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 July 31, 2008
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number333-131621
UOMO MEDIA INC.
(Exact name of registrant as specified in its charter)
NEVADA
20-1558589
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
161 Bay St. 27th Floor, Toronto, Ontario, Canada
M5J 2S1
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code(416) 368-4400
Securities registered under Section 12(b) of the Exchange Act: None.
Securities registered under Section 12(g) of the Exchange Act: None.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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. x Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer (Do not check if a smaller reporting company)
Smaller reporting company x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes No x
As of September 15, 2008, the registrant had 85,101,112 shares of common stock, par value $0.001, outstanding.
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UOMO MEDIA INC.
FORM 10-Q
For the three months ended July 31, 2008
TABLE OF CONTENTS
PAGE NUMBER
PART I
Item 1.
Financial Statements.
5
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
23
Item 3.
Quantitative and Qualitative Disclosures About Market Risk.
26
Item 4T.
Controls and Procedures.
26
PART II
Item 1.
Legal Proceedings.
28
Item 1A.
Risk Factors.
28
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
32
Item 3.
Defaults Upon Senior Securities.
32
Item 4.
Submission of Matters to a Vote of Security Holders.
32
Item 5.
Other Information.
33
Item 6.
Exhibits.
33
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CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
Statements in this quarterly report on Form 10-Q may be "forward-looking statements". Forward-looking statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions, or any other statements relating to our future activities or other future events or conditions. These statements are based on current expectations, estimates, and projections about our business based, in part, on assumptions made by our management. These statements are not guarantees of future performance and involve risks, uncertainties, and assumptions that are difficult to predict. Therefore, actual outcomes and results may, and probably will, differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors, including those described above and those risks discussed from time to time in this quarterly report on Form 10-Q, including the risks described under "Risk Factors" and "Manage ment's Discussion and Analysis of Financial Condition and Results of Operations" and in other documents we file with the Securities and Exchange Commission.
In addition, such statements could be affected by risks and uncertainties related to our financial condition, factors that affect our industry, market and customer acceptance, competition, government regulations and requirements and pricing, as well as general industry and market conditions and growth rates, and general economic conditions. Any forward-looking statements speak only as of the date on which they are made, and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this quarterly report on Form 10-Q, except as required by law.
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PART I
Item 1.
Financial Statements
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 2008 (UNAUDITED)
FORMING A PART OF QUARTERLY REPORT
PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934
UOMO MEDIA INC.
Page #
Interim Consolidated Balance Sheets as of July 31, 2008 and April 30, 2008 . . . . . . . . . . . . . . . .
6
Unaudited Interim Consolidated Statements of Operations for the Three Months ended
July 31, 2008 and 2007, and the period from June 10, 2004 (inception) to July 31, 2008 . . . . . . .
7
Unaudited Interim Consolidated Statement of Changes in Stockholders Deficiency for
the Three Months ended July 31, 2008 and 2007 and the period from June 10, 2004
(Inception) to July 31, 2008. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8-10
Unaudited Interim Consolidated Statement of Cash Flows for the Three Months ended
July 31, 2008 and 2007, and the period from June 10, 2004 (inception) to July 31, 2008 . . . . . . .
11
Condensed Notes to Unaudited Interim Consolidated Financial Statements . . . . . . . . . . . . . . . . . 12-22
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| | | | |
UOMO MEDIA INC. | | | |
(Formerly FIRST SOURCE DATA, INC.) | | | |
(A Development Stage Company) | | | |
INTERIM CONSOLIDATED BALANCE SHEETS AS OF JULY 31, 2008 AND APRIL 30, 2008 |
(Amounts expressed in US Dollars) | | | |
| Notes | 31-July-08 | 30-Apr-08 |
| | (Unaudited) | (Audited) |
ASSETS | | | |
Current Assets: | | | |
Cash and Cash Equivalents | | 51,891 | 11,087 |
Accounts Receivable (less Allowance for Doubtful Accounts | | 287,895 | - |
$ Nil & $ Nil at July 31, 2008 and April 30, 2008 respectively) | | | |
Prepaid Expenses and Deposits | | 3,874 | 3,874 |
Other Receivable | | - | 1,646 |
| | 343,660 | 16,607 |
| | | |
Publishing Catalogue | 7 | 210,000 | - |
Property and Equipment | 6 | 309 | 1,787 |
| | | |
TOTAL ASSETS | | $553,969 | $18,394 |
| | | |
LIABILITIES AND STOCKHOLDERS' DEFICIENCY | | | |
Current Liabilities: | | | |
Advances Against Royalty Revenue | 3 | 48,828 | - |
Accounts Payable and Accruals | 8 | 452,978 | 144,167 |
Notes Payable | 9 | 209,750 | 154,750 |
Other Payable | | 16,408 | - |
| | 727,964 | 298,917 |
| | | |
Advances Against Royalty Revenue | 3 | 194,665 | - |
| | | |
COMMITMENTS AND CONTINGENCIES (NOTE 8 & 13) | | |
GOING GONCERN (NOTE 2) RELATED PARTY TRANSACTIONS (NOTE 3) | | | |
| | | |
Stockholders' Deficiency: | | | |
Capital Stock | | | |
Authorized: | 11 | | |
Common stock(400,000,000 @ par value of $ 0.001) | | |
Issued: | | | |
Common stock | 11 | 85,101 | 85,088 |
Paid in Capital | | 294,045 | 284,896 |
Unamortized stock-based compensation for stockholders | 13 | (34,790) | (41,660) |
Deficit accumulated during development stage | (713,016) | (608,847) |
| | (368,660) | (280,523) |
| | | |
TOTAL LIABILITIES & STOCKHOLDERS' DEFICIENCY | $553,969 | $18,394 |
The accompanying condensed notes form an integral part of these unaudited interim consolidated financial statements. |
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| | | | |
UOMO MEDIA INC. |
(Formerly FIRST SOURCE DATA, INC.) |
(A Development Stage Company) |
UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED JULY 31, 2008 AND 2007, AND FROM JUNE 10, |
2004 (INCEPTION) TO JULY 31, 2008 (Amounts expressed in US Dollars) |
| Cumulative 10-Jun-04 (inception) 31-Jul-08 | For the Three Months ended 31-Jul-08 | For the Three Months ended 31-Jul-07 |
| |
| Notes |
| | |
Revenue | | 315,225 | 315,225 | - |
Cost of goods sold | | 311,036 | 311,036 | - |
Gross margin | | 4,189 | 4,189 | - |
| | | | |
Expenses: | | | | |
Selling and administrative | | 475,522 | 106,880 | 13,246 |
Amortization | | 24,436 | 1,478 | 1,478 |
Research and development | 5 | 10,560 | - | - |
| | 510,518 | 108,358 | 14,724 |
| | | | |
Loss from continuing operations | | (506,329) | (104,169) | (14,724) |
Loss from discontinued operations, net | 5 | (206,687) | - | (36,247) |
Net Loss for the Period | | (713,016) | (104,169) | (50,971) |
| | | | |
Net Loss per share from continuing operations | | | | |
Basic | | | - | - |
Diluted | | | - | - |
Net Loss per share from discontinued operations | | | | |
Basic | | | - | - |
Diluted | | | - | - |
Net Loss per share for the period | | | | |
Basic | | | - | - |
Diluted | | | - | - |
Weighted average number of shares outstanding | | | | |
Basic | | | *85,093,633 | *168,296,672 |
Diluted | | | *85,093,633 | *168,296,672 |
| | | | |
* Reflects the 4:1 stock splits effective September 27, 2006 and June 5, 2007 on a retroactive basis.
The accompanying condensed notes form an integral part of these unaudited interim consolidated financial statements.
