UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE)
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2010
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: 333-156235
BETA MUSIC GROUP, INC.
----------------------
(Name of registrant as specified in its charter)
---------------------------
(Former Name of Registrant)
FLORIDA 26-0582871
------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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 [ ] No [X]
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 as of September 7, 2010.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements............................................... 3
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.............................................. 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk......... 11
Item 4. Controls and Procedures............................................ 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.................................................. 12
Item 1A. Risk Factors....................................................... 12
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds........ 12
Item 3. Defaults Upon Senior Securities.................................... 12
Item 4. Submission of Matters to a Vote of Security Holders................ 12
Item 5. Other Information.................................................. 13
Item 6. Exhibits........................................................... 14
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.
2
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements.
BETA MUSIC GROUP, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2010 2009
--------- ------------
ASSETS
Current Assets:
Cash .............................................. $ 10,194 $ 1,936
Prepaid expenses .................................. 100 1,600
Current assets of discontinued operations ......... - 11,070
--------- ---------
Total Assets .................................... $ 10,294 $ 14,606
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable .................................. $ 5,000 $ --
Accrued liabilities ............................... 317 487
Notes payable ..................................... 20,000 5,000
Current liabilities of discontinued operations .... -- 94,211
--------- ---------
Total Current Liabilities ....................... 25,317 99,698
--------- ---------
Total Liabilities ................................... 25,317 99,698
--------- ---------
Stockholders' 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 24,958
Deficit Accumulated in the Development Stage ...... (355,066) (275,648)
--------- ---------
Total Beta Music Group, Inc. Deficit ............ (15,023) (85,137)
Non Controlling Interest .......................... - 45
--------- ---------
Total Stockholders' Deficit ..................... (15,023) (85,092)
--------- ---------
Total Liabilities and Stockholders' Deficit ..... $ 10,294 $ 14,606
========= =========
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements
3
BETA MUSIC GROUP, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
From
July 5, 2006
(Date of
Three Months Ended Six Months Ended Inception)
June 30, June 30, June 30, June 30, to June 30,
2010 2009 2010 2009 2010
------------ ------------ ------------ ------------ ------------
Revenue ............................... $ -- $ -- $ -- $ -- $ 2,760
Cost of sales ......................... -- -- -- -- 2,251
------------ ------------ ------------ ------------ ------------
Gross profit .......................... -- -- -- -- 509
General administrative expenses ....... 11,366 22,806 13,103 46,758 191,176
------------ ------------ ------------ ------------ ------------
Net loss from continuing operations ... (11,366) (22,806) (13,103) (46,758) (190,667)
------------ ------------ ------------ ------------ ------------
Loss from discontinued operations ..... (15,400) (15,077) (58,612) (28,685) (156,696)
------------ ------------ ------------ ------------ ------------
Net Loss .............................. $ (26,766) $ (37,883) $ (71,715) $ (75,443) $ (347,363)
Less: Net loss attributable to
non-controlling interest ............ 7,196 -- 7,196 -- 7,196
------------ ------------ ------------ ------------ ------------
Net loss attributable to
Beta Music Group, Inc. .............. $ (19,570) $ (37,883) $ (64,519) $ (75,443) $ (340,167)
============ ============ ============ ============ ============
Basic and Diluted Loss per Common Share
Loss from continuing operations ..... $ (0.00) $ (0.00) $ (0.00) $ (0.00)
