Beta Music (BEMG) 10-Q 2012 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Mark One)

Form 10-Q

[√] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2012

or

[  ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________________ to __________________

Commission file number: 333-113296

Beta Music Group, Inc.

(Name of registrant as specified in its charter)

Florida	26-0582871
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

160 East 65th Street, New York, NY	10065
(Address of principal executive offices)	(Zip Code)

(212) 249-4900

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the 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.   Yes [X]   No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes [X]   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	[  ]	Small Reporting Company	[X]

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

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

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock as of the latest practicable date: 16,555,315 shares of Common Stock as of May 10, 2012.

PART I. - FINANCIAL INFORMATION
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	6
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	7
Item 4.	Controls and Procedures.	7
PART II. - OTHER INFORMATION
Item 1.	Legal Proceedings.	8
Item 1A.	Risk Factors.	8
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	8
Item 3.	Defaults Upon Senior Securities.	8
Item 4.	Submission of Matters to a Vote of Security Holders.	8
Item 5.	Other Information.	8
Item 6.	Exhibits.	8

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this quarterly report on Form 10-Q contain or may contain forward-looking statements that are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Generally, the words “believes”, “anticipates,” “may,” “will,” “should,” “expect,” “intend,” “estimate,” “continue,” and similar expressions or the negative thereof or comparable terminology are intended to identify forward-looking statements which include, but are not limited to, statements concerning the Company’s expectations regarding its working capital requirements, financing requirements, business prospects, and other statements of expectations, beliefs, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Readers should carefully review this quarterly report in its entirety, including but not limited to our financial statements and the notes thereto. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. For any forward-looking statements contained in any document, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

OTHER PERTINENT INFORMATION

When used in this report, the terms “Beta”, the “Company”, “we”, “our”, and “us” refers to Beta Music Group, Inc., a Florida corporation.

PART I. – FINANCIAL INFORMATION

Item 1. Financial Statements.

BETA MUSIC GROUP, INC.

(A DEVELOPMENT STAGE COMPANY)

UNAUDITED CONDENSED BALANCE SHEETS

	March 31,			December 31,
	2012			2011
Assets
Current Assets:
Cash	$	28,295		$	938
Total Assets	$	28,295		$	938
Liabilities and Stockholders’ Deficit
Current Liabilities:
Accounts payable	$	7,081		$	1,284
Accrued liabilities		5,498			4,381
Notes payable		75,000			63,500
Notes payable- related party		20,000			—
Total Current Liabilities		107,579			69,165
Total Liabilities		107,579			69,165
Stockholders’ Equity (Deficit)
Common stock, $.01 par value 100,000,000 authorized and 16,555,315 issued and outstanding		165,553			165,553
Additional paid in capital		174,490			174,490
Deficit Accumulated in the Development Stage		(419,327	)		(408,270	)
Total Stockholders’ Deficit		(79,284	)		(68,227	)
Total Liabilities and Stockholders’ Deficit	$	28,295		$	938

The accompanying notes are an integral part of these unaudited condensed financial statements

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BETA MUSIC GROUP, INC.

(A DEVELOPMENT STAGE COMPANY)

UNAUDITED CONDENSED STATEMENTS OF OPERATIONS

							From
							July 5, 2006
							(Date of Inception)
	March 31,			March 31,			to March 31,
	2012			2011			2012
Revenue	$	—		$	—		$	2,760
Cost of sales		—			—			2,251
Gross profit		—			—			509
General administrative expenses		9,941			10,122			250,822
Net loss from continuing operations		(9,941	)		(10,122	)		(250,313	)
Loss from discontinued operations		—			—			(149,500	)
Interest expense		1,116			—			4,615
Net Loss	$	(11,057	)	$	(10,122	)	$	(404,428	)
Basic and Diluted Loss per Common Share	$	(0.00	)	$	(0.00	)
Basic and Diluted Weighted Average Common Shares Outstanding		16,555,315			16,555,315

The accompanying notes are an integral part of these unaudited condensed financial statements

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BETA MUSIC GROUP, INC.

(A DEVELOPMENT STAGE COMPANY)

