Business Context and Reporting Period
This Form 10-K covers the fiscal year ended December 31, 2011, for TransBiotec, Inc. (formerly Imagine Media, Ltd.). The Company is a development-stage entity that underwent a reverse acquisition in September 2011, acquiring a controlling interest in TransBiotec, Inc. (TBT), a developer of the "SOBR" transdermal alcohol detection and ignition interlock system. The Company has generated no revenue to date and is focused on product development, beta testing, and securing capital for commercialization.
Key Financial Metrics
| Metric | 2011 | 2010 |
|---|---|---|
| Revenue | $0 | $0 |
| Net Loss | $(1,182,243) | $(498,359) |
| Cash Flow from Operations | $(433,176) | $(94,752) |
| Cash and Equivalents (Ending) | $108,019 | $30,695 |
| Total Assets | $109,443 | $32,738 |
| Total Liabilities | $1,598,048 | $1,764,894 |
| Stockholders' Equity | $(1,488,605) | $(1,732,156) |
| Notes Payable (Total) | $826,523 | $748,845 |
Note: The Company reported a working capital deficit and a stockholders' equity deficit for the period.
Material Changes vs. Prior Period
- Reverse Acquisition: In September 2011, the Company acquired 52% of TBT, and in January 2012, acquired an additional 45%, resulting in 97% ownership. The transaction was accounted for as a reverse acquisition, with TBT treated as the accounting acquirer.
- Increased Operating Loss: Net loss increased significantly from $(498,359) in 2010 to $(1,182,243) in 2011. This was driven by increased operating expenses, including product development costs, hiring of sales representatives and a scientist, and travel related to the acquisition.
- Capital Structure: The Company raised $436,000 through the sale of common stock in 2011 compared to $127,500 in 2010. Additionally, significant debt was converted to equity ($1,110,875 in 2011 vs. $325,000 in 2010).
- Management Changes: Following the acquisition, original officers resigned, and new management from TBT (including Charles Bennington as CEO) was appointed.
Outlook, Risks, and Contingencies
- Going Concern: The independent auditor has raised substantial doubt about the Company's ability to continue as a going concern due to recurring losses, a working capital deficit, and the need for significant future expenditures for marketing and R&D.
- Capital Requirements: The Company projects estimated costs of $160,000 by June 2012, $185,000 by August 2012, and $370,000 by December 2012 to complete beta testing, improve manufacturing capabilities, and launch sales.
- Legal Proceedings: A lawsuit filed by Fashion Furniture Rental, Inc. resulted in a judgment against the Company in 2012 for approximately $61,000. Another suit by Orange County Valet and Security Patrol, Inc. for $9,720 remains pending with no recent action.
- Market Risks: The Company's stock trades on the OTC Bulletin Board under symbol "IMLE" and is subject to "penny stock" rules, which may limit liquidity. The Company has no revenue and relies on future product sales or financing.
Investor Verification Checklist
- Verify the status of the $61,000 judgment from Fashion Furniture Rental, Inc. and the pending $9,720 lawsuit.
- Confirm the Company's ability to raise the projected $715,000 in capital required for operations through 2012.
- Review the terms of the convertible notes payable, specifically the high interest rates (up to 30%) and conversion prices.
- Assess the progress of the SOBR product beta testing and the timeline for securing Original Equipment Manufacturer (OEM) partnerships.
- Monitor the Company's cash burn rate given the negative cash flow from operations of $(433,176) in 2011.