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| | | | | | | |
UOMO MEDIA INC. |
(Formerly FIRST SOURCE DATA, INC.) |
(A Development Stage Company) |
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY |
FOR THE THREE MONTHS ENDED JULY 31, 2008 AND 2007, AND THE PERIOD FROM JUNE 10, 2004 (INCEPTION) TO JULY 31, 2008 |
(Amounts expressed in US Dollars) | | | | | | |
(Page 1 of 3) | | | | | | |
| Common Stock* | Common Stock Amount | Additional Paid-in Capital | Deficit Accumulated During Development Stage | Unamortized Stock-based Compensation | Total Stockholders’ Equity(Deficiency) |
Balance as of June 10, 2004 | - | - | - | - | - | - |
Stock issued on June 10, 2004 for cash @ 0.00019 a share | 144,266,672 | 144,267 | (117,217) | | | 27,050 |
Stock issued in November 2004 for cash @ 0.01250 a share | 1,120,000 | 1,120 | 12,880 | | | 14,000 |
Stock issued in November 2004 for cash @ 0.01250 a share | 1,600,000 | 1,600 | 18,400 | | | 20,000 |
(valued at 0.01250 a share - see note 13) | | | | | | |
Stock issued in December 2004 for cash @ 0.01250 a share | 904,400 | 904 | 10,401 | | | 11,305 |
Stock issued in December 2004 for cash @ 0.00625 a share | 240,000 | 240 | 1,260 | | | 1,500 |
Stock issued in December 2004 for cash @ 0.00625 a share | 240,000 | 240 | 2,760 | | | 3,000 |
(valued at 0.0125 a share - see note 12) | | | | | | |
Stock issued in January 2005 for cash @ 0.01250 a share | 14,240,000 | 14,240 | 163,760 | | | 178,000 |
(valued at 0.0125 a share - see note 4 and 13) | | | | | |
Stock issued in January 2005 for cash @ 0.00625 a share | 264,000 | 264 | 1,386 | | | 1,650 |
Stock issued in January 2005 for cash @ 0.01250 a share | 5,061,600 | 5,062 | 58,208 | | | 63,270 |
Stock issued in February 2005 for cash @ 0.00625 a share | 160,000 | 160 | 840 | | | 1,000 |
Unamortized stock-based compensation for stockholders | | | | (69,120) | (69,120) |
Net loss, from June 10, 2004 to April 30, 2005 | | | | (164,300) | | (164,300) |
Balance as of April 30, 2005 (Audited) | 168,096,672 | 168,097 | 152,678 | (164,300) | (69,120) | 87,355 |
| | | | | | | |
UOMO MEDIA INC. | | | | | | |
(Formerly FIRST SOURCE DATA, INC.) | | | | | | |
(A Development Stage Company) | | | | | | |
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY |
FOR THE THREE MONTHS ENDED JULY 31, 2008 AND 2007, AND THE PERIOD FROM JUNE 10, 2004 (INCEPTION) TO JULY 31, 2008 |
(Amounts expressed in US Dollars) | | | | | | |
(Page 2 of 3) | Common Stock* | Common Stock Amount | Additional Paid-in Capital | Deficit Accumulated During Development Stage | Unamortized Stock-based Compensation | Total Stockholders’ Equity(Deficiency) |
Stock issued on May 10, 2005 for cash @ 0.01250 a share | 200,000 | 200 | 2,300 | | | 2,500 |
Amortization of stock-based compensation for stockholders | | | | | 23,800 | 23,800 |
Rent - Free use of existing premises for 5 months | | | 3,500 | | | 3,500 |
(From December 2005 to April 2006) | | | | | | |
Net loss for the year | | | | (4,165) | | (4,165) |
Balance as of April 30, 2006 (Audited) | 168,296,672 | 168,297 | 158,478 | (168,465) | (45,320) | 112,990 |
| | | | | | |
Amortization of stock-based compensation for stockholders | | | | 19,200 | 19,200 |
Rent - Free use of existing premises for 6 months | | | 3,600 | | | 3,600 |
(From November 2006 to April 2007) | | | | | | |
Net loss for the year | | | | (138,449) | | (138,449) |
Balance as of April 30, 2007 (Audited) | 168,296,672 | 168,297 | 162,078 | (306,914) | (26,120) | (2,659) |
| | | | | | |
Stock returned to Treasury and cancelled on Nov 1, 2007 (Note 11) | (83,296,672) | (83,297) | 83,297 | | | - |
Issuance of Restricted Stock Units | 87,500 | 88 | 34,912 | | (35,000) | - |
Amortization of stock-based compensation for stockholders | | | | | 19,460 | 19,460 |
Net loss for the year | | | | (301,933) | | (301,933) |
Imputed interest on shareholder’s loan | | | 4,609 | | | 4,609 |
Balance as of April 30, 2008 (Audited) | 85,087,500 | 85,088 | 284,896 | (608,847) | (41,660) | (280,523) |
| | | | | | |
| | | | | | | |
UOMO MEDIA INC. | | | | | | |
(Formerly FIRST SOURCE DATA, INC.) | | | | | | |
(A Development Stage Company) | | | | | | |
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY |
FOR THE THREE MONTHS ENDED JULY 31, 2008 AND 2007, AND THE PERIOD FROM JUNE 10, 2004 (INCEPTION) TO JULY 31, 2008 |
(Amounts expressed in US Dollars) | | | | | | |
(Page 3 of 3) | Common Stock* | Common Stock Amount | Additional Paid-in Capital | Deficit Accumulated During Development Stage | Unamortized Stock-based Compensation | Total Stockholders’ Equity(Deficiency) |
| | | | | | |
Issuance of Restricted Stock Units | 13,612 | 13 | 7,487 | | (7,500) | - |
Amortization of stock-based compensation for stockholders | | | | | 14,370 | 14,370 |
Net loss from May 1 to July 31, 2008 | | | | (104,169) | | (104,169) |
Imputed interest on shareholder’s loan | | | | | | |
(May 1 to July 31, 2008) | | | 1,662 | | | 1,662 |
Balance as of July 31, 2008 (Unaudited) | 85,101,112 | 85,101 | 294,045 | (713,016) | (34,790) | (368,660) |
| | | | | | |
|
|
* The number in Common Stock reflects the 4:1 stock splits effective September 27, 2006 and June 5, 2007 on a retroactive basis. |
| | |
The accompanying notes form an integral part of these consolidated financial statements. | | |
| | | | | | |
UOMO MEDIA INC. | | | |
(Formerly FIRST SOURCE DATA, INC.) | | | |
(A Development Stage Company) | | | |
UNAUDITED INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS |
FOR THE THREE MONTHS ENDED JULY 31, 2008 AND 2007, AND THE PERIOD |
FROM JUNE 10, 2004 (SINCE INCEPTION) TO JULY 31, 2008 |
(Amounts expressed in US Dollars) | Cumulative 10-Jun-04 (inception) Through 31-Jul-08 | For the Three Months Ended 31-Jul-08 | For the Three Months Ended 31-Jul-07 |
Cash Flows from Operating Activities | | | |
Net Loss | $(713,016) | $(104,169) | $(50,971) |
Adjustments made to reconcile net loss to | | | |
net cash from Operating activities: | | | |
Amortization | 24,436 | 1,478 | 1,478 |
Amortization of Stock Based Compensation | 76,830 | 14,370 | 4,800 |
Imputed interest on Note Payable | 6,271 | 1,662 | - |
Fair value of rent for free use of existing | 7,100 | - | - |
premises | | | |
Shares issued for services rendered | | | |
For CEO | 23,640 | - | - |
For former CEO | 80,770 | - | - |
For rent and utilities | 5,400 | - | - |
For professional services | 1,500 | - | - |
For web hosting services | 6,400 | - | - |
Changes in operating assets and liabilities | | | |
Decrease/(increase) in other receivable | - | 1,646 | (120) |
Decrease/(increase) in prepaid expenses | (3,874) | - | - |
and Deposits | | | |
Decrease/(increase) in accounts receivable | (287,895) | (287,895) | 866 |
Increase in net advances | 243,493 | 243,493 | |
Increase in accounts payable and accruals | 452,978 | 308,811 | |
Increase in accounts payable and accruals | 16,408 | 16,408 | 12,610 |
Cash flows used in operating activities | (59,559) | 195,804 | (31,337) |
Cash Flows from Investing Activities | | | |
Purchase of publishing catalogue | (210,000) | (210,000) | |
Purchase of property and equipment | (24,745) | - | - |
Cash flows used in investing activities | (234,745) | (210,000) | - |
Cash Flows from Financing Activities | | | |
Note Payable | 209,750 | 55,000 | - |
Cash received on subscribed common stock | 136,445 | - | - |
Cash flows provided by financing activities | 346,195 | 55,000 | - |
Increase/(decrease) in cash and cash equivalents | 51,891 | 40,804 | (31,337) |
Cash and cash equivalents, beginning of period | - | 11,087 | 88,388 |
Cash and cash equivalents, end of period | $51,891 | 51,891 | $57,051 |
Non-Cash Transaction: | | | |
Common Stock issued for services | 35,000 | | |
Common Stock issued as advance | 7,500 | | |
|
The accompanying condensed notes form an integral part of these unaudited interim consolidated financial statements. |
UOMO Media Inc.
(Formerly First Source Data, Inc.)
(A Development Stage Company)
Condensed Notes to Interim Unaudited Consolidated Financial Statements
July 31, 2008
(Amounts expressed in US dollars)
NOTE 1. ORGANIZATION, DESCRIPTION OF BUSINESS, DISCONTINUED OPERATIONS
AND BASIS OF PRESENTATION
UOMO Media Inc. (the “Company”) was incorporated under the laws of the State of Nevada on June 10, 2004 as First Source Data, Inc.
Prior to September 25, 2007, the Company was a marketing management and consulting service provider. The Company was in the development stage with its main objective being the development and commercialization of a business-to-business software product titled the "AdMeUp Network" which it was currently designing. The AdMeUp Network included online marketing software tools to be used to manage marketing campaigns. These operations have been discontinued.
As of September 25, 2007, the Company’s line of business changed from providing online marketing management and consulting services to providing music publishing, digital music, production, and talent management services.
“First Source Data, Inc.” no longer describes the business activities that the Company is now engaged in. Therefore, effective October 30, 2007, the Company changed its name to "UOMO Media Inc." Further, the Company formed new wholly-owned subsidiaries in Canada as follows: UOMO Productions Inc., The NE Inc. (which is a wholly-owned subsidiary of UOMO Productions Inc.), UOMO Music Publishing Inc., and UOMO Songs Ltd. (which is a wholly-owned subsidiary of UOMO Music Publishing Inc.).
