UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF
|
|
|
THE
SECURITIES EXCHANGE ACT OF 1934
|
For
the quarter ended June 30, 2009
Commission
file number 000-51770
|
CMG
HOLDINGS, INC.
|
|
(Exact
name of registrant as specified in its
charter)
|
|
Nevada
|
87-0733770
|
|
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
|
5601 Biscayne
Boulevard
|
||
|
Miami, Florida,
USA
|
33137
|
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Registrant's telephone
number including area code (305) 751-1667
---------------------------------------------------------------
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 is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or small reporting company.
See the definition of "large accelerated filer," "accelerated filer" and "small
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 Act).
Yes No x
As of
August 18, 2009, there were 42,400,000 common stock of the registrant
issued and outstanding.
1
CMG
HOLDINGS, INC.
FORM
10-Q
2
CMG
HOLDINGS, INC.
UNAUDITED FINANCIAL
STATEMENTS
FOR
THE QUARTER ENDED JUNE 30, 2009 AND 2008
CONTENTS
______________________________________________________________________________________
|
Consolidated
Balance Sheets as of June 30, 2009 and December 31, 2008
(Unaudited)
|
4
|
|
Consolidated
Statements of Operations for the three months and six months ended June
30, 2009 and 2008 (Unaudited)
|
5
|
|
Consolidated
Statements of Cash Flows for the six months ended June 30, 2009 and 2008
(Unaudited)
|
6
|
|
Notes
to Consolidated Financial Statements (Unaudited)
|
7
|
3
|
CMG
HOLDINGS, INC
|
||||||||
|
CONSOLIDATED
BALANCE SHEETS
|
||||||||
|
(unaudited)
|
||||||||
|
June
30,
2009
|
December
31, 2008
|
|||||||
|
ASSETS
|
||||||||
|
CURRENT
ASSETS:
|
||||||||
|
Cash
|
$
|
87,553
|
$
|
13,934
|
||||
|
Accounts receivable
|
531,594
|
1,050
|
||||||
|
Prepaid an other
|
6,130
|
--
|
||||||
|
Total current assets
|
625,277
|
14,984
|
||||||
|
Software licenses, net accumulated depreciation of $4,333 and $-,
respectively
|
47,667
|
--
|
||||||
|
Intangible assets, net accumulated amortization of $74,584 and $-,
respectively
|
820,414
|
--
|
||||||
|
Deposits
|
300,000
|
300,000
|
||||||
|
TOTAL
ASSETS
|
$
|
1,793,358
|
$
|
314,984
|
||||
|
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
||||||||
|
CURRENT
LIABILITIES:
|
||||||||
|
Client payable
|
$
|
123,036
|
$
|
8,000
|
||||
|
Accounts payable
|
660,280
|
29,320
|
||||||
|
Accrued liabilities
|
752,571
|
415,359
|
||||||
|
Line of credit
|
150,406
|
108,231
|
||||||
|
Advance from related party
|
25,000
|
--
|
||||||
|
Total
current liabilities
|
1,711,293
|
560,910
|
||||||
|
STOCKHOLDERS’
DEFICIT
|
||||||||
|
Preferred Stock:
|
||||||||
|
5,000,000
shares authorized par value $0.001 per share; none issued and
outstanding
|
||||||||
|
Common Stock:
|
||||||||
|
150,000,000 shares authorized par value $0.001 per share;
42,400,000 issued, and 31,726,518
and 31,726,518 shares outstanding
respectively
|
31,727
|
31,727
|
||||||
|
Additional paid-in-capital
|
4,449,863
|
4,449,863
|
||||||
|
Shares
held in reserve, 10,673,482 and 10,673,482 shares held,
respectively.
