VIBE RECORDS, INC. NEVADA - FORM 10-Q

Attached files

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EX-31.2 - VIBE RECORDS, INC. NEVADA	v175016_ex31-2.htm
EX-32.2 - VIBE RECORDS, INC. NEVADA	v175016_ex32-2.htm
EX-32.1 - VIBE RECORDS, INC. NEVADA	v175016_ex32-1.htm
EX-31.1 - VIBE RECORDS, INC. NEVADA	v175016_ex31-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10Q

(Mark One)

x	Quarterly Report Under Section 13 or 15(D) of the Securities Exchange Act of 1934

For the quarterly period ended December 31, 2009

¨	Transition Report Under Section 13 or 15(D) of the Securities Exchange Act of 1934

For the transition period from __________ to __________

VIBE RECORDS, INC. NEVADA

(Exact name of registrant as specified in its charter)

Nevada	0-51107	71-0928242
(State of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)

824 Old Country Road, P.O. Box 8, Westbury N.Y. 11590	11590
(Address of principal executive offices)	(Zip code)

(516) 333-2400

(Registrant's telephone number, including area code)

Indicate by check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check One):

Large accelerated filer ¨	Accelerated filer ¨

Non-accelerated filer ¨	Smaller reporting company x

Indicate by check mark if the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes ¨ No x

As of February 12, 2010, the number of shares of the registrant’s common stock, par value $0.0001 per share, outstanding was 20,185,687.

VIBE RECORDS, INC. NEVADA

Form 10-Q

For the Quarterly Period Ended December 31, 2009

Table of Contents

		Page

PART I	Financial Information

Item 1.	Financial Statements
	Balance Sheets	3
	Statements of Operations and Comprehensive Loss	4
	Statements of Cash Flows	5
	Notes to Consolidated Financial Statements (Unaudited)	6-14

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17
Item 4.	Controls and Procedures	18

PART II	Other Information	18

Item 1.	Legal Proceedings	18

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18
Item 3.	Defaults Upon Senior Securities	18
Item 4.	Submission of Matters to a Vote of Security Holders	18
Item 5.	Other Information	19
Item 6.	Exhibits	19

VIBE RECORDS, INC. NEVADA

(a development stage company)

Balance Sheets

December 31, 2009 (Unaudited) and September 30, 2009 (Audited)

	December 31, 2009			September 30, 2009
	Unaudited			Audited
ASSETS
CURRENT ASSETS
Cash on hand and in bank	$	19,531		$	23,809
TOTAL CURRENT ASSETS		19,531			23,809

PROPERTY AND EQUIPMENT - AT COST		96,937			96,937
Less accumulated depreciation		(48,692	)		(43,845	)
NET PROPERTY AND EQUIPMENT		48,245			53,092

TOTAL ASSETS	$	67,776		$	76,901

LIABILITIES AND STOCKHOLDERS DEFICIT

CURRENT LIABILITIES
Notes payable to bank and individuals	$	847,808		$	730,381
Accounts payable and other accrued liabilities		314,866			368,970
Accrued interest payable		776,746			719,081
Notes and advances payable to officers and stockholders		1,713,155			1,686,077

TOTAL LIABILITIES		3,652,575			3,504,509

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT
Preferred stock - $0.001 par value 50,000,000 shares authorized
Series A - 4,000 shares designated
Series B - 4,000 shares designated
None issued and outstanding		-			-

Common stock - $.0001 par value, 100,000,000 authorized; 22,109,267 and 21,249,267 issued and outstanding, respectively		2,211			2,125
Additional paid in capital		3,170,835			2,998,921
Accumulated deficit		(6,022,978	)		(5,693,787	)
		(2,849,932	)		(2,692,741	)
Less: Treasury stock		(734,867	)		(734,867	)

TOTAL STOCKHOLDERS' DEFICIT	$	(3,584,799	)	$	(3,427,608	)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	67,776		$	76,901

The accompanying notes are an integral part of these financial statements.

