UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





FORM 10-Q





(Mark One)





x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For the quarterly period ended June 30, 2011





o
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT





For the transition period from ______________ to _____________





Commission file number:  000-27574





IOWORLDMEDIA, INCORPORATED


(Exact name of registrant as specified in its charter)





Florida

59-3350778(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer  Identification No.)





5025 West lemon Street, Suite 200

Tampa, Florida

33609(Address of principal executive offices)

(Zip Code)





(813) 637-2229


(Registrant’s telephone number, including area code)





(Former name, former address and former fiscal year, if changed since last report)





Indicate by check mark whether the registrant (1) has filed 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 o





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 o  No o





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





Large accelerated filer
o

Accelerated filer
oNon-accelerated filer
o

Smaller reporting company
x








1





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





APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY


PROCEEDINGS DURING THE PRECEDING FIVE YEARS





Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.   Yes x  No o





APPLICABLE ONLY TO CORPORATE ISSUERS





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





As of August 12, 2011 there were 133,347,479 shares of  common stock , par value $0.001 (the "Common Stock"), issued and outstanding.








2





FORM 10-Q


IOWORLDMEDIA, INCORPORATED.


INDEX





PagePART I.

Financial InformationItem 1.  Financial Statements.

4Item 2.  Management’s Discussion and Analysis of Financial Condition and Plan of Operation.

16Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

19Item 4.  Controls and Procedures.

19PARTII.

Other InformationItem 1.  Legal Proceedings.

20Item 1A. Risk Factors.

20Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

20Item 3.  Defaults Upon Senior Securities.

20Item 4.  (Removed and Reserved).

20Item 5.  Other Information.

20Item 6.  Exhibits.

21Signatures

22







3





PART I - FINANCIAL INFORMATION





Item 1. Financial Statements







PART 1 - FINANCIAL INFORMATION
  ITEM 1.  FINANCIAL STATEMENTS
 
 ioWorldMedia, Incorporated and Subsidiaries
 CONSOLIDATED BALANCE SHEETS


June 30,


December 31,2011


2010(Unaudited)ASSETSCurrent assetsCash

$
420,051


$
2,057Accounts receivable


29,802



-Prepaid expense


140,415



1,500Accrued revenue


31,306



17,899Total current assets


621,574



21,456Property and equipment, net of accumulated depreciation
63,548



88,966Other assetsAdvance payments for contractual obligations
197,658



-Security deposit


-



1,046Total other assets


197,658



1,046Total assets

$
882,780


$
111,468LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilitiesNote payable related party shareholders


$
5,403,794Note payable


400,000



400,000Current portion of capital lease payable
-



4,072Accounts payable and accrued expenses
507,836



983,896Deferred revenue


334,457Total current liabilities
1,242,293



6,791,762Deferred revenue


488,442



-Total liabilities


1,730,735



6,791,762Stockholders' equityCommon stock, $.001 par value; 250,000,000 authorized, 133,347,479and 108,702,874 shares issued and outstanding at June 30, 2011and December 31, 2010, respectively
133,448



108,803Preferred stock, $.001 par value, 5,000,000 shares authorized,3,025,000 shares issued and 3,000,000 outstanding at June 30, 2011and 25,000 shares issued and none outstanding at December 31, 2010
3,025



25Additional paid-in capital
63,248,502



56,934,164Treasury stock, 25,000 shares of preferred, at cost
(25,931
)


(25,931
)Accumulated defcit


(64,206,999
)


(63,697,355
)Total stockholders' equity
(847,955
)


(6,680,294
)Total liabilities and stockholders' equity

$
882,780


$
111,468




See notes to consolidated financial statements.
  4
  ioWorldMedia, Incorporated and Subsidiaries
 CONSOLIDATED STATEMENT OF OPERATIONS
 Three Months Ended


Six Months EndedJune 30,


June 30,2011


2010


2011


2010(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)Sales

$
473,321


$
191,544


$
766,472


$
373,191Cost of sales


220,935



102,343



371,088



197,915Gross profit


252,386



89,201



395,384



175,276Operating expenses:Selling and general and administrative


564,724



336,067



931,962



618,846Depreciation and amortization


18,277



27,457



36,322



54,914Total expenses


583,001



363,524



968,284



673,760Net operating income


(330,615
)


(274,323
)


(572,900
)


(498,484
)Other income (expense)Interest income (expense)


69,151



(6,738
)


63,256



(14,353
)Total other income (expense)


69,151



(6,738
)


63,256



(14,353
)Net income (loss) before income taxes


(261,464
)


