10-Q 1 form10q.htm CULTURE MEDIUM HOLDINGS . FORM 10Q form10q.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 September 30, 2011
 
[     ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF 1934
For the transition period from
 
Commission File number 000-53318
 
CULTURE MEDIUM HOLDINGS CORP.
(Exact name of registrant as specified in its charter)

Nevada
98-0560939
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)
 
2190 E Pebble Rd, Suite 100, Las Vegas, NV 89123
(Address of principal executive offices)
702-331-6800
(Registrant’s telephone number, including area code)
 
N/A
(Former name, former address and former fiscal year, if changed since last report)
 
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject 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 [    ]  No [    ]
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See definition of “large accelerated filer”, “accelerated filer” and “small reporting company” Rule 12b-2 of the Exchange Act.

Large accelerated filer
[     ]
Accelerated filer
[     ]
Non-accelerated filer
[     ]
Small reporting company
[ X ]
(Do not check if a small reporting company)
     
 
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:
 
November 4, 2011: 30,584,204 common shares
 
 
 
1

 
 

 

INDEX

   
Page
   
Number
PART 1.
FINANCIAL INFORMATION
 
     
    ITEM 1.
Financial Statements
3
     
 
Consolidated Balance Sheets as at September 30, 2011 and March 31, 2011
4
     
 
Consolidated Statements of Operations For the three months and six months ended September 30, 2011 and 2010
5
     
 
Consolidated Statements of Cash Flows For the six months ended September 30, 2011 and 2010
6
     
 
Notes to the Consolidated Financial Statements.
7
     
    ITEM 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
11
        
    ITEM 3.
Quantitative and Qualitative Disclosure about Market Risk
15
     
    ITEM 4.
Controls and Procedures
15
     
PART II.
OTHER INFORMATION
15
     
    ITEM 1.
Legal Proceedings
15
     
    ITEM 2.
Unregistered Sales of Equity Securities and Use of Proceeds
15
     
    ITEM 3.
Defaults Upon Senior Securities
15
     
    ITEM 4.
[Removed and Reserved]
15
     
    ITEM 5.
Other Information
16
     
    ITEM 6.
Exhibits
16
     
 
SIGNATURES .
17
 
 
 
2

 

 
 
PART 1 – FINANCIAL INFORMATION
 
ITEM 1. FINANCIAL STATEMENTS
 
The accompanying consolidated balance sheets of Culture Medium Holdings Corp. at September 30, 2011 (with comparative figures as at March 31, 2011) and the consolidated statements of operations for the three and six months ended September 30, 2011 and 2010 and the consolidated statements of cash flows for the six months ended September 30, 2011 and 2010, have been prepared by our company’s management in conformity with accounting principles generally accepted in the United States of America. 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 six months ended September 30, 2011 are not necessarily indicative of the results that can be expected for the year ending March 31, 2012.
 
 
 
 

3
 
 
CULTURE MEDIUM HOLDINGS CORP. AND SUBSIDIARIES
 
             
CONSOLIDATED BALANCE SHEET
 
             
   
Unaudited
       
   
Sept. 30
   
March 31
 
   
2011
   
2011
 
ASSETS
 
Current Assets
           
   Cash
  $ -     $ 115,734  
   Accounts and advances receivable (Note 3)
    467,705       482,521  
   Inventories
    96,978       330,643  
   Prepaid expenses
    37,172       106,132  
   Net assets of discontinued operations (Note 10)
    0       76,615  
                 
TOTAL CURRENT ASSETS
    601,855       1,111,645  
Distribution rights, net of accumulated amortization of 17,550 at
September 30 and $5,850 at March 31, 2011
    99,450       111,150  
Website, net of accumulated amortization of $16,089 at
September 30 and $5,363 at March 31 (Note 4)
    79,425       90,153  
Goodwill (Note 5)
    1,000,000       1,000,000  
                 
TOTAL ASSETS
  $ 1,780,730     $ 2,312,948  
   
LIABILITIES AND SHAREHOLDERS' EQUITY
 
Current Liabilities
               
   Accounts payable
    274,174       394,303  
   Accrued expenses
    430,194       243,540  
   Advances payable
    -       150,745  
Notes and debentures payable, net of discount of $2,792 and
$34,092 at September 30, 2011 and March 31, 2011, respectively  
(Note 5)
    301,708       323,408  
   Due to related parties (Note 7)
    474,534       469,614  
   Debentures payable (Note 7)
    275,000       275,000  
                 
TOTAL LIABILITIES
    1,755,610       1,856,610  
                 
SHAREHOLDERS' EQUITY
               
Culture Medium Holdings Corp. and Subsidiaries Stockholders
Equity
               
Common shares: $0.001 par value, 500,000,00 shares
authorized 30,292,942 issued at September 30 and 29,880,571
issued at March 31, 2011 (Note 8)
    30,292       29,880  
Additional Paid-in Capital
    2,298,772       2,239,476  
Retained (deficit)
    (2,964,244 )     (2,579,267 )
Common stock to be issued (Note 5)
    1,000,000       1,000,000  
Total  Culture Medium Holdings Corp. and Subsidiaries
Stockholders Equity
    364,820       690,089  
Noncontrolling interest
    (339,700 )     (233,751 )
      25,120       456,338  
TOTAL LIABILITIES AND STOCKHOLDERS 'EQUITY
  $ 1,780,730     $ 2,312,948  
                 
The accompanying notes are an integral part of these consolidated financial statements.
 

