THC Farmaceuticals, Inc. - FORM 10-Q

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EXCEL - IDEA: XBRL DOCUMENT - THC Farmaceuticals, Inc.	Financial_Report.xls
EX-31 - CITY MEDIA, INC. - 10Q JUNE 30, 2013 EX 31 - THC Farmaceuticals, Inc.	citymedia10q613ex31.htm
EX-32 - CITY MEDIA, INC. - 10Q JUNE 30, 2013 EX 32 - THC Farmaceuticals, Inc.	citymedia10q613ex32.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________

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, 2013

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

For the transition period from ____________ to____________

Commission File Number: 333-171488

CITY MEDIA, INC.

(Exact Name of Registrant as specified in its charter)

Utah		26-1805170
(State or other jurisdiction of incorporation)		(I.R.S. Employer I.D. No.)

4685 S. Highland Drive, Suite 202

Salt Lake City, UT 84117

(Address of Principal Executive Office)

(801) 278-9424

(Registrant’s Telephone Number, including Area Code)

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

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes [X] No [ ] (The Registrant does not maintain a website.)

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 definition 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 [ ]

Smaller 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 [ ] No [X]

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:

The number of shares outstanding of each of the Registrant’s classes of common equity, as of the latest practicable date:



Class		Outstanding as of August 8, 2013
Common Capital Voting Stock, $0.001 par value per share		8,968,000 shares

FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, Financial Statements and Notes to Financial Statements contains forward-looking statements that discuss, among other things, future expectations and projections regarding future developments, operations and financial conditions. All forward-looking statements are based on management’s existing beliefs about present and future events outside of management’s control and on assumptions that may prove to be incorrect. If any underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, estimated, projected or intended.

PART I - FINANCIAL STATEMENTS

Item 1. Financial Statements.

June 30, 2013

C O N T E N T S

Condensed Consolidated Balance Sheets	3
Condensed Consolidated Statements of Operations	4
Condensed Consolidated Statements of Cash Flows	5
Notes to Condensed Consolidated Financial Statements	6

CITY MEDIA, INC.

Condensed Consolidated Balance Sheets

June 30, 2013 and September 30, 2012

(Unaudited)

	6/30/2013			9/30/2012

ASSETS

Current Assets:
Cash	$	1,323		$	2,309
Accounts Receivable		1,324			2,028
Total Current Assets		2,647			4,337
Property plant & equipment net of accumulated depreciation
of $9,321 and $8,423, respectively		12,833			13,731
Intangible Assets		33,677			33,677

TOTAL ASSETS	$	49,157		$	51,745

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current Liabilities:
Related Party Accounts Payable	$	1,400		$	1,400
Accounts Payable		905			963
Current portion of long term debt - Related Party		2,729			5,261
Total Current Liabilities		5,034			7,624
Long Term Liabilities:
Accrued Interest Related Party		4,577			1,602
Notes Payable to Related Parties		52,501			36,000
Total Long Term Liabilities		57,078			37,602
Total Liabilities		62,112			45,226

Stockholders' Equity (Deficit)
Preferred Stock 10,000,000 shares authorized having a
par value of $0.001 per share; with no shares issued and
outstanding as of June 30, 2013 and September 30, 2012,
respectively		-			-
Common Stock 90,000,000 shares authorized having a
par value of $0.001 per share; 8,968,000 shares issued and
outstanding as of June 30, 2013 and September 30, 2012,
respectively		8,968			8,968
Additional Paid-in Capital		83,875			83,875
Accumulated Deficit		(105,798	)		(86,324	)
Total Stockholders' Equity (Deficit)		(12,955	)		6,519

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	49,157		$	51,745

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

CITY MEDIA, INC.

Condensed Consolidated Statements of Operations

For the Three and Nine Months Ended June 30, 2013 and 2012

(Unaudited)

	For the			For the			For the			For the
	Three Months			Three Months			Nine Months			Nine Months
	Ended			Ended			Ended			Ended
	June 30,			June 30,			June 30,			June 30,
	2013			2012			2013			2012
Revenues
Revenues from transaction fees	$	4,482		$	7,127		$	17,087		$	24,490
Total Revenues		4,482			7,127			17,087			24,490

