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BEMG > SEC Filings for BEMG > Form 10-Q on 19-Aug-2014All Recent SEC Filings

Show all filings for BETA MUSIC GROUP, INC.

Form 10-Q for BETA MUSIC GROUP, INC.


19-Aug-2014

Quarterly Report


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

Business Description

The Company is a Florida Corporation and is headquartered in Miami, Florida.

The Company is an emerging growth digital media company. In December 2013, The Company acquired from Viewpon Holdings the exclusive worldwide licensing rights to operate and sell services and products available on Viewpon's digital media platform. The digital media platform will enable the Company to develop and design digital and interactive videos, applications, social media products, new media and internet television and social networks for sports, health, fitness and entertainment enthusiasts. In addition, The Company will sell digital coupons and digital media videos which was acquired from Viewpon. The Company will implement a multimarket revenue strategy that incorporates digital media videos, mobile applications, social media and internet television to engage consumers to purchase products and services for small businesses. The strategy of the Company is to offer digital media videos as a cost effective method for small businesses to connect to their clients in an efficient way to by placing the interests of their consumers first. The Company will also provide consulting, social networking and strategic planning for clients.

The Company's digital media platform will include mobile apps, interactive videos, online websites, mobile marketing and social media. The Company's strategy to drive revenues is by producing digital videos for small and large businesses across various sectors including retail, health, wellness, consulting and other specific communities. The digital media videos will serve small business sectors including boutiques and salons, restaurants, doctors, dentists, accountants, hotels, travel services as well as auto mechanics, plumbers and many more small businesses. Small businesses and large businesses will use the digital media platform to create interactive advertising videos so engage with current and potential consumers at the critical moment when they are deciding where to spend their money. The business revolves around three key constituencies: producing digital media advertising, contributors who submit digital streaming reviews of the small businesses products and services and consumers who watch digital reviews of the local businesses that they describe. The Company will invest in these small business communities to build customer loyalty and increase brand awareness by delivering digital videos of interest and enhanced interactive content of small business products and services that enrich and improve their client's lifestyle.

The Company is a marketing and media company that will provide digital media marketing, social and mobile marketing, strategic media planning and other specialty communications services. The Company will provide customers with digital, mobile, social and video content productions to promote small businesses to their clients by providing digital coupons as interactive experiences between clients and the small business community. The Company has entered into a licensing agreement with Viewpon Holdings to market and sell products and services developed by Viewpon's digital marketing platform. The licensing agreement grants to The Company the exclusive rights to utilize this platform to implement its business strategy. References throughout this business disclosure to "our digital media platform" refer to the digital media platform developed by Viewpon which the Company is licensed to use.

The Company currently has an inventory of video discount coupon purchased from Viewpon. Viewpon currently has approximately 20,000 registered users. The Company has been selectively contacting these users and offering them the opportunity to purchase these coupons. In addition to the sale of the video coupons, the Company provides creative solutions to the advertising and marketing challenges encountered by small businesses. The mission is to assist small businesses grow their operations by increasing their customers. The Company is a strategic marketing partner, creating online promotions that deliver results to reach a range of targeted audiences and provide strategic planning to clients across the sectors of social media and marketing services

The licensing agreement with Viewpon provides the Company with access to Viewpon's digital media technology platform that includes interactive coupon & multi-format publishing technologies and multiple new scalable revenue streams & innovative technologies designed specifically for internet couponing applications. The Company creates value for its clients that are comprised of consumers and businesses via digital value offers, retailers who create offers enabled with our technology and finally consumers who redeem offers, consume advertisements and products that generate revenue for our operation. The digital media platform provides digital video commercials and interactive broadcasting as the method of video presentations, distribution, and monetization.

The Company's website is located at www.betamusicgroupinc.com

To date, our revenues have been generated through consulting services offered to small business owners. Our digital media platform will enable us to develop digital media marketing programs by producing digital videos for small and large businesses across various sectors including retail, health, wellness, consulting and other specific communities. Our digital media videos will serve small business sectors including boutiques and salons, restaurants, doctors, dentists, accountants, hotels, travel services as well as auto mechanics, plumbers and other sectors within the small business community. Contracts with our clients to produce the digital media videos are negotiated individually and terms of the engagement with clients and the basis in which fees and commissions will vary significantly. Contracts with small business client are multifaceted arrangements that may include an upfront fee, an incentive compensation provision and may also include vendor credits. Clients may arrange for our services to be provided via local, regional across various business sectors.


