UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

COMMISSION FILE NUMBER 000-54211

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

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 ☐ No

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes   ☒ No

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: As of February 16, 2016, the Registrant had 31,599,926 shares of common stock outstanding.

PART I - FINANCIAL INFORMATION

The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X, and, therefore, do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders' equity in conformity with generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the three and nine months ended November 30, 2015 are not necessarily indicative of the results that can be expected for the year ending February 29, 2016.

As used in this Quarterly Report, the terms “we,” “us,” “our,” “IMK Group,” and the “Company” mean IMK Group, Inc. together with its subsidiaries unless otherwise indicated. All dollar amounts in this Quarterly Report are expressed in U.S. dollars, unless otherwise indicated.

IMK GROUP, INC.

(FORMERLY FUTURA PICTURES, INC.)

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED – EXPRESSED IN US DOLLARS)

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

IMK GROUP, INC.

(FORMERLY FUTURA PICTURES, INC.)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 30, 2015 AND 2014

(UNAUDITED – EXPRESSED IN US DOLLARS)

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

IMK GROUP, INC.

(FORMERLY FUTURA PICTURES, INC.)

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE NINE MONTHS ENDED NOVEMBER 30, 2015

(UNAUDITED – EXPRESSED IN US DOLLARS)

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

IMK GROUP, INC.

(FORMERLY FUTURA PICTURES, INC.)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED NOVEMBER 30, 2015 AND 2014

(UNAUDITED – EXPRESSED IN US DOLLARS)

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

IMK GROUP, INC.

(FORMERLY FUTURA PICTURES, INC.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOVEMBER 30, 2015

(UNAUDITED – EXPRESSED IN US DOLLARS)

Cautionary Statement Regarding Forward-Looking Statements

The information in this Quarterly Report contains forward-looking statements. These forward-looking statements involve risks and uncertainties, including statements regarding the Company’s capital needs, business strategy and expectations. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or “continue”, the negative of such terms or other comparable terminology. Actual events or results may differ materially. In evaluating these statements, you should consider various factors, including the risks outlined from time to time, in other reports the Company files with the Securities and Exchange Commission (the “SEC”).

The forward-looking statements in this Quarterly Report on Form 10-Q for the interim period ended November 30, 2015, are subject to risks and uncertainties that could cause actual results to differ materially from the results expressed in or implied by the statements contained in this report. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives requires the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and accordingly, no opinion is expressed on the achievability of those forward-looking statements. No assurance can be given that any of the assumptions relating to the forward-looking statements specified in the following information are accurate.

All forward-looking statements are made as of the date of the filing of this Quarterly Report on Form 10-Q and the Company disclaims any obligation to publicly update these statements, or disclose any difference between its actual results and those reflected in these statements. The Company may, from time to time, make oral forward-looking statements. The Company strongly advises that the above paragraphs and the risk factors described in this Quarterly Report and in the Company’s other documents filed with the SEC should be read for a description of certain factors that could cause the actual results of the Company to materially differ from those in the oral forward-looking statements. The Company disclaims any intention or obligation to update or revise any oral or written forward-looking statements whether as a result of new information, future events or otherwise.

The discussion provided in this Quarterly Report should be read in conjunction with our Annual Report on Form 10-K for the year ended February 28, 2015 filed with the SEC on July 29, 2015.

OVERVIEW

We were incorporated on December 10, 2003 under the laws of the State of Delaware under the name Futura Pictures, Inc. Effective March 13, 2015, we changed our name to IMK Group, Inc.

From 2008 to June 2015 we were engaged in the business of producing and distributing self-improvement and educational DVD’s and workforce training programs.

In March 2015, we announced our intention to change our business to the commercial manufacturing, distribution and marketing of cosmetics products (the “Cosmetics Business”) and formed a wholly owned subsidiary, IMK Korea Co. Ltd (“IMK Korea”) under the laws of the Republic of Korea for that purpose. In June 2015, we sold our self-improvement, educational and workforce training DVD and programs business and shifted our focus and available resources to the development of our Cosmetics Business.

On January 28, 2016, we sold all of our assets exclusively related to the Cosmetics Business. We are currently in the process of reorganizing our business and are evaluating alternative business opportunities to determine the direction of our future operations. See “Risk Factors” under Part II, Item 1A of this quarterly report on Form 10-Q.