(281,061
)


(509,644
)


(512,837
)Provision for income taxes


-



-



-



-Net income (loss)

$
(261,464
)

$
(281,061
)

$
(509,644
)

$
(512,837
)Net loss per weighted share,basic and fully diluted

$
(0.0020
)

$
(0.0032
)

$
(0.0044
)

$
(0.0059
)Weighted average number of commonshares outstanding, basic and fully diluted


132,298,669



87,196,830



115,936,119



87,078,012


See notes to consolidated financial statements.
   5
  
 ioWorldMedia, Incorporated and Subsidiaries
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Six Months EndedJune 30,2011


2010(Unaudited)


(Unaudited)Cash flows from operationsNet income (loss)

$
(509,644
)

$
(512,837
)Adjustment to reconcile net loss to net cash:Depreciation and amortization


36,322



54,914Expenses settled by issuance of common stock


128,128Changes in operating assets and liabilities:Accounts receivable


(29,802
)


5,996Deposits


1,046



-Accounts payable and accrued expenses


45,112



82,716Accrued revenue


(13,407
)


-Prepaid expenses


(105,581
)


448Advance payments on contractual obligations


(142,103
)


-Deferred revenue


822,899



-Net cash provided by (used for) operating activities


232,970



(368,763
)Cash flows from investing activitiesCapital expenditures


(10,904
)


-Net cash provided by financing activities


(10,904
)


-Cash flows from financing activitiesIssuance of common stock


200,000



217,450Due to related party shareholders


-



8,933Proceeds from long-term borrowing


-



293,867Payments on capital lease obligation


(4,072
)


(38,318
)Net cash provided by financing activities


195,928



481,932Net increase (decrease) in cash


417,994



113,169Cash, beginning of period


2,057



5,085Cash, end of period

$
420,051


$
118,254Supplemental disclosures:Cash paid during the year for:Interest

$
113


$
6,738
  See notes to consolidated financial statements.


6


ioWorldMedia, Incorporated and SUBSIDIARIES


Notes to Consolidated Financial Statements


June 30, 2011





1.
Nature of operations





PowerCerv Corporation was incorporated in Florida in January 1995 as a holding company. The Company’s Articles of Incorporation were amended in December of 2005 to change its name to ioWorldMedia, Incorporated.  Unless otherwise specified, references herein to “ioWorldMedia” and “the Company” mean ioWorldMedia, Incorporated and any subsidiaries and controlled limited liability companies.





On December 1, 2002, the Company completed the sale of substantially all of its operating assets to PCV Acquisition Inc., a subsidiary of ASA International, Ltd., a holding company of Vertical Enterprise Software Solutions based in Framingham, Massachusetts (collectively referred to as “ASA”).





During 2003 and 2004, there were no significant operations.





On December 30, 2003, the Company entered into a management and finance agreement with WhiteKnight SST (“WhiteKnight”), a related party, to develop and implement a business plan for the Company. Pursuant to this agreement, WhiteKnight agreed to infuse $250,000 into the Company. In exchange, WhiteKnight may elect to receive up to a 50 percent equity interest in the Company through the conversion of the $250,000 debt to Common Stock of the Company.





In furtherance, WhiteKnight investigated various possibilities and ultimately proposed to the Company’s Board of Directors that the Company set a plan in motion to engage in the business of providing internet radio services.  As part of this plan, WhiteKnight proposed that the Company acquire the intellectual property owned by the related entities of Search Play, LLC and Radioio.com, LLC, (together as “Search Play”).  At the time, Search Play owned several patents pending and other intellectual property that WhiteKnight believed would be advantageous to the Company as it sought to develop its internet radio operations.





To complete the SearchPlay purchase, the Company entered into a Contribution Agreement in November 2005.  Pursuant to the agreement, the Company agreed to exchange shares of its Common Stock in exchange for the membership interests of Search Play.  As part of this agreement, the Company also agreed to exchange shares of its Common Stock for certain debt owed to several individuals some of whom are principals or affiliates of WhiteKnight.





In January 2006 the Company officially changed its name to ioWorldMedia, Inc.





The Company is an internet media platform that delivers streamed audio product to distinctively differently audiences for the purposes of generating revenue and profits. Its three operating businesses are:





1) Radioio where IWDM streams a broad variety of different music genres to paying subscribers. The subscribers can receive extraordinarily high-quality fidelity music via 70+ different channels with, or without, advertising interruptions.