 
 
 

5
 
 
CULTURE MEDIUM HOLDINGS CORP.AND SUBSIDIARIES
 
                         
CONSOLIDATED STATEMENT OF OPERATIONS
 
(Unaudited)
 
                         
   
Period Ended September 30
 
   
Three Months
   
Six Months
 
   
2011
   
2010
   
2011
   
2010
 
                         
SALES
  $ 857,884       -     $ 1,929,772       -  
COST OF SALES
    232,189       -       433,418       -  
   Gross Income
    625,695       0       1,496,354       0  
OPERATING EXPENSES
                               
   General and administrative
    454,491       223,621       768,953       275,258  
   Sales and marketing
    384,322       65,200       985,811       103,308  
   Impairment loss on net assets of discontinued
   Operations (Note 10)
    76,615       -       76,615       -  
      915,428       288,821       1,831,379       378,566  
   Operating income (loss)
    (289,733 )     (288,821 )     (335,025 )     (378,566 )
OTHER EXPENSE
                               
   Interest expense, net of interest income of $9,500 in 2011
    27,140               155,901       10,572  
Net Loss
    (316,873 )     (288,821 )     (490,926 )     (389,138 )
                                 
Less net (loss) attributable to noncontrolling interest
    (67,801 )     -       (105,949 )     -  
                                 
NET LOSS ATTRIBUTABLE TO CULTURE MEDIUM
HOLDINGS CORP. AND SUBSIDIARIES
    (249,072 )     (288,821 )     (384,977 )     (389,138 )
                                 
NET LOSS PER COMMON SHARE - BASIC AND
DILUTED
  $ (0.01 )   $ (0.01 )   $ (0.02 )   $ (0.02 )
                                 
WEIGHTED AVERAGE SHARES OUTSTANDING  -
BASIC AND DILUTED
    29,880,571       25,592,738       29,880,571       25,592,738  
                                 
The accompanying notes are an integral part of these consolidated financial statements.
 
 
 
 
 

6
 
 
CULTURE MEDIUM HOLDINGS CORP.AND SUBSIDIARIES
 
             
STATEMENTS OF CONSOLIDATED CASH FLOWS
 
(Unaudited)
 
             
   
Six Months
 
   
2011
   
2010
 
OPERATING ACTIVITIES
           
   Net income (loss)
  $ (490,926 )   $ (389,138 )
   Adjustments to reconcile net loss to net cash
               
       used in operating activities
               
      Amortization
    53,726       12,000  
      Compensation cost of stock options
    51,709          
      Impairment loss on net assets of discontinued
operations
    76,615       -  
   Change in operating assets and liabilities
               
      Accounts and advances receivable
    14,816       -  
      Inventory
    233,665       (107,292 )
      Prepaid expenses
    68,960       (7,868 )
      Accounts payable
    (120,129 )     (16,810 )
      Accrued expenses
    186,654       -  
      Advances payable
    (145,824 )        
Net cash used in operating activities
    (70,734 )     (509,108 )
INVESTING ACTIVITIES
               
   Advances receivable
    -       368,664  
Net cash (used) in investing activities
    0       368,664  
FINANCING ACTIVITIES
               
   Net proceeds from sale of shares
    -       1,198,732  
   Repayment of notes
    (45,000 )     (312,116 )
Net cash provided by financing activities
    (45,000 )     886,616  
                 
NET INCREASE (DECREASE) IN CASH
    (115,734 )     8,844  
                 
CASH, BEGINNING OF PERIOD
    115,734       155  
                 
CASH, END OF PERIOD
  $ 0     $ 8,999  
                 
SUPPLEMENTAL DISCLOSURES OF NONCASH
               
INVESTING AND FINANCING TRANSACTIONS
               
   Conversion of notes to stock
  $ 8,000          
                 
The accompanying notes are an integral part of these consolidated financial statements.
 

 
 
 

 

CULTURE MEDIUM HOLDINGS CORP. AND SUBSIDIARIES
 Notes to the Consolidated Financial Statements
September 30, 2011
(UNAUDITED)

1.
ORGANIZATION AND BASIS OF PRESENTATION
   
 
Organization
   
 
Culture Medium Holdings Corp. was organized under the laws of the State of Nevada on March 15, 2007 with the authorized capital stock of 500,000,000 shares at $0.001 par value.
   
 
On July 10, 2009, the Company’s Articles of Incorporation were amended to change its name from “Qele Resources, Inc.” to “Brand Neue Corp.” On March 4, 2011 the Company merged with its wholly owned subsidiary and assumed the name of “Culture Medium Holdings Corp.”
   