The consolidated financial statements include the accounts of the Company and all of its wholly owned subsidiaries.
The Company’s initial operations include: capital formation, organization, website construction, target market identification, research costs, promotional materials costs, and marketing planning.
The accompanying unaudited interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim consolidated financial information and with the instructions for Form 10-Q. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete consolidated financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The results of operations for interim periods are not necessarily indicative of the results that may be expected for the fiscal year ending April 30, 2009. The financial statements should be read in conjunction with the Company’s April 30, 2008 financial statements and accompanying notes included in the Company’s 10-K Annual Report.
NOTE 2. GOING CONCERN
The accompanying unaudited interim consolidated financial statements are presented on a going concern basis. The Company is in a development stage and is currently developing digital music and video Web 2.0 software with commercial usage expected in the future.
Management does not believe that the Company’s current cash of $51,891 is sufficient to cover the expenses that the Company will incur during the next twelve months. The company has negative working capital and has been in deficit since inception due to recurring losses and negative cash flow from operations. The Company’s revenues generated in the past have been from ancillary services and operation of these services has been discontinued. The Company has embarked on a new line of business and revenues have begun to be generated. However, there is no
UOMO Media Inc.
(Formerly First Source Data, Inc.)
(A Development Stage Company)
Condensed Notes to Interim Unaudited Consolidated Financial Statements
July 31, 2008
(Amounts expressed in US dollars)
NOTE 2. GOING CONCERN (cont’d)
guarantee that the Company can continue to generate sufficient cash to fund the development of its new line of business activities.
Management plans to raise additional funds that the Company requires through debt or equity offerings. There is no guarantee that the Company will be able to raise any capital through any type of offering.
NOTE 3. REVENUE RECOGNITION
The Company recognizes revenue when the following four conditions are present:
·
persuasive evidence of an arrangement exists;
·
delivery has occurred or services have been rendered;
·
the seller’s price to the buyer is fixed or determinable; and
·
collection is reasonably assured.
The Company wishes to earn revenues from four categories of services, comprising of four divisions. These divisions are described below. The Company anticipates that, in the future, it would be able to negotiate similar contract terms prior to performing services under any of the categories below.
i)
Music Publishing:
UOMO Music Publishing is tasked with creating a catalogue of assets in the form of copyrights. Services include:
a)
Fund advances: providing advances to individual composers
b)
Administration: registration, tracking, and collection of royalties of copyrights
c)
Creative: creating copyrights by writing songs
d)
Licensing: finding opportunities to monetize copyrights by placing songs on recording artists, film, television, video games, commercials
ii)
Recorded Music:
The Company earns revenue from the ownership of master recordings. UOMO Recorded Music has three core functions:
a)
Catalogue acquisition
b)
Talent acquisition for production activities
c)
Distribution arrangements for projects
UOMO Recorded Music is the record label division of UOMO.
iii)
Digital Distribution:
The Company has been developing digital music and video Web 2.0 software.
iv)
Talent Management:
The Company earns a percentage of gross revenues for all projects it manages.
During Q1, the Company earned revenue from production activities and music publishing. These revenues are recognized at the time of performance. The Company defers revenue should payments be received in advance of the above services being recorded. During Q1, advances against royalty revenue of $48,828 was received. The amount payable on the purchase of the publishing catalogue (Refer note 7), presented as "Advance Against Royalty Revenue", will be offset against future royalties from music publishing revenue.
UOMO Media Inc.
(Formerly First Source Data, Inc.)
(A Development Stage Company)
Condensed Notes to Interim Unaudited Consolidated Financial Statements
July 31, 2008
(Amounts expressed in US dollars)
NOTE 4. RELATED PARTY TRANSACTIONS
On June 10, 2004,the Company issued 144,266,672 shares of its common stock to the former President of the Company in return for cash. On November 1, 2007, the Board of Directors resolved to cancel and return to Treasury 83,296,672 of these common stock to minimize the dilution of the Company in the event that the Company issued further shares for financing and acquisition purposes. No compensation was paid for this exchange.
During the fiscal period ended April 30, 2005, the Company advanced $25,000 to a consultant where the President of the Company was also a Director of the consultant. This loan was settled in full as at April 30, 2006. No amount was due from the consultant as at July 31, 2008.
On November 25, 2004, the Company issued 1,600,000 shares of its common stock to a shareholder of the Company, partly in return for the services and partly for cash(See note 13 for details).
On December 3, 2004, the Company issued 240,000 shares of its common stock to a shareholder of the Company, partly in return for his services and partly for cash. The stock-based portion of this issue has been valued at $1,500, which is the fair value of the services rendered.
On January 10, 2005, the Company issued 6,560,000 shares of its common stock to the former CEO of the Company, partly in return for his services and partly for cash. The stock-based portion of this issue has been valued at $82,000, which is the fair value of the shares. The difference between the fair value of the shares issued and the services rendered has been received in cash.
On January 25, 2005, the Company issued 1,920,000 shares of its common stock to the former CEO of the Company partly in return for his services and partly for cash. The stock-based portion of this issue has been valued at $24,000, which is the fair value of the shares. The difference between the fair value of the shares issued and the services rendered has been received in cash.
On January 26, 2005, the Company issued 5,760,000 shares of its common stock to a shareholder of the Company, partly in return for the web hosting services provided by her and partly for cash. The stock-based portion of this issue has been valued at $72,000, which is the fair value of shares. The difference between the fair value of the shares issued and the services rendered has been received in cash. This fair value of the services is being amortized and has been amortized over the term of the contract as follows:
First 36 months
- $1,600 a month
Next 8 months
- $1,665 a month
The term of the agreement is 44 months effective from January 1, 2005. The unamortized portion of this is$1,665 as at July 31, 2008 (April 30, 2008 - $6,660) and has been deducted from shareholders’ equity (See note 13 for more details).
On January 1, 2006, the Company entered into an agreement with a shareholder of the Company, for a period of 12 months for the programming services to be provided on the “AdMeUp Network” which has now been discontinued. The fees for this would be as follows:
a) $19,200 in cash; or
b) A number of shares in the common stock of the Company, without registration rights and incorporating such restrictive legends as are required by the Company to comply with all applicable laws, equal to $19,200 divided by the weighted average trading price of the Company’s common shares posted on any stock quotation or listing service for the 10-day period prior to the date of payment (or, if the trading price of the
UOMO Media Inc.
(Formerly First Source Data, Inc.)
(A Development Stage Company)
Condensed Notes to Interim Unaudited Consolidated Financial Statements
July 31, 2008
(Amounts expressed in US dollars)
NOTE 4. RELATED PARTY TRANSACTIONS (cont’d)
Company’s common shares is not at that time posted on any quotation or listing service, the weighted
average price applied to the three most recent issuances of the Company’s common shares); or
c) Some combination of a) and b) above that will yield a market value of $19,200 based on the foregoing valuation methodology.
The choice of the form in which payment of the fees shall be made shall be solely that of the Company. On January 1, 2007, the Company renewed this agreement with the same terms for a further period of 12 months to continue providing programming services on the “AdMeUp Network”. While the “AdMeUp Network” has been discontinued, programming services will be utilized until the end of this contract to develop the Company’s new digital music and video Web 2.0 software.
On April 27, 2007, a director of the Company gave an unsecured loan of $50,000 having a fair value of $ 46,838 calculated using the discounted rate of Prime rate plus 2%, to the Company payable on demand and with no interest. Interest has been imputed and included in Stockholder’s Equity.
On April 30, 2007, the Company entered into a contract to pay one of its directors $10,000 to carry out services as the Company’s director for a term of one year or until removed as a director. $5,000 in cash was paid in May 2007 and the remaining $5,000 in cash was paid in November 2007.
On November 28, 2007, the Company entered into a contract to pay one of its directors 25,000 common shares of its common stock to carry out services as the Company’s director for a term of one year or until removed as a director. On April 22, 2008, the Company issued 25,000 shares of its common stock to the director.
On December 11, 2007, the Company entered into a contract with a Managing Director to carry out services for a term of one year for cash and stock compensation. On April 22, 2008, the Company issued 62,500 shares of its common stock to the manager. During the three months ended July 31, 2008, $12,500 (April 30, 2008 - $20,833) has been paid by cash for professional services rendered.
During the three months ended July 31, 2008, $22,500 (April 30, 2008 - $40,500) has been paid by cash to the Chief Financial Officer of the Company for professional services rendered. Prior to the appointment, on May 10, 2005, the Company issued 12,500 shares of its common stock to the Chief Financial Officer in return for cash.
During the three months ended July 31, 2008, $30,000 (April 30, 2008 - $54,000) has been paid by cash to the CEO of the Company for professional services rendered.
As of July 31, 2008, a director of the Company gave unsecured loans totaling $83,750 having a fair value of $78,454 calculated using the discounted rate of Prime rate plus 2%, to the Company payable on demand and with no interest.
The above transactions have been measured and recorded at the fair values.
UOMO Media Inc.
(Formerly First Source Data, Inc.)
