Authentic Holdings, Inc. - Quarter Report: 2012 June (Form 10-Q)
FORM 10-Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended June 30, 2012
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from_________ to
Commission file number: 000-52047
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PREMIERE OPPORTUNITIES GROUP, INC.
(Exact name of small business issuer in its charter)
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Nevada
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11-3746201
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(State or other jurisdiction
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(I.R.S. Employer Identification No.)
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of incorporation
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or organization)
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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
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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x
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(Do not check if a smaller reporting company)
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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: 120,014,199 shares as of June 30, 2012
PREMIERE OPPORTUNITIES GROUP, INC.
INDEX
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Page
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PART I
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FINANCIAL INFORMATION
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3
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Item 1.
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Financial Statements
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3
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Consolidated Balance Sheets
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3
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Condensed Consolidated Statements of Operations (Unaudited)
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4
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Condensed Consolidated Statements of Cash Flows (Unaudited)
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5
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Notes to the Condensed Consolidated Financial Statements (Unaudited)
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6
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Item 2.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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13
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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14
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Item 4.
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Controls and Procedures
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14
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PART II
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OTHER INFORMATION
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15
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Item 1.
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Legal Proceedings
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15
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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15
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Item 3.
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Defaults Upon Senior Securities
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15
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Item 4.
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Submission of matters to a Vote of Security Holders
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15
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Item 5.
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Other Information
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15
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Item 6.
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Exhibits
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15
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Signatures
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15
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2
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Premiere Opportunities Group, Inc. and Subsidiaries
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(f/k/a Premiere Publishing Group, Inc. and Subsidiaries)
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Consolidated Balance Sheets
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June 30,
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December 31,
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2012
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2011
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(Unaudited)
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ASSETS
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Current assets:
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Cash
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$ | -- | $ | -- | ||||
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Total assets
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-- | -- | ||||||
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LIABILITIES AND STOCKHOLDERS' DEFICIT
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Current liabilities:
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Accounts payable
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72,000 | 493,195 | ||||||
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Accrued compensation
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340,000 | 340,000 | ||||||
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Secured note and accrued interest payable
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933,872 | 904,450 | ||||||
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Unsecured notes and accrued interest payable
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98,954 | 95,602 | ||||||
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Convertible notes and accrued interest,
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1,180,434 | 1,158,534 | ||||||
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Total current liabilities
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2,625,260 | 2,991,781 | ||||||
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Commitments and contingencies
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Stockholders' deficit
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Preferred stock $.001 par value, 1,000,000
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shares authorized, 200,000 issued and
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outstanding
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200 | 200 | ||||||
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Common stock $0.001 par value, 125,000,000
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shares authorized, 120,014,199 issued
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and outstanding
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120,014 | 120,014 | ||||||
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Additional paid-in capital
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5,358,694 | 5,358,694 | ||||||
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Stock subscriptions received
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57,400 | 15,000 | ||||||
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Accumulated deficit
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(8,161,568 | ) | (8,485,689 | ) | ||||
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Total stockholders' deficit
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(2,625,260 | ) | (2,991,781 | ) | ||||
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Total liabilities and stockholders' deficit
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$ | -- | $ | -- | ||||
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The accompanying notes are an integral part of these financial statements
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3
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Premiere Opportunities Group, Inc. and Subsidiaries
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(f/k/a Premiere Publishing Group, Inc. and Subsidiaries)