UNAUDITED CONDENSED STATEMENT OF CASH FLOWS

							From
							July 5, 2006
							(Date of Inception)
	March 31,			March 31,			to March 31,
	2012			2011			2012
Operating Activities:
Net loss	$	(11,057	)	$	(10,122	)	$	(404,428	)
Adjustments to reconcile net loss to net cash provided (used) by operating activities:
Rent expense paid through issuance of common stock		—			—			21,750
Shares issued for services		—			—			1,000
Shares issued for services-related party		—			—			28,800
Shares of subsidiary issued for services-related party		—			—			15,434
Officers compensation forgiven as paid-in capital		—			—			24,958
Shares of subsidiary issued to minority interest		—			—			(7,196	)
Loss allocated to non controlling interest		—			—			45
Amortization of prepaid expenses		—			—			12,496
Changes in Assets and Liabilities:
Accounts payable		5,797			4,155			18,060
Accounts payable-related parties		—			—			2,750
Accrued wages related party		—			—			47,930
Accrued liabilities		1,117			625			5,498
Net Cash Used by Operating Activities		(4,143	)		(5,342	)		(232,903	)
Investing Activities:
Cash relinquished in distribution of subsidiary		—			—			(394	)
Net Cash Used by Investing Activities		—			—			(394	)
Financing Activities:
Proceeds from related party advances		20,000			—			193,192
Repayment of related party advances		—			—			(6,600	)
Proceeds from notes payable		11,500			9,500			75,000
Net Cash Provided by Financing Activities		31,500			9,500			261,592
Net Increase in Cash		27,357			4,158			28,295
Cash at Beginning of Period		938			6,355			—
Cash at End of Period	$	28,295		$	10,513		$	28,295
Supplemental Disclosures:
Cash paid for income taxes	$	—		$	—		$	—
Cash paid for interest	$	—		$	—		$	—
Non-cash Transactions
Stock issued for repayment of related party advances	$	—		$	—		$	81,404
Shares of subsidiary issued as repayment of related party advances	$	—		$	—		$	33,126
Stock issued for prepaid compensation at subsidiary	$	—		$	—		$	13,676
Shares of subsidiary issued to non controlling interests	$	—		$	—		$	48,560
Dividend paid through issuance of shares of subsidiary	$	—		$	—		$	14,899
Stock issued as repayment of accrued liabilities	$	—		$	—		$	14,400

The accompanying notes are an integral part of these unaudited condensed financial statements

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BETA MUSIC GROUP, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

NOTE 1: Description of Company and Basis of Presentation

Beta Music Group, Inc. (the “Company” or “Beta”) was incorporated in the state of Florida on July 5, 2006 under the name Pop Starz Productions, Inc. On November 14, 2007 the name of the Company was changed to The Next Pop Star, Inc.  On October 20, 2008, the name was changed again to Beta Music Group, Inc.

In March 2012, the Company formed a subsidiary, Beta Auto Group, Inc. The principal business purpose of Beta Auto Group, Inc. is to operate as a wholesale automobile dealer. We have not yet commenced our primary operations.

The Company and its subsidiary is currently a shell company and has limited continuing operations.   The Company intends to locate and combine with an existing company that is profitable or which, in management’s view, has growth potential, irrespective of the industry in which it is engaged.   A combination may be structured as a merger, consolidation, exchange of the Company’s common stock for stock or assets or any other form.

Pending negotiation and consummation of a combination the Company anticipates that it will have, aside from carrying on its search for a combination partner, no business activities, and, thus, will have no source of revenue.  The Company does not currently have cash on hand sufficient to fund its operations until the earlier of a combination or a period of one year, and will be required to seek additional funding to consummate a transaction. The Company intends to either seek additional equity or debt financing.  No assurances can be given that such equity or debt financing will be available, nor can there be any assurance that a combination transaction will be consummated.  Should the Company be required to incur any significant liabilities prior to a combination transaction, including those associated with the current minimal level of general and administrative expenses, it may not be able to satisfy those liabilities in the event it was unable to obtain additional equity or debt financing.

The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s most recent Annual Financial Statements filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period presented have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the Form 10-K, have been omitted.

NOTE 2: Summary of Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of Beta and its wholly owned subsidiary Beta Auto Group, Inc. All intercompany accounts and transactions have been eliminated in consolidation.

NOTE 3: Going Concern

At March 31, 2012, the Company has a working capital deficit. As such, the accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company does not have sufficient working capital for its planned activities, which raises substantial doubt about its ability to continue as a going concern.

Continuation of the company as a going concern is dependent upon obtaining additional working capital and the management of the Company has developed a strategy, which it believes will accomplish this objective through short-term loans from related parties and additional equity investments, which will enable the Company to continue operations for the coming year.

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BETA MUSIC GROUP, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

NOTE 4: Notes Payable

At March 31, 2012 and December 31, 2011 the Company has notes payable outstanding in the amounts of $75,000 and $63,500, respectively. The notes are due on demand, unsecured, and accrue interest at the rate of 6% per year.

NOTE 5: Related Party

At March 31, 2012, the Company has a note payable due to a related party in the amount of $20,000. The note is due on demand, unsecured, and accrues interest at the rate of 6% per year.

NOTE 6: Subsequent Events

During April 2012, the Company received $10,000 from a related party. This amount is due on demand, unsecured, and accrues interest at 6% per year.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation.

THE FOLLOWING DISCUSSION OF THE RESULTS OF OUR OPERATIONS AND FINANCIAL CONDITION SHOULD BE READ IN CONJUNCTION WITH OUR FINANCIAL STATEMENTS AND THE NOTES THERETO INCLUDED ELSEWHERE IN THIS REPORT.