 
Basis of presentation
   
 
The accompanying consolidated balance sheets of Culture Medium Holdings Corp. at September 30, 2011 (with comparative figures as at March 31, 2011) and the consolidated statements of operations and cash flows for the three and six months ended September 30, 2011 and 2010, have been prepared by our company’s management in conformity with accounting principles generally accepted in the United States of America. 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 six months ended September 30, 2011 are not necessarily indicative of the results that can be expected for the year ending March 31, 2012.
   
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
   
 
Accounting Methods
   
 
The Company recognizes income and expenses based on the accrual method of accounting.
   
 
Principles of Consolidation
   
 
The consolidated financial statements of the Company include the Company and its wholly-owned and majority-owned subsidiaries. All material intercompany balances and transactions have been eliminated. For those consolidated subsidiaries in which the Company's ownership is less than 100 percent (100%), the outside stockholders' interests are shown as noncontrolling interest in the Company's consolidated balance sheet. The noncontrolling interest of the Company's earnings or loss is classified as net income or loss attributable to noncontrolling interest in the consolidated statement of operations.
   
 
Dividend Policy
   
 
The Company has not yet adopted a policy regarding payment of dividends.
   
 
Income Taxes
   
 
The Company utilizes the liability method of accounting for income taxes. Under the liability method deferred tax assets and liabilities are determined based on differences between financial reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates and laws that will be in effect, when the differences are expected to be reversed. An allowance against deferred tax assets is recorded, when it is more likely than not, that such tax benefits will not be realized.
   
 
On September 30, 2011 the Company had a net operating loss carry forward of $2,964,244 for income tax purposes. The tax benefit of approximately $1,007,000 from the loss carry forward has been fully offset by a valuation reserve because the future tax benefit is undeterminable since the Company is unable to establish a predictable projection of operating profits for future years. Losses will begin to expire in 2027.
 
 
7

 
 

Financial and Concentrations Risk
 
The company has no financial risks. However all of Voyager’s revenue is from the sale of one product.
 
Basic and Diluted Net Income (loss) Per Share
 
Basic net incomes (loss) per share amounts are computed based on the weighted average number of shares actually outstanding. Diluted net income (loss) per share amounts are computed using the weighted average number of common and common equivalent shares outstanding as if shares had been issued on the exercise of the common share rights unless the exercise becomes antidulutive and then the basic and diluted per share amounts are the same.
 
Statement of Cash Flows
 
For the purposes of the statement of cash flows, the Company considers all highly liquid investments with a maturity of three months or less to be cash equivalents
 
Revenue Recognition
 
Revenue is recognized on the sale and delivery of a product or the completion of a service provided.
 
Inventory
 
Inventory is carried at the lower of cost and net realizable value.
 

 
Amortization of Distribution Rights
 
The Company amortizes its distribution rights on a straight-line basis over its useful life of five years. Management will, on an annual basis, review the useful life of these costs to determine if there is impairment in their value.
 
Amortization of Website
 
The Company has determined the useful life of its website to be five year and amortizes its original cost on a straight line bases. Management will, on an annual basis, review the useful life of its website to determine if there is impairment in its value.
 
Advertising and Market Development
 
The company expenses advertising and market development costs as incurred.
 
Impairment of Long-Lived Assets
 
The Company reviews and evaluates long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The assets are subject to impairment consideration under ASC 360-10-35-17 if events or circumstances indicate that their carrying amount might not be recoverable. When the Company determines that an impairment analysis should be done, the analysis will be performed using the rules of ASC 930-360-35, Asset Impairment, and 360-10-15-3 through 15-5, Impairment or Disposal of Long-Lived Assets.
 
Estimates and Assumptions
 
Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing these financial statements.
 
Financial Instruments
 
The carrying amounts of financial instruments are considered by management to be their estimated fair values due to their short term maturities.
 
Recent Accounting Pronouncements
 
The Company does not expect that the adoption of other recent accounting pronouncements will have a material impact on its financial statements.
 
 
 
 

 

 
Foreign Currency Translations
 
Part of the transactions of the Company were completed in Canadian dollars and have been translated to US dollars as incurred, at the exchange rate in effect at the time, and therefore, no gain or loss from the translation is recognized. The functional currency is considered to be US dollars.

3.
ACCOUNTS AND ADVANCES RECEIVABLE
 
Accounts and advances receivable consist of:
 
      $267,888 – credit card payments being processed by banks
      $199,817 – Luma Vue – including interest
      $467,705

4.
WEBSITE
     
 
The Company’s subsidiary has developed a comprehensive website through which it conducts its business. The costs incurred ($95,515) have been capitalized and will be written off on a straight line basis over five years. Each year the Company will review the life of the website and if impairment occurs will expense the residual balance outstanding.
     
5.
ACQUISITION OF VOYAGER HEALTH TECHNOLOGIES CORP
     
 
On September 30, 2010 the Company entered into an agreement to acquire a 51% interest in Voyager Health Technologies Corp. (“Voyager”) through the issue of 2,000,000 common shares. The shares were valued at $0.50, the trading value at the time the agreement was signed. As of September 30, 2011, these shares had not yet been issued and are therefore reported as Common Stock to be issued on the balance sheet. Voyager successful launched its business on January 28, 2011.
     