RECENT CORPORATE DEVELOPMENTS

The following significant developments occurred since our fiscal quarter ended August 31, 2015:

Additional Loans from MBK Co. Ltd.

On October 8, 2015, IMK Korea entered into a Loan Agreement with MBK Co. Ltd. (“MBK”), pursuant to which MBK advanced to IMK Korea the principal sum of SKW 50,000,000 ($43,250). The loan was due and payable on April 7, 2016, with interest payable at a rate of 6.9% per annum, with overdue principal and interest accruing at 18% per annum. Another SKW 10,000,000 ($8,640) was advanced by MBK to IMK Korea on October 21, 2015 (the SKW 50,000,000 loan and the SKW 10,000,000 loan collectively being the “October 2015 MBK Loans”). On January 28, 2016, the full amount owed to MBK under the October 2015 MBK Loans and the initial loan of SKW 200,000,000 ($172,800) advanced by MBK in June 2015 (the “June 2015 MBK Loan”) was offset against the purchase price for the Cosmetics Business under the Cosmetics Asset Agreement (see below).

On January 28, 2016, MBK loaned an additional SKW 250,000,000 (approximately $216,000) to IMK Korea (the “January 2016 MBK Loan”). The January 2016 MBK Loan is due and payable on January 28, 2018, with interest accruing at a rate of 6.9% per annum, payable quarterly, with interest on overdue interest accruing at a rate of 12% per annum. The January 2016 MBK Loan was advanced to Jae Kang Lee as principal debtor, with our Company and IMK Korea acting as guarantors. A separate agreement was then executed between Jae Kang Lee and IMK Korea with respect to the advance of the proceeds of the January 2016 MBK Loan to IMK Korea. It was the intention of all parties (including MBK) that IMK Korea be the ultimate recipient of the full proceeds of the January 2016 MBK Loan, the full amount of which has been received by IMK Korea. Under the terms of the January 2016 MBK Loan, we granted MBK a security interest over our security deposit for IMK Korea’s office space in Seoul, Korea and over 1,000,000 of the shares of our common stock surrendered by Sung Ho Park upon his resignation as Chairman of our Board of Directors (see below).

Sung Ho Park, the former Chairman of our Board of Directors, is the Chief Executive Officer of MBK and Jae Kang Lee, a member of our Board of Directors, is a director of MBK.

Resignation of Chairman

Effective January 28, 2016, Sung Ho Park resigned as Chairman of our Board of Directors. Mr. Park’s resignation was not due to any disagreements with our Company on any matters relating to the Company’s policies, operations, practices or otherwise. In connection with his resignation from our Board of Directors, Mr. Park agreed to surrender 10,148,575 shares of our common stock for no consideration.

Sale of Cosmetics Business

On January 28, 2016, we entered into an Asset Purchase Agreement (the “Cosmetics Asset Agreement”) with MBK, pursuant to which we sold all of our right, title and interest in and to all our assets exclusively related to the Cosmetics Business, being all of our rights to the recipes for our cosmetics products and the trademarks and other intangible assets related thereto, including the PQ10, N-Time, Hanleggot and Mencanai brand names and trademarks. The purchase price for the assets sold to MBK was SKW 288,700,000 (approximately $250,000), the payment for which was offset against the existing debt owed to MBK under the June 2015 MBK Loan and the October 2015 MBK Loan.

RESULTS OF OPERATIONS

On June 22, 2015, we disposed of all our assets, and assigned all of our liabilities, that were exclusively related to our self-improvement, educational and workforce training business (the “Legacy Business”). On January 28, 2016, we sold all of our assets exclusively related to the Cosmetics Business. We are currently in the process of evaluating alternative business opportunities to determine the direction of our future operations.

Our results of operations for the interim periods ended November 30, 2015 and November 30, 2014 are not expected to be indicative of our future results or performance. We did not earn significant revenues from the Cosmetics Business, and there is no assurance that we will earn significant revenues in the future.

In addition, we are unable to provide an accurate estimate of our financial requirements for the next twelve months. If our management is successful in identifying a suitable business opportunity for us to pursue, we will likely need additional financing in order to pursue such that business opportunity.