|
10,673
|
|
10,673
|
|||||
|
Accumulated deficit
|
(4,410,198
|
)
|
(4,738,189
|
)
|
||||
|
TOTAL STOCKHOLDERS’ DEFICIT
|
82,065
|
(245,926
|
) | |||||
|
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
$
|
1,793,358
|
$
|
314,984
|
||||
See
accompanying notes to consolidated financial statements
4
|
CMG
HOLDINGS, INC
|
||||||||||||||||
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
||||||||||||||||
|
(unaudited)
|
||||||||||||||||
|
Three
months ended
|
Six months
ended
|
|||||||||||||||
|
June
30,
|
June
30,
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
Gross revenues
|
$
|
1,074,112
|
$
|
--
|
$
|
1,286,506
|
$
|
399,167
|
||||||||
|
Cost
of goods sold
|
201,517 | -- | 201,517 | -- | ||||||||||||
|
Net
revenues
|
872,575 | -- | 1,084,989 | 399,167 | ||||||||||||
|
|
||||||||||||||||
|
Operating
expenses
|
1,480,470
|
796,920
|
1,844,774
|
2,531,415
|
||||||||||||
|
Operating
loss
|
(607,875
|
)
|
(796,920
|
)
|
(759,785
|
) |
(2,132,248
|
)
|
||||||||
|
Other
income (expense)
|
||||||||||||||||
|
Brgain
purchase gain
|
1,038,733
|
--
|
1,038,733
|
--
|
||||||||||||
|
Interest
expense
|
(1,878
|
)
|
(62,464
|
)
|
(3,264
|
)
|
(84,844
|
)
|
||||||||
|
Interest
income
|
53,692
|
3,416
|
52,307
|
15,757
|
||||||||||||
|
Net income (loss)
|
$
|
482,672
|
$
|
(855,968
|
)
|
$
|
327,991
|
$
|
(2,201,335
|
)
|
||||||
|
Basic
and diluted income (loss) per common share
|
$
|
0.02
|
$
|
(0.04
|
)
|
$
|
0.01
|
$
|
(0.11
|
)
|
||||||
|
Basic
and diluted weighted average common shares
outstanding
|
31,726,518
|
23,998,549
|
31,726,518
|
19,709,450
|
||||||||||||
See
accompanying notes to consolidated financial statements
5
|
CMG
HOLDINGS, INC
|
||||||||
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
||||||||
|
(unaudited)
|
||||||||
|
Six
months ended
|
||||||||
|
June
30,
|
||||||||
|
2009
|
2008
|
|||||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||||||
|
Net
Gain (Loss)
|
$
|
327,991
|
$
|
(2,201,335
|
)
|
|||
|
Adjustments
to reconcile net loss to
net cash used in operating activities:
|
||||||||
|
Shares
issued for services
|
--
|
1,491,778
|
||||||
|
Additional
shares issued for interest expense
|
--
|
62,464
|
||||||
|
Bargain
purchase gain
|
(1,038,733
|
) |
--
|
|||||
|
Amortization
|
78,917
|
--
|
||||||
| Changes in: | ||||||||
|
Accounts
receivable
|
(288,353
|
) |
(304,167
|
)
|
||||
|
Prepaid
expense
|
(6,130
|
) |
17,454
|
|||||
|
Accounts payable
|
630,960
|
(124,826
|
)
|
|||||
|
Accrued
expense
|
451,792
|
510,522
|
||||||
|
Net
cash provided by (used in) operating activities
|
156,444
|
(548,110
|
)
|
|||||
|
CASH FROM
INVESTING ACTIVITIES
|
||||||||
|
Cash paid for acquisition of Pebble Beach Enterprises,
Inc.
|
--
|
(600,000
|
)
|
|||||
|
Cash paid to acquire a bank loan
|
(150,000
|
)
|
--
|
|||||
|
Net
cash used in investing activities:
|
(150,000
|
)
|
(600,000
|
)
|
||||
|
FINANCING
ACTIVITIES
|
||||||||
|
Advance from a related party
|
25,000
|
--
|
||||||
|
Net borrowings on line of credit
|
42,175
|
(132,763
|
)
|
|||||
|
Contributions to capital
|
--
|
30,000
|
||||||
|
Borrowing on convertible notes
|
--
|
314,000
|
||||||
|
Net
cash provided by financing activities
|
67,175
|
211,237
|
||||||
|
Net
increase (decrease) in cash
|
73,619
|
(936,873
|
)
|
|||||
|
Cash, beginning of period
|
13,934
|
1,213,035
|
||||||
|
CASH BALANCE AT END OF PERIOD
|
$
|
87,553
|
$
|
276,162
|
||||
|
Supplemental
cash flow information:
|
||||||||
|
Income tax paid
|
$
|
--
|
$
|
--
|
||||
|
Interest paid
|
--
|
--
|
||||||
| Non-cash investing and financing activities: | ||||||||
| Assets acquired after foreclosing on bank loan | $ | 242,191 | -- | |||||
See
accompanying notes to consolidated financial statements
6
CMG
HOLDINGS, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE
1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION AND ACCOUNTING
POLICIES
The
accompanying unaudited interim consolidated financial statements of CMG
Holdings, Inc. have been prepared in accordance with accounting principles
generally accepted in the United States of America and the rules of the
Securities and Exchange Commission, and should be read in conjunction with the
audited financial statements and notes thereto contained in its 2008 annual
report on Form 10-K. In the opinion of management, these interim financial
statements include all adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of financial position and the results of
operations for the interim periods presented have been reflected herein. The
results of operations for interim periods are not necessarily indicative of the
results to be expected for the full year. The unaudited consolidated financial
statements should be read in conjunction with the audited consolidated financial
statements and notes thereto of the Company and management’s discussion and
analysis of financial condition and results of operations included in the
Company’s Annual Report for the year ended December 31, 2008 as filed with the
Securities and Exchange Commission on Form 10-K. Notes to the
financial statements that would substantially duplicate the disclosure contained
in the audited financial statements for fiscal year 2008, as reported in the
Form 10-K, have been omitted.