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Consolidated Statements of Operations and Discontinued Operations
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(Unaudited)
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For The Three Months Ended
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For The Six Months Ended
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June 30
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June 30
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2012
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2011
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2012
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2011
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Revenues
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$ | 10,000 | $ | -- | $ | 10,000 | $ | -- | ||||||||
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Operating expenses:
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General and administrative
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43,800 | 6,000 | 52,400 | 114,997 | ||||||||||||
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Consulting services
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-- | -- | -- | -- | ||||||||||||
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Total operating expenses
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43,800 | 6,000 | 52,400 | 114,997 | ||||||||||||
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Income (loss) from discontinued operations
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(33,800 | ) | (6,000 | ) | (42,400 | ) | (114,997 | ) | ||||||||
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Other income (expense)
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Other income
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421,195 | -- | 421,195 | -- | ||||||||||||
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Interest expense and financing costs
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(27,337 | ) | (27,337 | ) | (54,674 | ) | (54,675 | ) | ||||||||
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Change in value of derivative liabilities
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-- | -- | -- | -- | ||||||||||||
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Total other income (expenses)
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from discontinued operations
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393,858 | (27,337 | ) | 366,521 | (54,675 | ) | ||||||||||
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Income (loss) before provision for income taxes
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360,058 | (33,337 | ) | 324,121 | (169,672 | ) | ||||||||||
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Provision for income taxes
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-- | -- | -- | -- | ||||||||||||
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Net income (loss) from discontinued operations
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$ | 360,058 | $ | (33,337 | ) | $ | 324,121 | $ | (169,672 | ) | ||||||
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Net loss per common share
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$ | 0.00 | $ | (0.00 | ) | $ | 0.00 | $ | (0.00 | ) | ||||||
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Weighted average common shares outstanding
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120,014,199 | 98,128,139 | 120,014,199 | 98,128,139 | ||||||||||||
The accompanying notes are an integral part of these financial statements
4
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Premiere Opportunities Group, Inc. and Subsidiaries
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(f/k/a Premiere Publishing Group, Inc. and Subsidiaries)
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Consolidated Statements of Operations and Discontinued Operations
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(Unaudited)
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For the Six Months
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Ended June 30,
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2012
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2011
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Cash flows from discontinued operating activities:
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Net income (loss)
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$ | 324,121 | $ | (169,672 | ) | |||
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Adjustments to reconcile net loss to net cash
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used in operating activities:
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Accounts payable written off
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(421,195 | ) | -- | |||||
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Common stock issued for services
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-- | 60,000 | ||||||
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Common stock issued for expenses paid
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-- | -- | ||||||
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Change in value of derivative liabilities
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-- | -- | ||||||
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Changes in assets and liabilities:
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Accounts payable
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-- | -- | ||||||
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Accrued interest
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54,674 | 54,675 | ||||||
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Net cash used by discontinued operating activities
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(42,400 | ) | (54,997 | ) | ||||
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Cash flows from financing activities:
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Proceeds from sale of common stock
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-- | |||||||
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Stock subscriptions received
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42,400 | 70,000 | ||||||
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Total cash flows from financing activities
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-- | 70,000 | ||||||
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Net decrease in cash
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-- | 15,003 | ||||||
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Cash at beginning of period
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-- | -- | ||||||
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Cash at end of period
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$ | -- | $ | 15,003 | ||||
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Supplemental disclosure of cash flow information:
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Cash paid during the periods for:
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Interest
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-- | -- | ||||||
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Income taxes
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$ | -- | $ | -- | ||||
The accompanying notes are an integral part of these financial statements
5
Premiere Opportunities Group, Inc. and Subsidiaries
(f/k/a Premiere Publishing Group, Inc. and Subsidiaries)
June 30, 2012
Note 1 – Description of Business
Premiere Publishing Group, Inc. (“Premiere”) was incorporated in Nevada on March 25, 2005. The Company’s name change to Premiere Opportunities Group, Inc. was approved by the State of Nevada on June 29, 2011. Premiere and its subsidiaries (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 has an accumulated deficit of $8,161,568 and a working capital deficit of $2,625,250. 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.
The Company discontinued all publishing activities, its sole business activity, during 2007. the company had a net income from discontinued operations of $153,802, primarily from the write-off of stale accounts payable (see Revenue Recognition policy below) and suffered a loss from discontinued operations of $441,085 at December 31, 2010.
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 be 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.
