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GREEN 4 MEDIA, INC. - 10-K - Management's Discussion and Analysis of Financial Condition and Results of Operations
(Edgar Glimpses Via Acquire Media NewsEdge) The following discussion should be read in conjunction with our consolidated
audited financial statements and the related notes that appear elsewhere in this
annual report. The following discussion contains forward-looking statements that
reflect our plans, estimates and beliefs. Our actual results could differ
materially from those discussed in the forward looking statements. Factors that
could cause or contribute report, particularly in the section entitled "Risk
Factors" beginning on page 7 of this annual report.
Our audited financial statements are stated in United States Dollars and are
prepared in accordance with United States Generally Accepted Accounting
Principles.
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Executive Summary
We have developed a web-based business offering eco-sustainable marketing and
advertising solutions to prospects wishing to emphasize they care about the
environment with the use of natural and sustainable materials. The Company is
virtual in nature, meaning that employees and contractors will primarily work
from home. Our services are highly specialized and emphasize creating campaigns
for our clients that focus on communicating their brand through sustainable and
natural mediums. We also offer professional web and graphic designers to
incorporate our client's green message across various mediums. Another aspect
of our plan is to better educate our clients and empower them to understand the
value of supporting environmental issues and minimizing their media choices'
environmental impact.
Strategic Initiatives
Fully optimized Green 4 Media Website: We have launched our fully SEO-friendly
website. The site has been optimized to rank high on Google, Bing, and Yahoo
organic searches by utilizing link-earning and building with partner websites
and blogs, and creating a social media presence to promote the value of creating
100% environmentally sustainable messages and advertisements, as well as
building brand awareness and loyalty.
Internet Marketing: We will invest in a Google Adwords / Paid Advertising
Campaign, along with a Bing Pay-per-Click Campaign, both including thoroughly
researched keywords to drive traffic to our site. Our online marketing efforts
include a Social Media Marketing Campaign, with profiles on the major Social
Media Platforms: Facebook, Twitter, YouTube and Pinterest. Video Marketing
(i.e., YouTube) is especially valuable in delivery of our services, providing
the immediate, visual representation of our eco-sustainable marketing campaigns.
Mobile / Smart Phone Advertising: Green 4 Media is deeply involved in an effort
to expand our services to include smart phone marketing. The exponential growth
of smart phone use and its related marketing potential is unprecedented, and
Green 4 Media is now positioned to capitalize on this trend. Green 4 Media is
exploring the creation of specially designed mobile websites that perform
exclusively on iOS, Blackberry OS and Android Systems. We are currently working
on launching these new mobile sites by January 2013.
Results of Operations
The following summary of our results of operations should be read in conjunction
with our audited financial statements for the year ended August 31, 2012 and
2011.
Our operating results for the year ended August 31, 2012 and the period from
inception (June 8, 2011) to August 31, 2011, are summarized as follows:
From
Year Ended June 8, 2011 to August 31,
August 31,
2012 2011
Revenue $ 25,419 $ -
Expenses $ 69,766 $ 1,634
Net Loss $ (44,347 ) $ (1,634 )
Revenue
The Company earned its initial revenues starting in the second quarter of this
fiscal year ended August 31, 2012. The revenues were from the sale of
eco-friendly, print-free advertising and marketing services, Search Engine
Optimization (Organic/Unpaid Advertising), Adwords Pay-per-Click Advertising,
Facebook Pay-per-Click Advertising and viral Social Media Marketing campaigns;
and were recognized upon the completion of these programs. We earned revenues
of $25,419 for the year ended August 31, 2012 compared to revenues of $0 for the
period ended August 31, 2011. Increased revenues in 2012 can be attributed to
increased awareness of Green 4 Media's services and expansion of our marketing
efforts to new customers. We anticipate revenues to stay consistent in the
upcoming fiscal year 2013.
