Digital Brand Media & Marketing Group, Inc. - Quarter Report: 2008 May (Form 10-Q)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE

For the quarterly period ended: May 31, 2008

(Exact name of small business issuer as specified in its charter)

c/o Paykin & Krieg, LLP 185 Madison Avenue New York, NY 10016

(Address of principal executive offices)

(Issuer's telephone number, including area code)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”) during the past 12 months (or for such a 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 [ ]

Indicate by check mark whether the registrant is a large accelerated filer, and accelerated filer, or non-accelerated filer.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes [] No [X]

Indicate by check mark whether the registrant has filed all the documents and reports required to be filed by Section 12, 13, or 15(d) of the Securities and Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes[X] No [ ]

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 118,818,885 shares of Common Stock, par value $.001 per share, as of July 15, 2008.

Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X].

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See notes to unaudited consolidated financial statements.

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NOTE 1 - NATURE OF BUSINESS

RTG Ventures, Inc. ("RTG" or the "Company") was incorporated in the state of Florida in September 1998 and was inactive until May 2003 when it acquired 100% of the outstanding common stock of MJWC, Inc. ("MJWC"), a British Virgin Island corporation, which is in the development stage.

MJWC was formed on July 17, 2000 and holds the contractual rights to promote and organize the Chinese Poker Championship, the Mah Jong Championship, and Chinese Chess Championship. On May 21, 2003 MJWC was acquired by RTG for 22,750,000 shares of RTG stock (the "Exchange"). The Exchange was completed pursuant to the Agreement and Plan of Reorganization between MJWC and RTG. The Exchange has been accounted for as a reverse acquisition under the purchase method for business combinations. Accordingly, the combination of the two companies was recorded as a recapitalization of MJWC, pursuant to which MJWC is treated as the continuing entity.

Effective August 27, 2003 the Company changed their fiscal year end from May 31 to August 31.

On May 22, 2003, the Company increased the number of authorized shares of common stock from 20,000,000 to 50,000,000.

On November 18, 2004, the Company increased the number of authorized shares of common stock from 50,000,000 to 100,000,000.

On August 12, 2005, the Company increased the number of authorized shares of no par value common stock from 100,000,000 to 200,000,000 and authorized capital of 2,000,000 no par value preferred shares. The Company amended both common and preferred stocks to reflect a par value of $.001 per share.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

Basis of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary MJWC, Inc. All significant inter-company transactions have been eliminated.

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Use of 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.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

Income Taxes

The Company accounts for income taxes under Statement of Financial Accounting Standard No.109, "Accounting for Income Taxes" ("SFAS109"). SFAS 109 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax losses and tax credit carryforwards. SFAS 109 additionally requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax asset.

Computation of Net Loss Per Share

The Company presents basic loss per share and, if appropriate, diluted earnings per share in accordance with SFAS 128, "Earnings Per Share ("SFAS 128"). Under SFAS 128 basic net loss per share is computed by dividing net income (loss) for the period by the weighted-average number of shares outstanding during the period. Diluted net income per share is computed by dividing net income for the period by the weighted-average number of common share equivalents during the period. Common stock equivalents arise from the issuance of stock options and warrants. Dilutive earnings per share are not shown as the effect is anti-dilutive.

Fair Value of Financial Instruments

The Company's financial instruments consist of accounts payable, accrued expenses and notes payable. The Company considers the carrying amounts of these financial instruments to approximate fair value due to the short-term nature of these liabilities.

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Stock Based Compensation

The Company has adopted FASB Statement of Financial Accounting Standard ("SFAS").123R "Share Based Payment." This statement is a revision of SFAS 123,and supersedes APB Opinion 25 and its related implementation guidance. SFAS 123R addresses all forms of share based payment ("SBP") awards including shares issued under employee stock purchase plans, stock options, restricted stock and stock appreciation rights. SBP awards result in a charge to operations that will be measured at fair value on the grant date, based on the estimated number of awards expected to vest over the service period.

Recent Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective, account standards, if currently adopted, could have a material effect on the accompanying financial statements.

NOTE 3 - GOING CONCERN

The Company's consolidated financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realizations of assets and liquidation of liabilities in the normal course of business. The Company has incurred an accumulated deficit for the period from July 17, 2000 (inception) through May 31, 2008 of approximately $5,559,000 and had negative working capital at May 31, 2008 of approximately $875,000. The Company incurred a net loss for the nine months ended May 31, 2008 of approximately $338,000. These factors, among others, raise substantial doubt about its ability to continue as a going concern. In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plans to obtain such resources for the Company include (1) obtaining capital from management and significant stockholders sufficient to meet its minimal operating expenses, and (2) seeking out and completing a merger with an existing operating company.