 
The purchase price of $1,000,000 was allocated $117,000 to Distribution Rights assets, $117,000 to notes and accounts payable, and $1,000,000 to Goodwill. On at least an annual basis, management will review the carrying value of the goodwill to determine if there is impairment in its value.
     
6.
NOTES AND DEBENTURES PAYABLE
     
 
On February 1, 2011 the Company issued a convertible promissory note for $37,500 and on March 7, 2011 a further note for $25,000, for a total outstanding of $62,500 at March 31, 2011. The notes were due November 3, 2011 and December 9, 2011 respectively. Both notes bear interest at 8% and can be prepaid with a 50% premium 120 to 180 days from the day of issue. After 180 days the holder of the notes can elect to convert the principal and interest on the notes into common shares. The conversion price is 55% of the lowest 3 bid closing days for the 10 days before the conversion election. The intrinsic value of the conversion feature is such that a discount on debt of $51,138 has been recorded and is being amortized over the term of the notes. As of September 30, 2011, $48,346 of this discount had been amortized to interest expense.  On September 22, 2011 the note holder converted $8,000 of notes to 412,371 common shares.  Subsequent to September 30, 2011 the note holder converted a further $6,000 of notes into 291,262 common shares.  The Company defaulted on the repayment of both notes on their due dates.
     
 
The Company’s subsidiary, Voyager Health Technologies Corp., has:
     
 
· 
$275,000 of 10% convertible debentures payable due May 31, 2012, with interest payable quarterly. At maturity and at the holder’s option, the debentures can be exchanged for common stock of the Company. For $250,000 of the debentures the conversion price is $0.35. For the remaining $25,000 the conversion price is $0.50 In the event of a default, all of Voyager’s assets at that time are security for the debenture holders
     
 
· 
$250,000 promissory note payable due May 17, 2011, with monthly interest of 8%. In addition the note holder is to receive Company common shares valued at $0.35 equal to the amount of interest paid. Interest of $7,857 has been paid to March 1, 2011. Voyager is currently negotiating an extension for the maturity date of the note, along with determining when shares will be issued pursuant to the provisions of the note agreement. Interest on the note has been accrued to September 30, 2011.
     
7.
SIGNIFICANT TRANSACTIONS WITH RELATED PARTY
     
 
During the year ended March 31, 2011, directors made advances to the Company of $388,615. These advances are non-interest bearing and payable on demand. No advances were received from or payments made to related parties, outside of the normal course of business, during the six months ended September 30, 2011.
     
 
 
 
9

 
 
 
8.
COMMON STOCK
   
 
In connection with the establishment of Voyager Health Technologies Corp. the Company is committed to issuing 2,000,000 common shares. As explained more fully in footnote 5, the shares have been reflected on the balance sheet as “Common Stock to be Issued” at a value of $0.50 each.  As explained in footnote 6, $14,000 of notes was converted into 703,633 shares ($6,000 in notes was converted subsequent to September 30, 2011).
     
9.
STOCK OPTIONS
     
 
On September 20, 2010 the directors approved the 2010 Stock Option Plan which permits the Company to issue up to 2,200,000 shares of common stock to directors, officers, employees and consultants of the Company. The options have an exercise price of $0.50 per share, a contractual term of 5 years, and vest at the rate of 20% of the grant in the 11 th , 23 rd , 35 th , 47 th and 59 th month after the date of grant.
     
 
On November 1, 2010 the Company awarded 500,000 stock options to a director and 400,000 to a consultant. In October, 2011, 180,000 of those options vested and 320,000 options award to the consultant were cancelled when the consultant terminated his contract.  In addition, a consultant who is paid monthly a combination of cash and stock options has earned a total of 168,000 stock options which are vested as of September 30, 2011.
     
 
The Company uses the Black Scholes model to value the options outstanding at September 30, 2011. The assumptions used in the valuation calculation included:
     
 
· 
Expected volatility of 328% (based on the previous 250 day’s stock price observations)
     
 
· 
Stock price of $0.35
     
 
· 
Option price of $0.50
     
 
· 
Expected term of 5 years
     
 
· 
Discount rate of 1.78%
     
 
· 
Expected dividends $0.00
     
 
There were no options issued or outstanding prior to September 2010. The weighted average exercise price for all options outstanding at September 30, 2011 is $0.50 (only 168,000 are exercisable). The total grant date fair value for the 1,026,000 options issued during the year ended March 31, 2011, was $358,997 ($97,516 for all nonvested options at September 30, 2011 – weighted average of $0.34 per option). The total fair value is being charged to expense over the expected term of 5 years, using the vesting rates identified above.
     
 
As a result, $51,709 was recorded as compensation expense in the statement of operations (included in G&A), for the six months ended September 30, 2011. No options were exercised during the period.  720,000  options were subsequently forfeited due to the Director and CFO resigning.
 
At the grant date and at September 30, 2011 the aggregate intrinsic value of all the options (vested and non vested) was zero because quoted market was less than the exercise price.
 
When options are exercised, the Company expects to issue shares from treasury.