2) io4business is the 21st century adaptation of the nearly century-old business, background music, found in restaurants, elevators, and office building lobbies, amongst other applications.  Io4business’ strategic advantages are lower cost, far better fidelity and far greater flexibility regarding programming.





3) Radioio Live is a wholly new operation that focuses on providing the Company’s listeners with access to live and archived proprietary talent content. Bubba the Love Sponge is the first of the Radioio Live producers of live content.





2.
Liquidity





During the six months ended June 30, 2011 and 2010, the Company incurred net losses of approximately $510,000 and $513,000, respectively, while cash provided (used) by operations was approximately $233,000 and ($369,000).  The Company has not attained a level of revenues sufficient to support recurring expenses.





3.
Summary of significant accounting policies




Basis of Presentation and Principles of Consolidation




The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries, radioio, Searchplay, io4business and radioioLive.  All intercompany balances and transactions have been eliminated in consolidation.





The information furnished in this report reflects all adjustments consisting of only normal recurring adjustments, which are in the opinion of management necessary for a fair presentation of the results for the interim periods. The results of operations for the six months ended June 30, 2011 are not necessarily indicative of results that may be expected for the fiscal year ending December 31, 2011.






7


These financial statements were approved by management and available for issuance on August 12, 2011.  Subsequent events have been evaluated through this date.





Use of Estimates





The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities at the date of the financial statements, as well as their related disclosures.  Such estimates and assumptions also affect the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.





Cash and Cash Equivalents





The Company considers short-term interest bearing investments with initial maturities of three months or less to be cash equivalents. Cash and cash equivalents consist of cash in banks, free credit on investment accounts and money market accounts.





Accounts Receivable





Accounts receivable are recorded at the invoiced amount.  Any allowance for doubtful accounts is the Company’s best estimate of the amount of probable losses to the Company’s existing accounts receivable.  No allowance for doubtful accounts was recorded for the quarter ended June 30, 2011.





Securities Owned





All securities owned are valued at market and unrealized gains and losses are reflected in revenues.





Property and Equipment





Equipment is stated at cost less accumulated depreciation.  Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Repairs and maintenance are expensed as incurred while betterments and improvements are capitalized.





The Company provides for depreciation and amortization over the following estimated useful lives:





Computers and office equipment
5 yearsFurniture and fixtures
7 years





Long-Lived Assets





In accordance with Financial Accounting Standard Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 360 “Property, Plant, and Equipment,” the Company records impairment losses on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts.  There were no impairment charges during the six month periods ended June 30, 2011and 2010.





Revenue recognition





The Company derives revenue primarily from premium listener subscriptions and from advertising.  Revenue from subscribers is recognized on a pro-rata basis over the life of the subscription beginning with the quarter ended March 31, 2011.  Revenue from subscribers was recognized when received for the year ended December 31, 2010.  Advertising revenue is recognized in the period in which the advertisement is broadcast.





Income Taxes





The Company files a consolidated income tax return with its subsidiaries.  The Company accounts for income taxes in accordance with FASB ASC Topic 740 “Income Taxes”, which requires accounting for deferred income taxes under the asset and liability method.  Deferred income tax assets and liabilities are computed for the difference between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on the enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income.  Valuation allowances are established, when necessary, to reduce the deferred income tax assets to the amount expected to be realized.








8





The determination of the Company’s provision for income taxes requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws.  Significant judgment is required in assessing the timing and amounts of deductible and taxable items and the probability of sustaining uncertain tax positions.  The benefits of uncertain tax positions are recorded in the Company’s financial statements only after determining a more-likely-than-not probability that the uncertain tax positions will withstand challenge, if any, from tax authorities.  When facts and circumstances change, the Company reassesses these probabilities and records any changes in the financial statements as appropriate.  Accrued interest and penalties related to income tax matters are classified as a component of income tax expense.




In accordance with GAAP, the Company is required to determine whether a tax position of the Company is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The Company files an income tax return in the U.S. federal jurisdiction, and may file income tax returns in various U.S. state and local jurisdictions.  The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement.  De-recognition of a tax benefit previously recognized could result in the Company recording a tax liability that would reduce stockholders’ equity. This policy also provides guidance on thresholds, measurement, de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition that is intended to provide better financial statement comparability among different entities.  It must be applied to all existing tax positions upon initial adoption and the cumulative effect, if any, is to be reported as an adjustment to stockholder’s equity as of January 1, 2009.  Based on its analysis, the Company has determined that the adoption of this policy did not have a material impact on the Company’s financial statements upon adoption. However, management’s conclusions regarding this policy may be subject to review and adjustment at a later date based on factors including, but not limited to, on-going analyses of and changes to tax laws, regulations and interpretations thereof.





