidated Statements of Cash Flows	5
Notes to Condensed Consolidated Financial Statements	6

CITY MEDIA, INC.

Condensed Consolidated Balance Sheets

March 31, 2012 and September 30, 2011

(Unaudited)

	3/31/2012			9/30/2011

ASSETS

Current Assets:
Cash	$	1,923		$	4,123
Accounts Receivable		3,050			2,146
Total Current Assets		4,973			6,269
Property plant & equipment net of accumulated depreciation
of $7,821 and $6,997, respectively		14,286			8,310
Property held for sale		-			7,749
Intangible Assets		33,677			43,485

TOTAL ASSETS	$	52,936		$	65,813

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
Related Party Accounts Payable	$	1,700		$	1,735
Accounts Payable		8			866
Current portion of long term debt		2,970			-
Total Current Liabilities		4,678			2,601
Long Term Liabilities:
Accrued Interest Related Party		495			-
Notes Payable to related parties		25,331			17,001
Total Long Term Liabilities		25,826			17,001
Total Liabilities		30,504			19,602

Stockholders' Equity
Preferred Stock 10,000,000 shares authorized having a
par value of $0.001 per share; with no shares issued and
outstanding as of March 31, 2012 and September 30, 2011,
respectively		-			-
Common Stock 90,000,000 shares authorized having a
par value of $0.001 per share; 8,968,000 shares issued and
outstanding as of March 31, 2012 and September 30, 2011,
respectively		8,968			8,968
Additional Paid-in Capital		83,875			83,875
Accumulated Deficit		(70,411	)		(46,632	)
Total Stockholders' Equity		22,432			46,211

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	52,936		$	65,813

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

CITY MEDIA, INC.

Condensed Consolidated Statements of Operations

For the Three and Six Months Ended March 31, 2012 and 2011

(Unaudited)

	For the			For the			For the			For the
	Three Months			Three Months			Six Months			Six Months
	Ended			Ended			Ended			Ended
	March 31,			March 31,			March 31,			March 31,
	2012			2011			2012			2011
Revenues
Revenues from transaction fees	$	8,981		$	8,888		$	17,363		$	18,350
Revenues from equipment rental		-			1,500			-			3,000
Total Revenues		8,981			10,388			17,363			21,350

Operating Expenses
General and Administrative		4,639			12,509			16,867			28,153
Depreciation		420			1,617			824			3,277
Impairment of Intangible Assets		9,808			-			9,808			-
Service, related party		4,200			3,000			8,400			6,000
Loss on sale of equipment		-			-			4,749			-
Total Operating Expense		19,067			17,126			40,648			37,430
Operating Loss		(10,086	)		(6,738	)		(23,285	)		(16,080	)
Interest Expense, related party		395			1,200			494			2,400
Net Loss	$	(10,481	)	$	(7,938	)	$	(23,779	)	$	(18,480	)
Loss per Common Share - Basic & Diluted	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.01	)
Weighted Average Shares Outstanding - Basic & Diluted		8,968,000			8,968,000			8,968,000			8,968,000

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

CITY MEDIA, INC.

Condensed Consolidated Statements of Cash Flows

For the Six Months Ended March 31, 2012 and 2011

(Unaudited)

	For the			For the
	Six Months			Six Months
	Ended			Ended
	March 31,			March 31,
	2012			2011

Cash Flows From Operating Activities
Net Loss	$	(23,779	)	$	(18,480	)
Adjustments to reconcile net loss to net cash
from operating activities:
Depreciation		824			3,277
Impairment of Intangible Assets		9,808			-
Loss on sale of equipment		4,749			-
(Increase)/Decrease in accounts receivable		(904	)		(2,822	)
Increase/(Decrease) in accounts payable		(893	)		2,776
Accrued interest on related party loan		495			-
Net Cash from Operating Activities		(9,700	)		(15,249	)

Cash Flows from Investing Activities
Purchase of Equipment		(6,800	)		-
Proceeds from sale of equipment		3,000			-
Net Cash from Investing Activities		(3,800	)		-

Cash Flows from Financing Activities
Proceeds from notes payable to related parties		11,300			12,001
Net Cash from Investing Activities		11,300			12,001

Net Increase/(Decrease) in Cash		(2,200	)		(3,248	)
Beginning Cash Balance		4,123			6,551
Ending Cash Balance	$	1,923		$	3,303

Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest	$	-		$	1,200
Cash paid during the period for taxes	$	-		$	-

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

CITY MEDIA, INC.

Notes to Condensed Consolidated Financial Statements

March 31, 2012

NOTE 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at March 31, 2012, and for all periods presented herein, have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2011. The results of operations for the three and six month periods ended March 31, 2012 are not necessarily indicative of the operating results for the full year.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Recent Accounting Pronouncements

The Company has reviewed all recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its consolidated results of operation, financial position or cash flows. Based on that review, the Company believes that none of these pronouncements will have a significant effect on its condensed consolidated financial statements.