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Expenses
Our total expenses for the year ended August 31, 2012 and period ended August
31, 2011, are outlined in the table below:
From
Year Ended June 8, 2011 to
August 31, August 31,
2012 2011
Selling, general and administrative $ 23,035 $ 996
Professional fees $ 46,731 $ 638
Total $ 69,766 $ 1,634
Liquidity and Financial Condition
Working Capital
At At
August 31, August 31,
2012 2011 Change
Current Assets $ 30,151 $ 8,766 $ 21,385
Current Liabilities $ 8,632 $ 400 $ 8,232
Working Capital (deficit) $ 21,519 $ 8,366 $ 13,153
Cash Flows
Year Ended Year Ended
August 31, August 31,
2012 2011Net Cash Used in Operating Activities $ (51,337 ) $ (1,234 )
Net Cash Used by Investing Activities $ - $ -
Net Cash Provided by Financing Activities $ 57,175 $ 10,000
Net Increase in Cash During the Period $ 5,838 $ 8,766
We will require additional funds to fund our budgeted expenses in the future.
These funds may be raised through equity financing, debt financing, or other
sources, which may result in further dilution in the equity ownership of our
shares. There is no assurance that we will be able to maintain operations at a
level sufficient for an investor to obtain a return on their investment in our
common stock. Further, we may continue to be unprofitable. Additionally, there
is no assurance that any party will advance additional funds to us in order to
enable us to sustain our plan of operations or to repay our liabilities.
Liquidity and Capital Resources
We received our initial funding of $10,000 through the sale of common stock to
Daniel Duval, who purchased 1,000,000 shares of common stock at $0.01 on June 9,
2011. In September 2011, we received $21,000 from 9 unrelated shareholders who
purchased 210,000 shares of our common stock at $0.10 per share. From February
to March 2012, we raised $36,500 from our post-effective amendment on Form S-1,
from the sale of 365,000 shares to 24 unaffiliated investors. From inception
until the date of this filing we have had limited operating activities. Our
financial statements from inception (June 8, 2011) through the period ended
August 31, 2011, reported revenues of $25,419 and a net loss of $45,981.
Growth of our operations will be based on our ability to internally finance from
cash flow and raise equity and/or debt to increase sales and production. Our
primary sources of liquidity are: (i) cash from sales of our services; and (ii)
financing activities. Our cash balance as of August 31, 2012 was $14,604.
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Limited Operating History; Need for Additional Capital
The report of our auditors on our audited financial statements for the fiscal
year ended August 31, 2012, contains a going concern qualification as we have
suffered losses since our inception. We have minimal assets and have not yet
established an ongoing source of revenues sufficient to cover our operating
costs and allow it to continue as a going concern. Unless and until we commence
material operations and achieve material revenues, we will remain dependent on
financings to continue our operations.
There is no historical financial information about us on which to base an
evaluation of our performance. We are a development stage company and have not
generated revenues from operations. We cannot guarantee we will be successful
in our business operations. Our business is subject to risks inherent in the
establishment of a new business enterprise, including limited capital resources
and possible cost overruns due to the price and cost increases in and services.
At present, we do not have enough cash on hand to cover operating costs for the
next 12 months.
While the officers and directors have generally indicated a willingness to
provide services and financial contributions if necessary, there are presently
no agreements, arrangements, commitments, or specific understandings, either
verbally or in writing, between the officers and directors and Green 4 Media.
If we are unable to meet our needs for cash from either the money that we raised
from our offering, or possible alternative sources, then we may be unable to
continue, develop, and expand our operations.
We have no plans to undertake any product research and development during the
next twelve months. There are also no plans or expectations to acquire or sell
any plant or plant equipment in the first full year of operations.
Plan of Operation and Cash Requirements
Green 4 Media began selling its services in February 2012. Our plan of action
over the next twelve months is to continue to market and sell our services and
raise additional capital financing as necessary to grow operations.
The success of our operations will be based on our ability to grow by financing
the operation through internal cash flow or to raise funds through equity and/or
debt financing to invest in marketing and sales of our services. The challenging
markets for credit do create a condition where some of our marketing plans may
have to be delayed if we are not able generate adequate capital. The
availability of equity and/or debt financings remains uncertain.