Interest and Penalty Recognition on Unrecognized Tax Benefits





The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses.





Comprehensive Income





The Company complies with FASB ASC Topic 220, “Comprehensive Income,” which establishes rules for the reporting and display of comprehensive income (loss) and its components.




Fair Value of Financial Instruments






The fair values of the Company’s assets and liabilities that qualify as financial instruments under FASB ASC Topic 825, “Financial Instruments,” approximate their carrying amounts presented in the accompanying consolidated statements of financial condition at June 30, 2011 and December 31, 2010.




Loss Per Common Share




The Company complies with the accounting and disclosure requirements of FASB ASC 260, “Earnings Per Share.” Basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period.  Diluted loss per common share incorporates the dilutive effect of Common Stock equivalents on an average basis during the period.  The calculation of diluted net loss per share excludes the conversion of any convertible debt obligations into common or  preferred stock as of June 30, 2011 and 2010, respectively, since the effect of conversion is anti-dilutive.





Stock-Based Compensation





The Company complies with FASB ASC Topic 718 “Compensation – Stock Compensation,” which establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services.  It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. FASB ASC Topic 718 focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions.  FASB ASC Topic 718 requires an entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions).  That cost will be recognized over the period during which an employee is required to provide service in exchange for the award the requisite service period (usually the vesting period).  No compensation costs are recognized for equity instruments for which employees do not render the requisite service.  The grant-date fair value of employee share options and similar instruments will be estimated using option-pricing models adjusted for the unique characteristics of those instruments (unless observable market prices for the same or similar instruments are available).  If an equity award is modified after the grant date, incremental compensation cost will be recognized in an amount equal to the excess of the fair value of the modified award over the fair value of the original award immediately before the modification.  No stock-based compensation expense under FASB ASC 718 was recorded during the six-month periods ended June 30, 2011 and 2010.






9


Valuation of Investments in Securities at Fair Value—Definition and Hierarchy





FASB ASC Topic 820 “Fair Value Measurements and Disclosures” provides a framework for measuring fair value under generally accepted accounting principles in the United States and requires expanded disclosures regarding fair value measurements.  ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date.





In determining fair value, the Company uses various valuation approaches.  In accordance with GAAP, a fair value hierarchy for inputs is used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.  Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company.  Unobservable inputs reflect the Company’s assumptions about the inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.  FASB ASC Topic 820 establishes a three-tiered fair value hierarchy that prioritizes inputs to valuation techniques used in fair value calculations, as follows:





Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.  Valuation adjustments and block discounts are not applied to Level 1 securities.  Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment.




Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.






Level 3 -Valuations based on inputs that are unobservable and significant to the overall fair value measurement.




The availability of valuation techniques and observable inputs can vary from security to security and is affected by a wide variety of factors including, the type of security, whether the security is new and not yet established in the marketplace, and other characteristics particular to the transaction.  To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment.  Those estimated values do not necessarily represent the amounts that may be ultimately realized due to the occurrence of future circumstances that cannot be reasonably determined.




Because of the inherent uncertainty of valuation, those estimated values may be materially higher or lower than the values that would have been used had a ready market for the securities existed. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for securities categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement.




Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure.  Therefore, even when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date.  The Company uses prices and inputs that are current as of the measurement date, including periods of market dislocation.  In periods of market dislocation, the observability of prices and inputs may be reduced for many securities.  This condition could cause a security to be reclassified to a lower level within the fair value hierarchy.




Valuation Techniques





The Company values investments in securities that are freely tradable and are listed on national securities exchange or reported on the NASDAQ national market at their last sales price as of the last business day of the reporting period.  At June 30, 2011 and December 31, 2010, the Company had no investments classified as securities owned on the consolidated balance sheets.





Certificate of Deposits





The fair values of the bank certificate of deposits are based on the face value of the certificate of deposits.





Recently Adopted Accounting Pronouncements





In December 2010, FASB issued ASC ASU 2010-28, “When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts (Topic 350) — Intangibles — Goodwill and Other.” ASU 2010-28 amends the criteria for performing Step 2 of the goodwill impairment test for reporting units with zero or negative carrying amounts and requires performing Step 2, if qualitative factors indicate that it is more likely than not that goodwill impairment exists. The amendments to this Update are effective for the Company in the first quarter of 2011. Any impairment to be recorded upon adoption will be recognized as an adjustment to our beginning retained earnings. The adoption of ASU 2010-28 did not have any financial impact on the consolidated financial statements.