Operating Expenses
General and Administrative		4,036			3,386			20,006			20,253
Depreciation		299			299			897			1,123
Loss on Sale of Equipment		-			-			-			4,749
Impairment of Intangible Assets		-			-			-			9,808
Service, related party		4,200			4,200			12,600			12,600
Total Operating Expense		8,535			7,885			33,503			48,533
Operating Loss		(4,053	)		(758	)		(16,416	)		(24,043	)
Interest Expense, related party		1,227			661			3,058			1,155
Net Loss	$	(5,280	)	$	(1,419	)	$	(19,474	)	$	(25,198	)
Loss per Common Share - Basic & Diluted	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.01	)
Weighted Average Shares Outstanding - Basic & Diluted		8,968,000			8,968,000			8,968,000			8,968,000

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

CITY MEDIA, INC.

Condensed Consolidated Statements of Cash Flows

For the Nine Months Ended June 30, 2013 and 2012

(Unaudited)

	For the			For the
	Nine Months			Nine Months
	Ended			Ended
	June 30,			June 30,
	2013			2012

Cash Flows From Operating Activities
Net Loss	$	(19,474	)	$	(25,198	)
Adjustments to reconcile net loss to net cash
from operating activities:
Depreciation		898			1,077
Impairment of Intangible Assets		-			9,808
Loss on sale of equipment		-			4,749
(Increase)/Decrease in accounts receivable		704			(288	)
Increase/(Decrease) in accounts payable		(58	)		(1,188	)
Accrued interest on related party loan		2,975			984
Net Cash from Operating Activities		(14,955	)		(10,056	)

Cash Flows from Investing Activities
Proceeds from sale of equipment		-			3,000
Net Cash from Investing Activities		-			3,000

Cash Flows from Financing Activities
Principal payments on Notes Payable		(2,532	)		(730	)
Proceeds from notes payable to related parties		16,501			4,500
Net Cash from Investing Activities		13,969			3,770

Net Increase/(Decrease) in Cash		(986	)		(3,286	)
Beginning Cash Balance		2,309			4,123
Ending Cash Balance	$	1,323		$	837

Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest	$	312		$	171
Cash paid during the period for taxes	$	200		$	-
Assets acquired in exchange for related party debt	$	-		$	6,800

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

CITY MEDIA, INC.

Notes to Condensed Consolidated Financial Statements

June 30, 2013

NOTE 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at June 30, 2013, and for all periods presented herein, have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2012. The results of operations for the three and nine month periods ended June 30, 2013 are not necessarily indicative of the operating results for the full year.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

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 that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Recent Accounting Pronouncements

The Company has reviewed all recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its consolidated results of operation, financial position or cash flows. Based on that review, the Company believes that none of these pronouncements will have a significant effect on its condensed consolidated financial statements.

NOTE 3 – RELATED PARTY TRANSACTIONS / SERVICE AGREEMENT

The Company has a Service Agreement with Wasatch ATM (“Wasatch”), a Utah limited liability corporation owned and managed by a Company stockholder. The agreement provides for Wasatch to provide all maintenance, repair and service work along with distribution of vault cash. Wasatch is compensated at a set rate of $1,400 per month. The agreement is automatically extended for successive annual renewal terms, and provides for an additional one-time $500 payable upon the placement of each additional ATM and an allowance of $500 per quarter for expenses.

As of June 30, 2013 and September 30, 2012, $1,400 and $1,400, respectively, was due to Wasatch, which is included in the “Related Party Accounts Payable” line item.

NOTE 4 - RELATED PARTY TRANSACTIONS / LONG-TERM DEBT

During the year ended September 30, 2011, the Company received $17,001 from certain shareholders to cover expenses during the year. On December 6, 2011 the Company signed convertible promissory notes with these shareholders resulting in a reclassification of $17,001 from a current liability to long-term notes payable. During the year ended September 30, 2012, the Company borrowed an additional $18,999 on these notes. The notes are convertible into shares of the Company’s common stock at a conversion price of $0.10 per share at the option of the Company. As of December 6, 2011 and until the notes are converted or settled, the loan from certain shareholders accrues interest at 8.5% per annum. Total accrued interest on these loans from shareholders at June 30, 2013 totaled $4,020. Interest and principal is due on December 6, 2014.

