Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended September 30, 2010, 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. As of the reporting date, the Company is a shell company seeking to acquire a new business, specifically JAKK'D Holdings, LLC, an alcoholic beverage producer.
Key Financial Metrics
| Metric | Three Months Ended Sep 30, 2010 | Nine Months Ended Sep 30, 2010 | Balance Sheet (Sep 30, 2010) |
|---|---|---|---|
| Revenue | $0 | $0 | N/A |
| Net Loss | $(22,321) | $(44,395) | N/A |
| Operating Expenses | $21,421 | $41,695 | N/A |
| Cash and Equivalents | N/A | N/A | $94 |
| Total Current Liabilities | N/A | N/A | $161,560 |
| Shareholders' Deficit | N/A | N/A | $(175,861) |
| Shares Outstanding | 1,410,650 | 1,407,317 (Wtd Avg) | 1,410,650 |
Liquidity and Debt: The Company has a working capital deficit and a net capital deficiency. Total current liabilities include $53,479 in trade accounts payable, $32,100 in indebtedness to related parties, and a $30,000 convertible debenture. Cash on hand is minimal at $94.
Material Changes vs. Prior Period
- Revenue: The Company reported $0 revenue for the three and nine months ended September 30, 2010, compared to $0 and $400 respectively in the prior year periods. The business remains inactive.
- Operating Expenses: Expenses increased significantly. Selling, general, and administrative expenses rose from $1,064 to $21,421 for the quarter, and from $39,855 to $41,695 for the nine-month period. This increase is largely attributed to $30,000 in stock-based compensation issued to directors.
- Net Loss: The net loss for the quarter widened from $(1,964) to $(22,321). The nine-month loss increased slightly from $(42,803) to $(44,395).
- Cash Flow: Net cash used in operating activities improved to $(18,359) for the nine months ended 2010, compared to $(37,134) in the prior year, primarily due to changes in accounts payable and accrued expenses.
Outlook, Risks, and Contingencies
- Going Concern: The filing explicitly states substantial doubt regarding the Company's ability to continue as a going concern due to operating losses, working capital deficits, and a lack of revenue. Management plans to restructure debt and increase equity, but there is no assurance of success.
- Acquisition Strategy: In June 2010, the Company reached a tentative agreement to acquire JAKK'D Holdings, LLC for 17,245,000 shares of common stock. Completion is subject to due diligence and definitive agreements. There is no assurance the transaction will close.
- Trademark Dispute: A third party in California holds a registered trademark for "Image Magazine." The Company has reached an agreement in principle for a license, but finalization is not guaranteed.
- Debt Obligations: The Company has an 8% Convertible Debenture (increased to 12% due to default) of $30,000 plus accrued interest that remains unpaid. Additionally, there are various short-term advances from related parties and non-affiliates totaling over $50,000 that are due on demand.
Investor Verification Checklist
- Acquisition Status: Verify if the tentative agreement to acquire JAKK'D Holdings has been finalized or abandoned.
- Capital Sufficiency: Confirm if the Company has secured the necessary capital to restructure its $161,560 in current liabilities and fund operations.
- Trademark Resolution: Check if the trademark license agreement with the California-based "Image Magazine" publisher has been executed.
- Debt Conversion: Monitor if the $30,000 convertible debenture or related party advances are being converted to equity or paid in cash.
- Shell Company Status: Note that the Company is currently a shell company with no active revenue-generating operations.