10


In January 2010, the FASB issued Accounting Standards Update 2010-06,“Fair Value Measurements and Disclosures (Topic 820) - Improving Disclosures about Fair Value Measurements” (ASU 2010-06), to require new disclosures related to transfers into and out of Levels 1 and 2 of the fair value hierarchy and additional disclosure requirements related to Level 3 measurements.  The guidance also clarifies existing fair value measurement disclosures about the level of disaggregation and about inputs and valuation techniques used to measure fair value.  The additional disclosure requirements are effective for the first reporting period beginning after December 15, 2009, except for the additional disclosure requirements related to Level 3 measurements, which are effective for fiscal years beginning after December 15, 2010.  The adoption of the additional requirements did not have any financial impact on the Company’s consolidated financial statements.





In December 2009, the FASB issued Accounting Standards Update (ASU) 2009-17, “Consolidations (FASB ASC Topic 810) - Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities,” which codifies FASB Statement No. 167, Amendments to FASB Interpretation No. 46(R). ASU 2009-17 represents a revision to former FASB Interpretation No. 46 (Revised December 2003), “Consolidation of Variable Interest Entities,” and changes how a reporting entity determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a reporting entity is required to consolidate another entity is based on, among other things, the other entity’s purpose and design and the reporting entity’s ability to direct the activities of the other entity that most significantly impact the other entity’s economic performance.  ASU 2009-17 also requires a reporting entity to provide additional disclosures about its involvement with variable interest entities and any significant changes in risk exposure due to that involvement. A reporting entity will be required to disclose how its involvement with a variable interest entity affects the reporting entity’s financial statements.  ASU 2009-17 is effective at the start of a reporting entity’s first fiscal year beginning after November 15, 2009, or the Company’s fiscal year beginning January 1, 2010. Early application is not permitted. We have not yet determined the impact, if any, which of the provisions of ASU 2009-15 may have on the Company’s consolidated financial statements.





On October 1, 2009, the Company adopted FASB ASC Topic 820-10 (ASC 820-10), “Fair Value Measurements and Disclosures,” for nonfinancial assets and liabilities that are not recognized or disclosed at fair value in the financial statements on a recurring basis. The adoption of ASC 820-10 did not have a material impact on the Company’s consolidated financial statements.





In August 2009, the FASB issued Accounting Standards Update 2009-05 (ASU 2009-05), “Fair Value Measurements and Disclosures (Topic 820) – Measuring Liabilities at Fair Value,” to amend FASB ASC Topic 820, “Fair Value Measurements and Disclosures,” to provide guidance on the measurement of liabilities at fair value.  The guidance provides clarification that in circumstances in which a quoted market price in an active market for an identical liability is not available, an entity is required to measure fair value using a valuation technique that uses the quoted price of an identical liability when traded as an asset or, if unavailable, quoted prices for similar liabilities or similar assets when traded as assets.  If none of this information is available, an entity should use a valuation technique in accordance with existing fair valuation principles.  The Company adopted the guidance in 2009, and there was no material impact on the Company’s consolidated financial statements or related footnotes.





In June 2009, the FASB issued the FASB Accounting Standards Codification (the “Codification”)and a new Hierarchy of Generally Accepted Accounting Principles which establishes only two levels of GAAP: authoritative and nonauthoritative. The Codification is now the source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with GAAP, except for rules and interpretive releases of the SEC, which are additional sources of authoritative GAAP for SEC registrants. All other non-grandfathered, non-SEC accounting literature not included in the Codification will become non-authoritative. The Codification is effective for financial statements for interim or annual reporting periods ending after September 15, 2009. The Company adopted the new guidelines and numbering system prescribed by the Codification when referring to GAAP in the third quarter of 2009. The application of the Codification did not have an impact on the Company’s consolidated financial statements; however, all references to authoritative accounting literature will now be references in accordance with the Codification.





In May 2009, the FASB issued authoritative guidance for subsequent events, now codified as FASB ASC Topic 855, “Subsequent Events,” which establishes general standards of accounting for and disclosures of events that occur after the balance sheet date but before the financial statements are issued or are available to be issued.  The guidance sets forth the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements.  The guidance also requires the disclosure of the date through which an entity has evaluated subsequent events and whether this date represents the date the financial statements were issued or were available to be issued.  The Company adopted this guidance in 2009 with no significant impact on the Company’s consolidated financial statements or related footnotes.