NOTE 4 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

At May 31, 2008 accounts payable and accrued expenses consisted of the following:

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NOTE 5 - STOCK OPTIONS

On September 1, 2007, the Company granted 2,500,000 stock options with a fair value of $33,500 as reported in the financial statements at November 30, 2007. The Black-Scholes option valuation model was used to estimate the fair value of the options granted in September 1, 2007. The model includes subjective input assumptions that can materially affect the fair value estimates. The model was developed for use in estimating the fair value of traded options that have no vesting restrictions and that are fully transferable. For example, the expected volatility is estimated based on the most recent historical period equal to the weighted average life of the options granted. Options issued under the Company's option plans have characteristics that differ from traded options. This valuation model does not necessarily provide a reliable single measure of the fair value of its employee stock options.

Principal assumptions used in applying the Black-Scholes model for options granted on September 1, 2007:

NOTE 6 - EMPLOYMENT AND CONSULTING AGREEMENTS

In April 2006, the Company entered into three year employment and consulting agreements with two officers for annual remuneration of $185,000 and $120,000. The Company also granted the officers stock options to purchase a combined total of 2,500,000 common shares at a price of $.001 per share. The options vested immediately and were to expire in April 2009. The options were exercised in full on January 30, 2007.

In September, 2007 additional options to purchase 2,500,000 common shares were granted to the officers of the Company These options were granted at the market value at the date of grant, vested immediately and were to expire five years from date of grant.

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Note 7 - SHARE EXCHANGE AGREEMENT

In December 2007 the Company entered into an Amendment to Share Exchange Agreement with Atlantic Network Holdings, Ltd, New Media TV Limited, both non U.S entities, and certain unaffiliated shareholders, whereby all of the above entities shares would be exchanged for 127,305,945 common shares of the Company. As of May 31, 2008 the acquirer had advanced $129,940 to the Company in anticipation of the completion of the pending transaction. As of July 2008, the transaction remained pending.

Note 8 - SUBSEQUENT EVENT

On July 14, 2008, the Company issued a note payable totaling $25,000. The note is due on or before September 30, 2008 in the amount of $37,500. 

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Item 2. Management's Discussion and Analysis or Plan of Operations

Cautionary Factors That May Affect Future Results

This Current Report on Form 10-Q and other written reports and oral statements made from time to time by the Company may contain predictive statements, all of which are subject to risks and uncertainties. One can identify these predictive statements by their use of words such as "expects," "plans," "will," "estimates," "forecasts," "projects" and other words of similar meaning. One can identify them by the fact that they do not relate strictly to historical or current facts. These statements are likely to address the Company's growth strategy, financial results and product and development programs. One must carefully consider any such statement and should understand that many factors could cause actual results to differ from the Company's predictive statements. These factors include inaccurate assumptions and a broad variety of other risks and uncertainties, including some that are known and some that are not. No predictive statement can be guaranteed and actual future results may vary materially. The Company does not assume the obligation to update any predictive statement. One should carefully evaluate such statements in light of factors described in the Company's filings with the SEC, especially on Forms 10-K, 10-Q and 8-K. In various filings the Company has identified important factors that could cause actual results to differ from expected or historic results. One should understand that it is not possible to predict or identify all such factors. Consequently, the reader should not consider any such list to be a complete list of all potential risks or uncertainties.

Company Overview

The following Plan of Operation should be read in conjunction with the consolidated financial statements and the notes thereto appearing elsewhere in this Report.

We are a development stage company and we have not generated any revenues in our present business.

We have financed our activity to date from sales of debentures and loans from shareholders and officers. The report of our independent registered public accounting firm, Sherb & Co., LLP, on our audited financial statements for the year ended August 31, 2007 contains an explanatory paragraph regarding our ability to continue as a going concern.

As reported in our Current Report on Form 8-K/A filed with the Commission on December 21, 2007, on December 20, 2007, we entered into an Amendment to Share Exchange Agreement with Atlantic Network Holdings Limited, a Guernsey company limited by shares ("ANHL"), New Media Television (Europe) Limited, a United Kingdom private company limited by shares and a majority owned subsidiary of ANHL ("NMTV"), and certain outside shareholders of NMTV (the "Amendment") which amended the terms of a Share Exchange Agreement previously entered into by the parties.