As of September 30, 2012, the Company had depleted its access to the capital pursuant to the promissory notes dated December 6, 2011, while sustaining operations, legal expenses, and more recently, attaining its DTC eligibility. On September 28, 2012, the Company signed convertible promissory notes with certain shareholders that provided for additional liquidity resources in the amount of $24,000, with $7,499 available at June 30, 2013, to be used at the Company’s discretion. The notes are convertible into shares of the Company’s common stock at a conversion price of $0.10 per share at the option of the Company. As of December 20, 2012 and until the notes are converted, the loan from certain shareholders accrues interest on any outstanding amount at a rate of 8.5% per annum. Total accrued interest on these loans from shareholders at June 30, 2013 totaled $557. Interest and principal will be due on September 28, 2014.

On June 24, 2013, the Company signed convertible promissory notes with certain shareholders that provided for additional liquidity resources in the amount of $21,000, with $21,000 available at June 30, 2013, to be used at the Company’s discretion. The notes are convertible into shares of the Company’s common stock at a conversion price of $0.10 per share at the option of the Company. As of June 30, 2013, there was no outstanding amount; however, the loan from certain shareholders will accrue interest on any outstanding amount at a rate of 8.5% per annum.

In conjunction with new ADA compliance regulations that took effect on March 15, 2012, requiring certain costly upgrades be made to all Hantle/Tranax and Hyosung ATM machines, the Company’s Board of Directors gave their unanimous consent on March 1, 2012, to purchase three new ATM machines that comply with the new ADA compliance regulations. The Board agreed that the new machines should be purchased and financed through our servicing partner, Wasatch ATM. The balance of $6,800 began accruing interest of 10% APR on April 1, 2012. Monthly payments of $316 are due on the first of every month, commencing on May 1, 2012, until the loan is paid in full on March 1, 2014. The balance owed as of June 30, 2013 was $2,729.

The Company utilizes office and storage space of its executive officers, for which no incremental costs are incurred. No monetary value has been placed on this, nor have any accruals or payments been made. Additionally, the Company has no employees who are not executive officers. There are no amounts due to or from these parties as of the balance sheet date.

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

Forward-looking Statements

Statements made in this Quarterly Report which are not purely historical are forward-looking statements with respect to the goals, plan objectives, intentions, expectations, financial condition, results of operations, future performance and our business, including, without limitation, (i) our ability to raise capital, and (ii) statements preceded by, followed by or that include the words “may,” “would,” “could,” “should,” “expects,” “projects,” “anticipates,” “believes,” “estimates,” “plans,” “intends,” “targets” or similar expressions.

Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following: general economic or industry conditions, nationally and/or in the communities in which we may conduct business, changes in the interest rate environment, legislation or regulatory requirements, conditions of the securities markets, our ability to raise capital, changes in accounting principles, policies or guidelines, financial or political instability, acts of war or terrorism, other economic, competitive, governmental, regulatory and technical factors affecting our current or potential business and related matters.

Accordingly, results actually achieved may differ materially from expected results in these statements. Forward-looking statements speak only as of the date they are made. We do not undertake, and specifically disclaim, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements.

Plan of Operations

Our primary focus for 2012-2013 is the continued placing, managing, and servicing of ATM machines for public utilization along the Wasatch Front in the State of Utah.

Results of Operations

Three Months Ended June 30, 2013 Compared to Three Months Ended June 30, 2012

During the three months ended June 30, 2013, we recognized $4,482 in revenues. During the three months ended June 30, 2012, we recognized $7,127 in revenues. The decrease in revenue for the period ended 2013 over the same period in 2012 can be attributed to new regulations governing surcharge fees and the termination of four of our ATM locations during 2012.

We had a net loss for the three months ended June 30, 2013, of $5,280 and a net loss of $1,419 for the three months ended June 30, 2012. The loss for 2013 is the result of decreased revenue due to the closure of four of our ATM locations, as well as increased expenses related to complying with new XBRL filing requirements. As we expand our operations, we are hopeful our revenues should start to increase. We will need additional capital to expand operations and anticipate seeking equity capital in 2014.

Additionally, as our business operations are only beginning, it is difficult to predict our ability to generate sufficient revenue to generate positive cash flows. Currently our biggest expenses are related to general and administrative costs which were $4,036 for the three months ended June 30, 2013 and $3,386 for the three months ended June 30, 2012. Our service fee to maintain ATM cash levels and operating functionality is $1,400 per month. We anticipate these fees remaining constant during 2013; however, they may rise in the future if we deploy more machines.