In April 2009, the FASBprovided additional guidance for estimating fair value in accordance with FASB ASC Topic 820, “Fair Value Measurements and Disclosures,” when the volume and level of activity for the asset or liability have significantly decreased.  This additional guidance re-emphasizes that regardless of market conditions the fair value measurement is an exit price concept and clarifies and includes additional factors to consider in determining whether there has been a significant decrease in market activity for an asset or liability. This guidance also provides additional clarification on estimating fair value when the market activity for an asset or liability has declined significantly.  The scope of this guidance does not include assets and liabilities measured under quoted prices in active markets.  This guidance is applied prospectively to all fair value measurements where appropriate and will be effective for interim and annual periods ending after June 15, 2009.  The adoption of the provisions of this guidance did not have any material impact on the Company’s consolidated financial statements.








11


In April 2009, FASB issued FSP FAS 107-1 and APB 28-1, now codified in FASB ASC Topic 825-10-65, “Interim Disclosures about Fair Value of Financial Instruments,” which amends U.S. GAAP to require entities to disclose the fair value of financial instruments in all interim financial statements.  The additional requirements of this guidance also require disclosure of the method(s) and significant assumptions used to estimate the fair value of those financial instruments.  Previously, these disclosures were required only in annual financial statements.  The additional requirements of this guidance are effective for interim reporting periods ending after June 15, 2009.  The adoption of the additional requirements did not have any financial impact on the Company’s consolidated financial statements.




In April, 2009, the FASB issued ASC Topic 320-10 (ASC 320-10), “Recognition and Presentation of Other-Than-Temporary Impairments,” which provides additional guidance designed to create greater clarity and consistency in accounting for and presenting impairment losses on securities. ASC Topic 320-10 provides greater clarity to investors about the credit and noncredit components of impaired debt securities that are not expected to be sold. The measure of impairment in comprehensive income remains fair value. This statement also requires more timely disclosures and an increase in disclosures regarding expected cash flows, credit losses, and an aging of securities with unrealized losses. We adopted these statements April 1, 2009 without material effect on our consolidated financial statements.





On January 1, 2009, the Company adopted FASB ASC Topic 805 (ASC 805), “Business Combinations,” which generally requires an acquirer to recognize the identifiable assets acquired, liabilities assumed, contingent purchase consideration and any non-controlling interest in the acquiree at fair value on the date of acquisition. It also requires an acquirer to recognize as expense most transaction and restructuring costs as incurred, rather than include such items in the cost of the acquired entity. For the Company, ASC 805 applies prospectively to business combinations for which the acquisition date is on or after October 1, 2009. The adoption of ASC 805 did not have a material impact on the Company’s consolidated financial statements.





Concentration of Credit Risk





The Company maintains its cash and cash equivalents in bank deposit accounts, which, at times may exceed federally insured limits.  The Company has not experienced any losses in such accounts.  Management believes the Company is not exposed to any significant credit risk related to cash and cash equivalents.





Going Concern





The accompanying financial statements have been prepared assuming that the company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business.  Currently, the Company has a minimum cash balance available for the payment of ongoing operating expenses, and its operations is not providing a source of funds from revenues sufficient to cover its operational costs to allow it to continue as a going concern.  The continued operations of the Company is dependent upon generating profits from operations and raising sufficient capital through placement of its Common Stock or issuance of debt securities, which would enable the Company to carry out its business plan.




In the event we do not generate sufficient funds from revenues or financing through the issuance of our Common Stock or from debt financing, we may be unable to fully implement our business plan and pay our obligations as they become due, any of which circumstances would have a material adverse effect on our business prospects, financial condition, and results of operations. The accompanying financial statements do not include any adjustments that might be required should the Company be unable to recover the value of its assets or satisfy its liabilities.







4.
Property and equipment





Property and equipment consisted of the following at:




June 30, 2011Capitalized leases

$
248,077Equipment


126,002374,079Less: accumulated depreciation


(310,531
)63,548





Depreciation expense was $36,322 and $54,914 for the six months ended June 30, 2011 and 2010, respectively.






12




5.
Notes Payable—Related Party Shareholders





Related party notes were converted to common and preferred shares at April 5, 2011.  See Note 11 - Stockholders’ Equity - and Note 13 - Related Party - for further detail regarding the transactions.





6.
Notes Payable





At various dates during the years 2010 and 2009, an individual investor advanced the Company funds, aggregating to a total of $400,000 at June 30, 2011.  The advances are non-interest bearing and due on demand.