Three-Month Period Ended November 30, 2015 Compared to Three-Month Period Ended November 30, 2014

Revenues

Our revenues for the three months ended November 30, 2015 was $nil. We did not earn any revenue from the distribution or sale of cosmetics products during the three month period ended November 30, 2015.

As a result of the disposal of the Legacy Business on June 22, 2015, revenues attributable to the Legacy Business during the three months ended November 30, 2015 were $nil (2014 – $14,935). Revenues attributable to the Legacy Business were included in the net earnings/(loss) from discontinued operations in the Company’s condensed consolidated statements of operations.

Expenses

Selling, general and administrative expenses during the three month period ended November 30, 2015 were $200,704, compared to a total of $10,820 not attributable to the Legacy Business during the three months ended November 30, 2014. The increase was primarily due to increased operations through IMK Korea, which incurred selling, general and administrative expenses of $174,342. During the three months ended November 30, 2015, our expenses consisted mainly of selling, general and administrative expenses, with the main components being salary expenses, professional and consulting services.

As a result of the disposal of the Legacy Business on June 22, 2015, selling, general and administrative expenses attributable to the Legacy Business during the three months ended November 30, 2015 were $nil (2014 – $46,207). Selling, general and administrative expenses attributable to the Legacy Business were included in the net loss from discontinued operations in the Company’s condensed consolidated statements of operations.

Nine-Month Period Ended November 30, 2015 Compared to Nine-Month Period Ended November 30, 2014

Revenues

Our revenues for the nine months ended November 30, 2015 were $12,649, which were derived from consulting services provided in relation to the marketing of cosmetics products. See “Revenue Recognition” under “Critical Accounting Policies.”

Revenues of $15,784 (2014 – $37,362) which were attributable to the Legacy Business during the nine months ended November 30, 2015 were included in the net loss from discontinued operations in the Company’s condensed consolidated statements of operations. The decrease of $21,578 in revenue was mainly the result of a shorter operating period due to the disposal of the Legacy Business on June 22, 2015.

The cost of revenues during the nine months ended November 30, 2015 were $820, which were comprised of cost of cosmetics products purchased for resale from other producers. The cost of revenues of $nil (2014 – $1,190) which were attributable to the Legacy Business during the nine months ended November 30, 2015 were included in the net loss from discontinued operations in the Company’s condensed consolidated statements of operations.

Expenses

Selling, general and administrative expenses during the nine month period ended November 30, 2015 were $799,990, compared to a total of $24,220 not attributable to the Legacy Business during the nine months ended November 30, 2014. The increase was primarily due to increased operations through IMK Korea, which incurred selling, general and administrative expenses of $612,116. During the nine months ended November 30, 2015, our expenses consisted mainly of selling, general and administrative expenses, with the main components being salary expenses, professional and consulting services.

The selling, general and administrative expenses of $73,762 (2014 – $114,965) which were attributable to the Legacy Business during the nine months ended November 30, 2015 were included in the net loss from discontinued operations in the Company’s condensed consolidated statements of operations. The decrease of $41,203 in selling, general and administrative expenses was mainly the result of a shorter operating period due to the disposal of the Legacy Business on June 22, 2015.

Gain from the Sale of Business

On June 22, 2015, we disposed of all our assets and assigned all of our liabilities that were exclusively related to the Legacy Business, to Buddy Young, in exchange for Mr. Young assuming all of the liabilities of the Company exclusively related to the Legacy Business. As at June 22, 2015, total assets and liabilities attributed to the Legacy Business were $15,901 and $40,227, respectively. As a result, a gain of $24,326 on sale of business was recognized and net loss from discontinued operations of $33,952 (2014 – $90,413) was reported in our condensed consolidated statements of operations for the nine months ended November 30, 2015.

We are currently determining the direction of our future operations. As such, our historical results are not expected to be reflective of our future expenses and capital requirements.

Liquidity and Capital Resources

We had a cash balance of $5,617 on November 30, 2015. During the nine months ended November 30, 2015, net cash used by operating activities was $670,353, net cash used by purchase of office equipment and long term lease deposit as part of investing activities was $193,320, and net cash provided by financing activities was $17,660 which consisted of issuance of common shares and issuance of convertible debenture offset by the settlement of promissory note payable. The promissory note settled in the amount of $223,221 was attributed to the Legacy Business and reported in the Company’s condensed consolidated statement of cash flows as discontinued operations in the financing activities.