PRINCIPLES
OF CONSOLIDATION
The
consolidated financial statements include the accounts of CMG Holdings, Inc.,
Creative Management Group and CMG Acquisitions, Inc., CMGO Capital, Inc. and
CMGO Events Marketing, Inc, Creative Management Group Logistics, Inc. after
elimination of all significant inter-company accounts and
transactions.
INTANGIBLE
ASSETS, GOODWILL AND IMPAIRMENT OF LONG-LIVED ASSETS
Intangibles are recorded at cost and amortized on
the straight-line method over their estimated useful lives. Goodwill is reviewed
annually. Intangible valuation and Goodwill impairment are determined using
similar processes. For intangibles, the first step is to compare the fair value
of the intangible to its carrying amount. For Goodwill, the first
step is to compare the fair value of a reporting unit with its carrying amount,
including goodwill. Inova determines the fair value of both intangibles and
reporting units by using a discounted cash flow (“DCF”) analysis approach.
Determining fair value requires the exercise of significant judgments, including
judgments about appropriate discount rates, perpetual growth rates, relevant
comparable company earnings multiples and the amount and timing of expected
future cash flows. The cash flows employed in the DCF analyses are based
on Inova’s budget and long-term
business plan, and various growth rates have been assumed for years beyond the
long-term business plan period. Discount rate assumptions are based on an
assessment of the risk inherent in the future cash flows of the respective
reporting units.
BUSINESS
COMBINATION
The
Company accounts for business combination in accordance with SFAS No. 141R,
"Business Combinations". In December 2007, the FASB issued SFAS No. 141R which
establishes principles and requirements for how the acquirer of a business
recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed and any noncontrolling interest in the
acquiree. The statement also provides guidance for recognizing and measuring the
goodwill acquired in the business combination and for disclosure to enable
evaluation of the nature and financial effects of the business
combination.
NEW
ACCOUNTING PRONONCEMENT
In
May 2009, the FASB issued SFAS No. 165, Subsequent Events. This standard is
intended to establish general standards of accounting for and disclosures of
events that occur after the balance sheet date but before financial statements
are issued or are available to be issued. Specifically, this standard sets forth
the period after the balance sheet date during which management of a reporting
entity should evaluate events or transactions that may occur for potential
recognition or disclosure in the financial statements, the circumstances under
which an entity should recognize events or transactions occurring after the
balance sheet date in its financial statements and the disclosures that an
entity should make about events or transactions that occurred after the balance
sheet date. SFAS No. 165 is effective for fiscal years and interim periods ended
after June 15, 2009. The Company adopted this standard effective June 15, 2009,
and has evaluated any subsequent events through August 18, 2009. The Company has
no significant subsequent events for the period from July 1, 2009 through August
18, 2009.
7
NOTE
2 – GOING CONCERN
As shown
in the accompanying financial statements, the Company has an accumulated deficit
and a working capital deficit as of June 30, 2009. These conditions raise
substantial doubt as to our ability to continue as a going concern. In response
to these conditions, the Company may raise additional capital through the sale
of equity securities, through an offering of debt securities or through
borrowings from financial institutions or individuals. The financial statements
do not include any adjustments that might be necessary if we are unable to
continue as a going concern.
NOTE
3 – NOTE RECEIVABLE AND ASSET ACQUISITION
On March
6, 2009, the Company, through a newly formed wholly owned subsidiary CMGO
Capital, Inc., a Nevada corporation, completed a Note Purchase Agreement with
Bank of America to purchase the senior secured debt obligations of The
Experiential Agency, Inc. The purchase price of the Note Purchase Agreement with
Bank of America to purchase the senior secured debt obligations of The
Experiential Agency, Inc. was a total of $150,000.