(A Development Stage Company)
Condensed Notes to Interim Unaudited Consolidated Financial Statements
July 31, 2008
(Amounts expressed in US dollars)
NOTE 5. DISCONTINUED OPERATIONS
As of September 25, 2007, the Company’s line of business changed from providing online marketing management and consulting services to providing music publishing, digital music, production, and talent management services.
Therefore, as of October 31, 2007 all of the Company’s revenues and 70% of research and development expense, as well as a 70% allocation of the Company’s prior selling and administrative expense, since inception has been classified as discontinued operations and their results of operations, financial position and cash flows are separately reported for all periods presented. General corporate overhead has not been allocated to discontinued operations. Summarized financial information for discontinued operations is set forth below.
| | | |
| | |
Cumulative 10-Jun-04 (inception) through 31-Jul-08 | For the Three Months Ended July 31, 2008 | For the
Three Months
Ended
July 31,
2007 |
Revenue | 618,555 | - | - |
Cost of goods sold | 437,403 | - | 539 |
Gross margin | 181,152 | - | (539) |
| | | |
| | | |
Expenses: | | | |
R&D - AdMeUp Network | 24,895 | - | 4,800 |
Selling and Administrative allocation | 362,944 | - | 30,908 |
| 387,839 | - | 35,708 |
NET LOSS FROM DISCONTINUED OPERATIONS | (206,687) | - | (36,247) |
NOTE 6. PROPERTY AND EQUIPMENT
| | | |
July 31, 2008 | Cost | Accumulated Amortization | Net book value |
Computer hardware | 17,736 | 17,427 | 309 |
| | | |
April 30, 2008 | Cost | Accumulated Amortization | Net book value |
Computer hardware | 17,736 | 15,949 | 1,787 |
UOMO Media Inc.
(Formerly First Source Data, Inc.)
(A Development Stage Company)
Condensed Notes to Interim Unaudited Consolidated Financial Statements
July 31, 2008
(Amounts expressed in US dollars)
NOTE 7. PUBLISHING CATALOGUE
During the three months ending July 31, 2008, the Company acquired a publishing catalogue from a third party in return for cash and common stock measured and recorded at total cost of $210,000, which equates its fair value. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable, in accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." An impairment loss would be recognized when the carrying amount of an asset exceeds the estimated undiscounted future cash flows that are expected to result from the use of the asset and its eventual disposition. The excess of the asset’s carrying value over its fair value calculates the amount of the impairment loss to be recorded. The publishing catalogue has been tested under these conditions and no impairment loss is necessary.
NOTE 8. ACCOUNTS PAYABLE AND ACCRUALS
| | | |
| | Jul 31, 2008 | Apr 30, 2008 |
Expenses Reimbursement | - | 1,946 |
Accounting Charges | 60,096 | 46,693 |
Management Fees | 16,950 | 8,617 |
Audit Fees Payable | 18,000 | 18,000 |
R & D Expenses payable | 35,200 | 35,200 |
Rent payable | 4,522 | 4,522 |
Investor Relations | | 15,000 | 15,000 |
Legal | | - | 760 |
Trade Payable – Production Costs | 278,925 | - |
Credit Cards | | 11,588 | 11,670 |
Others | | 12,697 | 1,759 |
| | 452,978 | 144,167 |
NOTE 9. NOTES PAYABLE
Notes payable include:
| | |
July 31, 2008 | 2008 | 2007 |
Next Level Ltd. | 76,000 | - |
Director | 83,750 | - |
Shareholder | 50,000 | 50,000 |
| 209,750 | 50,000 |
| | |
UOMO Media Inc.
(Formerly First Source Data, Inc.)
(A Development Stage Company)
Condensed Notes to Interim Unaudited Consolidated Financial Statements
July 31, 2008
(Amounts expressed in US dollars)
NOTE 9. NOTES PAYABLE (cont’d)
On April 1, 2008, the Company issued a Notes Payable to Next Level Ltd., in consideration of a draw down unsecured loan up to an aggregate of US$200,000 over a term of one year. Any unpaid amount of the drawn down balance borrowed is payable, on demand by Next Level. Interest payable on the Principal Amount is to be accrued at a floating rate equal to the prime interest rate plus 2%. The Company is permitted to make partial payments against the principal amount and interest at any time without penalty. On March 26, 2008, the Company borrowed $21,000 against the total $200,000 available to be drawn down. On May 30, 2008, the Company borrowed $15,000 against the total $179,000 available to be drawn down. On July 7, 2008, the Company borrowed $40,000 against the total $164,000 available to be drawn down. As of July 31, 2008, a balance of $124,000 net was available. The total interest payable on the above notes of $5,611 forms part of the selling and administrative expense in the Income statement.
On April 27, 2007, a shareholder of the Company gave an unsecured loan of $50,000 having a fair value of $ 46,838 calculated using the discounted rate of Prime rate plus 2%, to the Company payable on demand and with no interest. As of July 31, 2008, a director of the Company gave unsecured loans totaling $83,750 having a fair value of $ 78,454 calculated using the discounted rate of Prime rate plus 2%, to the Company payable on demand and with no interest.
NOTE 10. OPERATING LEASE COMMITMENTS
On August 2004, the Company entered into a sub-lease agreement with Foreground Image Inc., a shareholder of the Company, for office space. The lease is for a period of 16 months with the option to renew for a further one-year period. The lease payments are as follows:
First 12 months
- $600 per month
Next 4 months
- $700 per month
The Company issued 100,000 shares during the fiscal period ended April 30, 2005 to Foreground Image Inc. in satisfaction of its rent obligation for the sub-lease term of 16 months. The fair value of these shares amounted to $20,000.
The above sub-lease agreement was effective until November 30, 2005. Thereafter, the Company negotiated with Foreground Image Inc. to have the premises rented to the Company free of charge for the rest of the financial year until April 30, 2006.
On May 1, 2006, the Company entered into a sub-lease agreement with Foreground Image Inc. to have the premises rented for $600 per month for a further 6 months to October 31, 2006.
On November 1, 2006, the Company renewed the sub-lease with Foreground Image Inc. to continue renting the premises from November 1, 2006 through April 30, 2007. However, no fees were payable to Foreground Image Inc. under this agreement.
The amounts of free rent were accounted for as additions to Paid-in Capital in Stockholders’ Equity and charged against income.
On April 5, 2007, the Company entered into a lease agreement with Regus Business Centres. The lease is for a period of 12 months beginning May 1, 2007 with the option to renew. The lease payment is approximately $236 per month. This lease was automatically renewed on May 1, 2008 on the same terms.
UOMO Media Inc.
(Formerly First Source Data, Inc.)
(A Development Stage Company)
Condensed Notes to Interim Unaudited Consolidated Financial Statements
July 31, 2008
(Amounts expressed in US dollars)
NOTE 11. STOCKHOLDERS' DEFICIENCY
The stockholders' deficiency section of the Company contains the following classes of capital stock as of July 31, 2008:
Common stock, $0.001 par value; 400,000,000* shares authorized and 85,101,112* shares issued and outstanding.
On November 1, 2007, the Board of Directors resolved to return to Treasury and cancel 83,296,672 of common stock to minimize the dilution of the Company in the event that the Company issued further shares for financing and acquisition purposes. No compensation was paid for this exchange.
Since there was no change in par value of common stock, common stock amount and additional paid in capital were adjusted accordingly.
The stockholders' deficiency section of the Company contains the following classes of capital stock as of July 31, 2007:
Common stock, $0.001 par value; 400,000,000* shares authorized and 168,296,672* shares issued and outstanding.
* After giving retroactive effect of 4:1 stock splits effective September 27, 2006 and June 5, 2007.
NOTE 12. STOCK TRANSACTIONS
These transactions have been accounted for based on the fair value of the consideration received.
On June 10, 2004, the Company issued 144,266,672 shares of its common stock to the President of the Company in return for cash. On November 1, 2007, the Board of Directors resolved to cancel and return to Treasury 83,296,672 of these common stock to minimize the dilution of the Company in the event that the Company issued further shares for financing and acquisition purposes. No compensation was paid for this exchange.
In November 2004, the Company issued 1,120, 000 shares at $0.01250 a share in return for cash. In addition to that, on November 25, 2004, the Company issued 1,600,000 shares of its common stock at $0.00625 a share to a shareholder of the Company, Foreground Image Inc., partly in return for the services and partly for cash(See note 13 for details).
In December 2004, the Company issued 240,000 shares at $0.00625 a share and 904,400 shares at $0.01250 a share in return for cash. In addition to that, on December 3, 2004, the Company issued 240,000 shares of its common stock at $0.00625 a share to a shareholder of the Company, partly in return for his services and partly for cash.
On April 22, 2008, the Company issued 25,000 shares of its common stock to a director in return for services. The market value of shares on the day of issuance was $0.40 a share.
On April 22, 2008, the Company issued 62,500 shares of its common stock to a manager of the Company in return for services. The value of the shares was calculated on a 10-day closing trading average valued at $0.40 a share, which was also the market value of the share on the day of issuance.
On June 20, 2008, the Company issued 13,612 shares of its common stock as part of the compensation to acquire a publishing catalogue. The value of the shares was calculated on a 10-day closing trading average valued at $0.551 a share; the market value of the share on the day of issuance was $0.35.
UOMO Media Inc.