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 not engaged in any specific discussions with any potential company regarding a transaction. In addition, although we have not developed any definitive criteria for evaluating a successful target.
6
Our financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of our financial statements requires us to make estimates and judgments that affect the reported amount of assets, liabilities, revenues and expenses. These estimates are based on information that is currently available to us and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could vary significantly from those estimates under different assumptions and conditions.
Critical accounting policies are defined as those significant accounting policies that are most critical to an understanding of a company’s financial condition and results of operation. We consider an accounting estimate or judgment to be critical if (i) it requires assumptions to be made that were uncertain at the time the estimate was made, and (ii) changes in the estimate or different estimates that could have been selected could have a material impact on our results of operations or financial condition.
Principles of Consolidation
The accompanying consolidated financial statements include all of the accounts of Premiere and its wholly owned subsidiary Poker Life LLC for all periods presented and include the accounts of Sobe Life LLC from the date of formation to the date of abandonment on September 23, 2007 All significant intercompany accounts and transactions have been eliminated.
Equity-Based Compensation Arrangements
The Company adopted ASC Topic 718 (formerly SFAS No. 123 revised 2004), “Share-Based Payment” (“SFAS 123(R)”), on January 1, 2006, which requires the measurement and recognition of compensation expense for all share-based awards made to employees and directors, including employee stock options and shares issued.
Through its employee stock purchase plan, based on estimated fair values. Prior to the adoption of SFAS 123(R), the Company accounted for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees.” Under the intrinsic value method that was used to account for stock-based awards prior to January 1, 2006, which had been allowed under the original provision of SFAS 123, compensation expense is recorded on the date of grant if the current market price of the underlying stock exceeded the exercise price. Any compensation expense is recorded on a straight-line basis over the vesting period of the grant. The adoption of this standard had no impact to the Company’s financial position, results of the operations or cash flows as the Company’s previous stock-based compensation awards expired prior to January 1, 2006. See Note 7 for a description of the Company’s Share Based Agreement established during 2010.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and investments in money market funds. The Company considers all highly-liquid instruments with an original maturity of 90 days or less at the time of purchase to be cash equivalents.
Trade Accounts Receivable
Trade accounts receivable are stated at outstanding balances, less an allowance for doubtful accounts. The allowance for doubtful accounts is established through provisions charged against income. Accounts deemed to be uncollectible are charged against the allowance and subsequent recoveries, if any, are credited to the allowance. The allowance for doubtful accounts is maintained at a level considered adequate to provide for losses that can be reasonably anticipated. Management’s periodic evaluation of the adequacy of the allowance is based on past experience, aging of the receivables, adverse situations that may affect a customer’s ability to pay, current economic conditions and other relevant factors. This evaluation is inherently subjective as it requires estimates that may be susceptible to significant change. Unpaid balances remaining after the stated payment terms are considered past due.
7
Equipment
Property and equipment are stated at cost. Costs of replacements and major improvements are capitalized, and maintenance and repairs are charged to operations as incurred. Depreciation expense is provided primarily by the straight-line method over the estimated useful lives of the assets, five years for computer equipment, and ten years for office furnishings. Depreciation for the three months ended June 31, 2012 and 2011 was $-0- and $-0- respectively. The equipment had been abandoned during 2008 , and the remaining value of $41,633 was impaired at December 31, 2008.
Capitalized Interest
There was no capitalized interest during 2011 or 2012 to date.
Revenue Recognition
Revenues are recognized only when realized / realizable and earned, in accordance with GAAP. Advertising revenues are recognized when the underlying advertisements are published, defined as the issuer’s on-sale date. Barter advertising revenues and the offsetting expense are recognized at the fair value of the advertising as determined by similar cash transactions. Revenues from magazine subscriptions are deferred and recognized proportionately as products are delivered to subscribers. The Company had $10,000 in revenue for the three months ended June 30, 2012 giving credence only to the cash portion of its advisory fees and zero value to the equity portion of such fees.