VIBE RECORDS, INC. NEVADA

(a development stage company)

Statements of Operations and Comprehensive Loss

For the Three Months ended December 31, 2009 and 2008 and

Period from January 13, 2003 (date of inception) through December 31, 2009

							January 13, 2003
							Inception
							Through
	2009			2008			December 31, 2009
REVENUES	$	-		$	-		$	-

OPERATING EXPENSES
Research and artist developments costs		81,457			22,692			807,653
General and administrative expenses		69,313			35,769			3,170,034
Professional fees		115,570			46,446			958,644
TOTAL OPERATING EXPENSES		266,340			104,907			4,936,331

LOSS FROM OPERATIONS		(266,340	)		(104,907	)		(4,936,331	)

OTHER (EXPENSE)
Interest expense		(62,852	)		(60,418	)		955,014
TOTAL OTHER (INCOME) EXPENSES		(62,852	)		(60,418	)		955,014

LOSS BEFORE PROVISION FOR INCOME TAXES		(329,192	)		(165,325	)		(5,891,345	)

PROVISION FOR INCOME TAXES		-			-			(5,930	)

NET LOSS	$	(329,192	)	$	(165,325	)	$	(5,897,275	)

Loss per weighted-average share of common stock outstanding, computed on net loss-basic and fully diluted	$	(0.02	)	$	(0.01	)

Weighted-average number of shares of common stock outstanding basic and fully diluted		21,613,832			14,564,267

The accompanying notes are an integral part of these financial statements.

VIBE RECORDS, INC. NEVADA

(a development stage company)

Statements of Cash Flows

For the Three Months ended December 31, 2009 and 2008 and

Period from January 13, 2003 (date of inception) through December 31, 2009

							January 13, 2003
							Inception
							Through
	December 31, 2009			December 31, 2008			December 31, 2009

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss for the year	$	(329,192	)	$	(165,325	)	$	(6,022,979	)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation		4,847			2,674			48,692
Amortization of original issue discount on note payable to individual		5,218			-			5,218
Expenses paid with common stock		172,000			-			701,550
Increase (Decrease) in:
Accounts payable and other accrued expenses		(54,103	)		14,570			314,867
Accrued interest payable		57,665			46,734			908,539
NET CASH (USED) IN OPERATING ACTIVITIES		(143,565	)		(101,347	)		(4,044,113	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Cash advanced to affiliated parties		-			(24,071	)		(182,709	)
Cash paid to acquire property and equipment		-			-			(96,937	)
NET CASH PROVIDED BY (USED) IN INVESTING ACTIVITIES		-			(24,071	)		(279,646	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in bank overdraft		-			(417	)		-
Cash received on notes payable to banks and individuals		140,000			126,144			1,317,952
Cash paid on notes payable to banks and individuals		(27,791	)		-			(142,689	)
Cash received on notes and advances from officers, directors, and other related parties		84,150			-			3,793,297
Cash paid on notes and advances from officers, directors, and other related parties		(57,072	)		-			(115,403	)
Purchase of treasury stock		-			-			(509,867	)
NET CASH PROVIDED BY FINANCING ACTIVITIES		139,287			125,727			4,343,290

INCREASE (DECREASE) IN CASH		(4,278	)		309			19,531

CASH AT BEGINNING OF PERIOD		23,809			-			-

CASH AT END OF PERIOD	$	19,531		$	309		$	19,531

SUPPLEMENTAL DISCLOSURE OF INTEREST AND
INCOME TAXES PAID
Interest paid during the period	$	6,575		$	13,684		$	173,567
Income taxes paid during the period	$	-		$	-		$	-

SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES
Advances to affiliated entities assigned to repay certain notes and advances from shareholder, officer and director		-			206,780			-
Common stock issued to settle notes payable		-						1,600,000

The accompanying notes are an integral part of these financial statements.

Vibe Records, Inc. Nevada

(A development stage company.)