(Formerly First Source Data, Inc.)
(A Development Stage Company)
Condensed Notes to Interim Unaudited Consolidated Financial Statements
July 31, 2008
(Amounts expressed in US dollars)
NOTE 13. UNAMORTIZED STOCK-BASED COMPENSATION FOR STOCKHOLDERS
On January 26, 2005, the Company issued 5,760,000 shares of its common stock to a shareholder of the Company, partly in return for her services in providing web hosting and partly for cash. The stock-based compensation portion of this issue has been valued at $70,920 as the difference between the issue price ($0.00019 per share) and the grant-date fair value ($0.01250 per share) and is being amortized over the term of the contract as follows:
First 36 months
- $1,600 a month
Next 8 months
- $1,665 a month
The term of the agreement is 44 months effective from January 1, 2005. The unamortized portion of this is$1,665 as at July 31, 2008 (April 30, 2008 - $6,660) and has been deducted from shareholders’ equity.
On November 25, 2004, the Company issued 1,600, 000 shares of its common stock to a shareholder of the Company, partly in return for the services and partly for cash. The stock based compensation portion of this issue has been valued at $10,000 as the difference between the issue price ($0.000625 per share) and the grant-date fair value ($0.01250 per share) and has been amortized over the term of the contract between the Company and the shareholder as follows:
First 12 months
- $600 a month
Next 4 months
- $700 a month
The term of the agreement is 16 months effective from August 1, 2004. The unamortized portion of this is$Nil as at July 31, 2008 and has been deducted from shareholders’ equity.
On April 22, 2008, the Company issued 25,000 shares of its common stock to a director of the Company in return for services. The stock based compensation issued has been valued at $10,000 ($0.40 per share) which was the fair value of the stock on the day of issuance. The stock must be held for a minimum of six months from date of issuance. The amount of this compensation is being amortized over the term of the service contract between the Company and the director starting May 1, 2008. . The unamortized portion of this is$7,500 as at July 31, 2008 and has been deducted from shareholders’ equity.
On April 22, 2008, the Company issued 62,500 shares of its common stock to a manager of the Company in return for services. The stock based compensation issued has been valued at $25,000 ($0.40 per share) which was the fair value of the stock on the day of issuance. The stock must be held for a minimum of six months from date of issuance. The amount of this compensation is being amortized over the term of the service contract between the Company and the manager starting May 1, 2008. The unamortized portion of this is$18,750 as at July 31, 2008 and has been deducted from shareholders’ equity.
On June 20, 2008, the Company acquired a publishing catalogue in return for cash and common stock. The Company issued 13,612 shares of its common stock as well as $14,710 in cash as part of the compensation to acquire the publishing catalogue. The stock based compensation issued has been valued at $7,500 ($0.551 per share); the fair value of the stock on the day of issuance was $0.35. The stock must be held for a minimum of six months from date of issuance. The amount of the stock portion of this compensation is being amortized over one year starting July 1, 2008. The unamortized portion of this is$6,875 as at July 31, 2008 and has been deducted from shareholders’ equity.
The total unamortized portion of stock based compensation for shareholders is$34,790 as at July 31, 2008 (April 30, 2008 - $41,660) and has been deducted from shareholders’ equity.
UOMO Media Inc.
(Formerly First Source Data, Inc.)
(A Development Stage Company)
Condensed Notes to Interim Unaudited Consolidated Financial Statements
July 31, 2008
(Amounts expressed in US dollars)
NOTE 14. WEB HOSTING SERVICE AND PROGRAMMING SERVICE AGREEMENTS
The Company entered into a web hosting service agreement with a shareholder of the Company to install and service the Company’s servers.
In return for these services, on January 26, 2005, the Company issued 5,760,000 shares of its common stock to the shareholder for cash at $0.00019 per share where the issue-date share price has been determined as $0.01250 a share. The stock-based compensation portion of this issue has been valued at $70,920 as the difference between the issue price ($0.00019 per share) and the grant-date fair value. ($0.0125 per share) and has been amortized over the term of the contract as follows:
First 36 months
- $1,600 a month
Next 8 months
- $1,665 a month
The term of the agreement is 44 months effective from January 1, 2005.
Further, on January 1, 2006, the Company entered into an agreement with a shareholder of the Company, for a period of 12 months for the programming services to be provided on the “AdMeUp Network” which is now discontinued. The fees for this would be as follows:
a) $19,200 in cash; or
b) A number of shares in the common stock of the Company, without registration rights and incorporating such restrictive legends as are required by the Company to comply with all applicable laws, equal to $19,200 divided by the weighted average trading price of the Company’s common shares posted on any stock quotation or listing service for the 10-day period prior to the date of payment (or, if the trading price of the Company’s common shares is not at that time posted on any quotation or listing service, the weighted average price applied to the three most recent issuances of the Company’s common shares); or
c) Some combination of a) and b) above that will yield a market value of $19,200 based on the foregoing valuation methodology.
The choice of the form in which payment of the fees shall be made shall be solely that of the Company. On January 1, 2007, the Company renewed this agreement with the same terms for a further period of 12 months to continue providing programming services on the “AdMeUp Network”. While the “AdMeUp Network” has been discontinued, programming services will be utilized until the end of this contract to develop the Company’s new digital music and video Web 2.0 software.
The shareholder is to provide programming services to develop Web 2.0 software for the Company’s new Digital music and video portal. Approximately 30% of the programming work that was done for the “AdMeUp Network” was transferred towards building the Digital music and video Web 2.0 software. This is currently on hold.
NOTE 15. COMMITMENTS
On January 1, 2007, the Company renewed an agreement with a shareholder of the Company, for a period of 12 months for the programming services to be provided on the “AdMeUp Network” which has been discontinued. The fees for this would be as follows.
a) $19,200 in cash; or
UOMO Media Inc.
(Formerly First Source Data, Inc.)
(A Development Stage Company)
Condensed Notes to Interim Unaudited Consolidated Financial Statements
July 31, 2008
(Amounts expressed in US dollars)
NOTE 15. COMMITMENTS (cont’d)
b) A number of shares in the common stock of the Company, without registration rights and incorporating such restrictive legends as are required by the Company to comply with all applicable laws, equal to $19,200 divided by the weighted average trading price of the Company’s common shares posted on any stock quotation or listing service for the 10-day period prior to the date of payment (or, if the trading price of the Company’s common shares is not at that time posted on any quotation or listing service, the weighted average price applied to the three most recent issuances of the Company’s common shares); or
c) Some combination of a) and b) above that will yield a market value of $19,200 based on the foregoing valuation methodology.
The choice of the form in which payment of the fees shall be made shall be solely that of the Company. While the “AdMeUp Network” has been discontinued, programming services will be utilized until the end of this contract to develop the Company’s new digital music and video Web 2.0 software.
On April 5, 2007, the Company entered into a lease agreement with Regus Business Centres. The lease is for a period of 12 months beginning May 1, 2007 with the option to renew. The lease payment is approximately $236 per month. The lease has been automatically renewed on the same terms beginning May 1, 2008.
On November 1, 2007, the Company entered into an Independent Contractor Agreement with the Chairman & Chief Executive Officer for managing and directing daily operations of the Company pursuant to the directives of the Board of Directors for services through to June 30, 2008, under which he would be compensated as follows:
$7,000 per month for the first two months (November and December 2007)
$10,000 per month for the remaining 6 months (January to June 2008)
On July 25, 2008, the Company renewed the Independent Contractor Agreement with the Chairman & Chief Executive Officer for $10,000 per month for a further six months beginning July 1, 2008.
On December 11, 2007, the Company entered into an Independent Contractor Agreement with the Managing Director of UOMO Publishing division, under which the Managing Director would be compensated $4,167 per month to continue performing services for a period of twelve months to December 10, 2008.
On January 31, 2008, the Company entered into an Independent Contractor Agreement with the Chief Financial Officer, under which the Chief Financial Officer would be compensated $7,500 per month to continue performing services as the Company’s Chief Financial Officer from February 1, 2008 through June 30, 2008. This agreement was renewed on July 25, 2008, under the same terms for a further six months beginning July 1, 2008.
NOTE 16. SUBSEQUENT EVENTS
There have been no subsequent events.
NOTE 17. GEOGRAPHIC INFORMATION
All the Company's operations and assets are located in Canada.
NOTE 18. COMPARATIVE FIGURES
The comparative figures have been re-classified to conform to the current period’s presentation
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
INTRODUCTION
The following discussion and analysis compares our results of operations for the three months ended July 31, 2008 to the same period in 2007. This discussion and analysis should be read in conjunction with our financial statements and the related notes thereto included elsewhere in this quarterly report for the three months ended July 31, 2008. This quarterly report contains certain forward-looking statements and our future operation results could differ materially from those discussed herein.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This quarterly report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. You should not place undue reliance on these forward-looking statements. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons, including the risks described in this report and other reports we file with the U.S. Securities and Exchange Commission. Although we believe the expectations reflected in the forward-looking statements are reasonable, they relate only to events as of the date on which the statements are made. We do not intend to update any of the forward-looking statements after the date of this report to conform these statements to actual results or to changes in our expectations, except as required by law.