============ ============ ============ ============
Loss from discontinued operations ... $ (0.00) $ (0.00) $ (0.00) $ (0.00)
============ ============ ============ ============
Net Loss ............................ $ (0.00) $ (0.00) $ (0.00) $ (0.01)
============ ============ ============ ============
Basic and Diluted Weighted Average
Common Shares Outstanding ........... 16,555,315 10,189,710 16,555,315 9,924,039
============ ============ ============ ============
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements
4
BETA MUSIC GROUP, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
Deficit
Accumulated
in the Non Total
Common Paid in Development Controlling Stockholders'
Stock Amount Capital Stage Interest Deficit
---------- -------- -------- ----------- ----------- -------------
Balance, July 5, 2006, date of inception ... -- $ -- $ -- $ -- $ -- $ --
Proceeds from Founders shares issued on
July 14, 2006 at $.01 per share ........... 10,000 100 -- -- -- 100
Net Loss ................................... -- -- -- (100) -- (100)
---------- -------- -------- ---------- ---------- ------------
Balance December 31, 2006 .................. 10,000 100 -- (100) -- --
Net Loss ................................... -- -- -- (21,522) -- (21,522)
---------- -------- -------- ---------- ---------- ------------
Balance, December 31, 2007 ................. 10,000 100 -- (21,622) -- (21,522)
Shares issued for conversion of accounts
payable-related parties at $.01 per share
on June 30, 2008 ......................... 2,160,087 21,601 -- -- -- 21,601
Shares issued for conversion of accounts
payable-related party at $.01 per share
on April 24, 2008 ........................ 244,000 2,440 -- -- -- 2,440
Shares issued for conversion of accounts
payable-related party and accrued wages-
related parties on May 27, 2008 .......... 1,000,091 10,001 -- -- -- 10,001
Shares issued for conversion of accounts
payable-related party and accrued wages-
related parties on August 21, 2008 ....... 383,000 3,830 -- -- -- 3,830
Shares issued for conversion of accounts
payable-related party and accrued wages-
related parties on September 4, 2008 ..... 1,126,590 11,266 -- -- -- 11,266
Shares issued for conversion of accounts
payable-related party and accrued wages-
related parties on October 22, 2008 ...... 645,500 6,455 -- -- -- 6,455
Shares issued for prepaid expenses on
October 22, 2008 ......................... 1,230,942 12,309 -- -- -- 12,309
Net Loss ................................... -- -- -- (75,614) -- (75,614)
---------- -------- -------- ---------- ---------- ------------
Balance, December 31, 2008 ................. 6,800,210 68,002 -- (97,236) -- (29,234)
Shares issued for conversion of accounts
payable-related party and accrued wages-
related parties on January 7, 2009 ....... 1,969,500 19,695 -- -- -- 19,695
Shares issued for services and prepaid
expenses on January 7, 2009 .............. 550,000 5,500 -- -- -- 5,500
Shares issued for conversion of accounts
payable-related party and accrued wages-
related parties on February 4, 2009 ...... 870,000 8,700 -- -- -- 8,700
Shares issued for accrued liabilities and
consulting expenses on August 3, 2009
at $.01 .................................. 100,000 1,000 -- -- -- 1,000
Shares issued for conversion of accounts
payable-related party and accrued wages-
related parties on August 3, 2009 ........ 4,795,605 47,956 -- -- -- 47,956
Shares issued for accrued rent-related party 750,000 7,500 -- -- -- 7,500
Shares issued for conversion of accounts
payable-related party and accrued wages-
related parties on September 1, 2009 ..... 720,000 7,200 -- -- -- 7,200
Contributed capital from related party debt
forgiveness .............................. -- -- 24,958 -- -- 24,958
Shares of subsidiary issued to non
controlling interest ..................... -- -- -- -- 45 45
Net Loss ................................... -- -- -- (178,412) -- (178,412)
---------- -------- -------- ---------- ---------- ------------
Balance, December 31, 2009 ................. 16,555,315 165,553 24,958 (275,648) 45 (85,092)
Shares of subsidiaries issued to non
controlling interests .................... -- -- -- (48,560) 48,560 --
Spin off of subsidiaries ................... -- -- 149,532 48,560 (41,409) 156,683
Dividend ................................... -- -- -- (14,899) -- (14,899)
Net Loss ................................... -- -- -- (64,519) (7,196) (71,715)
---------- -------- -------- ---------- ---------- ------------
Balance, June 30, 2010 (Unaudited) ......... 16,555,315 $165,553 $174,490 $ (355,066) $ -- $ (15,023)