Notes to Financial Statements

December 31, 2009

NOTE A - Organization and Description of Business

Vibe Records, Inc. Nevada, (“we” “us” or the “Company”) was incorporated on January 17, 2003 under the laws of the State of Nevada as Benacquista Galleries, Inc. On May 30, 2008, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Vibe Records, Inc., a privately held Delaware corporation. Pursuant to the terms of the closing of the Merger Agreement, Vibe Records, Inc. was merged with and into the Company. In connection with the closing of the Merger Agreement, our name was changed from Benacquista Galleries, Inc. to Vibe Records, Inc. Nevada. This transaction was accounted for as a reverse merger.

The acquisition of Vibe Records, Inc. (Vibe) by Benaquista Galleries, Inc. (Benaquista) effected a change in control of Benaquista and is accounted for as a “reverse acquisition” whereby Vibe is the accounting acquiror for financial statement purposes. Accordingly, for all periods subsequent to the reverse merger transaction, the financial statements of the Company will reflect the historical financial statements of Vibe from its inception and the operations of Benaquista for all periods subsequent to the May 30, 2008 transaction date.

The Company conducts business as an artist and repertoire company, as well as an independent record label in the music industry. We intend to distribute recordings made by our artists on a national basis, as well as operate state-of-the-art recording and production facilities.

NOTE B - Preparation of Financial Statements

The acquisition of Vibe Records, Inc. on May 30, 2008, by the Company effected a change in control and was accounted for as a ”reverse acquisition” whereby Vibe Records, Inc. was the accounting acquiror for financial statement purposes. Accordingly, the historical financial statements of the Company are those of Vibe Records, Inc. from its inception.

The Company follows the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America and has adopted a year-end of September 30.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company’s system of internal accounting control is designed to assure, among other items, that 1) recorded transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods being presented.

During interim periods, the Company follows the accounting policies set forth in its annual audited financial statements filed with the U. S. Securities and Exchange Commission on its Annual Report on Form 10-K containing the Company’s financial statements for the year ended September 30, 2009. The information presented within these interim financial statements may not include all disclosures required by generally accepted accounting principles and the users of financial information provided for interim periods should refer to the annual financial information and footnotes when reviewing the interim financial results presented herein.

Vibe Records, Inc. Nevada

(A development stage company.)

Notes to Financial Statements

December 31, 2009

NOTE B - Preparation of Financial Statements (continued)

In the opinion of management, the accompanying interim financial statements, prepared in accordance with the U. S. Securities and Exchange Commission’s instructions for Form 10-Q, are unaudited and contain all material adjustments, consisting only of normal recurring adjustments necessary to present fairly the financial condition, results of operations and cash flows of the Company for the respective interim periods presented. The current period results of operations are not necessarily indicative of results which ultimately will be reported for the full fiscal year ending September 30, 2010.

For segment reporting purposes, the Company operated in only one industry segment during the periods represented in the accompanying financial statements and makes all operating decisions and allocates resources based on the best benefit to the Company as a whole.

NOTE C - Going Concern Uncertainty

As of December 31, 2009, the Company has no revenue producing activities, limited cash on hand, and significant debt related to the financing of its operations. Because of these factors, the Company’s auditors have issued an audit opinion on the Company’s financial statements which includes a statement describing our going concern status. This means, in the auditor’s opinion, substantial doubt about our ability to continue as a going concern exists at the date of their opinion.

The Company operates as an independent record label and a highly selective artist and repertoire company that intends to distribute nationally recordings made by its artists, as well as operate state-of-the-art recording and production facilities.

After selecting an artist, the Company intends to nurture each artist’s career through teaching, encouraging and supervising the artist, while simultaneously searching for and selecting suitable material, accompanists, side-men, producers and other professionals to enhance that individual’s chances for success. The Company intends to attempt to secure exclusive standard industry recording contracts for between three (3) to five (5) new artists per year. The ultimate success of this business plan will extensively rely upon the past history and experience of the Company’s President and Chief Executive Officer in the music industry.

