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Authentic Holdings, Inc. - Quarter Report: 2010 September (Form 10-Q)

premiere10q093010.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
______________
 
FORM 10-Q
 
______________
(Mark One)
 
 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2010
 
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
For the transition period from                to
 
Commission file number: 000-52047
______________
 
PREMIERE PUBLISHING GROUP, INC.
(Exact name of small business issuer in its charter)
______________
 
 
Nevada
11-3746201
 
 
(State or other jurisdiction
(I.R.S. Employer Identification No.)
 
 
of  incorporation
   
 
 or organization)
   
 
264 Union Blvd, First Floor, Totowa NJ 0712
(Address of principal executive offices)
 
(973-390-0072)
(Issuer’s telephone number)
 
 
(Former name, former address and former fiscal year, if changed since last report)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes x No  o
 
 
Large accelerated filer  
o
 
Accelerated filer
o
 
Non-accelerated filer
o
 
Smaller reporting company
x
 
(Do not check if a smaller reporting company)
       

 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  o No x 
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
 
78,493,132 shares outstanding as of November 19, 2010.
 
 
 
1

 

 
 
PREMIERE PUBLISHING GROUP, INC.
 
INDEX
 
     
Page
 
 
   
     
PART I
FINANCIAL INFORMATION
    3  
Item 1.
Financial Statements
    3  
 
Consolidated Balance Sheets
    3  
 
Condensed Consolidated Statements of Operations (Unaudited)
    4  
 
Condensed Consolidated Statements of Cash Flows (Unaudited)
    5  
 
Notes to the Condensed Consolidated Financial Statements (Unaudited)
    6  
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
    10  
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
    11  
Item 4.
Controls and Procedures
    11  
Item 4T.
Controls and Procedures
    12  
 
   
       
PART II
OTHER INFORMATION
    12  
Item 1.
Legal Proceedings
    12  
Item 1A.
Risk Factors
    12  
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
    12  
Item 3.
Defaults Upon Senior Securities
    12  
Item 4.
Submission of matters to a Vote of Security Holders
    12  
Item 5.
Other Information
    12  
Item 6.
Exhibits
    12  
 
Signatures
    13  

 

 

 
2

 
 
PART I – FINANCIAL INFORMATION
 
  Item 1.     Financial Statements
 
PREMIERE PUBLISHING GROUP, INC. and Subsidiaries
 
Consolidated Balance Sheets at September 30, 2010 (Unaudited)
 
and at December 31, 2009 (Audited)
 
         
         
 
September 30,
 
December 31
 
 
2010
 
2009
 
ASSETS
(Unaudited)
     
Current Assets:
       
Total Current Assets
   
-
     
-
 
             
Total Assets
 
$
-
   
$
-
 
             
LIABILITIES &STOCKHOLDERS'EQUITY (DEFICIT)
               
Current Liabilities
               
   Cash overdraft
 
$
2,834
   
$
2,834
 
    Accounts payable
   
1,131,011
     
1,131,011
 
    Accrued officers compensation
   
600,000
     
420,000
 
    Secured note and accrued interest payable
   
830,895
     
786,762
 
    Unsecured notes and accrued interest payable
   
86,722
     
82,192
 
    Convertible notes and accrued interest payable
   
1,140,124 
     
764,199 
 
     
 
     
 
 
Total Current Liabilities
   
3,791,586
     
3,186,998
 
             
Commitments and Contingencies
   
-
     
-
 
             
Stockholder' Deficit
               
                 
      Common Stock - $0.001 par value, 100,000,000 shares authorized,
               
          78,493,132 shares issued and outstanding
 
$
78,493
   
$
54,247
 
      Additional Paid-In Capital
   
4,957,915
     
4,957,161
 
      Accumulated (Deficit)
   
(8,827,994)
     
(8,198,406
 
Total Stockholder 'Deficit
   
(3,791,586)
     
(3,186,998
 
             
Total Liabilities and Stockholder' Deficit
 
$
-
   
$
-
 
 
 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
 
 
 
3

 
 
PREMIERE PUBLISHING GROUP, INC. and Subsidiaries
Condensed Consolidated Statements of Operations and Discounted Operations
(Unaudited)
 