========== ======== ======== ========== ========== ============
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements
5
BETA MUSIC GROUP, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
From
July 5, 2006
(Date of
Inception)
June 30, June 30, to June 30,
2010 2009 2010
--------- --------- ------------
OPERATING ACTIVITIES:
Net loss .................................................... $ (71,715) $ (75,443) $ (347,363)
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 ................................ -- 500 1,000
Shares issued for services-related party .................. -- -- 28,800
Shares of subsidiary issued to non-controlling interest ... -- -- 45
Officers compensation forgiven as paid-in capital ......... -- -- 24,958
Amortization of prepaid expenses .......................... 1,368 -- 12,497
Changes in Assets and Liabilities:
Accounts receivable ..................................... 834 -- --
Prepaid expenses ........................................ 1,500 1,802 (100)
Accounts payable ........................................ 18,320 (9,456) 18,320
Accounts payable-related parties ........................ -- -- 2,750
Accrued wages related party ............................. 24,210 41,472 60,992
Accrued liabilities ..................................... (140) 10,250 347
--------- --------- -----------
Net Cash Provided (Used) by Operating Activities ...... (25,623) (30,875) (176,004)
--------- --------- -----------
INVESTING ACTIVITIES
Cash relinquished in spinoff .............................. (394) -- (394)
--------- --------- -----------
Net Cash Used by Operating Activities ................. (394) -- (394)
--------- --------- -----------
FINANCING ACTIVITIES:
Proceeds from related party advances ...................... 24,275 33,776 173,192
Repayment of related party advances ....................... (5,000) (1,000) (6,600)
Proceeds from notes payable ............................... 15,000 -- 20,000
--------- --------- -----------
Net Cash Provided by Financing Activities ............. 34,275 32,776 186,592
--------- --------- -----------
Net Increase in Cash .................................. 8,652 1,901 10,588
--------- --------- -----------
Cash at Beginning of Period ................................. 1,936 8 --
--------- --------- -----------
Cash at End of Period ....................................... $ 10,194 $ 1,909 $ 10,194
========= ========= ===========
NON-CASH TRANSACTIONS
Stock issued for repayment of related party advances ........ $ 33,171 $ 9,595 $ 114,454
========= ========= ===========
Stock issued for prepaid compensation at subsidiary ......... $ -- $ -- $ 12,309
========= ========= ===========
Stock issued as repayment of accrued liabilities ............ $ -- $ 5,000 $ 34,535
========= ========= ===========
Shares of subsidiaries issued to non controlling interests .. $ 48,560 $ -- $ 48,560
========= ========= ===========
Dividend paid through the distribution of share of subsidiary $ 14,899 $ -- $ 14,899
========= ========= ===========
Supplemental Disclosures:
Cash paid for income taxes ................................ $ -- $ -- $ --
========= ========= ===========
Cash paid for interest .................................... $ -- $ -- $ --
========= ========= ===========
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements
6
BETA MUSIC GROUP, INC. AND SUBSIDIARIES
(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.
The consolidated financial statements include the accounts of the Company's
subsidiaries Delta Entertainment Group, Inc. ("Delta") and Famous Records, Corp.
("Famous").
The Company, through its subsidiary Famous, is in the business of producing
master recordings to commercially release and promote finished "Master"
recordings for distribution on an exclusive basis during a specific term to
record stores, other non-traditional outlets and digitally through downloads &
ringtones. Pursuant to a Stock Sale and Agreement, this line of business is
presented as discontinued operations. (See below.)
Delta Entertainment Group, Inc. was incorporated in the state of Florida on
October 2, 2009. Its principal business purpose is to act as a holding
corporation for Famous.
On December 14, 2009, pursuant to a Stock Purchase and Sale Agreement between a
third party and certain shareholders of Beta, the Board of Directors of Beta
resolved to spin off Delta Music Group, Inc. and its subsidiary Famous Records
Corp. This Board action was taken in relation to the change in control of Beta.