The Company's continued existence is dependent upon its ability to generate sufficient cash flows from operations to support its daily operations as well as provide sufficient resources to retire existing liabilities and obligations on a timely basis. Further, the Company faces considerable risk in its business plan. If no additional operating capital is received during the next twelve months, the Company will be forced to rely on existing cash in the bank and additional funds loaned by management and/or significant stockholders.

The Company remains dependent upon additional external sources of financing; including being dependent upon its management and/or significant stockholders to provide sufficient working capital in excess of the Company’s initial capitalization to preserve the integrity of the corporate entity.

The Company anticipates offering future sales of equity securities. However, there is no assurance that the Company will be able to obtain additional funding through the sales of additional equity securities or, that such funding, if available, will be obtained on terms favorable to or affordable by the Company.

Vibe Records, Inc. Nevada

(A development stage company.)

Notes to Financial Statements

December 31, 2009

NOTE C - Going Concern Uncertainty (continued)

It is the intent of management and significant stockholders to provide sufficient working capital necessary to support and preserve the integrity of the corporate entity. However, no formal commitments or arrangements to advance or loan funds to the Company or repay any such advances or loans exist. There is no legal obligation for either management or significant stockholders to provide additional future funding.

In such a restricted cash flow scenario, the Company would be unable to complete its business plan steps, and would, instead, delay all cash intensive activities. Without necessary cash flow, the Company may become dormant during the next twelve months, or until such time as necessary funds could be raised in the equity securities market.

While the Company is of the opinion that good faith estimates of the Company’s ability to secure additional capital in the future to reach its goals have been made, there is no guarantee that the Company will receive sufficient funding to sustain operations or implement any future business plan steps.

NOTE D - Summary of Significant Accounting Policies

1.	Cash and cash equivalents

For Statement of Cash Flows purposes, the Company considers all cash on hand and in banks, certificates of deposit and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents.

Cash overdraft positions may occur from time to time due to the timing of making bank deposits and releasing checks, in accordance with the Company's cash management policies.

2.	Property and Equipment

Property and equipment were recorded at cost. Depreciation was calculated on a straight-line basis over the estimated useful lives of five years. Maintenance and repairs are charged to operations as incurred.

The Company records impairment losses on long-lived assets used in operations when events and circumstances indicate assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than their carrying amounts. The amount of impairment loss recognized is the amount by which the carrying amounts of the assets exceed the estimated fair values.

3.	Research and Development

Research and development costs are expensed as incurred.

4.	Advertising costs

Advertising costs are expensed in the period incurred. The Company had no advertising expenses for the three months ended December 31, 2009 and 2008.

Vibe Records, Inc. Nevada

(A development stage company.)

Notes to Financial Statements

December 31, 2009

NOTE D - Summary of Significant Accounting Policies - Continued

5.	Income taxes

The Company files income tax returns in the United States of America and various states, as appropriate and applicable. As a result of the Company’s bankruptcy action, the Company is no longer subject to U.S. federal, state and local, as applicable, income tax examinations by regulatory taxing authorities for any period prior to September 30, 2006. The Company does not anticipate any examinations of returns filed for periods ending after September 30, 2006.

The Company uses the asset and liability method of accounting for income taxes. At December 31, 2009 and 2008, respectively, the deferred tax asset and deferred tax liability accounts, as recorded when material to the financial statements, are entirely the result of temporary differences. Temporary differences generally represent differences in the recognition of assets and liabilities for tax and financial reporting purposes, primarily accumulated depreciation and amortization, allowance for doubtful accounts and vacation accruals.

The Company has adopted the provisions required by the Income Taxes topic of the FASB Accounting Standards Codification. The Codification Topic requires the recognition of potential liabilities as a result of management’s acceptance of potentially uncertain positions for income tax treatment on a “more-likely-than-not” probability of an assessment upon examination by a respective taxing authority. As a result of the implementation of Codification’s Income Tax Topic, the Company did not incur any liability for unrecognized tax benefits.