On or about June 22, 2015, IMK Korea entered into the June 2015 MBK Loan Agreement, pursuant to which MBK advanced to IMK Korea the principal sum of SKW 200,000,000 ($172,800). The principal amount due under the June 2015 MBK Loan was due and payable on June 22, 2016, with interest payable at a rate of 6.9% per annum, payable every six months.

On October 8, 2015, IMK Korea entered into a loan agreement with MBK, pursuant to which MBK advanced to IMK Korea the principal sum of SKW 50,000,000 ($43,250). The loan was due and payable on April 7, 2016, with interest payable at a rate of 6.9% per annum, with overdue principal and interest accruing at 18% per annum. Another SKW 10,000,000 ($8,640) was advanced by MBK to IMK Korea on October 21, 2015 (the SKW 50,000,000 loan and the SKW 10,000,000 loan collectively being the “October 2015 MBK Loans”).

On January 28, 2016, we entered into the Cosmetics Asset Agreement with MBK, pursuant to which we sold all of our right, title and interest in and to those assets exclusively related to the Cosmetics Business, including the cosmetics recipes and trademarks related thereto. Under the terms of the Cosmetics Asset Agreement, we agreed to grant, convey, assign and transfer all of our assets exclusively related to the Cosmetics Business to MBK for consideration of SKW 288,700,000 (approximately $250,000), the payment for which was offset against the existing debt owed to MBK under June 2015 MBK Loan and the October 2015 MBK Loans.

On January 28, 2016, MBK loaned an additional SKW 250,000,000 (approximately $216,000) to IMK Korea (the “January 2016 MBK Loan”). The January 2016 MBK Loan is due and payable on January 28, 2018, with interest accruing at a rate of 6.9% per annum, payable quarterly, with interest on overdue interest accruing at a rate of 12% per annum. The January 2016 MBK Loan was advanced to Jae Kang Lee as principal debtor, with our Company and IMK Korea acting as guarantors. A separate agreement was then executed between Jae Kang Lee and IMK Korea with respect to the advance of the proceeds of the January 2016 MBK Loan to IMK Korea. It was the intention of all parties (including MBK) that IMK Korea be the ultimate recipient of the full proceeds of the January 2016 MBK Loan, the full amount of which has been received by IMK Korea. Under the terms of the January 2016 MBK Loan, we granted MBK a security interest over our security deposit for IMK Korea’s office space in Seoul, Korea and over 1,000,000 of the shares of our common stock surrendered by Sung Ho Park upon his resignation as Chairman of our Board of Directors.

Sung Ho Park, the former Chairman of our Board of Directors, is the Chief Executive Officer of MBK and Jae Kang Lee, a member of our Board of Directors, is a director of MBK.

We are currently in the process of evaluating alternative business opportunities to determine the direction of our future operations. As such, we are unable to provide an accurate estimate of our financial requirements for the next twelve months. If our management is successful in identifying a suitable business opportunity for us to pursue, we will likely need additional financing in order to pursue such that business opportunity. Failure to obtain sufficient financing may result in delaying or indefinite postponement of any business development efforts. There can be no assurance that additional capital or other types of financing will be available if needed or that, if available, the terms of such financings will be favorable to us.

GOING CONCERN

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  On February 27, 2015, we issued 29,115,670 shares of our common stock for total gross proceeds of $823,099 pursuant to a private placement offering. All the assets and liabilities exclusively related to the Legacy Business were disposed of on June 22, 2015. All of the assets exclusively related to the Cosmetics Business were disposed of on January 28, 2016. We are currently in the process of evaluating alternative business opportunities to determine the direction of our future operations. Our current financial resources will likely not be adequate to fund any future operations. This condition raises substantial doubt about our ability to continue as a going concern.  The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

Our continuation as a going concern currently is dependent upon timely procuring significant external debt and/or equity financing to fund its immediate and near-term operations, and subsequently realizing operating cash flows from future revenue generating activities sufficient to sustain its longer-term operations and growth initiatives.

As part of our efforts to obtain financing, our management is currently examining all of the options available to us. Historical results experienced by our Company are not expected to be reflective of our future expenses and capital requirements. Because we are currently evaluating alternative business opportunities, we are not able to accurately predict or anticipate our future results or capital requirements.   