Viewpon Acquisition:

Management has determined that the most expedient way to achieve these goals is for the Company to purchase Viewpon Holdings. In furtherance thereof, the Company signed a Letter of Intent with Viewpon which provides in part for Beta to acquire 100% of the issued and outstanding shares of common stock of Viewpon in consideration for the issuance of 1,900,000 shares of Beta common stock. Closing will be subject to execution of a definitive share exchange agreement and satisfaction of certain conditions precedent including but not limited to the absence of pending or threatened litigation, satisfactory review of the Company's financial condition and results of operations, the execution of a non-compete agreement with the principal shareholders.

On June 27, 2014, The Company entered into a Share Exchange Agreement providing for the acquisition by the Company of all of the outstanding capital stock of Viewpon Holdings, Inc. a company formed under the laws of Delaware, from the shareholders of Viewpon in exchange for the issuance of up to 1,900,000 shares common stock of the Company payable upon closing. Closing was subject to obtaining the consent from shareholders owning no less than 90% of Viewpon's issued and outstanding shares of common stock. Shareholders representing the holders of 100% of the outstanding common stock have consented to the agreement.

The Viewpon website is located at www.viewpon.tv. The Sideshow Entertainment website is located at www.sideshowentertainment.tv.

Viewpon is a lifestyle entertainment show and online listing services website that features small businesses and stories across San Francisco and the Pacific Northwest. From the coolest places to stay, play and dine, Viewpon takes viewers on a tour of all that is best in the area where they live. Viewpon's television show and digital video content website highlights small businesses and fun things to do your area and then offers those experiences at a discount. Viewpon's television show drives customers to our website where customers can view digital videos of all of our small business clients.

Sideshow Entertainment is a full service television and video production company producing original, non-scripted programming. Founded in San Francisco in 2007, by President and Executive Producer Michael Orkin, Sideshow Entertainment has produced reality-based programming featuring home makeovers, real estate, home brewing, infomercials and even a game show. Sideshow Entertainment has partnered with high profile companies such as IKEA, Kelly Moore Paints, Big O Tires and Miller/Coors. Sideshow Entertainment prides itself in being able to help such high profile companies turn "branding" into compelling television.

The Company's strategy to drive revenues is by producing digital videos for small and large businesses across various sectors including retail, health, wellness, consulting and other specific communities. The Company's digital media videos will serve small business sectors including boutiques and salons, restaurants, doctors, dentists, accountants, hotels, travel services as well as auto mechanics, plumbers and many more small businesses. Small businesses and large businesses will use the digital media platform to create interactive advertising videos so engage with current and potential consumers at the critical moment when they are deciding where to spend their money. The Company's business revolves around three key constituencies: producing digital media advertising, contributors who submit digital streaming reviews of the small businesses products and services and consumers who watch digital reviews of the local businesses that they describe. The Company will invest in these small business communities to build customer loyalty and increase brand awareness by delivering digital videos of interest and enhanced interactive content of small business products and services that enrich and improve their client's lifestyle. The Company is a marketing and media company that will provide digital media marketing, social and mobile marketing, strategic media planning and other specialty communications services. The Company will provide customers with digital, mobile, social and video content productions to promote small businesses to their clients by providing digital coupons as interactive experiences between clients and the small business community. Viewpon has approximately 20,000 registered users and has produced an approximately total of 378 television shows and over 5,000 digital media network broadcasts regarding their digital media platform. As a result of the acquisition of Viewpon, the Company is expected to be the premier provider of digital media marketing, social and mobile marketing, strategic media planning and other specialty communications services and produce digital videos for small and large businesses across various sectors including retail, health, wellness, consulting and other specific communities. The digital media videos will serve small business sectors including boutiques and salons, restaurants, doctors, dentists, accountants, hotels, travel services as well as auto mechanics, plumbers and many more small businesses.


Comparison of Operating Results for the Three Months ended June 30, 2014 and 2013.

Revenues

The Company recognized revenue of $17,500 during the three months ended June 30, 2014 and compared to $0 revenues for period ended June 30, 2013. The increase in revenue is primarily due to the consulting services for our subsidiary EVG Media, Inc. operations.