We expect to continue a number of marketing initiatives that we started last
quarter including the following:
† Continued development of a fully optimized website, increasing the number
of link-building and link-earning outreaches to blogs and partner sites that
promote our eco-sustainable message
† Embrace the use and expansion of mobile marketing technology
† Google Adwords and Bing Pay-per-Click Advertising
† Extensive Social Media Marketing including the leveraging of Facebook,
Twitter, Pinterest, and YouTube
† Facebook Pay-per-Click Advertising
† Twitter Pay-per-Click Advertising
† You Tube Videos Monetization (currently creating videos with still images
of our campaigns)
† Networking for sales leads at local technology events
As our business is a marketing and advertising company we are able to complete
most of our marketing initiatives without incurring additional outside expenses
by completing the work internally hence being able to keep our advertising and
marketing costs to a minimum. Over the next 12 months, we anticipate that the
company will require funds of approximately $25,000 to meet our working capital
requirements.
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In the event that we need additional funds in addition to the cash on hand, we
will endeavor to proceed with our plan of operations by locating alternative
sources of financing. Although there are no written agreements in place, one
form of alternative financing that may be available to us is self-financing
through contributions from the officers and directors. While the officers and
directors have generally indicated a willingness to provide services and
financial contributions if necessary, there are presently no agreements,
arrangements, commitments, or specific understandings, either verbally or in
writing, between the officers and directors and Green 4 Media.
We do not anticipate hiring any staff during the next 12 months of operation,
and will rely on the services of our officers and directors and outside
contractors.
As a result of these initiatives if we are unable to increase sales and cash
flow we may not have sufficient working capital to implement our strategy and we
will be forced to scale down our business plan. Over time this could cause us
to curtail or suspend our operations and may eventually cause our business to
fail.
Going Concern
As of August 31, 2012, our company has an annual loss of $44,347 and an
accumulated deficit of $45,981. Our company intends to fund operations through
operational cash flow and equity/debt financing arrangements. These sources may
be insufficient to fund its capital expenditures, working capital and other cash
requirements for the future. In response to these problems, management intends
to raise additional funds through public or private placement offerings. These
factors, among others, raise substantial doubt about our company's ability to
continue as a going concern. The accompanying financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that is material to stockholders.
Critical 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 and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amount of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
Company's periodic filings with the Securities and Exchange Commission include,
where applicable, disclosures of estimates, assumptions, uncertainties and
markets that could affect the financial statements and future operations of the
Company.
Cash and Cash Equivalents
Cash and cash equivalents include cash in banks, money market funds, and
certificates of term deposits with maturities of less than three months from
inception, which are readily convertible to known amounts of cash and which, in
the opinion of management, are subject to an insignificant risk of loss in
value. The Company had $14,604 and $8,766 in cash and cash equivalents at
August 31, 2012 and 2011, respectively.
Start-Up Costs
In accordance with ASC 720, "Start-up Costs", the Company expenses all costs
incurred in connection with the start-up and organization of the Company.
Accounts Receivable
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Accounts receivable consist of charges for service provided to customers. An
allowance for doubtful accounts is considered to be established for any amounts
that may not be recoverable, which is based on an analysis of the Company's
customer credit worthiness, and current economic trends. Based on management's
review of accounts receivable, no allowance for doubtful accounts was considered
necessary. Receivables are determined to be past due, based on payment terms of
original invoices. The Company does not typically charge interest on past due
receivables.
Revenue Recognition
The Company recognizes revenue from the sale of services in accordance with ASC
605, "Revenue Recognition." Revenue consists of internet marketing services;
focusing on website design, search engine optimization, and viral social media
marketing. Sales income is recognized only when all of the following criteria
have been met:
i) Persuasive evidence for an agreement exists;
ii) Service has been provided;
iii) The fee is fixed or determinable; and
iv) Revenue is reasonably assured.
Recent Accounting Pronouncements
Management has considered all recent accounting pronouncements issued since the
last audit of our consolidated financial statements. The Company's management
believes that these recent pronouncements will not have a material effect on the
Company's consolidated financial statements.
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