OVERVIEW
We incorporated on June 10, 2004 as First Source Data, Inc. under the laws of the State of Nevada. As of September 25, 2007, our line of business changed from providing online marketing management and consulting services to providing music publishing, digital music and video, recorded music and production, and talent management services. We are now in the business of producing, managing, and monetizing music-based intellectual property. Effective October 30, 2007, we changed our name to UOMO Media Inc., which we believe more appropriately reflects our current business focus.
CRITICAL ACCOUNTING POLICIES
Management's Discussion and Analysis of Financial Condition and Results of Operations is based upon our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to the reported amounts of revenues and expenses, bad debt, investments, intangible assets, income taxes, and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results c ould differ from these estimates under different assumptions or conditions. We consider the following accounting policies to be critical because the nature of the estimates or assumptions is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change or because the impact of the estimates and assumptions on financial condition or operating performance is material.
Cash and Cash Equivalents
Cash equivalents usually consist of highly liquid investments, which are readily convertible into cash with maturity of three months or less when purchased.
Revenue Recognition
We recognize revenue when the following four conditions are present:
·
persuasive evidence of an arrangement exists;
·
delivery has occurred or services have been rendered;
·
the seller’s price to the buyer is fixed or determinable; and
·
collection is reasonably assured.
Services revenues are generally recognized at the time of performance. We defer revenue should payments be received in advance of the above services being recorded.
For the new line of business, we plan to earn revenues from four categories of services, comprising of four divisions: Music Publishing, Recorded Music, Digital Distribution and Talent Management.
Foreign Currency Translations
We maintain our accounting records in U.S. dollars, which is the functional, and reporting currency. Foreign currency transactions are translated into the functional currency in the following manner.
At the transaction date, each asset, liability, revenue and expense is translated into the functional currency by the use of the exchange rate in effect at that date. At the period end, monetary assets and liabilities are translated into the functional currency by using the exchange rate in effect at that date. The resulting foreign exchange gains and losses are included in operations.
Stock-based compensation
We have adopted SFAS 123 (Revised), “Share Based Payment,” which requires us to measure the cost of employee and non-employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. That cost will be recognized over the period during which an employee or a non-employee is required to provide service in exchange for the award-the requisite service period. We do not recognize compensation cost for equity instruments for which employees do not render the requisite service. We will estimate the grant-date fair value of employee and non-employee share options and similar instruments using option-pricing models adjusted for the unique characteristics of those instruments.
RECENT ACCOUNTING PRONOUNCEMENTS
In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted Accounting Principles" ("SFAS 162"). SFAS 162 is intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. GAAP for nongovernmental entities. SFAS 162 is effective 60 days following the Securities and Exchange Commission's approval of the Public Company Accounting Oversight Board auditing amendments to AU Section 411, "The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles." The Company does not expect SFAS 162 to have a material effect on its consolidated financial statements.
In May 2008, the FASB issued SFAS 163 "Accounting for Financial Guarantee Insurance Contracts-an interpretation of FASB Statement No. 60." SFAS 163 requires that an insurance enterprise recognize a claim liability prior to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation. This Statement also clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement to be used to account for premium revenue and claim liabilities. Those clarifications will increase comparability in financial reporting of financial guarantee insurance contracts by insurance enterprises. This Statement requires expanded disclosures about financial guarantee insurance contracts. The accounting and disclosure requirements of the Statement will improve the quality of information provided to users of financial statements. This Statement is effective for financial statements issued for fiscal years beginning after December 15, 2008, and all interim periods within those fiscal years, except for some disclosures about the insurance enterprise's risk-management activities. The Company does not expect SFAS 163 to have a material effect on its consolidated financial statements.
None of these recent pronouncements are applicable to our Company or have a material effect on our results of operations or financial position.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JULY 31, 2008 AS COMPARED TO THE THREE MONTHS ENDED JULY 31, 2007
Revenue
For the three months ended July 31, 2008, we generated $315,225 in revenues. For the three months ended July 31, 2007, no revenues were generated. Our revenues generated in the past had been from ancillary services and operation of these services has been discontinued as of September 25, 2007; as of July 31, 2007, operations had been winding down. Since we have embarked on our new line of business, $315,225 is the total revenues generated from continued operations to date. Since our inception on June 10, 2004, we have had revenues from discontinued operations of $618,555.
Cost of Goods Sold
During the three months ended July 31, 2008, we incurred $311,036 in cost of goods sold expense for providing production services. Since we did not generate any revenues for the three months ended July 31, 2007, we did not incur any cost of goods sold expense during this period.
Expenses
During the three months ended July 31, 2008, we incurred total expenses from continuing operations of $108,358 comprised of selling and administrative expense of $106,880 and amortization expense of $1,478. For the same three month period ended July 31, 2007, we incurred total expenses from both continuing and discontinued operations of $50,971 comprised of selling and administrative expense of $13,246 from continuing operations, amortization expense of $1,478, and $36,247 from discontinued operation. The largest two expenses in the three months ended July 31, 2008, besides Cost of Goods Sold expense of $311,036, were $52,876 for consulting and management services, and $22,392 for accounting fees, compared to $15,000 for advertising and promotion fees, the largest single expense for the three months ended July 31, 2007. Expenses were higher in the three months ended July 31, 2008 due to increased operations.
There were no research and development expenses in either of the three month periods which pertain to development of the AdMeUp Network as this has been discontinued. The AdMeUp Network is no longer in development, however, we intend to use a portion of the code that was developed for our digital video and sound operations.
Discontinued Operations
As of September 25, 2007, our line of business changed from providing online marketing management and consulting services to providing music publishing, digital music, production, and talent management services. We decided to change our business focus because we identified new opportunities in the music publishing, digital music, production, and talent management business that could enable us to achieve greater profits over the course of the next twelve months and in the long term than we would be able to achieve if the existing line of business was continued.
Therefore, as of October 31, 2007, all of our revenues and 70% of our research and development expense, as well as a 70% allocation of our selling and administrative expense, since inception, has been classified as discontinued operations.
Net Income/Loss
During the three month period ended July 31, 2008, we incurred a net loss of $104,169 compared with a net loss of $50,971 for the three month period ended July 31, 2007. Our expenses for the three month period ended July 31, 2008 were higher than the same period during the previous fiscal year primarily due to our increased operations. While we did recognize revenue in the three month period ended July 31, 2008, we also incurred the corresponding Cost of Goods sold of $311,036, as well as overall increased expenses due to increase in activity and personnel.
LIQUIDITY AND CAPITAL RESOURCES
We do not yet have an adequate source of reliable, long-term revenue to fund operations. We may not achieve a consistent and reliable revenue stream adequate to support continued operations and development of our new line of business activities.
As of July 31, 2008, we had cash and cash equivalents of $51,891. We had total current assets of $343,660, which includes $3,874 in prepaid expenses and deposits. Our liquidity as of July 31, 2008 should be interpreted in conjunction with a recorded liability of $209,750 loan payable on demand.
Our future capital requirements will depend on a number of factors, including costs associated with development of our new line of business activities, the cost of marketing the new activities, and our ability to generate revenues from the music publishing, digital video and music, recorded music and production, and talent management services. We lacked sufficient cash and cash equivalents on hand to conduct operations at the end of our fiscal year ending April 30, 2009.
In order to generate adequate cash to continue operations, we plan to begin assembling a team of top music professionals to serve in our key management areas in each of our four divisions: Digital music and video, Music publishing, Recorded music, and Talent management services. We have already found someone to lead our Publishing division and we are actively searching for other qualified personnel. We plan to use a portion of the source code developed for the AdMeUp Network for our digital music and video distribution technology portal. In addition, we intend to identify other companies that may be suitable for acquisition. If we acquire or merge with another entertainment company, we may be able to fund the continued development of our new line of business by using the cash held by the acquired or merged company or the cash proceeds of ongoing operations of the resulting company.
Our financial statements have been prepared on a continuing operation basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.
SUBSEQUENT EVENTS
None.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
Smaller reporting companies are not required to provide the information required by this Item.
Item 4T. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management evaluated, with the participation of our Chief Executive Officer and our Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this annual report on Form 10-Q. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures cannot be relied upon to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934 (i) is recorded,
processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required reasonable assurance that such information is accumulated and communicated to our management. Our disclosure controls and procedures are designed to provide reasonable assurance that such information is accumulated and communicated to our management. Our disclosure controls and procedures include components of our internal control over financial reporting. Management's assessment of the effectiveness of our internal control over financial reporting is expressed at the level of reasonable assurance that the control system, no matter how well designed and operated, can provide only reasonable, but not absolute, assurance that the control system's obje ctives will be met.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. We have assessed the effectiveness of those internal controls as of July 31, 2008. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) inInternal Control—Integrated Framework.
Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
A material weakness in internal controls is a deficiency in internal control, or combination of control deficiencies, that adversely affects a company's ability to initiate, authorize, record, process, or report external financial data reliably in accordance with accounting principles generally accepted in the United States of America such that there is more than a remote likelihood that a material misstatement of the company's annual or interim financial statements that is more than inconsequential will not be prevented or detected. In the course of making our assessment of the effectiveness of internal controls over financial reporting, we identified a material weakness in our internal control over financial reporting. This material weakness consisted of inadequate staffing within the accounting operations of our Company. The small number of employees who are responsible for accounting functions prevents us from segregating duties within our internal control system. The inadequate segregation of duties is a weakness because it could lead to the untimely identification and resolution of accounting and disclosure matters or could lead to a failure to perform timely and effective reviews. Due to this material weakness, management could not conclude that its internal control over financial reporting was effective as of July 31, 2008.