Nine Months Ended June 30, 2013 Compared to Nine Months Ended June 30, 2012

During the nine months ended June 30, 2013, we recognized $17,087 in revenues. During the nine months ended June 30, 2012, we recognized $24,490 in revenues. The decrease in revenue for the period ended 2013 over the same period in 2012 can be attributed to new regulations governing surcharge fees, downtime due to technical and setup issues, and the closure of four retail locations during the 2012 period.

We had a net loss for the nine months ended June 30, 2013, of $19,474 and a net loss of $25,198 for the nine months ended June 30, 2012. Our net loss for the 2013 period was the result of costs of service for maintaining our ATM machines, as well as general and administrative expenses. Part of the loss for the 2012 period was for loss on the sale of equipment recognized the first quarter of 2012, and impairment expenses recognized during the second quarter of 2012 with the closure of four of our ATM locations.

Liquidity and Capital Requirements

We had $1,323 cash or cash equivalents on hand as of June 30, 2013. During the years ended September 30, 2012 and 2011, we received $36,000 from certain shareholders to cover expenses during those years, for which, on December 6, 2011 the Company signed convertible promissory notes. Until the notes are converted or settled, the loan from certain shareholders accrues interest at 8.5% per annum. Accrued interest on these loans from shareholders for the three-month period ended June 30, 2013 totaled $823. Total accrued interest on these loans from shareholders at June 30, 2013 totaled $4,020. Interest and principal is due on December 6, 2014.

As of September 30, 2012, the Company had depleted its access to the capital pursuant to the promissory notes dated December 6, 2011, while sustaining operations, legal expenses, and more recently, attaining its DTC eligibility. On September 28, 2012, the Company signed convertible promissory notes with certain shareholders that provided for additional liquidity resources in the amount of $24,000, with $7,499 available at June 30, 2013, to be used at the Company’s discretion. The notes are convertible into shares of the Company’s common stock at a conversion price of $0.10 per share at the option of the Company. As of December 20, 2012 and until the notes are converted, the loan from certain shareholders accrues interest on any outstanding amount at a rate of 8.5% per annum. Accrued interest on loans from shareholders for the three-month period ended June 30, 2013 totaled $321. Total accrued interest on these loans from shareholders at June 30, 2013 totaled $557. Interest and principal will be due on September 28, 2014.

Total accrued interest on all loans from shareholders at June 30, 2013 totaled $4,577.

The Company has accumulated operating losses of $105,798. Currently, management’s plans include placing more ATMs in retail locations in order to improve our cash flows. The Company has an availability of funds sufficient for the next 12 months.

Off-balance Sheet Arrangements

Neither City Media nor its wholly-owned subsidiary have had any off balance sheet arrangements from their respective periods to the date hereof.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not required.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in rules and forms adopted by the Securities and Exchange Commission, and that such information is accumulated and communicated to management, including the President and Secretary, to allow timely decisions regarding required disclosures.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based upon that evaluation, our President and Treasurer concluded that, as of the end of the period covered by this Quarterly Report, our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

During the fiscal quarter covered by this Quarterly Report, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are not a party to any pending legal proceeding. To the knowledge of management, no federal, state or local governmental agency is presently contemplating any proceeding against us. No director, executive officer or affiliate of ours or owner of record or beneficially of more than five percent of our common stock is a party adverse to us or has a material interest adverse to us in any proceeding.

Item 1A. Risk Factors

Not required.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosure

We have no mining activities.

Item 5. Other Information

Item 6. Exhibits

Exhibit No.	Identification of Exhibit
8-A12G	Registration of Securities as filed on June 29, 2012.
31	Certification of Thomas J. Howells Pursuant to Section 302 of the Sarbanes-Oxley Act.
32	Certification of Thomas J. Howells pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act.
101.INS	XBRL Instance Document*
101.SCH	XBRL Taxonomy Extension Schema*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase*
101.DEF	XBRL Taxonomy Extension Definition Linkbase*
101.LAB	XBRL Taxonomy Extension Label Linkbase*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase*

*Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed “furnished” and not “filed” or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, or deemed “furnished” and not “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise is not subject to liability under these sections.

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.

CITY MEDIA, INC.

(Issuer)

Date:	August 8, 2013		By:	/s/ Thomas J. Howells
				Thomas J. Howells, Director, President and Chief Executive Officer, Principal Financial Officer

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