10.
ACQUISITION OF INTELEDGENT LIGHTING SOLUTIONS INC.
 
On September 10, 2010, the Company entered into a memorandum of understanding under which the business of WorldWide LED Lights Inc. and the Company’s LED business will be combined under the name “InteLEDgent Lighting Solutions Inc.” (“InteLEDgent”) The Company acquired a 51% equity interest in InteLEDgent through the issue of 2,500,000 of its common shares. The agreements reflecting the memorandum of understanding were signed in December, 2010 and the 2,500,000 shares issued in January, 2011. These shares were valued using the stock price on December 31, 2010, which was $0.25. As a result, the purchase price was $625,000 and was entirely allocated to Goodwill, as there were no identifiable assets or liabilities.
 
Management of InteLEDgent has been unable to conclude any sales Since the Company does not have the resources needed to develop the LED business, as of March 31, 2011 the Company decided to discontinue those operations. The InteLEDgent assets are reflected as “Net assets of discontinued operations” in the consolidated balance sheet. Accordingly, the recorded goodwill of $625,000 was impaired at March 31, 2011.  As of September 30, 2011 the Company wrote off the balance ($76,615) of the net assets.

11.
LITIGATION
 
 
 
 

 
 
   
 
In March, 2011 management of Voyager Health Technologies Corp. (“Voyager”) violated the terms of its employment and consulting contract. As a result, our company applied to the District Court, Clark County, Nevada for an ex parte temporary restraining order (TRO) which was issued on May 3, 2011. The TRO required, among other things, that management leave the Voyager offices with only their personal effects. Instead, management continued operating Voyager to the detriment of Voyager. On May 17, 2011 the Court converted the TRO to a preliminary injunction. On that date new management began operating Voyager.
 
The management of Voyager estimate damages caused by the defendants in the TRO to be considerable due to the defendants misappropriation of funds and alleged siphoning of assets, including directing of inventory to unauthorized parties. In response, the defendants contend that they are owned commission and compensation for past due services.
 
In September, 2011 Voyager settled the litigation with the assignment of $65,000 of cash reserves held in the company’s merchant account and the cancellation  of $231,619 of liabilities due to the defendants as recorded in Voyager’s financial statements. The balance of $166,619 is recorded as an offset to general and administrative expense in the statement of operations.
 
12.
LEASE COMMITMENTS
   
 
Voyager Health Technologies Corp. has entered into an office lease which expires on April 30, 2012 and which requires minimum lease payments of $112,974 in fiscal year 2012, and $9,414 in fiscal year 2013.
   
13.
SUBSEQUENT EVENTS
 
 
Subsequent to September 30, 2011 the CEO resigned as a director and officer of the Company.  Effective December 14, 2011 the CFO resigned.  Successors have not yet been named.
   
14.
GOING CONCERN
 
The Company intends to seek business opportunities that will provide a profit. However, the Company does not have the working capital necessary to be successful in this effort and to service its debt, which raises substantial doubt about its ability to continue as a going concern. Continuation of the Company as a going concern is dependent upon obtaining additional working capital. Management of the Company has developed a strategy, which it believes will accomplish this objective through additional loans from related parties, and equity funding, which will enable the Company to operate for the coming year.
 
 
 
10

 
 
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
Forward Looking Statements
 
This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "could", "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
 
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable laws, including the securities laws of the United States, we do not intend to update any of the forward-looking statements so as to conform these statements to actual results.
 
Our unaudited financial statements are stated in U.S. dollars and are prepared in accordance with generally accepted accounting principles in the United States. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report.
 
As used in this current report and unless otherwise indicated, the terms "we", "us", "our" and "our company" mean Culture Medium Holdings Corp., and our subsidiary Voyager Health Technologies Corp., unless otherwise indicated.
 
Overview
 
We were incorporated in the State of Nevada on March 15, 2007. Our original business purpose was to engage in the business of acquisition, exploration and development of natural resource properties. We have shifted our business to concentrate on bringing innovative products to market. In the past year we formed a subsidiary, Voyager Health Technologies Corp., to market nutraceutical products. It began operations on January 28, 2011,
 
The following discussion and analysis should be read in conjunction with our consolidated financial statements and the notes related thereto. The discussion of results, causes and trends should not be construed to infer conclusions that such results, causes or trends necessarily will continue in the future.
 
The consolidated financial statements mentioned above have been prepared in conformity with accounting principles generally accepted in the United States of America and are stated in United States dollars.
 
Analysis of Financial Condition and Results of Operations
 
The following summary of our results of operations should be read in conjunction with our unaudited interim financial statements for the six months ended September 30, 2011 and 2010.
 
Our operating results for the six month period ended September 30, 2011 and 2010 are summarized as follows:

   
Six Months Ended
 September 30
 
   
2011
   
2010
 
Revenue
  $ 1,929,772     $Nil  
Operating expenses
  $ 2,264,797     $ 378,566  
Interest expense, net of interest income of $9,500 and $0 (six months ended September 30, 2011
 and 2010, respectively).
  $ 155,901     $ 10,572  
Net Loss
  $ (490,926 )   $ (389,138 )
 
Our net loss for the six month period ended September 30, 2011 was $490,926 compared to a net loss of $389,138 during the six month period ended September 30, 2010. However, a comparison of 2011 with 2010 is not meaningful. In January, 2011, one of the Company’s subsidiaries began operations. Its revenue and expenses are reflected in these consolidated financial statement. The company had no revenue in 2010 and the 2010 expenses reflect the cost of organizing the company to be an investment holding company.
 
