Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended June 30, 2011, for Imagine Media, Ltd. (Note: The request metadata listed "SOBR Safe, Inc.", but the filing text identifies the registrant as Imagine Media, Ltd.). The Company, originally formed to publish a regional magazine, abandoned that business plan in January 2009. It is currently classified as a shell company and a smaller reporting company. As of June 30, 2011, the Company had 1,410,650 shares of common stock outstanding.
Key Financial Metrics
| Metric | Three Months Ended June 30, 2011 | Six Months Ended June 30, 2011 | Balance Sheet (June 30, 2011) |
|---|---|---|---|
| Net Sales/Revenue | $0 | $0 | N/A |
| Net Loss | $(3,579) | $(12,475) | N/A |
| Operating Expenses | $2,638 | $10,634 | N/A |
| Cash and Equivalents | N/A | N/A | $37 |
| Total Current Liabilities | N/A | N/A | $214,305 |
| Shareholders' Deficit | N/A | N/A | $(214,268) |
| Working Capital | N/A | N/A | $(214,268) |
Debt Composition (Current Liabilities):
- Trade creditors: $112,138
- Indebtedness to related parties: $39,485
- Convertible debenture (8%): $30,000 (plus $9,300 accrued interest)
- Short term advances: $17,300
Material Changes vs. Prior Period
- Revenue: Remained at $0 for both the three and six-month periods ended June 30, 2011, consistent with the prior year periods.
- Net Loss: The net loss for the six months ended June 30, 2011, was $(12,475), a significant improvement compared to $(22,074) in the same period in 2010. This reduction is primarily due to lower selling, general, and administrative expenses ($10,634 vs. $20,274).
- Cash Flow: Net cash used in operating activities decreased drastically to $(92) for the six months ended June 30, 2011, compared to $(18,314) in the prior year period. This was driven by an increase in accounts payable of $10,583.
- Liquidity: Cash and cash equivalents declined from $83 at December 31, 2010, to $37 at June 30, 2011.
Outlook, Risks, and Contingencies
Going Concern: The Company has incurred operating losses and has a working capital deficit and net capital deficiency of $(214,268). Independent auditors have expressed substantial doubt regarding the Company's ability to continue as a going concern. Management's ability to continue operations depends on generating sufficient cash flow, restructuring debt, increasing equity, or acquiring another business.
Acquisition Strategy: In April 2011, the Company entered into a tentative agreement to acquire Transbiotec, Inc. ("TBT"), a developer of a transdermal blood alcohol sensor, in exchange for 23,557,810 shares of common stock. The transaction is subject to due diligence, audit completion, and a definitive agreement. There is no assurance the deal will close.
Contingencies:
- Trademark Dispute: A third party in California holds a trademark for "Image Magazine." The Company has discontinued publishing operations and is negotiating a license, though no assurance of resolution exists.
- Related Party Debt: Significant portions of liabilities are owed to related parties and are payable on demand.
Investor Verification Checklist
- Verify the status of the tentative acquisition of Transbiotec, Inc., as the Company's future viability depends on this transaction.
- Confirm the Company's ability to meet its $214,305 in current liabilities given only $37 in cash on hand.
- Review the terms of the $30,000 convertible debenture and $9,300 accrued interest, which are in default status.
- Assess the resolution of the "Image Magazine" trademark dispute to ensure no future legal costs or operational restrictions.
- Monitor for any capital raises or debt restructuring efforts, as the filing states there are no current third-party commitments for capital.