7.
Intellectual Property





In November 2005, the Company acquired Search Play, LLC, a provider of internet based radio entertainment, in a transaction accounted for as a business combination.  Part of the purchase price was allocated to intellectual property, as summarized in the table that follows:





Description

June 30, 2011Patents pending and developed technology

$
758,922Trademarks and other


189,072Total


947,994Less:  accumulated depreciation


(947,994
)Unamortized intellectual property

$
-




8.
Income Taxes





At June 30, 2011, the Company had approximately $46.5 million of net operating losses (“NOL”) carry-forwards for federal and state income purposes.  These losses are available for future years and expire through 2031.  Utilization of these losses may be severely or completely limited if the Company undergoes an ownership change pursuant to Internal Revenue Code Section 382.


The deferred tax asset is summarized as follows:





June 30, 2011


December 31, 2010Deferred tax assetNet operating loss carryforwards

$
18,400,000


$
18,400,000Deferred tax liability


18,400,000



18,400,000Less:  Valuation allowance


(18,400,000
)


(18,400,000
)Net deferred tax asset

$
-


$
-





A reconciliation of income tax expense computed at the U.S. federal, state, and local statutory rates and the Company’s effective tax rate is as follows:





June 30, 2011


December 31, 2010Statutory federal income tax expense


(34
) %


(34
) %State and local income tax


(4
)


(4
)Valuation allowance


38



38-
%


-
%





The Company has taken a 100% valuation allowance against the deferred tax asset attributable to the NOL carryforwards of $18.4 million and $18.9 million at June 30, 2011 and December 31, 2010, respectively, due to the uncertainty of realizing the future tax benefits.





9.
Common Stock





The Company is authorized to issue 250 million shares of Common Stock. At June 30, 2011 and December 31, 2010, 133,347,479 and 108,702,874 shares were outstanding, respectively.






13




10.
Preferred stock





The Company is authorized to issue 5 million shares of preferred stock with a par value of $.001. Preferred stock has a conversion value of Three Dollars ($3.00) per share and the following rights:





1.
Upon a Change of Control Event or an equity raise for the company, or its subsidiaries, of Twenty million dollars ($20,000,000) or greater, and at the discretion of the New Control party or equity party either:


a.
Cash redemption with an 8% per annum accrued interest rate, or


b.
Stock conversion redemption with a 50% premium to the preceding Twenty (20) day average closing price of the Company’s Common Stock prior to a Change of Control Event or equity infusion as described above.


c.
Any combination of 1(a) or 1(b) above.





2.
Conversion rights in to the Company’s Common Stock after Two Years from issue with a Twenty Five (25%) discount to the preceding Twenty (20) day average closing price of the Company’s Common Stock.





At June 30, 2011, 3,025,000 preferred shares were issued and 3,000,000 shares wereoutstanding and at December 31, 2010, 25,000 preferred shares were issued and none were outstanding.





11.
Stockholders’ Equity





In April 2010, the Company amended the Articles of Incorporation to increase the authorized common shares to 250,000,000.





In June 2010, the Company issued 16,000,000 shares of its Common Stock to related parties in connection with the conversion of debt.  Entities controlled by Thomas Bean received 10,000,000 shares and entities controlled by Alex H. Edwards received 6,000,000 shares.





In June 2010, the Company issued 2,000,000 shares to vendors for services rendered or a reduction of a portion of the amount owed by the Company.





In June 2010, the Company issued 3,745,000 shares of its Common Stock to the holder of a convertible note payable in a partial redemption of the note.





In February 2011, the Company issued 1,000,000 million shares to a non-related party for an investment of $200,000.





In April 2011, the Company issued of 3,000,000 restricted common shares to each of the directors, Thomas Bean, John Stanton, and Alex Edwards, in lieu of any compensation, which would have been received during the previous five years of service through December 31, 2010;





In April 2011, the Company issued 2,420,000 restricted common shares for services provided by nine individuals since the inception of the Company.





In April 2011, the Company converted the balance due Zanett Opportunity Fund, Ltd, a related party shareholder, against the unsecured, 5% convertible promissory note, due June 5, 2103, into 1,942,905 shares of the Company’s Common Stock.





In April 2011, the Company issued 3,000,000 shares of preferred stock to convert all outstanding debt obligations of related party shareholders, exclusive of the debt obligation due the Zanett Opportunity Fund, Ltd, whose debt obligation was converted into common shares.





In April 2011, the Company issued 10,000,000 restricted shares to the Bubba Radio Network and related personnel as an obligation of the negotiated contract for providing content and services to Radioio Live.