 
 
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As explained more fully below under “Legal Proceedings”, a subsidiary incurred substantial costs replacing management and consultants who violated the terms of their contracts, to the detriment of the subsidiary. The net costs associated with removing them from the subsidiary total $85,052 and have been included in general and administrative expenses.
 
Expenses
 
Our operating expenses for the six months ended September 30, 2011 and 2010 are summarized in the table below:

   
Six Months Ended
September 30
 
   
2011
   
2010
 
 General and administrative
           
   Personnel
  $ 353.032     $ 64,349  
   Compensation cost of stock options
    56,766       -  
   Rent
    69,563       37,673  
   Merchant discount fees
    85,155          
   Professional fees
    14,589       75,219  
   Consultants
    -       55,926  
   Insurance
    16,424       -  
   Office supplies
    9,831       -  
   Travel
    -       35,156  
   Cost of replacing management
    85,052       -  
   All other G & A expenses
    78,541       6,935  
    $ 768,953     $ 275,258  
  Sales and marketing
               
   Commissions to distributors
  $ 727,779     $ -  
   Website and internet
    43,491       -  
   Sales incentives prizes
    65,481       -  
   Distributor development
    68,892       -  
   Rent
    -       16,104  
   Personnel
    21,030       15,525  
   Consultants
    -       47,832  
   Travel
    4,442       15,303  
   All other sales and marketing expenses
    54,696       8,544  
    $ 985,811     $ 103,308  

Liquidity and Capital Resources
           
             
Six Month Period Ended September 30, 2011 and 2010
           
             
Working Capital
           
   
At
   
At
 
   
September 30,
   
March 31,
 
   
2011
   
2011
 
  Current Assets
  $ 601,855     $ 1,111,645  
  Current Liabilities
  $ 1,755,610     $ 1,581,610  
  Working Capital (Deficit)
  $ (1,153,755 )   $ (469,965 )

Cash Flows
           
    Six Months Ended September 30  
   
2011
   
2010
 
Net Cash from (used in) Operating Activities
  $ (70,734 )   $ (509,108 )
Net Cash used in Investing Activities
  $Nil     $ (368,664 )
Net Cash (Used) Provided by Financing Activities
  $ (45,000 )   $ 886,616  
Increase (Decrease) in Cash During the Period
  $ (115,734 )   $ 8,844  
 
 
 
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We realize that we will have to raise additional funds in the near future to continue our operations. If, in the future, we are unable to raise such funds we may be unable to pay our creditors.
 
We have no historical information to allow anyone to base an evaluation on our future performance. We have only been incorporated since March 15, 2007 and have generated revenue only in 2011. We have incurred net losses of $2,964,244 for the period from March 15, 2007 (inception) to September 30, 2011. We do not know if we will be successful in our business operations in the future. We are a start-up company and are exposed to all the risks of being a start-up company, including the following:
 
 
·
possible delays or inability to develop a market for our products;
 
 
·
trying to generate revenue or identify sources of cash, managing our assets and administrating ongoing financial commitments to our creditors;
 
 
·
adhering to all regulatory requirements both as a future public company and as a company required to meet state and federal filing requirements; and
 
 
·
ensuring our shareholders are informed about our development on a regular basis.
 
Off-balance Sheet Arrangements
 
We do not have any 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 investors.
 
Critical Accounting Policies
 
Principles of Consolidation
 
The consolidated financial statements of our company include our company and our wholly-owned and majority-owned subsidiaries. All material intercompany balances and transactions have been eliminated. For those consolidated subsidiaries in which our company's ownership is less than 100 percent (100%), the outside stockholders' interests are shown as noncontrolling interest in our company's consolidated balance sheet. The noncontrolling interest of our company's earnings or loss is classified as net income or loss attributable to noncontrolling interest in the consolidated statement of operations.
 
Income Taxes
 
Our company utilizes the liability method of accounting for income taxes. Under the liability method deferred tax assets and liabilities are determined based on differences between financial reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates and laws that will be in effect, when the differences are expected to be reversed. An allowance against deferred tax assets is recorded, when it is more likely than not, that such tax benefits will not be realized.
 
On September 30, 2011 our company had a net operating loss carry forward of $2,964,000 for income tax purposes. The tax benefit of approximately $1,008,000 from the loss carry forward has been fully offset by a valuation reserve because the future tax benefit is undeterminable since the Company is unable to establish a predictable projection of operating profits for future years. Losses will expire during 2031.
 
Financial and Concentrations Risk
 
The company has no financial risks. However all of Voyager’s revenue is from the sale of one product.
 