Shareholders of Beta on the record date, December 13, 2009 will receive one
share of Delta for each share of Beta held. The spin-off was effective on the
date the Registration statement for Delta Entertainment Group, Inc. was declared
effective by the Securities and Exchange Commission, which was April 13, 2010.
Due to the Stock Purchase and Sale Agreement, these financial statements present
the assets, liabilities and operations of Delta and Famous as discontinued
operations.
The Company 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.
7
BETA MUSIC GROUP, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information.
Accordingly, they do not include all the information and footnotes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for fair presentation have been included.
NOTE 2: SUMMARY OF ACCOUNTING POLICIES
CONSOLIDATION PRINCIPLES
The consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States for all periods
presented and include the accounts of the Company and its subsidiaries. All
intercompany accounts and transactions have been eliminated in consolidation.
USE OF ESTIMATES
The preparation of financial statements, in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions, which affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period.
NOTE 3: STOCK PURCHASE AND SALE AGREEMENT AND DISCONTINUED OPERATIONS
In December 2009, certain shareholders entered into a Stock Purchase and Sale
Agreement to sell 13,711,676 shares of common stock held to an individual.
Pursuant to that agreement, the Board of Directors of the Company resolved to
spin off the subsidiaries to the shareholders of record as of December 15, 2009.
The effective date of the spin-off was to be the later of December 31, 2009 or
the date that the Securities and Exchange Commission declared the registration
statement of Delta Entertainment Group, Inc. effective, which was April 13,
2010. Accordingly, the financial statements present the assets, liabilities and
operations of the subsidiaries as discontinued operations.
In relation to the spin-off, the Company distributed its investment in Delta to
the shareholders of record as of December 15, 2009 through the issuance of
16,555,315 shares of common stock of Delta. The value of the dividend was
determined to be $14,854, which represented Beta's investment in Delta.
As of the date of the spin off, the Company recorded Additional Paid in Capital
of $149,532, which represented the net liabilities and stockholders' equity of
Delta and subsidiary on the date of the spinoff. The assets and liabilities
divested were as follows:
8
BETA MUSIC GROUP, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
APRIL 12,
2010
---------
Assets of discontinued operations
Cash .............................................. $ 394
Accounts receivable ............................... --
Prepaid expenses .................................. 6,496
Investment in Famous .............................. 29,616
---------
$ 36,506
=========
LIABILITIES OF DISCONTINUED OPERATIONS
Bank overdraft .................................... $ 4,050
Accounts payable .................................. 6,929
Accounts payable-related parties .................. 19,233
Accrued wages-related party ....................... 69,903
Accrued liabilities ............................... --
Common stock of Famous, net of minority interest .. 29,616
---------
$ 129,731
=========
Net liabilities divested ........................... $ 93,225
=========
NOTE 4: Notes Payable
At December 31, 2009 and June 30, 2010, the Company has notes payable of $5,000
and $20,000, respectively. The notes are due on the demand of the creditors and
bear interest at the rate of 6% annually.
NOTE 5: GOING CONCERN
At June 30, 2010, 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.
NOTE 6: SUBSEQUENT EVENTS
In July 2010 the Company received proceeds from a note payable in the amount of
$8,000. The note bears interest at the rate of 6% and is due on demand.
9
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 endeavor was to produce live entertainment competitions (in
installments or episodes) to be taped and/or filmed for distribution by
television and/or internet means. We were not successful and changed our
business plan. Through the Company's subsidiary, Famous Records, Corp., our new
business focus was to establish contact with new artists who write their own
songs ("singer-songwriters") and produce their own work. The Company's objective
was to sign these artists to exclusive services agreements or license the
artists' products for exploitation in domestic and foreign markets. Once these
artists were signed, their appeal could be enhanced by concert promotions. With
limited capital we were not successful.