6.	Income (Loss) per share

Basic earnings (loss) per share is computed by dividing the net income (loss) available to common stockholders by the weighted-average number of common shares outstanding during the respective period presented in our accompanying financial statements.

Fully diluted earnings (loss) per share is computed similar to basic income (loss) per share except that the denominator is increased to include the number of common stock equivalents (primarily outstanding options and warrants).

Common stock equivalents represent the dilutive effect of the assumed exercise of the outstanding stock options and warrants, using the treasury stock method, at either the beginning of the respective period presented or the date of issuance, whichever is later, and only if the common stock equivalents are considered dilutive based upon the Company’s net income (loss) position at the calculation date.

As of December 31, 2009 and 2008, respectively, the Company does not have any outstanding items which could be deemed to be dilutive.

7.	New and Pending Accounting Pronouncements

The Company is of the opinion that any and all pending accounting pronouncements, either in the adoption phase or not yet required to be adopted, will not have a significant impact on the Company's financial position or results of operations.

Vibe Records, Inc. Nevada

(A development stage company.)

Notes to Financial Statements

December 31, 2009

NOTE E - Fair Value of Financial Instruments

The carrying amount of cash, accounts receivable, accounts payable and notes payable, as applicable, approximates fair value due to the short term nature of these items and/or the current interest rates payable in relation to current market conditions.

Interest rate risk is the risk that the Company’s earnings are subject to fluctuations in interest rates on either investments or on debt and is fully dependent upon the volatility of these rates. The Company does not use derivative instruments to moderate its exposure to interest rate risk, if any.

Financial risk is the risk that the Company’s earnings are subject to fluctuations in interest rates or foreign exchange rates and are fully dependent upon the volatility of these rates. The Company does not use derivative instruments to moderate its exposure to financial risk, if any.

NOTE F - Concentrations of Credit Risk

Financial instruments, which potentially subject us to a concentration of risk, include cash and accounts receivable. All of our customers are based in the United States at this time and we are not subject to exchange risk for accounts receivable.

The Company maintains its cash in domestic financial institutions subject to insurance coverage issued by the Federal Deposit Insurance Corporation (FDIC). Under FDIC rules, the Company is entitled to aggregate coverage as defined by Federal regulation per account type per separate legal entity per financial institution. During the three months ended December 31, 2009 and 2008, and subsequent thereto, respectively, the Company, from time-to-time, had deposits in a financial institution with credit risk exposures in excess of statutory FDIC coverage. The Company has incurred no losses as a result of any unsecured credit risk exposures.

NOTE G - Property and Equipment

Property and equipment consists of the following at December 31, 2009 and 2008, respectively:

	December 31,			December 31,			Estimated
	2009			2008			useful life
Recording and computer equipment	$	54,523		$	20,523		5 years
Furniture and fixtures		12,161			8,268		5 years
Automobile		30,253			30,253		5 years
		96,937			59,044
Less: Accumulated Depreciation		(48,692	)		(30,298	)
Net property and equipment	$	48,245		$	28,746

Depreciation expense for each of the three months ended December 31, 2009 and 2008 was $4,847 and $2,674 respectively.

Vibe Records, Inc. Nevada

(A development stage company.)

Notes to Financial Statements

December 31, 2009

NOTE H - Master Recordings

In previous years, the Company acquired the rights to use the Vibe Records, Inc. trademark license, master recordings and its name. The Company purchased these rights by issuing stock effect the initial capitalization of the privately-owned company, Vibe Records, Inc. Management has provided a 100% valuation allowance in regard to this asset.

NOTE I - Loans Payable to a Bank and Individuals

The Company maintains a working capital line of credit for $600,000 with Wachovia Bank. Interest is paid monthly at the bank’s prime rate. The note is 100% secured by marketable securities of a shareholder. The balance outstanding at December 31, 2009 and September 30, 2009 were approximately $599,847 and $599,847, respectively.