NOTE 3 – RELATED PARTY TRANSACTIONS / SERVICE AGREEMENT

The Company has a Service Agreement with Wasatch ATM (“Wasatch”), a Utah limited liability corporation owned and managed by a Company stockholder. The agreement provides for Wasatch to provide all maintenance, repair and service work along with distribution of vault cash. Wasatch is compensated at a set rate of $1,400 per month. The agreement is for thirty-six months and provides for an additional one-time $500 payable upon the placement of each additional ATM and an allowance of $500 per quarter for expenses.

As of March 31, 2012, $1,700 was due to Wasatch, which is included in the “Related Party Accounts Payable” line item.

NOTE 4 - RELATED PARTY TRANSACTIONS / LONG-TERM DEBT

During the year ended September 30, 2011, we received $17,001 from certain shareholders to cover expenses during the year. On December 6, 2011 the Company signed convertible promissory notes with these shareholders resulting in a reclassification of $17,001 from a current liability to long-term notes payable. The notes are convertible into shares of the Company’s common stock at a conversion price of $0.10 per share at the option of the Company. In addition, the notes provided for additional liquidity resources in the amount of $36,000, with $16,999 available to be used at the Company’s discretion. During the three-month period ended March 31, 2012, the Company borrowed an additional $4,500 against the note, making the total outstanding long-term payable $21,501. As of December 6, 2011 and until the notes are converted or settled, the loan from certain shareholders accrues interest at 8.5% per annum. Total accrued interest on loans from shareholders at March 31, 2012 totaled $495. Interest and principal is due on December 6, 2013.

In conjunction with new ADA compliance regulations that took effect on March 15, 2012, requiring certain costly upgrades be made to all Hantle/Tranax and Hyosung ATM machines, the Company’s Board of Directors gave their unanimous consent on March 1, 2012, to purchase three new ATM machines that comply with the new ADA compliance regulations. The Board agreed that the new machines should be purchased and financed through our servicing partner, Wasatch ATM. The balance of $6,800 began accruing interest of 10% APR on April 1, 2012. Monthly payments of $316 are due on the first of every month, commencing on May 1, 2012, until the loan is paid in full on March 1, 2014.

The Company utilizes office and storage space of its executive officers, for which no incremental costs are incurred. No monetary value has been placed on this, nor have any accruals or payments been made. Additionally, the Company has no employees who are not executive officers. There are no amounts due to or from these parties as of the balance sheet date.

NOTE 5 – EQUIPMENT

On December 28, 2011, the Company completed the disposal of its equipment held for sale. The Company received $3,000 cash, resulting in a loss on sale of $4,749.

NOTE 6 – IMPAIRMENT OF INTANGIBLE ASSETS / LOSS ON DISPOSITION OF ASSETS

On March 1, 2012, the Company’s Board of Directors agreed unanimously to cease ATM operations at four of their thirteen locations, due to the low volume of transactions, resulting in the impairment of intangible assets of $9,808. The ATM machines from these four locations are being held in storage until such time as they can be offered for resale.

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

Forward-looking Statements

Statements made in this Quarterly Report which are not purely historical are forward-looking statements with respect to the goals, plan objectives, intentions, expectations, financial condition, results of operations, future performance and our business, including, without limitation, (i) our ability to raise capital, and (ii) statements preceded by, followed by or that include the words “may,” “would,” “could,” “should,” “expects,” “projects,” “anticipates,” “believes,” “estimates,” “plans,” “intends,” “targets” or similar expressions.

Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following: general economic or industry conditions, nationally and/or in the communities in which we may conduct business, changes in the interest rate environment, legislation or regulatory requirements, conditions of the securities markets, our ability to raise capital, changes in accounting principles, policies or guidelines, financial or political instability, acts of war or terrorism, other economic, competitive, governmental, regulatory and technical factors affecting our current or potential business and related matters.

Accordingly, results actually achieved may differ materially from expected results in these statements. Forward-looking statements speak only as of the date they are made. We do not undertake, and specifically disclaim, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements.

Plan of Operations

Our primary focus for 2012-2013 is the continued placing, managing, and servicing of ATM machines for public utilization along the Wasatch Front in the State of Utah.

Results of Operations

Three Months Ended March 31, 2012 Compared to Three Months Ended March 31, 2011

During the three months ended March 31, 2012, we recognized $8,981 in revenues. During the three months ended March 31, 2011, we recognized $10,388 in revenues. The decrease in revenue for the period ended 2012 over the same period in 2011 can be attributed to the lack of revenues from equipment rental in 2012. City Media receives transaction or surcharge fees from its processing agent on a monthly basis along with interchange fees. Such fees make up City Media’s revenue. The liquidity of City Media has been primarily impacted by professional fees.