   
Three Months Ended
   
Nine Months Ended
 
   
September 30,
   
September 30,
   
September 30,
   
September 30,
 
   
2010
   
2009
   
2010
   
2009
 
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
 
Revenues from Discontinued Operations
                       
   Advertising, circulation, events and other
 
$
-
   
$
-
   
$
-
   
$
-
 
                                 
Operating Expenses
                               
   Production, distribution and editorial
   
-
     
-
     
-
     
-
 
   Selling, general and administrative
   
60,000
     
60,000
     
205,000
     
180,000
 
   Consulting services
   
-
     
-
     
-
     
-
 
Total Operating Expenses
   
60,000
     
60,000
     
205,000
     
180,000
 
Loss From Operations
   
(60,000
     
(60,000
   
(205,000
)
   
(180,000
                                 
Other Income (Expense)
                               
 Interest expense and financing costs
   
(366,610),
     
(34,550
     
(424,588
)
   
(103,650
 
 Change in value of warrant and derivative liabilities
   
-
     
-
   
 
-
     
28,400
 
Total Other Income (Expense)
   
(366,610)
)
   
(34,550
)
   
(424,588
)
   
(75,250
)
                                 
Income (Loss) Before Provision for Income Taxes
   
(426,610
)
   
(94,500
     
(629,588
)
   
(255,250)
 
Provision for Income Taxes
   
-
     
-
     
-
     
-
 
                                 
Net (Loss) From Operations
 
$
(426,610
)
 
$
(94,500
)
 
$
(629,588
)
   
(255,250
                                 
Net (Loss) Per Common Share
 
$
(0.005
)
 
$
(0.002
   
$
(0.009
)
 
$
(0.003
 
                                 
Weighted Average Common Shares Outstanding
   
78,493,132
     
54,246,846
     
70,411,037
     
54,246,846
 
 
 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
 
 
 
4

 
 
PREMIERE PUBLISHING GROUP, INC. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 
   
Nine Months Ended
 
   
September 30,
 
September 30,
 
   
2010
 
2009
 
   
(Unaudited)
 
(Uaudited)
 
CASH FLOWS FROM OPERATING ACTIVITIES:
         
Net income (loss)
 
$
(629,588
)
 
$
(255,250
)
Adjustment to reconcile net income (loss) to net cash used in operating activities:
               
   Depreciation and amortization expense
   
-
     
-
 
   Common stock issued for expenses
   
25,000
     
-
 
   Amortization of debt issue costs
   
--
     
17,745
 
   Change in value of warrant and derivative liabilities
   
302,521
     
(28,400
)
Changes in assets and liabilities:
               
   Accounts payable
   
180,000
     
180,000
 
   Accrued expenses
   
-
     
-
 
   Accrued interest
   
122,067
     
85,905
 
Net cash used in operating activities
   
-
     
-
 
NET INCREASE (DECREASE) IN CASH AND
               
CASH EQUIVALENTS
   
-
     
-
 
CASH AND CASH EQUIVALENTS, Beginning of period
   
(2,834) 
     
(2,834)
 
CASH AND CASH EQUIVALENTS, End of period
 
$
(2,834) 
   
$
(2,834)
 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
           
Interest paid
 
$
-
   
$
-
 
Income taxes paid
 
$
-
   
$
-
 
Supplemental disclosure of cash flow information
               
Cash paid for:
               
   Interest
 
$
-
   
$
-
 
   Income Taxes
 
$
-
   
$
-
 
Supplemental disclosure of non-cash investing and financing activities:
           
   Rent contributed to capital
 
$
-
   
$
6,000
 
 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
 
 
 
 
5

 
 
 
Notes to the Condensed Consolidated Financial Statements
For the Nine Months Ended September 30, 2010
(Unaudited)
 
 
Note 1 - Unaudited Financial Information
 
Premiere Publishing Group, Inc. (“Premiere”) was incorporated in Nevada on March 25, 2005. Premiere and its wholly owned subsidiary Poker Life LLC, (“Poker Life”) a New York limited liability company (collectively, the “Company”) have limited operations.
 
Going Concern
 
The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles, which contemplates continuation of the Company as a going concern. The Company incurred a net loss of $629,588 and $255,250  for the nine months ended September 30, 2010 and 2009, respectively and as of September 30, 2010 the Company has an accumulated deficit of $8,827,994 and a working capital deficit of $3,791,586.  Consequently, the aforementioned items raise substantial doubt about the Company’s ability to continue as a going concern.
 