The Company has a $20,000 bank overdraft line of credit with Wachovia Bank. Interest is payable monthly at approximately 11.24%. The balance outstanding at December 31, 2009 and September 30, 2009 was approximately $17,013 and $17,929, respectively. This note is unsecured.

The Company has a $30,253 term note payable secured by an automobile. Principal and interest is payable monthly in installments of approximately $694 and the note matures in March 2011. The balance outstanding at December 31, 2009 and September 30, 2009, respectively was approximately $10,730 and $12,605.

The Company has notes payable to various individuals (7 at December 31, 2009 and 3 at September 30, 2009) aggregating approximately $230,000 and $100,000 at December 31, 2009 and September 30, 2009, respectively. These notes are convertible into shares of the Company’s common stock at agreed-upon prices per share according to Convertible Promissory Notes and Note Purchase Agreements upon maturity of the notes. At December 31, 2009, 5 of the notes bear interest at 10% per annum and mature on various dates, while 2 notes no not bear interest. One note for $40,000 that matures on April 30, 2010 contains an original issue discount of $15,000. At December 31, 2009, $5,218 was amortized on this OID. On September 30, 2009, 7 separate noteholders agreed to accept stock owned by the Company’s President in satisfaction of an aggregate $210,000 in debt and approximately $131,793 in accrued interest in settlement of the debt outstanding. The remaining 3 notes, which originated during Fiscal 2009, bear interest at 10% per annum and mature in one year.

NOTE J - Notes and Advances Payable to Officers and Stockholders

The Company has been advanced various sums by various corporate officers and other Company stockholders, including members of the Company’s Board of Directors aggregating approximately $1,713,155 and $1,686,077. These notes are secured in part by 30% of the issued and outstanding stock of the Company owned by the Company’s President. They bear interest at 10% and are due upon demand.

Vibe Records, Inc. Nevada

(A development stage company.)

Notes to Financial Statements

December 31, 2009

NOTE K - Income Taxes

The components of income tax (benefit) expense for each of the years months ended December 31, 2009 and 2008, respectively, are as follows:

	Year ended		Year ended
	December 31,		December 31,
	2009		2008
Federal:
Current	$	-	$	-
Deferred		-		-
		-		-
State:
Current		-		-
Deferred		-		-
		-		-
Total	$	-	$	-

The Company has a cumulative net operating loss carryforward of approximately $4,390,000 as of December 31, 2009 to offset future taxable income. Subject to current regulations, components of this cumulative carryforward will begin to expire at the end of each fiscal year starting in 2023. The amount and availability of the net operating loss carryforwards may be subject to limitations set forth by the Internal Revenue Code. Factors such as the number of shares ultimately issued within a three year look-back period; whether there is a deemed more than 50 percent change in control; the applicable long-term tax exempt bond rate; continuity of historical business; and subsequent income of the Company all enter into the annual computation of allowable annual utilization of the carryforwards.

The Company's income tax expense (benefit) for the three months ended December 31, 2009 and 2008, respectively, differed from the statutory federal rate of 34 percent as follows:

	Year ended			Year ended
	December 31,			December 31,
	2009			2008

Statutory rate applied to loss before income taxes	$	(111,925	)	$	(56,211	)
Increase (decrease) in income taxes resulting from:
State income taxes		-			-
Other, including reserve for deferred tax asset		111,925			56,211

Income tax expense	$	-		$	-

Vibe Records, Inc. Nevada

(A development stage company.)

Notes to Financial Statements

December 31, 2009

NOTE L - Preferred Stock

On January 19, 2009, our Board of Directors approved the issuance of up to 50,000,000 shares of $0.001 par value Preferred Stock and authorized the issuance of two separate series.