During the second quarter of 2012, the Company reviewed all of its outstanding liabilities to determine their enforceability and collectability in light of the applicable statute of limitations. Based upon this review, the Company concluded that by operation of law approximately $421,000 of its outstanding liabilities are no longer collectable and should be written-off. These uncollectable liabilities consisting of accounts payable. The liabilities were written off resulting in an increase to other revenue.
Advertising expenses
Advertising costs are expensed when the advertising takes place. The total advertising expenses included in the consolidated statement of operations for the three months ended June 30, 2012 and 2011 was $-0- and $-0-.
Income taxes
Income taxes are accounted for under the asset and liability method as stipulated by A5C 740 "Income Taxes". Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under A5C 740, the effect on deferred tax assets and liabilities or a change in tax rate is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced to estimated amounts to be realized by the use of a valuation allowance. A valuation allowance is applied when in management's view it is more likely than not (50%) that such deferred tax will not be utilized.
The Company adopted certain provisions under A5C Topic 740, which provide interpretative guidance for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Effective with the Company's adoption of these provisions, interest related to the unrecognized tax benefits is recognized in the financial statements as a component of income taxes.
In the unlikely event that an uncertain tax position exists in which the Company could incur income taxes, the Company would evaluate whether there is a probability that the uncertain tax position taken would be sustained upon examination by the taxing authorities. Reserves for uncertain tax positions would be recorded if the Company determined it is probable that a position would not be sustained upon examination or if payment would have to be made to a taxing authority and the amount is reasonably estimated. As of December 31, 2011, the Company does not believe it has any uncertain tax positions that would result in the Company having a liability to the taxing authorities. The Company's tax returns are subject to examination by the federal and state tax authorities for the years ended 2008 through 2011.
8
Impairment or Disposal of Long-Lived Assets:
ASC Topic 360 (formerly FASB issued Statement No. 144), "Accounting for the Impairment or Disposal of Long-Lived Assets" ("FAS 144") clarifies the accounting for the impairment of long-lived assets and for long-lived assets to be disposed of, including the disposal of business segments and major lines of business. Long-lived assets are reviewed when facts and circumstances indicate that the carrying value of the asset may not be recoverable. When necessary, impaired assets are written down to their estimated fair value based on the best information available.
In December 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) No. 2011-11, an amendment to the accounting guidance for disclosure of offsetting assets and liabilities and related arrangements. The amendment expands the disclosure requirements in that entities will be required to disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. The amendment is effective for fiscal years, and interim periods within those years, beginning on or after January 1, 2013, and shall be applied retrospectively. We do not expect the adoption of this accounting pronouncement to have a material effect on our financial statements when implemented.
In September 2011, the FASB issued Accounting Standards Update (ASU) 2011-8an amendment to the accounting guidance for goodwill in order to simplify how companies test goodwill for impairment. The amendment permits an entity to first assess the qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. The amendment is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted. We elected not to early adopt. We do not expect the adoption of this accounting pronouncement to have a material effect on our financial statements when implemented.
In June 2011, the FASB issued Accounting Standards Update (ASU) 2011-05 an amendment to the accounting guidance for presentation of comprehensive income. Under the amended guidance, an entity may present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In either case, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. For public companies, the amendment is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, and shall be applied retrospectively. Early adoption is permitted. We elected not to early adopt. Other than a change in presentation, the implementation of this accounting pronouncement is not expected to have a material impact on our financial statements when implemented.
In May 2011, the FASB issued an amendment to the accounting guidance for fair value measurement and disclosure. Among other things, the guidance expands the disclosure requirements around fair value measurements categorized in Level 3 of the fair value hierarchy and requires disclosure of the level in the fair value hierarchy of items that are not measured at fair value in the statement of financial position but whose fair value must be disclosed. It also clarifies and expands upon existing requirements for measurement of the fair value of financial assets and liabilities as well as instruments classified in shareholders’ equity. The guidance is effective for interim and annual periods beginning after December 15, 2011. We do not expect the adoption of the guidance to have a material impact on our financial statements when implemented.