In December 2009 there was a change in the Company's control and new
management was appointed. In connection with this change in control, Beta
spun-off the operations of Delta Entertainment Group, Inc, the holding company
for Famous Records, pursuant to a stock dividend to the shareholders of record
of Beta on December 15, 2009. The spin-off was effective April 12, 2010. Assets
and expenses attributable to discontinued operations represent the operations of
Delta.
Since the completion of the spin-off, the Company has had no
operations. Our current objective is to identify potential business
acquisitions.
The consolidated financial statements include the accounts of the
Company's subsidiaries Delta Entertainment Group, Inc. ("Delta") and Famous
Records, Corp. ("Famous").
COMPARISON OF OPERATING RESULTS FOR THE THREE and Six MONTHS ENDED June 30, 2010
AND 2009 AND FROM JULY 5, 2006 ("INCEPTION") TO June 30, 2010.
REVENUES AND EXPENSES
We had no revenues for the three and six month periods ended June 30,
2010 and 2009.
For the three months ended June 30, 2010 and 2009, general and
administrative expenses totaled $11,366 and $22,806, respectively resulting in a
net loss from continuing operations of $11,366 and $22,806. Our net loss from
discontinued operations totaled $15,400 and $15,077. Our net loss for the three
months ended June 30, 2010 and 2009 totaled $26,766 and $37,883. Net loss
attributable to Beta totaled $19,570 and $37,883.
For the six months ended June 30, 2010 and 2009, general and
administrative expenses totaled $13,103 and $46,758,, respectively. Losses from
discontinued operations totaled $58,612 and $28,685. We incurred a net loss of
$71,715 and $75,443 for the respective periods. Net loss attributable to Beta
Music totaled $64,519 and $75,443 for the six months ended June 30, 2010 and
2009.
10
Since Inception total revenues were $2,760. We incurred losses from
continuing operations totaling $191,176 and losses from discontinued operations
totaling $156,696. Our Net loss since inception totaled $347,363 and our net
loss attributable to Beta totaled $340,167.
Our net loss per share during all applicable periods was $0.00.
Until we complete a business combination, we do not anticipate
generating revenues. Any revenues that we generate following a business
combination may not be sufficient to cover our operating expenses. In which case
we may cease operations and you may lose your entire investment.
LIQUIDITY AND CAPITAL RESOURCES
ASSETS AND LIABILITIES
At June 30, 2010 we had cash of $10,194 and prepaid expenses totaling
$100 as compared to cash of $1,936 and prepaid expenses totaling $1,600 at
December 31, 2010. The reason for the increase in our cash holdings was a loan
that we received in the amount of $15,000. Also at December 31, 2009, assets
attributable to discontinued operations were $11,070. Total assets at June 30,
2010 were $10, 294 and $14,606 at December 31, 2009.
Our current liabilities at June 30, 2010 totaled $25,317 consisting
primarily of a note payable totaling $20,000 and accounts payable totaling
$5,000. At December 31, 2009 our current liabilities totaled $99,698 consisting
primarily of a $5,000 note payable and a liability for discontinued operations
totaling $94,211. Total liabilities were $25,317 and $99,698 at June 30, 2010
and December 31, 2009. The primary reason for the decline in our total
liabilities is attributable to the elimination of our liability for discontinued
operations.
We had a working capital deficit of $15,023 at June 30, 2010 and a
working capital deficit of $85,092 at December 31, 2009. We have no revenues to
satisfy these liabilities. Unless we secure 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.
11
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
was 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.
ITEM 4T. THE INFORMATION REQUIRED BY ITEM 4T IS CONTAINED IN ITEM 4.
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,
2009.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES.
During the quarter ended June 30, 2010 we did not issue any shares of
common stock.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
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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 the Principal Executive Officer *
32.2 Section 906 Certification of the Principal Financial and
Accounting Officer *
* Filed herewith
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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: September 8, 2010
By: /s/ Edwin Mendlinger
- ------------------------
Edwin Mendlinger
Chief Executive Officer
Date: September 8, 2010
By: /s/ Edwin Mendlinger
- ------------------------
Edwin Mendlinger
Chief Financial Officer
14