On or about January 23, 2009, we filed a Certificate of Designation, Preferences and Rights of Series A Convertible Preferred Stock (the “Series A Preferred Stock”) and a Certificate of Designation, Preferences and Rights of Series B Convertible Preferred Stock (“the Series B Preferred Stock”) (together the “Certificates of Designation”) with the Secretary of State of Nevada. Pursuant to the Certificates of Designation, we authorized 200,000 shares of our preferred stock to be designated the Series A Preferred Stock and 200,000 shares of our preferred stock to be designated the Series B Preferred Stock.

Series A Preferred Stock

The holders of the Series A Preferred Stock may, in their sole discretion, convert each share of Series A Preferred Stock into 4,000 shares of our common stock at any time following the date of issuance of the Series A Preferred Stock. Adjustments in the conversion ratio will be made in the event of a stock dividend, stock split, reclassification, reorganization, consolidation or merger in a manner which will provide the preferred holders, upon full conversion into common stock, with the same percentage ownership of the Company that existed immediately prior to such action. The Series A Preferred Stock has the same voting rights as our common stock, on an as-converted basis, with the Series A preferred holders having one vote for each share of common stock into which their Series A Preferred Stock is convertible. The holders of the Series A preferred stock have a liquidation preference over our common stock of up to one hundred dollars ($100) per Series A share held. The Company will not pay a dividend on the shares of Series A Preferred Stock.

As of December 31, 2009, there are no shares of the Series A Preferred Stock issued and outstanding.

Series B Preferred Stock

The holders of the Series B Preferred Stock may, in their discretion, convert each share of Series B Preferred stock into 4,000 shares of our common stock at any time following the date of issuance of the Series B Preferred Stock. Adjustments in the conversion ratio will be made in the event of a stock dividend, stock split, reclassification, reorganization, consolidation or merger in a manner which will provide the preferred holders, upon full conversion into common stock, with the same percentage ownership of the Company that existed immediately prior to such action. The Series B Preferred Stock does not have voting rights on matters presented to our common stockholders, for a vote. The Series B Preferred Stock and has an equal liquidation right with any shares of our Series A Preferred Stock then outstanding. We will not pay a dividend on the shares of Series B Preferred Stock.

As of December 31, 2009, there were no shares of the Series B Preferred Stock issued and outstanding.

NOTE M - Common Stock Transactions

In November 2009, the Company issued 310,000 shares of its common stock to an officer and director for compensation. The Company charged approximately $62,000 to operations related to this issuance. See Note O for further details.

In November 2009, the Company issued 100,000 shares of its common stock for legal services. The Company charged approximately $20,000 to operations related to this issuance.

In November 2009, the Company issued 450,000 shares of its common stock to various consultants. The Company charged approximately $90,000 to operations related to these issuances.

Vibe Records, Inc. Nevada

(A development stage company.)

Notes to Financial Statements

December 31, 2009

NOTE N - Legal Proceedings

As of December 31, 2009, all previously disclosed legal matters have been settled with no material impact on the financial position or cash position of the Company.

NOTE O - Commitments and Contingencies

Leases

The Company entered into both month-to-month and long-term lease agreements for office space. The long-term lease agreement expires in Fiscal 2012. The leases require aggregate monthly payments of approximately $7,000. Future minimum lease payments on the long-term lease agreement are as follows:

Year ending
December 31,	Amounts

2012	$	42,000
2013		42,000
2014		42,000

Totals	$	126,000

Employment Agreement

On January 16, 2009, we entered into an employment agreement with Mr. Timothy Olphie (the “Olphie Employment Agreement”) that has an initial term of three (3) years. Under the Olphie Employment Agreement, Mr. Olphie will continue to serve as our CEO, President and a member of our Board of Directors. Mr. Olphie will receive a base salary of $75,000 per year, and will be entitled to an annual discretionary bonus. The amount of Mr. Olphie’s bonus will be determined by our Board of Directors, and will be based upon the achievement of certain milestones as determined by the Board of Directors. The Company paid $62,000 through the issuance of common stock in November 2009. As of December 31, 2009, the Company has accrued approximately $13,000 payable under this employment agreement.