There are no other new accounting pronouncements adopted or enacted during the twelve months ended December 31, 2011 that had, or are expected to have, a material impact on our financial statements.
9
Use of Accounting Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Fair Value
FASB ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) establishes a framework for all fair value measurements and expands disclosures related to fair value measurement and developments. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
ASC 820 requires that assets and liabilities measured at fair value are classified and disclosed in one of the following three categories:
Level 1—Quoted market prices for identical assets or liabilities in active markets or observable inputs;
Level 2—Significant other observable inputs that can be corroborated by observable market data; and
Level 3—Significant unobservable inputs that cannot be corroborated by observable market data.
The carrying amounts of cash, accounts receivable, accrued compensation, accounts payable and other liabilities, accrued interest payable, and short-term portion of notes payable approximate fair value because of the short-term nature of these items.
Concentration of credit risk
The carrying value of short-term financial instruments, including cash, restricted cash, trade accounts receivable, accounts payable, accrued expenses and short-term debt, approximates the fair value of these instruments. These financial instruments generally expose the Company to limited credit risk and have no stated maturities or have short-term maturities and carry interest rates that approximate market. The Company maintains cash balances at financial institutions that are insured by the FDIC. At December 31, 2011 or 2010 the Company had no amounts in excess of the FDIC limit.
Earnings (loss) per share
In accordance with SFAS No. 128, “Earnings Per Share,” the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. At December 31, 2011, potential dilutive securities were convertible notes that are convertible into 64,000,000 shares of common stock. For the years ended December 31, 2011 and 2010, the Company incurred a net loss; therefore the effect of any dilutive securities would be anti-dilutive. During the year ended December 31, 2011 potential dilutive securities consisting of 1,989,990 warrants expired.
Note 3 – Sobe Life LLC
Involuntary Bankruptcy
On September 20, 2007 three creditors of Sobe Life LLC (“Sobe”) filed a petition for involuntary bankruptcy with the United States Bankruptcy Court for the Southern District of New York Case No. 07-12963. Involuntary bankruptcy is a process where a court appointed trustee is empowered to liquidate the non-exempt property, if any, of the debtor and distribute the proceeds to the creditors of the debtor. The Company did not oppose the petition. As of the date of filing, Sobe had assets of $35,575, current liabilities of $505,890 and was jointly liable with Premiere on an additional $727,186 of current liabilities. Following the filing of the petition for involuntary bankruptcy, the Company has written off and abandoned its investment in Sobe.
10
Termination of Trump Licensing Agreement
Sobe was the publisher of the “Trump Magazine,” of which it ceased publication following the winter edition. On August 31, 2007 Trump World Publications, LLC and Mr. Donald Trump (“Trump”) terminated their publishing and licensee agreements with Sobe. On the date of termination, Sobe owed Trump $270,000 of unpaid license fees.
Note 4 – Capital Stock
Preferred stock
The Company has designated a “Class B Convertible Preferred Stock” (the “Class B Preferred”. The number of authorized shares totals 1,000,000 and the par value is $.001 per share. The Class B Preferred share holders vote together with the common stock as a single class. The holders of Class B Preferred are entitled to receive all notices relating to voting as are required to be given to the holders of the Common Stock. The holders of shares of Class B Preferred shall be entitled to 10,000 votes per share. The Class B Preferred Stock will have the rights to liquidation as all classes of the Common Stock of the company. The Class B Preferred stock holders are entitled to receive dividends at the rate of 8% per annum, and are accrued daily. The Class B Preferred Stock shall be redeemed by the Corporation for 100% of the original purchase price plus the amount of cash dividends accrued on the earlier of 6 months from the date of issuance, or the date that the Corporation received its funding from any outside source in conjunction with a merger, reverse merger or any change of control. In the event of any liquidation, dissolution or winding up of the Corporation, either voluntary or involuntary, the holders of the Class B Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any assets of the Corporation to the holders of the Common Stock, the amount of $.035 per share plus any and all accrued but unpaid dividends.