Operating Update

General and administrative expenses for the three months ended June 30, 2014 and June 30, 2013 totaled $592,763 and $61,800 respectively. The increase in general and administrative expenses is due to the $510,000 in stock based expenses for business development regarding the expansion of the digital media platform. This is a one-time expense for startup cost related to the digital media expansion and is not forecasted to be a recurring expense. There was an additional $20,585 in legal expenses regarding the additional filings of the public company and $45,000 in executive salary that was accrued but not paid during this period.

The Company's Net Income for the three months ended June 30, 2014 totaled $2,568,945 compared to $61,800 in net losses for the three months ending of June 30, 2013.

The net income is primarily due to the net non-operating income of $173,642 related to bargain purchase gain regarding the acquisition of Viewpon. This increase in net income is also due to the reduction in derivative liabilities totaling $3,013,854. The increase in general and administrative expenses is due to the $510,000 in stock based expenses for business development regarding the expansion of the digital media platform. This is a one-time expense for startup cost related to the digital media expansion and is not forecasted to be a recurring expense. There was an additional $20,585 in legal expenses regarding the additional filings of the public company and $45,000 in executive salary that was accrued but not paid during this period.

Comparison of Operating Results for the Six Months ended June 30, 2014 and 2013.

Revenues

The Company recognized revenue of $20,000 during the six months ended June 30, 2014 and compared to $0 revenues for period ended June 30, 2013. The increase in revenue is primarily due to the consulting services for our subsidiary EVG Media, Inc. operations.

Operating Update

General and administrative expenses for the six months ended June 30, 2014 and June 30, 2013 totaled $707,784 and $158,600 respectively. The increase in general and administrative expenses is due to the $570,000 in stock based expenses for business development regarding the expansion of the digital media platform. This is a one-time expense for startup cost related to the digital media expansion and is not forecasted to be a recurring expense. There was an additional $24,585 in legal expenses regarding the additional filings of the public company and $90,000 in executive salary that was accrued but not paid during this period.

The Company's Net Loss for the six months ended June 30, 2014 totaled $1,081,607 compared to $158,600 in net losses for the six months ending of June 30, 2013.

The increase in net losses is primarily due to the net non-operating loss of $480,000 related to derivative liabilities. The increase in general and administrative expenses of $570,000 in stock based expenses for business development regarding the expansion of the digital media platform. This is a one-time expense for startup cost related to the digital media expansion and is not forecasted to be a recurring expense. There was an additional $24,097 in legal expenses regarding the additional filings of the public company and $90,000 in executive salary that was accrued but not paid during this period. This was offset by the net non-operating income of $173,642 related to bargain purchase gain regarding the acquisition of Viewpon.


Liquidity and Capital Resources

Assets and Liabilities

At June 30, 2014, The Company had cash totaling $9,007, inventory assets of $68,994, fixed assets of $4,567 and intangible assets of $378,102 which represented the Company's assets. At December 31, 2013, the Company had cash totaling $1,174, accounts receivable of $18,000, inventory assets of $68,994, fixed assets of $3,000, intangible assets of $0, which represented the Company's assets.

The Company's total assets were $460,670 at June 30, 2014. The Company's total assets were $91,168 at December 31, 2013.

The Company's liabilities at June 30, 2014 totaled $870,831 of which $129,451 is attributable to notes payable, $162,164 is accounts payable, $134,200 is salary payable, $78,874 is accrued liabilities, $20,000 is deferred income, $35,650 is notes payable related party and $310,492 is derivative liability. The Company' liabilities at December 31, 2013 totaled $1,429,722 of which $41,986 is attributable to notes payable, $48,044 is accounts payable, $69,200 is salary payable and $1,270,492 is derivative liability

The Company had a working capital deficit at June 30, 2014 of $410,161 compared to working capital deficit at December 31, 2013 of $1,338,554.

The change in the working capital deficit is primarily due to the increase of intangible assets related to the Viewpon Acquisition, the decrease in derivative liability, the increase in notes payables due to amortization of debt discount, and increase in deferred revenues regarding initial expansion of digital media business of our operations. The Company does not have sufficient revenues and operating profits to satisfy our ongoing liabilities. Unless the Company secures equity or debt financing, of which there can be no assurance, or identify an acquisition candidate, we will not be able to continue any operations.

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