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As was previously reported in our Current Report on Form 8-K filed with the Commission on March 21, 2007, on March 20, 2007 we entered into a Share Exchange Agreement with ANHL, NMTV and certain outside shareholders of NMTV (the "Exchange Agreement") pursuant to which ANHL and the outside shareholders of NMTV agreed to exchange all of their shares in NMTV for a 90% equity interest in the Company, NMTV would become a wholly-owned subsidiary of the Company and ANHL would own an approximate 80% interest in the Company.

As modified by the Amendment, the Exchange Agreement now provides for ANHL and the outside shareholders of NMTV to receive a 75% equity interest in the Company and ANHL will own an approximate 65% interest in the Company.

In addition, certain other provisions of the Exchange Agreement have been modified to reflect an agreement by ANHL to transfer to NMTV prior to closing of all of the issued and outstanding shares of Ecommercenet Limited and its subsidiaries (collectively, "Ecommercenet). Ecommercenet has developed an internet payment and financial transaction processing system geared toward online media purchases, which is anticipated to be operated in tandem with NMTV's online media business.

On July 14, 2008, the Company issued a note payable totaling $25,000. The note is due on or before September 30, 2008 in the amount of $37,500.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this item.

Item 4T. CONTROLS AND PROCEDURES

CEO and CFO Certifications

As of the end of the period covered by this quarterly report, our company carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer ("the Certifying Officers"), an evaluation of the effectiveness of our "disclosure controls and procedures". The certifications of the CEO and the CFO required by Rules 13a-14(a) and 15d-14(c) of the Securities Exchange Act of 1934, as amended (the "Certifications") are filed as exhibits to this report. This section of this report contains information concerning the evaluation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) ("Disclosure Controls") and changes to internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) ("Internal Controls") referred to in the Certifications and should be read in conjunction with the Certifications for a more complete understanding of the topics presented.

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Evaluation of Disclosure Controls

We maintain controls and procedures designed to ensure that we are able to collect the information that is required to be disclosed in the reports we file with the Securities and Exchange Commission (the "SEC") and to process, summarize and disclose this information within the time period specified in the rules of the SEC. Our Chief Executive and Chief Financial Officers are responsible for establishing, maintaining and enhancing these procedures. They are also responsible, as required by the rules established by the SEC, for the evaluation of the effectiveness of these procedures.

Based on our management's evaluation (with participation of our principal executive officer and principal financial officer), as of the end of the period covered by this report, our principal executive officer and principal financial officer concluded that a deficiency was identified in our internal controls over financial reporting which constituted a "material weakness". Accordingly, management concluded that our disclosure controls and procedures were not effective.

The material weakness was the result of an insufficient number of personnel having adequate knowledge, experience and training to provide effective oversight and review over our financial close and reporting process.

Limitations on the Effectiveness of Controls

Our management does not expect that our disclosure controls or our internal controls over financial reporting will prevent all error and fraud. A control system, no matter how well conceived and operated, can provide only reasonable, but not absolute, assurance that the objectives of a control system are met. Further, any control system reflects limitations on resources, and the benefits of a control system must be considered relative to its costs. These limitations also include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of a control. A design of a control system is also based upon certain assumptions about potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.

Changes in Internal Controls

We maintain a system of internal controls designed to provide reasonable assurance that transactions are executed in accordance with management's general or specific authorization; transactions are recorded as necessary to permit preparation of financial statements in conformity with Generally Accepted Accounting Principles ("GAAP") and maintain accountability for assets. Access to assets is permitted only in accordance with management's general or specific authorization.

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It is the responsibility of our management to establish and maintain adequate internal control over financial reporting. The material weakness identified relates to an insufficient number of personnel having adequate knowledge, experience and training to provide effective oversight and review over our financial close and reporting process. This is the result of limited financial resources. These control deficiencies in the aggregate did not result in any misstatements in the interim consolidated financial statements. Management is in the process of remedying the material weakness described above.

Internal control over financial reporting

Management has initiated the following activities intended to improve our internal control over financial reporting:

As reported in the Company's Current Report on Form 8-K filed with the SEC on April 24, 2006 and amended on April 28, 2006, the previous management was removed by written consent of our shareholders and replaced by the former executive officers and directors and the internal controls previously in place were re-instituted.

PART II

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this item.

ITEM 2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS

During the three month period ended May 31, 2008 the Company did not sell any stock nor repurchase any of its equity securities.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

ITEM 5. OTHER INFORMATION

None.

Item 6.  EXHIBITS

Exhibit #   Description

31.1        Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted to Section 302 Sarbanes-Oxley Act of 2002

31.2        Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted to Section 302 Sarbanes-Oxley Act of 2002

32.1        Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted to Section 906 Sarbanes-Oxley Act of 2002

32.2        Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted to Section 906 Sarbanes-Oxley Act of 2002

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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