On April
1, 2009, CMG Holdings, Inc. foreclosed on the note and completed the acquisition
of the assets of The Experiential Agency, Inc. The Experiential
Agency, Inc. offers a full degree of solutions, services and consulting
expertise comprising of management, creation, and execution of entertainment
event for corporate clients and individual clients general service areas of
event marketing, interactive marketing, event production, public relations,
talent representation, corporate consulting, digital media. The Experiential
Agency, Inc. earns consulting fees when it provides general consulting services
and generates revenues for services for event marketing and communications
assignments. As a result of the acquisition of the assets of Experiential
Agency, Inc., the Company is expected to be the premier provider of solutions,
services and consulting expertise comprising of management, creation, and
execution of entertainment event for corporate clients and individual clients
general service areas of event marketing, interactive marketing, event
production, public relations, talent representation, corporate consulting,
digital media and services in those markets. The Company also expects to reduce
costs through economies of scale.
In
accordance with FAS 141R, the Company determined the assets acquired constituted
a business and applied purchase accounting to the assets acquired.
The
assets acquired include accounts receivable and software licenses with a fair
value of $242,191 and $52,000, respectively.
The fair
value of the acquired identifiable intangible assets of $894,998 is provisional
pending receipt of the final valuations for those assets. The $894,998 of
acquired intangible assets (customers list/company name) has a useful life of
approximately 3 years. During the six months ended June 30, 2009, the Company
recorded amortization expense of $78,917.
The
Company recognized a gain of $1,038,733 as a result of the asset acquisition.
The gain is included in other income in the Company’s statement of operations
for the six months ended June 30, 2009
The
following table summarizes the consideration paid for acquisition of the assets
and the amount of the assets acquired at the acquisition date as well as the
fair value at the acquisition date.
Consideration:
| Cash Consideration | $ | 150,000 | ||
| Total | $ | 150,000 | ||
| Acquisition-related costs | $ | -- | ||
| Recognized amounts of identifiable assets acquired and liabilities assumed: | ||||
| Accounts receivable | 242,191 | |||
| Software licenses | 52,000 | |||
| Identifiable intentangible assets | 894,998 | |||
| Total identifiable net assets | 1,188,733 | |||
| Bargain purchase gain | (1,038,733 | ) | ||
| Total | $ | 150,000 |
8
The
amounts of The Experiential Agency, Inc revenues and earnings included in the
Company’s consolidated statement of operations for the six months ended June 30,
2009, and the revenues and earnings of the combined entity had the acquisition
date been January 1, 2009, or January 1, 2008, are:
|
Revenues
|
Earnings
|
|||||||
| Actual from April 1, 2009 to June 30, 2009 | $ | 872,595 | $ | 482,672 | ||||
| Supplemental pro forma from 04/01/08 – 06/30/08 | 1,788,887 | (727,025 | ) | |||||
| Supplemental pro forma from 01/01/09 – 06/30/09 | 2,310,681 | 579,120 | ||||||
| Supplemental pro forma for 01/01/08 – 06/30/08 | 4,095,829 | (2,077,434 | ) | |||||
NOTE
4 – ADVANCE FROM RELATED PARTY
In March
2009, the Company received a total of $25,000 advances from one of its
officer/directors. The funds were used by the Company for working capital
purposes. The payable bears 0% interest, is unsecured and is due on
demand.
9
The
information contained in this Management’s Discussion and Analysis of Financial
Condition and Results of Operation contains “forward
looking statements.” Actual results may materially differ from those
projected in the forward looking statements as a result of certain risks and
uncertainties set forth in this report. Although our management believes that
the assumptions made and expectations reflected in the forward looking
statements are reasonable, there is no assurance that the underlying assumptions
will, in fact, prove to be correct or that actual future results will not be
materially different from the expectations expressed in this Annual
Report.
PLAN
OF OPERATION
RESULTS
OF OPERATIONS
FOR
THE SIX MONTH PERIOD ENDED JUNE 30, 2009
Net
revenues increased from $399,167 in the six months period ending June 30, 2008
to $1,084,989 for the six months period ending June 30, 2009. The increase in
revenues is mainly due to more revenues generated in public relations, marketing
services and event marketing consulting business. Also, during the second
quarter of 2009, after the acquisition of assets of The Experiential Agency,
Inc., we started to generate and recognize revenues from this new line of
business.