Our review also indicated the existence of certain high level procedures that might or might not serve to provide compensating control over these weaknesses. These procedures consisted of analytical review of key operating results by our senior management, including preparation and review of monthly operating results, comparison of such results to budgets and to historical amounts. In addition, the board of directors received monthly updates on operations, and on a quarterly basis, reviews, investigates and discusses apparent inconsistencies and concerns with senior operating management.
Our review also revealed that although a number of controls appeared to exist, and were observed to have been in operation, documentary evidence that such controls were operating throughout the period was found to be lacking. Such evidence as signatures indicating that a certain procedure had been carried out and affixing responsibility were lacking in the internal control system.
This quarterly report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this quarterly report.
Changes in Internal Control Over Financial Reporting
There was no change in our internal controls over financial reporting that occurred during the quarter ended July 31, 2008 that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
PART II
Item 1.
Legal Proceedings
We may be involved from time to time in ordinary litigation, negotiation and settlement matters that will not have a material effect on our operations or finances. We are not aware of any pending or threatened litigation against us or our officers and directors in their capacity as such that could have a material impact on our operations or finances.
ITEM 1A.
Risk Factors
Risks Relating To Our Business
We intend to grow our Company by acquisition, and if we are not successful, our business will be harmed.
Our business strategy includes the attainment of a portion of our growth through our ability to successfully execute our acquisition model. In order to pursue a growth by acquisition strategy successfully, we must identify suitable candidates for these transactions, complete these transactions, and manage post-closing issues such as integration of the acquired business into our corporate structure. Integration issues are complex, time-consuming, and expensive and, without proper planning and implementation, could significantly disrupt our business. Potential disruptions include diversion of management's attention, loss of key business and/or personnel from the acquired company, unanticipated events, and legal liabilities. If the business becomes impaired, there could be partial or full write-offs attributed to the acquisition.
Our continued operations are contingent on our ability to raise additional capital and obtain financing and success in future operations. If we do not acquire sufficient additional funding or alternative sources of capital to meet our working capital, we may have to substantially curtail our operations and business plan. If we do not achieve sufficient revenues to meet our future obligations, we intend to seek sufficient financial resources by issuing shares of common stock, borrowing cash from a bank or one of our directors, or a combination of these activities. We may be unable to obtain additional financing using any of these methods. These conditions raise substantial doubt about our ability to continue as a going concern. However, our financial statements do not include any adjustments that might result if we are unable to continue our business.
We have a limited operating history and may never achieve or sustain profitable operations.
We have a short operating history and have not been profitable since our incorporation in June 2004. Since inception until July 31, 2008, we have had only five customers from discontinued operations. Since we have embarked on our new line of business, we have just begun generating revenues from our continuing operations. Even if we obtain future revenues sufficient to continue to expand our operations, increased operational or marketing expenses could adversely affect our liquidity. The limited extent of our assets and revenues, our early stage of development, and our limited operating history make us subject to the risks associated with start-up companies, including potentially negative cash flows. We have no significant assets or financial resources. Our lack of operating history makes it very difficult for you to make an investment decision based upon our managerial skill. We may never become profitable and our stockholders may lose their entire investment.
We depend on our officers and directors to perform our business activities and our ability to recruit and retain the qualified individuals needed to operate and develop our business is unknown.
We depend on our officers and directors to perform many of our business activities. Currently, our Chairman and Chief Executive Officer, Camara Alford, personally carries out our management activities. Mr. Alford also liaises with external contractors who provide additional consulting services. Our Chief Financial Officer, Jueane Thiessen, personally performs most of our accounting and financial management functions. Our present management structure, although adequate for the early stage of our operations, will likely have to be significantly augmented as our operations expand. Our future success will depend in part on the services of our key personnel and, additionally, on our ability to identify, hire and retain additional qualified personnel. There is intense competition for qualified management, marketing, accounting, and sales personnel in our main area of business, online marketing consulting and management. We may not be able to continue to attract and retain the personnel needed to operate and develop our business. Because we rely on our directors and officers to perform our sales, accounting, and financial management activities, failure to attract and retain key personnel could have a material adverse effect on us.
We have limited cash which we anticipate will be insufficient to fund our plan of operations for the nine months ending April 30, 2009 and if we are unable to raise additional capital, our business may fail and stockholders may lose their entire investment.
We have limited capital reserves to finance expansion or to protect us from a downturn in business. We currently do not have sufficient cash to fund operations for the nine months ending April 30, 2009. We will need to raise additional funds to fully fund our operations over the nine month period beginning August 1, 2008. Additional financing may come in the form of an offering of common shares, borrowing from a bank or one of our directors, or from revenues generated by new business. If additional shares are issued to raise capital, our existing stockholders will suffer a dilution of their stock ownership and the value of our outstanding shares may fall. If we borrow more money, we will have to pay interest and may also have to agree to restrictions that limit our operating flexibility. We have no commitments for additional financing and there can be no assurance that additional funds will be available when needed, or on terms acceptable to us, if at all. If adequate funds are no t available we may be required to change our planned business strategies. If we are unable to obtain adequate financing, we may not be able to successfully develop and market our products and services. As a result, we would need to curtail business operations which would have a material negative effect on operating results, the value of our outstanding stock is likely to fall, and our business may fail causing our stockholders to lose their entire investment.
Two of our directors, Camara Alford and Jueane Thiessen, also serve as our officers. These interrelationships may create conflicts of interest that might be detrimental to us.
There are various interrelationships between our officers and directors that may create conflicts of interest that might be detrimental to us. One of our directors, Camara Alford, is our Chairman and Chief Executive Officer. Jueane Thiessen, also our director, is our Chief Financial Officer and Secretary. Our board of directors, which appoints our officers, currently consists of three persons, Mr. Alford, Ms. Thiessen, and J. Sean Diaz. Together, Mr. Alford and Ms. Thiessen control over sixty-six percent of the voting power of the board of directors. Because Mr. Alford and Ms. Thiessen are both directors and officers, there exists a potential future conflict of interest regarding the decision to remove our officers or appoint new officers. Our directors and officers will deal with any such conflicts of interest, should they arise, in accordance with our Corporate Code of Ethics and applicable corporate law principles.
We may be subject to foreign currency fluctuation and such fluctuation may adversely affect our financial position and results.
We are currently located in Canada and pay most of our expenses in United States dollars. However, our target market is global. We may enter into contracts that require customers to pay us in currencies other than United States dollars. Therefore, our potential operations make us subject to foreign currency fluctuation. We do not make investments that offset the risk of adverse foreign currency fluctuations and we may suffer increased expenses and overall losses as a result.
We do not own patents on our products and, if other companies copy our products, our revenues may decline which may result in a decrease in our stock price.
We do not own patents on our products we have developed and we do not currently intend to file for patent protection on those products. Therefore, another company could recreate our products and could compete against us, which could adversely affect our revenues.
We do not carry any insurance and we may be subject to significant lawsuits which could substantially increase our expenses.
We do not carry any insurance. There are a number of occurrences that could adversely affect our financial condition. These include damage to our assets, financial records, or other property by fire or water, as well as any successful lawsuits against us involving recovery of damages arising out of our contractual, legal, or other duties. Should such an uninsured loss occur, our costs may substantially increase which would lower our overall profitability, if any.
Risks Relating To Our Stock
“Penny stock” rules may make buying or selling our securities difficult, which may make our stock less liquid and make it harder for investors to buy and sell our shares.
Trading in our securities is subject to the SEC’s “penny stock” rules and it is anticipated that trading in our securities will continue to be subject to the penny stock rules for the foreseeable future. The SEC has adopted regulations that generally define a penny stock to be any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. These rules require that any broker-dealer who recommends our securities to persons other than prior customers and accredited investors must, prior to the sale, make a special written suitability determination for the purchaser and receive the purchaser’s written agreement to execute the transaction. Unless an exception is available, the regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the risks associated with trading in the penny stock market. In addition, broker-dealers must disclose commissions payable to both the broker-dealer and the register representative and current quotations for the securities they offer. The additional burdens imposed upon broker-dealers by these requirements may discourage broker-dealers from recommending transactions in our securities, which could severely limit the liquidity of our securities and consequently adversely affect the market price for our securities.
Existing and prospective stockholders may experience significant dilution if we enter into a business combination with a private concern or public company and issue securities to stockholders of such private company.
Our business plan contemplates that we may acquire other companies or assets. As a result, we may enter into a business combination with a private concern or public company that, depending on the terms of merger or acquisition, may result in us issuing securities to stockholders of any such private company. The issuance of previously authorized and unissued common shares would result in a reduction in the percentage of shares owned by our present and prospective stockholders and may result in a change in control or management of our Company.
Douglas McClelland, one of our former directors, controls approximately 72% of our common shares, and he may not vote his shares in a manner that benefits minority stockholders.