Basic and Diluted Net Income (loss) Per Share
 
Basic net incomes (loss) per share amounts are computed based on the weighted average number of shares actually outstanding. Diluted net income (loss) per share amounts are computed using the weighted average number of common and common equivalent shares outstanding as if shares had been issued on the exercise of the common share rights unless the exercise becomes antidulutive and then the basic and diluted per share amounts are the same.
 
 
 
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Statement of Cash Flows
 
For the purposes of the statement of cash flows, our company considers all highly liquid investments with a maturity of three months or less to be cash equivalents
 
Revenue Recognition
 
Revenue is recognized on the sale and delivery of a product or the completion of a service provided.
 
Inventory
 
Inventory is carried at the lower of cost and net realizable value.
 
Amortization of Distribution Rights
 
Our company amortizes its distribution rights on a straight-line basis over its useful life of five years. Management will, on an annual basis, review the useful life of these costs to determine if there is impairment in their value.
 
Amortization of Website
 
Our company has determined the useful life of its website to be five year and amortizes its original cost on a straight line bases. Management will, on an annual basis, review the useful life of its website to determine if there is impairment in its value.
 
Advertising and Market Development
 
Our company expenses advertising and market development costs as incurred.
 
Impairment of Long-Lived Assets
 
Our company reviews and evaluates long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The assets are subject to impairment consideration under ASC 360-10-35-17 if events or circumstances indicate that their carrying amount might not be recoverable. When our company determines that an impairment analysis should be done, the analysis will be performed using the rules of ASC 930-360-35, Asset Impairment, and 360-10-15-3 through 15-5, Impairment or Disposal of Long-Lived Assets.
 
Estimates and Assumptions
 
Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing these financial statements.
 
Financial Instruments
 
The carrying amounts of financial instruments are considered by management to be their estimated fair values due to their short term maturities.
 
Recent Accounting Pronouncements
 
Our company does not expect that the adoption of other recent accounting pronouncements will have a material impact on its financial statements.
 
Foreign Currency Translations
 
Part of the transactions of our company were completed in Canadian dollars and have been translated to US dollars as incurred, at the exchange rate in effect at the time, and therefore, no gain or loss from the translation is recognized. The functional currency is considered to be US dollars.
 
 
 
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
 
As a smaller reporting company, we are not required to provide the information required by this Item.
 
ITEM 4 – CONTROLS AND PROCEDURES
 
Evaluation of Disclosure Controls and Procedures
 
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 , as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer (our principal executive officer) and our chief financial officer (our principal financial officer and principle accounting officer) to allow for timely decisions regarding required disclosure.
 
As of the end of our quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our chief executive officer (our principal executive officer) and our chief financial officer (our principal financial officer and principle accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our chief executive officer (our principal executive officer) and our chief financial officer (our principal financial officer and principle accounting officer) concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this quarterly report.
 
Changes in Internal Controls Over Financial Reporting
 
There were no changes in our internal control over financial reporting during the quarterly period covered by this report 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
 
In April, 2011the Company and its majority owned subsidiary, Voyager Health Technologies Corp. (“Voyager”) initiated litigation in the State of Nevada against the former management of Voyager for alleged violations of the terms of employment and consulting agreements with the Company.  The allegations asserted against the defendants included but were not limited to misappropriation of funds and other assets, including directing inventory to unauthorized parties.  As a result, our company applied to the District Court, Clark County, Nevada for an ex parte temporary restraining order (TRO) which was issued on May 3, 2011. The TRO required, among other things, that the defendants vacate the Voyager offices with only their personal effects. The defendants did not adhere to the terms of the TRO and,on May 17, 2011, the Court converted the TRO to a preliminary injunction. On that date new management began operating Voyager.
 
The management of Voyager estimates damages caused by the defendants to be considerable. In response to the claims asserted by Voyager, the defendants contended that they were owed commission and compensation for past services.
 
In September, 2011 Voyager settled the litigation with the assignment of $65,000 of cash reserves held in the company’s merchant account and the elimination of $231,619 of liabilities due to the defendants as recorded in Voyager’s financial statements.
 
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 
None.
 
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
 
None.
 
ITEM 4. [REMOVED AND RESERVED]
 
 
 
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ITEM 5. OTHER INFORMATION

Resignation of Directors

On October 11, 2011 Alex Eliashevsky resigned from the Company’s Board of Directors and as Chief Executive Officer. Mr. Eliashevsky did not wish to continue as a director or officer of the Company in light of the events described in above Item 1 (Legal Proceedings).
 
On October 13, 2011 Stephen Wolfe also resigned from the Company’s Board of Directors. Mr. Wolfe did not wish to continue as a director of the Company in light of the events described in above Item 1 (Legal Proceedings).
 
Appointment of Director

Concurrent with Mr. Wolfe’s resignation, Steve Pappas was appointed as a director of the Company’s Board of Directors.   Mr. Pappas is now our sole director.