NOTE P - Subsequent Events

Management has evaluated all activity of the Company through February 18, 2010 (the issue date of the financial statements) and concluded that no other subsequent events have occurred that would require recognition in the financial statements or disclosure in the notes to financial statements.

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control, which may include statements about our:

business strategy;

financial strategy;

uncertainty regarding our future operating results;

plans, objectives, expectations and intentions contained in this report that are not historical.

All statements, other than statements of historical fact included in this report, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this report, the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. All forward-looking statements speak only as of the date of this report. You should not place undue reliance on these forward-looking statements. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this report are reasonable, we can give no assurance that these plans, intentions or expectations will be achieved. We disclose important factors that could cause our actual results to differ materially from our expectations under “Risk Factors” in our Annual Report on Form 10K and elsewhere in this report. These cautionary statements qualify all forward-looking statements attributable to us, or persons acting on our behalf.

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

The following discussion highlights the principal factors that have affected our financial condition and results of operations as well as our liquidity and capital resources for the periods described. This discussion contains forward-looking statements. Please see “Forward-Looking Statements” above for a discussion of the uncertainties, risks and assumptions associated with these forward-looking statements.

The following discussion and analysis of our financial condition and results of operations are based on our financial statements, which we have prepared in accordance with U.S. generally accepted accounting principles. You should read the discussion and analysis together with such financial statements and the related notes thereto.

Overview

We are an early stage company led by an experienced management team and focused on identifying qualified and talented artists. Our long term role includes nurturing the artist’s career through teaching, encouragement and supervision, while concurrently searching for and selecting suitable material, accompanists, side-men, producers and other professionals to enhance the artist’s chances for success.

Plan of Operations

We intend to attempt to secure exclusive standard industry recording contracts for between three (3) to five (5) new artists per year. We intend to utilize a highly focused artist selection process. The artist’s value will be significantly increased through the support of our specialized and well seasoned management team, modest recording budgets supported by a state of-the-art recording studio, strategic alliances with a renowned audio engineer, and the use of a major manufacturing and distributing firm. Furthermore, we will utilize these economic efficiencies to seek out and enter into agreements with pre-established artists. Arrangements with established artists will allow us to offer profit sharing ventures with established artists in which the artists submit their master recordings (while retaining their own ownership rights) and license the master recordings to us for manufacture, distribution and promotion.

We house and operate state of the art recording and production facilities. The facilities are utilized not only by our internal artist roster but also are available for outside contracting.

Through these and other endeavors, we intend to simultaneously promote and brand the Vibe Records label. We believe that operating in this fashion will reduce overhead, and concerns about collection from accounts.

Critical Accounting Policies

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” discusses our consolidated financial statements that have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements, the 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. On an on-going basis, we evaluate our estimates and judgments, including those related to revenue recognition, valuation allowances for inventory and accounts receivable, and impairment of long-lived assets. We base our estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances. The result of these estimates and judgments form the basis for making conclusions about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The SEC suggests that all registrants list their most “critical accounting policies” in Management’s Discussion and Analysis.

Critical accounting policies are those that are most important to the portrayal of our financial condition and our results of operations, and require management’s most difficult, subjective and complex judgments as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our most critical accounting policies include, but are not limited to, revenue recognition, our ability to collect accounts receivable, the carrying value of inventories and fixed assets, the useful lives of our fixed assets and long-lived assets, the impairment of goodwill, the valuation of common stock related to compensation and other services and the recoverability of deferred tax assets. In applying these policies, management must use its informed judgments and best estimates. Estimates, by their nature, are based on judgments and available information such as the estimated life of fixed assets for depreciation purposes, the market valuation of inventory in reporting inventory at the lower of cost or market, and the determination of the market value of stock when issued as compensation or as repayment for loans. The estimates that we make are based upon historical factors, current circumstances and the experience and judgment of our management. We evaluate our assumptions and estimates on an ongoing basis and may employ outside experts to assist in our evaluations. Changes in such estimates, based on more accurate future information, may affect amounts reported in future periods.