As of July 31, 2008, Douglas McClelland, one of our former directors, owns approximately 72% of our voting stock. As a result, Mr. McClelland exercises significant control over our business affairs and policy. Mr. McClelland is able to significantly influence all matters requiring approval by stockholders, including the election of directors and the approval of significant corporate transactions. This concentration of ownership may also have the effect of delaying, deterring, or preventing a change in control and may make some transactions more difficult or impossible to complete without the support of Mr. McClelland. In addition, Mr. McClelland may not have an interest in fully promoting the sale of our common stock if such sales would reduce the opportunity for him to sell his own shares at any time in the future.
Our common stock has experienced in the past, and is expected to experience in the future, significant price and volume volatility, which substantially increases the risk that our stockholders may not be able to sell their shares at or above the price that they paid for the shares.
Because of the limited trading market for our common stock, and because of the possible price volatility, you may not be able to sell your shares of common stock when you desire to do so. From March 25, 2008 and through July 25, 2008 , our common stock was sold and purchased at prices that ranged from a high of $0.80 to a low of $0.25 per share (with prices adjusted for a four-to-one forward split in our stock that occurred on June 6, 2007). An inability for our stockholders to sell their shares in a rapidly declining market as a result of the illiquidity in our stock may substantially increase their risk of loss because the price for our common stock may suffer greater declines due to its price volatility.
The price of our common stock that will prevail in the market may be higher or lower than the price that our stockholders pay. Certain factors, some of which are beyond our control, that may cause our share price to fluctuate significantly include, but are not limited to, the following:
·
Variations in our quarterly operating results;
·
Development of a market in general for our products and services;
·
Changes in market valuations of similar companies;
·
Announcement by us or our competitors of significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments;
·
Loss of a major customer or failure to complete significant transactions;
·
Additions or departures of key personnel; and
·
Fluctuations in stock market price and volume.
Additionally, in recent years the stock market in general, and stocks quoted on the Over-The-Counter, or OTC, Bulletin Board in particular, have experienced significant price and volume fluctuations. In some cases, these fluctuations are unrelated or disproportionate to the operating performance of the underlying companies. These market and industry factors may materially and adversely affect our stock price, regardless of our operating performance.
Over the past few months, there have been periods of significant increases in trading volume of our common stock during which the price of our stock has both increased and decreased. The historical trading of our common stock is not necessarily an indicator of how it will trade in the future and our trading price as of the date of this annual report does not necessarily portend what the trading price of our common stock might be in the future.
Moreover, class action litigation has often been brought against companies following periods of volatility in the market price of the common stock of those companies. If we become involved in this type of litigation in the future, it could result in substantial costs and diversion of management attention and resources, which could have a further negative effect on investments in our stock.
Our directors have the right to authorize the issuance of preferred stock and additional shares of our common stock.
Our directors, within the limitations and restrictions contained in our articles of incorporation and without further action by our stockholders, have the authority to issue shares of preferred stock from time to time in one or more series and to fix the number of shares and the relative rights, conversion rights, voting rights, and terms of redemption, liquidation preferences and any other preferences, special rights and qualifications of any such series. We have no intention of issuing preferred stock at the present time. Any issuance of preferred stock could adversely affect the rights of holders of our common stock.
Should we issue additional shares of our common stock at a later time, the ownership interest of each of our current stockholders would be proportionally reduced. Our stockholders do not have any preemptive right to acquire additional shares of our common stock, or any of our other securities.
If we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board which would limit the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.
Companies trading on the OTC Bulletin Board, such as us, must be reporting issuers under Section 12 of the Exchange Act, and must be current in their reports under Section 13, in order to maintain price quotation privileges on the OTC Bulletin Board. If we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board. As a result, the market liquidity for our securities could be severely adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
On January 1, 2006, we entered into an agreement with Lenka Gazova, one of our stockholders, for a period of twelve months under which Ms. Gazova was required to perform programming services to develop the “AdMeUp Network” for a minimum of 20 hours per month. Under this agreement, we owned all copyright, intellectual property, and other ownership rights to the work performed by Ms. Gazova. Compensation was due when all services were complete and we had the option to determine the form and amount of compensation payable to Ms. Gazova based on one of the following options: a) $ 19,200 in cash; b) a number of our unregistered common shares equal to $19,200 divided by the weighted average trading price of the our common shares posted on any stock quotation or listing service for the 10-day period prior to the date of payment; or c) some combination of a) and b) that will yield a market value of $19,200. We have not yet paid the compensation owing to Ms. Gazova under this agreement and have not yet determined whether the fees or these services will be paid in cash, unregistered stock, or a combination of cash and unregistered stock. On January 1, 2007, we entered into a new agreement with Ms. Gazova with the same terms for an additional period of twelve months to continue providing programming services on the “AdMeUp Network.” The option for us to issue shares to Ms. Gazova under each of these agreements was pursuant to the Regulation S exemption. Ms. Gazova is not a U.S. person as defined in Rule 902(k) of Regulation S, and no sales efforts were conducted in the U.S. in accordance with Rule 903(c). Ms. Gazova acknowledged that if we compensate her in unregistered shares for her services, the shares purchased must come to rest outside the U.S. This transaction did not involve a distribution or public offering, and no commission was paid in connection with this option agreement.
On April 22, 2008, we issued 25,000 shares of our restricted common stock to J. Sean Diaz, as compensation for serving on our board of directors, valued at $10,000.
On April 22, 2008, we issued 62,500 shares of our restricted common stock to Peter Coquillard, as compensation for serving as the Managing Director of our Publishing division, valued at $25,000.
On June 20, 2008, we issued 13,612 shares of our restricted common stock to Christopher Perry, as part of the compensation to acquire a publishing catalogue, valued at $7,500.
With respect to the issuance of our securities described above, we relied on the Section 4(2) exemption from securities registration under the federal securities laws for transactions not involving any public offering. No advertising or general solicitation was employed in offering the securities. The securities were issued to an accredited investor. The securities were offered for investment purposes only and not for the purpose of resale or distribution, and the transfer thereof was appropriately restricted by us.
Item 3.
Defaults Upon Senior Securities
None.
Item 4.
Submission of Matters to a Vote of Security Holders
During the first quarter of our fiscal year ended April 30, 2009, no matter was submitted to a vote of security holders through the solicitation of proxies or otherwise.
Item 5. Other Information
None.
Item 6. Exhibits
The exhibits listed below are filed as part of or incorporated by reference in this report.
Exhibit
No.
Identification of Exhibit
10.1.
Promissory Note between UOMO Media Inc. and Next Level Ltd., dated April 1, 2008 (included as Exhibit 10.1 to the Form 8-K filed April 7, 2008 and incorporated herein by reference).
10.2.
Independent Contractor Agreement between Camara Alford and UOMO Media Inc., dated July 25, 2008 (included as Exhibit 10.1 to the Form 8-K filed July 28, 2008 and incorporated herein by reference).
10.3.
Independent Contractor Agreement between Jueane Thiessen and UOMO Media Inc., dated July 25, 2008 (included as Exhibit 10.2 to the Form 8-K filed July 28, 2008 and incorporated herein by reference).
10.4
Exclusive Sub-Publishing Agreement with Nettwerk One Music (Canada) Limited
(included as Exhibit 10.21 to the Form 10-K filed August 13, 2008 and incorporated herein by reference).
21.1
Subsidiaries of the Registrant (filed herewith).
31.1.
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
Certification of Officers pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
UOMO Media Inc.
(Registrant)
By
/s/ Camara Alford
Camara Alford
President and Chief Executive Officer
Date
September 15, 2008
By
/s/ Jueane Thiessen
Jueane Thiessen
Chief Financial Officer and Principal Accounting Officer
Date
September 15, 2008
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the registrant and in the capacity and on the date indicated.
By
/s/ Camara Alford
Camara Alford
Chairman of the Board of Directors
Date
September 15, 2008
By
/s/ Jueane Thiessen
Jueane Thiessen
Director
Date
September 15, 2008
By
/s/ J. Sean Diaz
J. Sean Diaz
Director
Date
September 15, 2008
EXHIBIT 31.1
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
I, Camara Alford, certify that:
1.
I have reviewed this annual report of UOMO Media Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: September 15, 2008
/s/ Camara Alford
--------------------------------------
By: Camara Alford
Chief Executive Officer
EXHIBIT 31.2
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
I, Jueane Thiessen, certify that:
1.
I have reviewed this annual report of UOMO Media Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: September 15, 2008
/s/ Jueane Thiessen
--------------------------------------
By: Jueane Thiessen
Chief Financial Officer and Principal Accounting Officer
EXHIBIT 32.1
CERTIFICATIONS PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of UOMO Media Inc., a Nevada corporation (the "Company"), does hereby certify, to such officer's knowledge, that:
The annual report on Form 10-K for the fiscal year ended April 30, 2008 (the "Form 10-K") of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: September 15, 2008
/s/ Camara Alford
-------------------------------------
By: Camara Alford
Chief Executive Officer
Date: September 15, 2008
/s/ Jueane Thiessen
-------------------------------------
By: Jueane Thiessen
Chief Financial Officer and Principal Accounting Officer