The Company’s ability to continue as a going concern is dependent upon its ability to repay its substantial indebtedness, acquire an operating business and raise capital through equity and debt financing or other means on desirable terms. If the Company is unable to obtain additional funds when they are required or if the funds cannot be obtained on favorable terms, management may be required to, liquidate available assets, restructure the company or cease operations. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.
 
Plan of Operations
 
We have ceased all publishing operations, and our operations consist solely of attempting to preserve our status as a public company, seek to compromise our debt and identify a business combination with an operating company. We will use our limited resources to pay for our minimal operations and legal, accounting and professional services required to prepare and file our reports with the SEC. Our remaining resources, however, will be sufficient to sustain us as an inactive company for only the short-term. If we are unable to locate additional financing within the short-term, we will be forced to suspend all public reporting with the SEC and possibly liquidate.
 
 Our indebtedness is substantial which must be settled prior to undertaking an acquisition of an operating company. As of the date of this report, we have not settled any of our obligations and may unable to do so. Failure to settle these obligations may also require us to suspend current filing with the SEC and force us to liquidate.
 
 
 
 
6

 
 
Our primary objective is to identify a suitable operating company with a view to achieving long-term growth. As of the date of this report, we have not identified a particular industry and have determined not to restrict our search for a target company to any specific business, industry or geographical location.     As of the date of this report, we have engaged in general discussions with several companies  regarding a transaction and will continue to do so for the foreseeable future.
 
Note 5 – Capital Stock
 
Common Stock
 
During the quarter ended June 30, 2010, the Company issued 24,246,286 shares of common stock in exchange for payment of expenses in the amount of $25,000.
 
As of September 30th, 2010 the Company has 78,493,132 shares of its $0.001 par value common stock issued and outstanding
 
Registration Rights
 
The Company has granted piggy-back registration rights to the holders of the Divine Notes in respect of the shares of common stock in which the Divine Notes may be converted, which rights expire in November 2011. The cost to the Company of registering such shares shall not exceed $55,000. The Company is also obligated to register upon demand 28,000,000 shares of common stock at the sole expense of the Company.
 
Note 6 – Accounts and Notes Payable
 
Accounts Payable
 
The Company’s consolidated accounts payable at June 30, 2010 is $1,131,011.
 
Secured Note Payable
 
The Company (Premiere, Poker Life and Sobe, jointly and severally) entered into a settlement agreement with R.R. Donnelly & Sons Company (“Donnelly”) on June 6, 2007. As part of the settlement, the Company issued to Donnelly a Secured Promissory Note in the principal sum of $601,048, with an interest rate of 9% per annum and a requirement for monthly payments of $43,577 and granted Donnelly a first lien security interest in all of the Company’s assets. The Company was unable to meet the monthly payments and Donnelly obtained judgment in the amount of $653,841. The accompanying financial statements include $44,133 of interest expense for the nine months ended September 30, 2010, and a total balance due at September 30, 2010 of $830,895. R.R. Donnelly is no longer the holder of this Note, which was sold to one of the Company's Directors in March of 2008.
 
Unsecured Notes Payable
 
The Company has an unsecured note payable in the principal amount of $77,842. This note was issued to a vendor on August 23, 2007. The note bears interest at the rate of 10% per annum and required monthly payments of $4,500 with final payment due on July 15, 2008. The Company has made no payments under this note and the note is in default. The accompanying financial statements include $4,530 of interest expense for the nine months ended September 30, 2010 with a total balance due at September 30, 2010 of $86,722.
 
 
 
 
7

 
 
Convertible Notes Payable
 
The Company’s convertible notes payable consist of two series of unsecured convertible promissory notes; (i) $250,000 in principal amount of 8% convertible notes issued in 2005 to two investors as part of the Company’s 2005 bridge note financing (the “Bridge Notes”), and (ii) $480,000 in aggregate principal amount of 6% convertible notes issued in 2006 and 2007 to sixteen investors pursuant to a private placement offering conducted by Divine Capital Markets LLC (the “Divine Notes”).
 
The Bridge Notes
 
The Company has $250,000 of principal amount of 8% convertible promissory Bridge Notes with an original maturity date of October, 2005. The principal amount of each Bridge Note is convertible, at the option of the holder at anytime into shares of the Company’s common stock at the rate of $0.25 per share. The Company may at its election, pay the interest due on the Bridge Notes in shares of common stock at the rate of $0.50 per share. The estimated number of shares potentially issuable upon an election to convert all of the Bridge Notes would be approximately 1,100,000 shares of common stock. The accompanying financial statements include $30,204 of interest expense for the nine months ended September 30, 2010, respectively with an aggregate balance due at September 30, 2010 of $370,319.
 