Background

Beta Music Group Inc. (“BETA”, the “Company” or “we” ) is a Florida corporation incorporated in the state of Florida on July 5, 2006. Our original business plan was to produce live entertainment competitions to be taped and/or filmed for distribution by television and/or internet means. We were not successful in this endeavor. Our next business focus was to sign “singer-songwriters” to exclusive services agreements or license the artists’ products in domestic and foreign markets. With limited capital we were not successful in this endeavor.

In December 2009 there was a change in the Company’s control and new management was appointed. In April 2010 we spun-off our operating subsidiary and issued a stock dividend to our shareholders.

Since the completion of the spin-off, we have had no operations. Our focus has been to effect a merger, exchange of capital stock, asset acquisition or other similar business combination with an operating or development stage business which desires to utilize our status as a reporting corporation under the Securities Exchange Act of 1934. To date, we have not found an acquisition candidate.

Currently under consideration is establishing a wholesale auto dealer in the state of Indiana. In furtherance thereof we formed a wholly owned subsidiary, Beta Auto Group, Inc. We have submitted a license application and secured garage insurance. If we continue with this business plan we will need to secure additional funding.

We have no commitment for additional funding nor can there be any assurance that we will be able to secure sufficient funding to launch this business.

Comparison of Operating Results for the Three Months ended March 31, 2012 and 2010 and from July 5, 2006 (“Inception”) to March 31, 2012.

Revenues

We had no revenues for the three month periods ended March 31, 2012 or 2011. Total revenues since inception totaled $2,760.

For the three months ended March 31, 2012 we incurred general administrative expenses totaling $9,941 and interest expense totaling $1,116 resulting in a Net Loss of $(11,057). This compares to a Net Loss for the three months ended March 31, 2011 totaling $(10,122) which is attributable to general administrative expenses. Our Net Loss since Inception totaled $(403,312).

Our net loss per share during for the three months ended March 31, 2012 and 2011 was $(0.00).

We will require additional capital to implement our business plan. There can be no assurance that we will be able to secure additional capital or if available, on commercially acceptable terms. Until such time as we can implement our business plan, it is unlikely that we will be able to reverse our continuing losses in which case an investor may lose their entire investment.

6

Liquidity and Capital Resources

Assets and Liabilities

At March 31, 2012 we had cash of $28,295 as compared to $938 on December 31, 2011. The increase in our cash reserves is directly attributable to additional debt financing.

Our current liabilities at March 31, 2012 totaled $107,579 consisting primarily of a note payable in the amount of $95,000. At December 31, 2011 current liabilities totaled $69,165 which was primarily attributable to a note payable totaling $63,500. We used the proceeds from these notes for working capital.

Accounts payable at March 31, 2012 were $7,081 as compared to $1,284 at December 31, 2011. Accrued liabilities totaled $5,498 as compared to $4,381.

We had a working capital deficit of $79,284 at March 31, 2012 and a working capital deficit of $68,227 at December 31, 2011. We have no revenues to satisfy these liabilities. Unless we secure additional debt or equity financing, of which there can be no assurance, or enter into some form of business combination, we may be forced to discontinue our limited operations.

Off-Balance Sheet Arrangements

We are not currently a party to, or otherwise involved with, 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 Disclosure About Market Risk.

Not applicable.

Item 4. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) and determined that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q. The evaluation considered the procedures designed to ensure that the information required to be disclosed by us in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and communicated to our management as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in Internal Control over Financial Reporting

During the period covered by this Quarterly Report on Form 10-Q, there were no change in our internal control over financial reporting (as such term is defined in Rules 13a-15(d) and 13d-15(d) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

(c) Inherent Limitations of Disclosure Controls and Internal Controls over Financial Reporting

Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Projections of any evaluation or effectiveness to future periods are subject to risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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PART II. – OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

There have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the period ended December 31, 2011.

Item 2. Unregistered Sales of Equity Securities.

During the quarter ended March 31, 2012 we did not issue any shares of common stock.

Item 3. Defaults upon senior securities.

None.

Item 4. Mine Safety Disclosure.

Not Applicable.

Item 5. Other information.

None.

Item 6. Exhibits.

Exhibit No.	Description
31.1*	Section 302 Certification of the Principal Executive Officer
31.2*	Section 302 Certification of the Principal Financial Officer
32.1*	Section 906 Certification of Principal Executive Officer
32.2*	Section 906 Certification of Principal Financial and Accounting Officer
101**	XBRL data files of Financial Statements and Notes contained in this Quarterly Report on Form 10-Q.

*  Filed herewith.

**  In accordance with Regulation S-T, the Interactive Data Files in Exhibit 101 to the Quarterly Report on Form 10-Q shall be deemed “furnished” and not “filed.”

8

SIGNATURES

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

Beta Music Group, Inc.

Date:   May 15, 2012

By:  /s/ Edwin Mendlinger

Edwin Mendlinger

Chief Executive Officer

Date:   May 15, 2012

By:  /s/ Edwin Mendlinger

Edwin Mendlinger

Chief Financial Officer

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