During the fourth quarter, 2011, a total of 200,000 shares of the Series B Preferred Stock were issued to a related party for legal and accounting fees paid for the Company’s benefit in the amount of $7,500.
Common Stock
As of June 30, 2012 the Company has 120,014,199 shares of its $0.001 par value common stock issued and outstanding. In addition common stock subscriptions of $15,000 have been received.
As of June 30, 2012 the Company had the following warrants for the purchase of shares of common stock issued and outstanding:
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Warrants
Outstanding
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Weighted
Average
Exercise
Price
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Aggregate
Intrinsic
Value
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||||||||||
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Outstanding, December 31, 2009
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1,989,990
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$
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0.58
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$
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0
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Granted
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-
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-
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Expired
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1,989,990
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$
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0.58
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$
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0
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Exercised
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-
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-
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||||||||||
|
Outstanding, December 31, 2010
|
0
|
0
|
0
|
|||||||||
11
Note 5 – Accounts and Notes Payable
Accounts Payable
The Company’s consolidated accounts payable at December 31, 2011 is $138,170. . On August 28, 2007 386 PAS Partners LLC, the Company’s former landlord, was granted a judgment against the Company in the amount of $85,025 for unpaid rent, which amount is included in accounts payable.
During the fourth quarter of 2010, the Company reviewed all of its outstanding liabilities to determine their enforceability and collectability in light of the applicable statute of limitations. Based upon this review, the Company concluded that by operation of law approximately $400,650 its outstanding liabilities are no longer collectable and should be written-off. These uncollectable liabilities consisting of accounts payable. The liabilities were written off resulting in an increase to other revenue.
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. This note was subsequently sold to a Director of the Company. The balance of this note plus accrued interest totals $933,872 and $904,450 at June 31, 2012. A related party has purchased this note from R.R. Donnelly & Sons Company.
The Company has an unsecured note payable in the principal amount of $67,057. 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 balance of this note plus accrued interest totals $99,954 at June 30, 2012.
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 balance of the convertible notes payable plus accrued interest and the accrued derivative liability is $1,180,034.
The Bridge Notes
The Company’s $250,000 Bridge Notes had an original maturity date of October, 2005. The Bridge Notes have not been repaid and are currently in default, and are included in the accompanying financial statements as current liabilities. 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.
12
The Divine Notes
The Company’s $480,000 Divine Notes have 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 debentures accrue interest at 6% 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 were amortized over the term of the notes and is fully amortized at December 31, 2011.
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 March 31, 2012 is $0.075 per share and the estimated number of shares issuable upon an election to convert all of the Divine Notes at the March 31, 2012 conversion price would be approximately 64,000,000 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.
The Company is actively negotiating with the Note holders the conversion of the Notes to common equity. There can be no assurance that the results of such negotiations will have a favorable outcome or that upon such conversion would not be highly dilutive to shareholders.
Note 6 – Consulting Agreement
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 shares issued to Totowa constitute approximately 51.87% of the total shares of common stock outstanding. The Investors Rights Agreement includes a provision that requires the Company sell additional shares to Totowa in the event its ownership interest in the Company’s voting common stock falls below 51% at any time during the seven year period following the date of the Agreement.
The shares of common stock issued to Totowa have been valued based upon the fair value of the services rendered. The Company determined that the value of the services is an appropriate measurement for the fair value of the shares issued, in that the shares of the Company’s common stock are not now actively traded and the share price has continued to decline such that as of the date of this report the quoted bid price is four-tenths of one-cent ($0.004) per share. The accompanying financial statements include $340,000 of accrued consulting fees as of December 31, 2011 and 2010. During the year ended December 31, 2010 $340,000 of accrued consulting fees under this contract were forgiven and included in additional paid-in capital.
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.
