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.)
Reporting Period: Quarterly period ended June 30, 2009 (Form 10-Q).
Business Overview: The Company previously 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 evaluating strategies to resume publishing less frequently or transition to an Internet-based platform. The Company is classified as a "Smaller Reporting Company" and a "Shell Company."
Key Financial Metrics
| Metric | Six Months Ended June 30, 2009 | Six Months Ended June 30, 2008 |
|---|---|---|
| Total Revenues | $400 | $81,850 |
| Net Loss | $(40,839) | $(89,695) |
| Loss Per Share (Basic/Diluted) | $(0.03) | $(0.09) |
| Cash and Cash Equivalents (End of Period) | $80 | $45 |
| Working Capital Deficit | $(124,600) | $(148,261) |
| Total Liabilities | $124,680 | $160,198 |
| Convertible Debenture Outstanding | $30,000 | $30,000 |
Note: The filing does not provide a clear value for operating margins or gross profit margins due to negligible revenue.
Material Changes vs. Prior Period
- Revenue Collapse: Total revenues dropped from $81,850 in the prior year period to $400, primarily due to the suspension of magazine production in January 2009. Barter revenues, which were $18,650 in 2008, were $0 in 2009.
- Expense Reduction: Operating expenses decreased significantly from $171,545 to $39,539. Editorial, production, and circulation costs fell from $56,308 to $748 following the suspension of the magazine.
- Debt Restructuring: The Company converted approximately $64,500 of accounts payable, short-term advances, and related party indebtedness into common stock during the six-month period, reducing total liabilities.
- Liquidity: While the working capital deficit improved slightly (from $(148,261) to $(124,600)), cash on hand remains critically low at $80.
Outlook, Risks, and Contingencies
- Going Concern: Management explicitly states that the Company's ability to continue as a going concern is uncertain. This is due to a history of operating losses and a net capital deficiency. Continued operations depend on generating sufficient cash flow or securing additional financing.
- Financing Needs: The Company has no commercial bank credit facilities. Future operations rely on short-term loans from shareholders/affiliates or additional debt/equity financing, with no assurance such funds will be available.
- Trademark Dispute: A third party in California holds a registered trademark for "Image Magazine" and owns the domain "imagemagazine.com." While a license is being negotiated, failure to resolve this could force a rebranding and result in substantial economic loss of goodwill.
- Convertible Debenture Default: An 8% Convertible Debenture of $30,000 matured on April 1, 2009, and is in default. The default interest rate of 12% is now effective, with $2,100 in accrued interest unpaid.
- Internal Controls: Management concluded that disclosure controls and procedures are not effective as of June 30, 2009.
Investor Verification Checklist
- Cash Runway: Verify the sufficiency of the $80 cash balance against immediate obligations, given the lack of operating revenue.
- Debt Conversion Terms: Confirm the valuation and terms of the recent conversions of debt to equity ($0.25/share) to assess dilution impact.
- Trademark Resolution: Monitor the status of the trademark license negotiation with the California-based publisher to assess the risk of forced rebranding.
- Related Party Dependence: Evaluate the sustainability of funding sources, as the Company relies heavily on advances from related parties (e.g., Rockies Fund, Triumph Capital) with no legal obligation for future support.
- Control Deficiencies: Review the specific reasons for the ineffectiveness of disclosure controls and the remediation plan.