Mr. Pappas, age 67, is the Founder, Chairman, and Chief Executive Officer of Xemex Group Inc. (XMEX.PK) and its subsidiary Xemex Holdings Corporation.  Xemex presently owns, manages and develops and operates a portfolio of residential and commercial development properties in Brooklyn, New York
 
During his long-standing real estate and finance career, Mr. Pappas has successfully developed and managed real estate projects throughout New York City and abroad. At present, he serves as Managing Partner of SPL Associates ("SPL") based in Brooklyn, New York, which holds numerous properties representing several hundred thousand square feet in aggregate. Concurrently, Mr. Pappas serves as a Director of Envirokare Composite Corp. Formerly, as President of Envirokare, he completed several rounds of financing, facilitated the commercialization of the company’s technology, and oversaw a nearly eight-fold appreciation in the company’s value.  Previously, from 1985-1987, Mr. Pappas served as Executive Producer of “HOTSHOT”, a full-length feature film starring soccer legend Pele.  Earlier, building upon his three year tenure with Xerox Corporation, Mr. Pappas founded, operated, and served as President of Servco Leasing Corporation from 1971-1980. During that period, the company became the largest third party leasing agent for Xerox.
 
Mr. Pappas received a Bachelor of Science degree in Engineering from University of Detroit in 1968.
 
Appointment of Interim Chief Executive Officer
 
On December 12, 2011 Mr. R. Bev Harrison, our Chief Financial Officer was appointed interim Chief Executive Officer of the Company.  Mr. Harrison was appointed to the position of Chief Financial Officer of the Company on June 1, 2010.  From 2002 until present, Mr. Harrison has served as President of WestFactor Capital Inc., a factoring company that purchases commercial accounts receivable from small and mid-sized businesses in Western Canada. Prior to joining WestFactor Capital Inc., Mr. Harrison was President of Ashlar Capital Corporation from 1995 through 2002 and prior to joining Ashlar Capital Corporation, Mr. Harrison held senior management positions for a number of organizations, including Davis & Company and Columbia Computing Services Ltd.  Mr. Harrison was also a partner at Arthur Andersen & Co. from 1973 to 1986.  Mr. Harrison graduated from Queen's University in 1962 with a gold medal as top scholastic graduate.
 
On  December 14, 2011, the Company received the resignation of R. Bev Harrison as Chief Financial Officer and Interim Chief Executive Officer of the Company.  Mr. Harrison’s resignation will become effective immediately following the filing of this report on Form 10-Q.  Mr. Harrison did not wish to continue as an officer of the Company in light of the events described in above Item 1 (Legal Proceedings).
 
ITEM 6. EXHIBITS
 
The following exhibits are included as part of this report by reference:

Exhibit 
Description No.
(3)
Articles of Incorporation and Bylaws
3.1
Corporate Charter (incorporated by reference from our Registration Statement on Form S-1 filed on September 17, 2008)
3.2
Articles of Incorporation (incorporated by reference from our Registration Statement on Form S-1 filed on September 17, 2008)
3.3
By-laws (incorporated by reference from our Registration Statement on Form S-1 filed on September 17, 2008)
3.4
Articles of Merger (incorporated by reference from our Current Report on Form 8-K filed on March 14, 2011)
(10)
Material Contracts
10.1
Purchase and Sale Agreement dated September 30, 2010 between our subsidiary, Voyager Health Technologies Corp. and Triunity International Inc. (incorporated by reference from our Quarterly Report on Form 10-Q filed on February 15, 2011)
10.2
Stock Purchase Agreement dated September 10, 2010 between our company and Antonio Grande, Fiorino Grande, Michele Bosco, George A. Milas and Michael Lancellotti (incorporated by reference from our Quarterly Report on Form 10-Q filed on February 15, 2011)
10.3
2010 Stock Option Plan (incorporated by reference from our Quarterly Report on Form 10-Q filed on October 14, 2010)
10.4
Form of Stock Option Agreement (incorporated by reference from our Quarterly Report on Form 10-Q filed on October 14, 2010)
10.5
Independent Contractor Agreement dated July 1, 2011 by and between our company and Harrison Management Corporation (incorporated by reference from our Annual Report on Form 10-K filed on August 15, 2011).
(21)
Subsidiaries of Registrant
21.1
Voyager Health Technologies Corp.
(31)
Rule 13a-14(a)/15d-14(a) Certification
31.1
Section 302 Certification under Sarbanes-Oxley Act of 2002 of Alex Eliashevsky (principal executive officer).
31.2
Section 302 Certification under Sarbanes-Oxley Act of 2002 of R. Bev Harrison (principal financial officer and principal
accounting officer).
 
 
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32
Section 1350 Certifications
32.1*
Section 906 Certifications under Sarbanes-Oxley Act of 2002 of Alex Eliashevsky (principal executive officer, principal financial officer and principal accounting officer).
32.2*
Section 906 Certifications under Sarbanes-Oxley Act of 2002 of R. Bev Harrison (principal financial officer and principal
accounting officer).
* Filed herewith.
 
 

SIGNATURE
 
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 hereunto duly authorized.
 
December 12, 2011
 
/s/    R. Bev Harrison              
 
R. Bev Harrison
Acting Chief Executive Officer
(Principal Executive Officer)
 
December 12, 2011
/s/     R. Bev Harrison                              
R. Bev Harrison
Chief Financial Officer
(Principal Financial Officer and Principal
Accounting Officer)
 
 
 
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