13
Note 7 – Share award agreement
On July 8, 2010 the Company a Share Award Agreement (the “Agreement”) with the Company’s Co-Chairmen. The Agreement grants each participant the right to receive up to 7,500,000 shares of the Company’s $.001 par value common stock under the following terms:
The following table sets forth the number of Shares that the Company shall deliver to each of the two Participants at the end of any 20 consecutive day trading period where the Company’s per Share price has closed at or above the following price for each day during such trading period:
|
Price Achieved
|
Number of Shares
to be Delivered
|
|
$0.10
|
1,250,000
|
|
$0.25
|
1,250,000
|
|
$0.50
|
1,500,000
|
|
$1.00
|
3,500,000
|
|
Total
|
7,500,000
|
The Company shall have at all times available and reserved for issuance pursuant to this Agreement authorized but unissued Shares in amounts sufficient to meet the Company’s obligations to issue Shares to the Participant under this Agreement.
To date none of these shares have been awarded or earned.
Vesting and Forfeiture Provisions.
(i) Except as otherwise provided at such time as the Participant is no longer serving for any reason as an officer, director, or employee of the Company or any subsidiary of the Company, the Participant shall forfeit the right to delivery of any further Shares.
(ii) In the event that the Company undergoes a Change in Control while the Participant is serving as an officer, director, or employee of the Company or any subsidiary of the Company or during the period of one year beginning on the first day after the Participant is no longer serving for any reason as an officer, director, or employee of the Company or any subsidiary of the Company, then the Participant shall become vested in 100% of the Shares effective immediately prior to the time of the Change in Control.
(iii) If the Participant dies while serving as an officer, director, or employee of the Company, the Participant shall become vested in 100% of the Shares effective immediately prior to his death.
(iv) If the Company pays any dividend, other than ordinary course cash dividends, to its shareholders while the Participant is serving as an officer, director, or employee of the Company or any subsidiary of the Company, the Participant shall become vested in 100% of the Shares effective immediately prior to such dividend payment.
For each year, the Company shall pay to the Participant such additional compensation as is necessary (after taking into account all federal, state, and local taxes, including income, excise, and employment taxes payable by the Participant as a result of the receipt of such additional compensation) to place the Participant in the same after-tax position he would have been in had no tax been paid or incurred with respect to the benefits received under this Agreement (the “Tax Gross-Up”). The Tax Gross-Up shall be determined assuming that the maximum federal, state, and local tax rates apply to all such amounts and shall include interest and penalties, if any. Any applicable Tax Gross-Up shall be paid to the Participant, withheld, or remitted, as applicable, in cash or stock, at the option of the Company, at the appropriate time but no later than December 31 of each year. Notwithstanding the form of any Tax Gross-Up, it is the intent of the parties that the Participant will be in the same after-tax position he would have been in had no federal, state, and local taxes of any kind (or interest and penalties thereon) been payable with respect.
14
Note 8 – Income Taxes
The Company uses the liability method, whereby deferred taxes and liabilities are determined based on the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial and income tax reporting purposes. During 2011 and 2010, the company incurred net losses and, therefore, has no tax liability. The net deferred tax asset generated by the loss carry-forward has been fully reserved. The cumulative net operating loss carry-forward is approximately $8,500,000 at December 31, 2011, and will expire in the years 2025 through 2031.
At December 31, 2011, deferred tax assets consisted of the following:
|
2011
|
||||
|
Deferred tax assets
|
||||
|
Net operating loss carry forward
|
$
|
2,800,000
|
||
|
Valuation allowance
|
(2,800,000
|
)
|
||
|
Net deferred tax asset
|
$
|
---
|
The utilization of the carry forwards is dependent upon the Company's ability to generate sufficient taxable income during the carry forward period. In addition, utilization of these carry forwards may be limited due to ownership changes as defined in the Internal Revenue Code.
