SOBR

Business Context and Reporting Period

Company: Imagine Media, Ltd. (Note: Request metadata listed "SOBR Safe, Inc.", but the filing text identifies the registrant as Imagine Media, Ltd.)
Reporting Period: Fiscal year ended December 31, 2009
Status: Smaller Reporting Company; Shell Company
Operations: The Company suspended publishing its primary asset, Image Magazine, in January 2009 due to declining advertising revenues and rising costs. It currently has no substantive commercial operations and intends to serve as a vehicle for a business combination (merger or acquisition) with an operating company.

Key Financial Metrics

Liquidity: The Company has a severe working capital deficit and minimal cash ($94). It relies entirely on short-term advances from shareholders and affiliates to meet obligations. There are no commercial bank credit facilities.

Material Changes vs. Prior Period

• Revenue Collapse: Revenues dropped from $196,445 in 2008 to $400 in 2009 following the suspension of magazine production in January 2009. Barter revenue, which was $45,465 in 2008, was $0 in 2009.
• Expense Reduction: Operating expenses decreased significantly from $368,847 to $74,605, primarily due to the cessation of editorial, production, and circulation costs ($128,079 in 2008 vs. $748 in 2009).
• Debt Conversions: To reduce liabilities, the Company converted approximately $64,500 of accounts payable, short-term advances, and related party indebtedness into common stock during 2009.
• Stock-Based Compensation: Non-cash stock-based compensation expense increased to $30,000 in 2009 (vs. $7,500 in 2008) due to grants to directors.

Outlook, Risks, and Contingencies

• Going Concern: Auditors have issued a report with an explanatory paragraph indicating substantial doubt about the Company's ability to continue as a going concern due to recurring losses and negative cash flows.
• Business Strategy: The Company is seeking a "Business Combination" (reverse merger) with a target business. No specific target has been identified. Success is highly speculative and dependent on management's ability to locate a suitable partner.
• Internal Controls: Management concluded that disclosure controls and internal controls over financial reporting were not effective as of December 31, 2009. Material weaknesses include a lack of segregation of duties (one or two individuals control all transactions) and inadequate accounting software audit trails.
• Trademark Contingency: A third party in California holds a registered trademark for "Image Magazine." While the Company's publishing operations are suspended, a potential license agreement was discussed but not finalized.
• Dilution Risk: Future business combinations may require issuing significant new shares, potentially diluting existing shareholders to 20% or less of the surviving entity.

Investor Verification Checklist

• Going Concern Status: Verify if the Company has secured new financing or identified a merger target to resolve the auditor's "substantial doubt" regarding its ability to continue operations.
• Related Party Advances: Review the terms of the $161,560 in liabilities, a significant portion of which are owed to related parties (shareholders/directors) and may be convertible to equity or demandable at any time.
• Internal Control Weaknesses: Assess the risk of financial misstatement given the lack of segregation of duties and the CEO's ability to override controls.
• Shell Company Status: Confirm the Company's status as a shell company with no assets other than cash and nominal assets, implying high risk for any future reverse merger transaction.
• Stock Price Volatility: Note the stock trades on the OTC Bulletin Board (Symbol: IMLE) and is subject to "penny stock" rules, which may severely limit liquidity.