We had a net loss for the three months ended March 31, 2012, of $10,481 and a net loss of $7,938 for the three months ended March 31, 2011. Part of the loss for 2012 was the result of decreased revenue due to the closure of four of our ATM locations, as well as increased expenses related to complying with new XBRL filing requirements. As we expand our operations, we are hopeful our revenues should start to increase. We will need additional capital to expand operations and anticipate seeking equity capital in 2013.

Additionally, as our business operations are only beginning, it is difficult to predict our ability to generate sufficient revenue to generate positive cash flows. Currently our biggest expenses are related to general and administrative costs which were $4,639 for the three months ended March 31, 2012 and $12,509 for the three months ended March 31, 2011. Our service fee to maintain ATM cash levels and operating functionality is $1,400 a month. We anticipate these fees remaining constant during 2012; however, they may rise in the future as we deploy more machines.

During the three months ended March 31, 2012, the Company closed four of our thirteen locations that were lacking in total monthly transactions. As we seek out better locations, we are hopeful we can move into multiple locations owned by the same landlord, thus allowing us to increase the revenue generated by each machine.

Six Months Ended March 31, 2012 Compared to Six Months Ended March 31, 2011

During the six months ended March 31, 2012, we recognized $17,363 in revenues. During the six months ended March 31, 2011, we recognized $21,350 in revenues. The decrease in revenue for the period ended 2012 over the same period in 2011 can be attributed to new regulations governing surcharge fees, downtime due to technical and setup issues, and the closure of four retail locations during the 2012 period.

We had a net loss for the six months ended March 31, 2012, of $23,779 and a net loss of $18,480 for the six months ended March 31, 2011. Part of the loss for 2012 was the result of increased costs of service for maintaining our ATM machines, as well as a loss on the sale of equipment recognized in our first quarter, and impairment expenses recognized during the second quarter with the closure of four of our ATM locations.

Liquidity and Capital Requirements

We had $1,923 cash or cash equivalents on hand as of March 31, 2012. During the year ended September 30, 2011, we received $17,001 from certain shareholders to cover expenses during the year, for which, on December 6, 2011 the Company signed convertible promissory notes with these shareholders resulting in a reclassification of $17,001 from a current liability to long-term notes payable. In addition, the notes provided for additional liquidity resources in the amount of $36,000, with $16,999 available to be used at the Company’s discretion. During the three-month period ended March 31, 2012, we received an additional $4,500, making the total loans from certain shareholders $21,501, with $12,499 available to be used at the Company’s discretion. Until the notes are converted or settled, the loan from certain shareholders accrues interest at 8.5% per annum. Accrued interest on loans from shareholders for the six-month period ended March 31, 2012 totaled $495.

The Company has accumulated operating losses of $70,411. Currently, management’s plans include placing more ATMs in retail locations in order to improve our cash flows. The Company has an availability of funds sufficient for the next 12 months.

Off-balance Sheet Arrangements

Neither City Media nor its wholly-owned subsidiary have had any off balance sheet arrangements from their respective periods to the date hereof.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not required.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in rules and forms adopted by the Securities and Exchange Commission, and that such information is accumulated and communicated to management, including the President and Secretary, to allow timely decisions regarding required disclosures.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based upon that evaluation, our President and Treasurer concluded that, as of the end of the period covered by this Quarterly Report, our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

During the fiscal quarter covered by this Quarterly Report, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are not a party to any pending legal proceeding. To the knowledge of management, no federal, state or local governmental agency is presently contemplating any proceeding against us. No director, executive officer or affiliate of ours or owner of record or beneficially of more than five percent of our common stock is a party adverse to us or has a material interest adverse to us in any proceeding.

Item 1A. Risk Factors

Not required.

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

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosure

We have no mining activities.

Item 5. Other Information

Item 6. Exhibits

Exhibit No.	Identification of Exhibit
31	Certification of Thomas J. Howells Pursuant to Section 302 of the Sarbanes-Oxley Act.
32	Certification of Thomas J. Howells pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act.
101.INS	XBRL Instance Document*
101.SCH	XBRL Taxonomy Extension Schema*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase*
101.DEF	XBRL Taxonomy Extension Definition Linkbase*
101.LAB	XBRL Taxonomy Extension Label Linkbase*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase*

*Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed “furnished” and not “filed” or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, or deemed “furnished” and not “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise is not subject to liability under these sections.

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.

CITY MEDIA, INC.

(Issuer)

Date:	May 14, 2012		By:	/s/ Thomas J. Howells
				Thomas J. Howells, Director, President and Chief Executive Officer, Principal Financial Officer

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