Note 9 – Commitments and Contingencies
Bankruptcy of Sobe Life LLC
On September 20, 2007 three creditors of Sobe filed a petition for involuntary bankruptcy with the United States Bankruptcy Court for the Southern District of New York. As of the date of the bankruptcy filing we had invested a total of approximately $3,800,000 in Sobe. Sobe had no cash resources and no assets of value. Accordingly, we do not expect any recovery of this amount.
On August 12, 2010 a wholly owned subsidiary of the Company acquired certain assets of BOLDTv excluding the following: (a) All television scripts, treatments, shows, music, lyrics and other creative materials that were created and copy written by Dan Bruder and/or Bold Horizon Entertainment LLC prior to this agreement will remain in the full ownership of Dan Bruder and/or Bold Horizon Entertainment LLC. Pursuant to the Non-Exclusive Agreement signed between BOLDtv Corporation and Bold Horizon Entertainment LLC on 8/10/09, BOLDtv Corporation will have non-exclusive rights to these materials. This includes, but is not limited to, programs including “ Who the Hell is Dan Bruder,” and all songs included in the soundtrack and accompanying album, “ Act of Kindness. ”
The Company has not assigned a value to the remaining assets at December 31, 2011.
Note 11 – Luminx Holdings, Inc.
During the year ended December 31, 2011 the Company acquired a 15% ownership of Luminx Holdings, Inc. in exchange for consulting services. The Company has not assigned a value to the investment at December 31, 2011 due to the lack of marketability of the minority interest.
15
Note 12 – Subsequent Events
On March 15, 2012 the Company signed a Letter of Intent to acquire Global Products Holdings, Inc. ("Global") in a reverse merger transaction. Global is a fully integrated design, apparel and manufacturing company based in NYC and also has a letter of intent to acquire 25 retail stores in South Korea with plans of expanding the store base in both South Korea and Mainland China. The Company has set a date of September 31st, 2012 for the potential closing of the transaction.
On March 29, 2012 the Company signed a letter of intent with Defense Technology Corporation (“DTC”) to advise the company in the funding, capital structure, strategic planning and going public process. DTC was formed in 2007 to bring products to market in the areas of personal and collateral protection.
On May 17, 2012 the Company signed an advisory agreement with Flex Fuel Technologies, Inc. to assist the company with its strategic planning, EPA testing and budget planning for the future introduction of its products into the automotive aftermarket. The Company will also assist Flex Fuel Technologies, Inc. with its other goal of becoming a public company and expects the Company to file its registration statement with the Securities and Exchange Commission.
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
We have completely discontinued any and all of our publishing operations from the past. We have no intention of starting any of the operations in the future. We have added key people to our Board of Directors with substantial experience in the areas of mergers and acquisitions and corporate planning. Henceforth, we are in the process of launching our new business model which centers itself around the expertise of our board members and their expertise in the area of corporate and strategic planning, recapitalizations, work out and bankruptcy planning as well as merger and acquisition planning.
16
None of our Board Members are compensated in the form of a salary or are they re-imbursed for any expenses related to our intended Plan of Operation. There is no expectation that either now or in the future that we will pay any officer or director a salary as an “ at will” or “contracted employee”. We are in discussions with several companies who are very interested in the services our group can provide and although there are no assurances that we will close any of these transactions it is our intent to pursue this area of advisory services aggressively.
We expect our overhead expenses to be limited primarily to our outside vendors such as legal and accounting as well as expenses associated with our transfer agent and our financial printing company.
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.
17
PART II - OTHER INFORMATION
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
The Secured Notes are held by the Company’s Co-Chairman Chris H Giordano. Although the Note is technically in default Mr. Giordano has not pursued any action against the Company and may not do so until a later date.
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
|
|
101
|
Interactive data files pursuant to Rule 405 of Regulation S-T.
|
* Filed herewith.
18
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 August 22, 2012
|
/ s/ Omar Barrientos
|
|||
|
President
|
||||
|
Principal Executive Officer and
|
||||
|
Principal Accounting Officer
|
||||
19