Business Context and Reporting Period
Company: Imagine Media, Ltd. (Note: Request metadata listed "SOBR Safe, Inc.", but the filing text identifies the issuer as Imagine Media, Ltd.)
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: September 30, 2009
Business Overview: The Company formerly published "Image Magazine," a Denver-based entertainment guide. In January 2009, the Company suspended publication due to declining advertising revenues and increased costs. The Company is currently a shell company seeking strategic opportunities, restructuring debt, and increasing equity to improve working capital.
Key Financial Metrics
| Metric | Three Months Ended Sep 30, 2009 | Nine Months Ended Sep 30, 2009 | Balance Sheet (Sep 30, 2009) |
|---|---|---|---|
| Total Revenues | $0 | $400 | - |
| Net Loss | $(1,964) | $(42,803) | - |
| Operating Expenses | $1,064 | $40,603 | - |
| Cash and Equivalents | - | - | $484 |
| Total Current Liabilities | - | - | $127,048 |
| Working Capital Deficit | - | - | $(126,564) |
| Shares Outstanding | 1,380,650 | 1,329,991 (Wtd Avg) | 1,380,650 |
Material Changes vs. Prior Period
- Revenue Collapse: Total revenues dropped from $54,670 in the three months ended September 30, 2008, to $0 in the same period in 2009. This is directly attributed to the suspension of magazine production in January 2009.
- Expense Reduction: Operating expenses decreased significantly from $97,819 (Q3 2008) to $1,064 (Q3 2009) as production and circulation costs were eliminated.
- Net Loss Improvement: Net loss narrowed from $(43,149) in Q3 2008 to $(1,964) in Q3 2009 due to the cessation of magazine operations.
- Debt Conversions: During the nine months ended September 30, 2009, the Company converted approximately $64,500 of accounts payable, short-term advances, and related party indebtedness into common stock to reduce liabilities.
Outlook, Risks, and Management Commentary
- Going Concern: The filing explicitly states substantial doubt about the Company's ability to continue as a going concern. The Company has a history of operating losses and a working capital deficit.
- Liquidity Strategy: Management plans to restructure debt and increase ownership equity. The Company currently relies on short-term loans from shareholders and affiliates, with no assurance of future funding.
- Future Operations: The Company is considering publishing the magazine less frequently or utilizing the Internet as a primary distribution platform, but no specific strategy has been finalized.
- Legal Risk (Trademark): A third party in California holds a registered trademark for "Image Magazine." While a license is being negotiated, failure to resolve this could force a rebranding and result in the forfeiture of goodwill.
- Controls: Management concluded that disclosure controls and procedures were not effective as of the end of the period.
Investor Verification Checklist
- Capital Sufficiency: Verify if the Company has secured the additional equity financing or debt restructuring necessary to cover the $127,048 in current liabilities.
- Trademark Resolution: Confirm the status of the trademark license negotiation with the California-based publisher to assess the risk of forced rebranding.
- Related Party Dependence: Assess the sustainability of funding sources, as the Company relies heavily on advances from shareholders and affiliates (e.g., Prospector Capital, Rockies Fund) which are payable on demand.
- Convertible Debenture: Note the $30,000 8% Convertible Debenture (plus $3,000 accrued interest) is in default and has not been converted or paid.