Operating
expenses decreased from $2,531,415 for the six months ending June 30, 2008 to
$1,844,774 for the same period in 2009. This was mainly due to the Company
recognized significant stock-based compensation costs in 2008 and in 2009 the
Company did not have any of this type of expense. The expenses for 2009 mainly
incurred for marketing services, public relations, consulting services and event
marketing.
Net
income increased from a net loss of $2,201,335 for the six months ending June
30, 2008 to net income of $327,991 for the same period in 2009. The increase in
net income is mainly due to more revenues generated and not having any
stock-based compensation expense in 2009 compared to 2008.
FOR
THE THREE MONTH PERIOD ENDED JUNE 30, 2009
Net
revenues increased from $0 in the three months period ending June 30, 2008 to
$872,595 for the three months period ending June 30, 2009. The increase in
revenues is mainly due to more revenues generated in public relations, marketing
services and event marketing consulting business. Also, during the second
quarter of 2009, after the acquisition of assets of The Experiential Agency,
Inc., we started to generate and recognize revenues from this new line of
business.
Operating
expenses increased from $796,920 for the three months ending June 30, 2008 to
$1,480,470 for the same period in 2009. This was mainly due to the Company
recognized expenses for marketing services, public relations, consulting
services and event marketing.
Net
income increased from a net loss of $855,968 for the three months ending June
30, 2008 to net income of $482,672 for the same period in 2009. The increase in
net income is mainly due to more revenues generated.
LIQUIDITY AND CAPITAL
RESOURCES.
As
of June 30, 2009, the Company’s cash on hand was $87,553.
Cash
provided by operations for the six months period ended June 30, 2009 was
$156,444, as compared to cash used by operations of $548,110 for the six months
ended June 30, 2008. The increase in cash provided by operating activities is
mainly due to more revenues generated in public relations, marketing services
and event marketing consulting business during six months ended June 30,
2009.
Cash
used in investing activities for the six month period ended June 30, 2009 was
$150,000, as compared to $600,000 for the six months ended June 30, 2008. For
the six months ended June 30, 2008, the Company incurred $600,000 for the
acquisition of Pebble Beach
Enterprises, Inc. and for the six month ended June 30, 2009, the Company paid
$150,000 to obtain a note receivable regarding the note purchase agreement to
purchase the senior secured debt obligations of The Experiential Agency,
Inc.
10
Cash
provided by financing activities for the six month period ended June 30, 2009
was $67,175, as compared to $1,029,830 provided for the six months ended June
30, 2008. In 2008, the Company obtained $314,000 from selling convertible
notes.
Security Ownership of Certain Beneficial Owners and Management
The
following table sets forth information regarding the number of shares of common
stock beneficially owned on August 7, 2008, following consummation of the
Reorganization by Each person who is known by us to beneficially own 5% or more
of the Registrant’s common stock; Each of the Registrant’s directors and named
executive officers; and All of the Registrant’s directors and executive officers
as a group.
Security
Ownership of CMG Holdings, Inc. as of August 7, 2008:
|
Title
of Class
|
Name
|
Shares
|
Percent
(1)
|
||||||
|
Common
Stock
|
CMG
Acquisitions, Inc.
|
14,085,789 | 33.22 | % | |||||
|
Alan
Morell
|
10,107,000 | 23.84 | % | ||||||
|
James
J. Ennis
|
2,500,000 | 5.89 | % | ||||||
Security
Ownership of CMG Holdings Inc. directors and executive officers as of May 27,
2008:
|
Title
of Class
|
Name
|
Shares
|
Percent
(1)
|
||||||
|
Common
Stock
|
Alan
Morell
|
10,107,000 | (2 | ) | 23.84 | % | |||
|
James
J. Ennis
|
2,500,000 | (3 | ) | 5.89 | % | ||||
|
Michael
Vandetty
|
1,000,000 | 2.35 | % | ||||||
|
All
Directors and Executive Officers as a Group
|
13,607,000 | 32.09 | % | ||||||
|
(1)
|
Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission and includes voting and investment power with respect
to shares. Unless otherwise indicated, the persons named in the table have
sole voting and sole investment control with respect to all shares
beneficially owned, subject to community property laws where applicable.