The Divine Notes
 
 The Company has $480,000 of principal amount of 6% convertible promissory Divine Notes with an original maturity date of November, 2009. The principal amount of each Divine Note is convertible, at the option of the holder into shares of the Company’s common stock. The convertible notes accrue interest at 6% per annum and are due three years after issuance. The Company paid $69,800 in fees and commissions to Divine Capital Markets LLC as debt issue costs. Debt issue costs are being amortized over the term of the notes. The accompanying financial statements include $43,200 of accrued interest expense for the ninemonths ended September 30, 2010, respectively with an aggregate balance due at March 31, 2010 of $769,805, including the derivative liability of $192,451.
 
Upon the occurrence of an event of default, the full unpaid amount of the Divine Notes becomes, at the election of the holder, immediately due and payable. The Company is in default under the terms of the Divine Notes and the notes are included in the accompanying financial statements as current liabilities.
 
The Divine Notes are convertible into shares of the Company’s common stock at a ratio determined by dividing the dollar amount being converted by 75% of the lowest closing bid of the Company’s common stock for the fifteen (15) trading days immediately preceding the date of conversion. The estimated conversion price at September 30, 2010 is $0.0075 per share and the estimated number of shares potentially issuable upon an election to convert all of the Divine Notes would be approximately 76,980,533 shares of common stock. The Company does not have a sufficient number of authorized and unissued shares of common stock to meet this obligation, and will be required to amend its articles of incorporation (which requires shareholder approval) in order to increase its number of authorized shares in order to meet such obligation.
 
Accrued Derivative Liability
 
The accrued derivative liability of $192,451 represents the September 30, 2010 unamortized fair value of the liability associated with the beneficial conversion feature associated with the conversion provision of the Company’s convertible notes and is recorded as a debt discount. The fair value of the beneficial conversion feature is measured at each reporting period with changes in fair value recognized in net income.
 
 
 
 
 
8

 
 
Note 7 – Officer’s Compensation
 
The Company is not party to any employment agreements  or at will contracts and there are no accruals of salary being taken by Mr. Barrientos.
 
On August 7, 2007 the Company entered into a Consulting Agreement together with an Investors Rights Agreement with Totowa Consulting Group, Inc. (“Totowa”). The agreements provide for Totowa to assist the Company in its negotiations with creditors and to advise the Company as to financing, cash flow management and business and financial planning. The term of the Consulting Agreement is for 24 months with a monthly fee of $20,000 and provides for the payment of the first seven months in advance with the issuance of 28,000,000 shares of restricted fully vested common stock. The accompanying financial statements include consulting fee expense of $180,000 for the nine months ended September 30, 2010.
 
The Consulting Agreement includes a provision for anti-dilution in value, whereby additional shares may be issued to Totowa in the event the trading price of the Company’s common stock declines to an amount less than the original issuance value of one-half of one cent ($0.005) per share as measured by the market price at the six month anniversary of the Agreement.
 
The Investor Rights Agreement, among other things, (i) prohibits Totowa from transferring its shares to anyone other than certain permissible persons for a period of one year from the date of the Agreement, (ii) grants Totowa registration rights in respect of its shares, and (iii) in the event the Company issues additional voting securities at any time during a period of seven years from the date of the Agreement, grants Totowa the right to purchase further securities in number sufficient for Totowa to maintain ownership of 51% of the outstanding voting securities of the Company at a purchase price equal to the price of Totowa’s original issuance of one-half cent per share.
 
Note 9 – Material Subsequent Events and Contingencies
 
The Secured Note which was given to RR Donnelly in lieu of its claim against the company was purchased by Birchwood Capital Advisors Group, Inc., in March of 2008. “Birchwood” is controlled by Mr. Chris H Giordano one of the company's directors in a private transaction.
 
The Totowa Agreement expired on August 7, 2009 and all rights under the agreement have been terminated.
 
 
 
 
 
9

 
 
Item 2. Management's Discussion and Analysis or Plan of Operation
 
The following discussion of our plan of operations should be read in conjunction with the financial statements and the related notes thereto included elsewhere in this quarterly report.
 