OFF-BALANCE SHEET ARRANGEMENTS

None.  

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with United States generally accepted accounting principles requires our management to make estimates and assumptions that affect the reported amount 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. Our management routinely makes judgments and estimates about the effects of matters that are inherently uncertain.

Our significant accounting policies are disclosed in Note 1 to the unaudited condensed financial statements included in this Quarterly Report. The following accounting policies have been determined by our management to be the most important to the portrayal of our financial condition and results of operation:

Revenue Recognition. Prior to June 22, 2015, we sold videos produced by us, as well as videos produced by third parties. Sales were recognized upon shipment of videos to the customer or upon website download by the customer. The products sold may not be returned by the customer. Accordingly, we made no provision for returns.

We distributed and sold cosmetics products and recognized revenue upon transfer of ownership of the product to the customer which occurred when (i) the product was physically received by the customer, (ii) an invoice was generated which evidenced an arrangement between the customer and us, (iii) a fixed sales price had been included in such invoice and (iv) collection from such customer was reasonably assured.

We also provided consulting services in relation to the marketing of cosmetics products and recognized revenue upon delivery of services to the customer which occurred when (i) the services were rendered to the customer, (ii) an invoice was generated which evidenced an arrangement between the customer and us, (iii) a fixed sales price had been included in such invoice and (iv) collection from such customer was reasonably assured.

Non-Cash Equity Issuances. We periodically issues shares of our common stock in exchange for, or in settlement of, services. Our management values the shares issued in such transactions at either the then market price of our common stock, as determined by the Board of Directors and after taking into consideration factors such as volume of shares issued or trading restrictions, or the value of the services rendered, whichever is more readily determinable.

Foreign Currency Gains and Losses. Our functional and reporting currency is the United States dollar. The functional currency of IMK Korea is the South Korean Won (SKW). Financial statements of IMK Korea are translated into United States dollars using period-end rates of exchange for assets and liabilities, and average rates of exchange for the period for revenues and expenses. Translation gains (losses) are recorded in accumulated other comprehensive income (loss) as a component of stockholders’ equity. Foreign currency transactions are primarily undertaken in SKW and transaction gains and losses are included in the determination of income. As of November 30, 2015, we have not entered into derivative instruments to offset the impact of foreign currency fluctuations.

Recent Accounting Standards and Pronouncements. Recent accounting pronouncements issued by the Financial Accounting Standards Board or other authoritative standards groups with future effective dates are either not applicable or are not expected to be significant to our financial statements.

ITEM 3.      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

ITEM 4.      CONTROLS AND PROCEDURES.

In connection with the preparation of this Quarterly Report on Form 10-Q, an evaluation was carried out by our management, with the participation of our Chief Executive Officer and the Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”) as of November 30, 2015. Based on the evaluation, our management concluded, as of the end of the period covered by this report, that our disclosure controls and procedures were effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Securities and Exchange Commission’s rules and forms.

During the quarter ended November 30, 2015, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1.      Legal Proceedings.

None.

Item 1A.      RISK FACTORS.

The following are some of the important factors that could affect our financial performance or could cause actual results to differ materially from estimates contained in our forward-looking statements. We may encounter risks in addition to those described below. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, may also impair or adversely affect our business, financial condition or results of operation.

We do not currently have any business operations or any significant assets. We have not identified any alternative business opportunities. Our plan of operation for the next twelve months will consist solely of seeking suitable business opportunities.

We are currently in the process of reorganizing our business and are seeking alternative business opportunities. We have not yet identified any suitable business opportunities and there is no assurance that we will be able to do so in the future. Even if we are able to identify suitable business opportunities, there are no assurances that we will be able to acquire an interest in those opportunities or that we will have the resources to pursue such opportunities. As such, an investment in our shares at this time would be highly speculative.

Although we are not currently able to accurately predict our future financing requirements, we anticipate that we will, in the future, require financing in an amount that is significantly greater than our current financial resources. If we are not able to acquire financing in the amounts and when needed, our future business prospects could be adversely affected.

We anticipate that will require additional financing in the near future. Our ability to obtain future financing will be subject to a number of factors, including the variability of global market conditions and the performance of equity markets in general. These factors may make the timing, amount, terms or conditions of additional financing unavailable to us. If we are unable to obtain financing in amounts, or when, needed on terms that are acceptable to us, our business could be adversely affected.