The number and percentage of shares beneficially owned are based on
42,400,000 shares of common stock outstanding as of May 27, 2008, the
closing date of the Reorganization. The address for those individuals for
which an address is not otherwise indicated is: c/o CMG Holdings, Inc.,
5601 Biscayne Boulevard, Miami, Florida 33137,
USA.
|
|
(2)
|
Mr.
Morell owns 3,500,000 shares of Creative Management Group, Inc. directly,
and is the beneficial owner of an additional 6,607,000 shares owned by
Commercial Rights Intl Corp. for a total of 10,107,000
shares.
|
|
(3)
|
Mr.
Ennis owns 500,000 shares of Creative Management Group, Inc. directly, and
is the beneficial owner of an additional 2,000,000 shares owned by
Hastings Creek Group, Inc. for a total of 2,500,000
shares.
|
None.
11
(a)
Evaluation of disclosure controls and procedures.
Disclosure
controls and procedures have been designed to ensure that information required
to be disclosed by the Company is collected and communicated to management to
allow timely decisions regarding required disclosures. The Chief Executive
Officer and the Chief Financial Officer have concluded, based on their
evaluation as of June 30, 2009, the disclosure controls and procedures were
ineffective in providing reasonable assurance that material information is made
known to them by others within the Company:
a)
We did not maintain sufficient personnel with an appropriate level of technical
accounting knowledge, experience, and training in the application of generally
accepted accounting principles commensurate with our complexity and our
financial accounting and reporting requirements. We have limited experience in
the areas of financial reporting and disclosure controls and procedures. As a
result, there is a lack of monitoring of the financial reporting process and
there is a reasonable possibility that material misstatements of the
consolidated financial statements, including disclosures, will not be prevented
or detected on a timely basis; and
b)
There is a lack of sufficient accounting staff which results in a lack of
segregation of duties necessary for a good system of internal control. This
control deficiency, which is pervasive in nature, results in a reasonable
possibility that material misstatements of the financial statements will not be
prevented or detected on a timely basis.
Management’s
efforts to address these deficiencies in its disclosure controls and procedures
is reflected in its commitment to providing continued education and training for
our Chief Financial Officer and accounting staff to ensure the level of
expertise required for a public company. In addition, management has budgeted in
the coming year for additional accounting staff to address internal control
weaknesses associated with lack of segregation of duties.
(b)
Changes in internal controls
There
have been no changes to our internal control in the quarter ended June 30,
2009.
12
There is no past, pending or, to the Company’s
knowledge,
threatened litigation or administrative action which has or is expected by
the Company’s management to have a material effect upon our Company’s business,
financial condition or operations, including any litigation or action
involving our Company’s officers,
directors, or other key
personnel.
ITEM 1A – RISK FACTORS
Registrant
is a smaller reporting company and is therefore not required to provide this
information.
ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
None
ITEM 3 – DEFAULT UPON SENIOR SECURITIES
None
None
None
13
Exhibit
No. Document
Description
|
31.1
|
Certification
of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a)
of the Securities
Exchange Act,
as amended.
|
|
31.2
|
Certification
of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a)
of the Securities Exchange Act, as
amended.
|
|
32.1
|
Certification
of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as adopted
Pursuant to Section 906 of the Sarbanes Oxley Act of
2002.
|
|
32.2
|
Certification
of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as adopted
Pursuant to Section 906 of the Sarbanes Oxley Act of
2002.
|
Reports
on Form 8-K:
The Company filed a Form 8-K on April 8, 2009 - Item 2.01 Completion of
Acquisition of Assets - announcing the acquisition of The Experiential Agency,
Inc.
14
In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, there unto duly
authorized.
|
CMG HOLDINGS, INC.
|
|||
|
(Registrant)
|
|||
|
Date:
August 18, 2009
|
By: /s/ ALAN
MORELL
|
||
|
Alan
Morell
|
|||
|
Chief
Executive Officer and
|
|||
|
Chairman of the Board
|
|||
|
Date:
August 18, 2009
|
By: /s/ JAMES J.
ENNIS
|
||
|
James J. Ennis
|
|||
|
Chief
Financial Officer and
|
|||
|
Director
|
|||
In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
|
SIGNATURE
|
NAME
|
TITLE
|
DATE
|
|||
|
/s/Alan
Morell
|
Alan
Morell
|
CEO
& Chairman
|
August
18, 2009
|
|||
|
of
the Board
|
||||||
|
/s/James
I. Ennis
|
James
I. Ennis
|
CFO
& Director
|
August
18, 2009
|
|||
15