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: Quarter ended March 31, 2009
Business Overview: The Company previously published "Image Magazine," a Denver-based entertainment guide. In January 2009, the Company suspended publication of the magazine 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.
Key Financial Metrics
| Metric | Q1 2009 | Q1 2008 |
|---|---|---|
| Total Revenues | $400 | $39,600 |
| Net Loss | $(17,044) | $(39,069) |
| Loss Per Share (Basic/Diluted) | $(0.01) | $(0.04) |
| Cash and Cash Equivalents | $658 | $2,263 |
| Working Capital Deficit | $(100,805) | $(148,661) |
| Total Liabilities | $101,463 | $160,198 |
| Convertible Debenture Outstanding | $30,000 | $30,000 |
Cash Flow: Net cash used in operating activities was $6,560 for Q1 2009, compared to $29,024 in Q1 2008. Net cash provided by financing activities was $7,150, primarily from short-term advances.
Material Changes vs. Prior Period
- Revenue Collapse: Total revenues dropped from $39,600 to $400, a decrease of approximately 99%. This is directly attributed to the suspension of magazine production in January 2009. The $400 revenue consists entirely of a single web-based advertisement.
- Expense Reduction: Operating expenses decreased significantly from $78,669 to $16,644. Editorial, production, and circulation costs fell from $29,542 to $444 due to the cessation of print operations.
- Debt Restructuring: The Company converted approximately $70,000 of liabilities (accounts payable, short-term advances, and related party indebtedness) into 218,000 shares of common stock during the quarter. This reduced total current liabilities from $160,198 to $101,463.
- Improved Loss Position: While the Company remains unprofitable, the net loss narrowed by 56% year-over-year due to the drastic reduction in operating costs.
Outlook, Risks, and Contingencies
- Going Concern: The filing explicitly states that the Company has incurred operating losses since inception and has a working capital deficit. The ability to continue as a going concern is dependent on generating sufficient cash flow, restructuring debt, and increasing equity. There is no assurance these efforts will succeed.
- Trademark Dispute: A third party in Orange County, CA, holds a registered trademark for "Image Magazine" and owns the domain "imagemagazine.com." While preliminary contacts suggest a potential license agreement, failure to resolve this could force the Company to rebrand, resulting in the forfeiture of all goodwill and substantial economic loss.
- Liquidity Constraints: The Company has no commercial bank credit facilities and relies on short-term loans from shareholders and affiliates. There is no legal obligation for these parties to continue providing funds.
- Internal Controls: Management concluded that disclosure controls and procedures were not effective as of March 31, 2009.
Investor Verification Checklist
- Trademark Resolution: Verify the status of the trademark license negotiation with the California-based "Image Magazine" publisher to assess the risk of forced rebranding.
- Convertible Debenture Status: Confirm the status of the $30,000 8% Convertible Debenture which matured on April 1, 2009, and whether it has been converted or paid.
- Capital Sufficiency: Assess the Company's ability to fund operations with only $658 in cash and no bank credit lines.
- Revenue Model Viability: Evaluate the feasibility of the proposed shift to an Internet-based distribution platform given the lack of historical web revenue data.
- Related Party Dependence: Review the extent of reliance on related parties for debt forgiveness and future financing.