Forward Looking Statements
 
Because the Company intends to take advantage of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, the Company cautions readers regarding forward looking statements found in the following discussion and elsewhere in this report and in any other statement made by, or on the behalf of the Company, whether or not in future filings with the Securities and Exchange Commission. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company's control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by or on behalf of the Company. The Company disclaims any obligation to update forward-looking statements.
 
Readers are also urged to carefully review and consider the various disclosures made by the Company in this report that seek to advise interested parties of the risks and other factors that affect the Company's business. Interested parties should also review the Company's reports on Forms 10-KSB, 10-QSB, 10-Q and 8-K and other reports that are periodically filed with or furnished to the Securities and Exchange Commission. The risks affecting the Company's business include, among others: continuation as a going concern; obtaining financing and obtaining such financing on suitable terms; successful compromise or payment of the Company's substantial debt; the Company's continuing compliance with applicable laws and regulations; intellectual property challenges and claims; and success in identifying and acquiring a suitable acquisition or merger company. All forward-looking statements, whether made in this report or elsewhere, should be considered in context with the various disclosures made by the Company about its business.
 
Plan of Operation
 
Our business was the preparation for publication of specific interest magazines for others and the publication and distribution of our own magazine, titled "Poker Life Magazine." Our business was conducted through our principal operating subsidiary Poker Life LLC, a New York limited liability company. We also published the Trump Magazine under the terms of a license agreement with Donald Trump through our subsidiary Sobe Life LLC ("Sobe"), a Illinois limited liability company. Sobe has ceased operations and is the subject of an involuntary bankruptcy proceeding filed on September 20, 2007 which has been terminated.
 
 
 
 
10

 
 
We have temporarily suspended publication of Poker Life Magazine and presently are earning no revenue. Before resuming publication we require additional financing and arrangements for the settlement of our debts. We have made significant progress in our negotiations with our Senior Creditors for the settlement of the amounts owed them. Such negotiations are continuing and we are unable to predict the outcome of these negotiations with them and our trade creditors.
 
Our current funds are less than necessary for the continued operation of our business and are not sufficient to permit us to continue publishing. Our present operations depend upon the continued support of our shareholders and Director, Mr. Chris Giordano and our continuation as a going concern is dependent upon continued financial support from these parties.
 
In order to resume publication and provide for future business, the Company requires additional financing. In addition, the Company will have to provide for the payment of its substantial debt which as of September 30, 2010 totals $3,791,586 of current liabilities. The company is  in substantial negotiations with its creditors in order to settle their outstanding claims.
 
We do not currently have any commitments for financing and we may not be able to find such financing and, if available, such financing may not be available on reasonable terms. Obtaining additional financing is subject to a number of factors, including market conditions and overall investor sentiment, and such factors may make the timing, amount, terms or conditions of additional financing unavailable to us.
 
Item 3. Quantitative and Qualitative Disclosures About Market Risk
 
The Company has no market risk sensitive instruments.
 
Item 4. Controls and Procedures
 
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports that we file under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based on the definition of “disclosure controls and procedures” in Rule 13a-15(e).  In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
 
At the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation, under the supervision and with the participation of our former management, including our  principal Executive Officer and our principal  accounting Officer, of the effectiveness of the design and operation of our disclosure controls and procedures.  Based on the foregoing, our principal Executive Officer and our principal accounting  Officer concluded that our disclosure controls and procedures were effective to ensure that all material information required to be disclosed in this Quarterly Report on Form 10-Q has been made known to them in a timely fashion.
 
 
 
 
 
11

 
PART II - OTHER INFORMATION
 
 
 
Item 1. Legal Proceedings
 
None.
 
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 
None.
 
Limitations on the Payments of Dividends
 
None.
 
Item 3. Defaults Upon Senior Securities
 
None.
 
Item 4. Submission of Matters to a Vote of Security Holders
 
None.
 
Item 5. Other Information
 
None.
 
Item 6. Exhibits
 
Exhibit  Exhibit 
No.
 
   
31.1 *  Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer and Principal Financial & Accounting Officer 
   
32.1 * 
 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Principal Executive Officer and Principal Financial & Accounting Officer
 
 
* Filed herewith.
 
 
 
12

 
 
 
 
SIGNATURES
 
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
 
  
Premiere Publishing Group, Inc.
         
         
Date November 22, 2010
 
/ s/ Omar Barrientos
 
     
President
 
     
Principal Executive Officer and
 
     
Principal Accounting Officer
 

 
 
 
 
 
 
 

 
 
 
 
 
 
 
13