Even if we are able to obtain financing, our stockholders may experience dilution. We anticipate that any business opportunities that we pursue will be in the early stages of development. As such, we do not expect traditional debt financing to be available to us. We may be required to seek financing through the sale of our equity securities or instruments convertible or exercisable into our equity securities. As such, our stockholders could experience significant dilution. Further, even if we are able to obtain debt financing, our cashflows from our operations to date have been extremely limited and we may not be able to service our debt obligations as they become due.

We may not be able to continue our business as a going concern.

We have suffered recurring losses and net cash outflows since our inception and we expect to continue to incur substantial losses in the near future.

Our ability to continue as a going concern is dependent upon our ability to obtain alternative business opportunities and financing, restructure our debt, and reduce our costs. We are currently in the process of identifying business opportunities, sources of additional financing, negotiating changes to our debt structure and evaluating our strategic options. However, there are no assurances that these plans can be accomplished on satisfactory terms, or at all, or that they will provide sufficient cash to fund our operations, pay the principal of, and interest on, our indebtedness, fund our other liquidity needs or permit us to refinance our indebtedness. Our inability to obtain business opportunities, additional financing, restructure our indebtedness, or reduce our costs would have a material adverse effect on our financial condition, results of operations and ability to satisfy our obligations, and may result in our pursuing a restructuring of our indebtedness either on a consensual basis or under the provisions of bankruptcy legislation, or liquidating our business and operations. Further, our inability to obtain additional financing or restructure our indebtedness, or our pursuing a restructuring of our indebtedness either on a consensual basis or under the provisions of bankruptcy legislation, may result in our stockholders losing all or a material portion of their investment in our securities.

Because our stock is a penny stock, stockholders will be more limited in their ability to sell their stock.

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or quotation system.

Because our securities constitute "penny stocks" within the meaning of the rules, the rules apply to us and to our securities. The rules may further affect the ability of owners of shares to sell our securities in any market that might develop for them. As long as the quotation price of our common stock is less than $5.00 per share, the common stock will be subject to Rule 15g-9 under the Exchange Act. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that:

The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with: (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statements showing the market value of each penny stock held in the customer's account. In addition, the penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our stock.

FOR ALL OF THE AFORESAID REASONS AND OTHERS SET-FORTH AND NOT SET-FORTH HEREIN, AN INVESTMENT IN OUR SECURITIES INVOLVES A CERTAIN DEGREE OF RISK. ANY PERSON CONSIDERING TO INVEST IN OUR SECURITIES SHOULD BE AWARE OF THESE AND OTHER FACTORS SET-FORTH IN THIS REPORT AND IN THE OTHER REPORTS AND DOCUMENTS THAT WE FILE FROM TIME TO TIME WITH THE SEC AND SHOULD CONSULT WITH HIS/HER LEGAL, TAX AND FINANCIAL ADVISORS PRIOR TO MAKING AN INVESTMENT IN OUR SECURITIES. AN INVESTMENT IN OUR SECURITIES SHOULD ONLY BE ACQUIRED BY PERSONS WHO CAN AFFORD TO LOSE THEIR TOTAL INVESTMENT.

None.

None.

Not applicable.

Additional Loans from MBK Co. Ltd.

As further described in Part I, Item 2 of this Quarterly Report on Form 10-Q, on January 28, 2016, the full amount owed to MBK under the June 2015 MBK Loan and the October 2015 MBK Loans was offset against the purchase price for the Cosmetics Business under the Cosmetics Asset Agreement.

As further described in Part I, Item 2 of this Quarterly Report on Form 10-Q, on January 28, 2016, MBK advanced the January 2016 MBK Loan to IMK Korea.

Sale of Cosmetics Business

As further described in Part I, Item 2 of this Quarterly Report on Form 10-Q, on January 28, 2016, we sold to MBK all of our right, title and interest in and to those assets exclusively related to the Cosmetics Business, including the cosmetics recipes and trademarks related thereto. The purchase price for the assets related to the Cosmetics Business was offset against the amounts owed to MBK under the June 2015 MBK Loan and the October 2015 MBK Loan.

The following exhibits are either provided with this Quarterly Report or are incorporated herein by reference:

Notes:

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.

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