In June 2011, the Company issued 281,700 restricted common shares in total to 2,817 subscribers that are part of the Bubba Army Early Enlistment subscription program.




12.
Capital Lease - Future Minimum Lease Payments





The Company leases certain office equipment under an agreement that is classified as a capital lease. At June 30, 2011 office equipment with a cost basis of $39,031 and accumulated depreciation of $33,176 is recorded under a capital lease.





There are no future minimum lease payments required under the capital lease as of March 31, 2011.







14




13.
Related Party





At various dates during the years 2008 and 2011, a related party shareholder advanced the Company funds, aggregating to a total $110,178 and $80,000 at March 31, 2011 and December 31, 2010, respectively. The advances are non-interest bearing and due on demand.  The unsecured note obligation was converted into preferred stock on April 5, 2011.





At various dates during the years 2004 through 2011, a related party shareholder advanced the Company funds, aggregating to a total $1,903,271 and $1,853,271 at March 31, 2011 and December 31, 2010, respectively. The advances are non-interest bearing and due on demand.  The unsecured note obligation was converted into preferred stock on April 5, 2011.





At various dates during the years 2007 and 2008, a related party shareholder advanced the Company funds, aggregating to a total $1,519,496 at March 31, 2011 and December 31, 2010, respectively. The advances are non-interest bearing and due on demand.  The unsecured note obligation was converted into preferred stock on April 5, 2011.





At various dates during the years 2005 through 2011, a related party shareholder advanced the Company funds, aggregating to a total $1,440,107 and $1,425,107 at March 31, 2011 and December 31, 2010, respectively. The advances are non-interest bearing and due on demand.  The unsecured note obligation was converted into preferred stock on April 5, 2011.





On June 5, 2008, a related party shareholder loaned the Company $500,000, subsequently reduced to $250,000, which resulted from the sale of one half of the original note total to a third party.  The unsecured convertible promissory note bears interest at 5% per annum and is due June 5, 2013.  At March 31, 2011 and December 31, 2010, the balance due, including accrued interest, was $309,863 and $306,738, respectively.  The note obligation was converted to preferred stock on April 5, 2011.  In accordance with the convertible promissory note agreement all accrued interest amounts were forgiven upon conversion.




On May 2010, a third party, and related party shareholder, purchased one half of a note obligation from a related party shareholder in the amount of $250,000.  During 2010, a portion of the note obligation was converted to Common Stock.  The unsecured convertible promissory note bears interest at 5% and is due June 5, 2013. At March 31, 2011 and December 31, 2010, the balance due, including accrued interest, was $221,838 and $219,181, respectively.  The note obligation was converted to Common Stock on April 5, 2011.  In accordance with the convertible promissory note agreement all accrued interest amounts were forgiven upon conversion.





14.
Subsequent Events





The Company has analyzed its operations subsequent to June 30, 2011 through the date these financial statements were filed with the Securities and Exchange Commission and determined that there were not reportable subsequent events.









15







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





The following discussion of the financial condition and results of operation of the Company for the periods ended June 30, 2011 and 2010 should be read in conjunction with the selected financial data, the financial statements, and the notes to those statements that are included elsewhere in this quarterly report.  Some of the information contained in this discussion and analysis or set forth elsewhere in this quarterly report, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties.





In this quarterly report, references to “ioWorldMedia,” “the Company,” “we,” “our,” and “us,” refer to ioWorldMedia, Incorporated.





We make certain forward-looking statements in this report. Statements concerning our future operations, prospects, strategies, financial condition, future economic performance (including growth and earnings), demand for our services, and other statements of our plans, beliefs, or expectations, including the statements contained under the captions “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as captions elsewhere in this document, are forward-looking statements.  In some cases these statements are identifiable through the use of words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “target,” “can”, “could,” “may,” “should,” “will,” “would,” and similar expressions. We intend such forward-looking statements to be covered by the safe harbor provisions contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and in Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  The forward-looking statements we make are not guarantees of future performance and are subject to various assumptions, risks, and other factors that could cause actual results to differ materially from those suggested by these forward-looking statements.  Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. Indeed, it is likely that some of our assumptions will prove to be incorrect.  Our actual results and financial position will vary from those projected or implied in the forward-looking statements and the variances may be material.  You are cautioned not to place undue reliance on such forward-looking statements. These risks and uncertainties, together with the other risks described from time to time in reports and documents that we file with the SEC should be considered in evaluating forward-looking statements.





In evaluating these forward-looking statements, you should consider various factors, including the following: (a) those risks and uncertainties related to general economic conditions, (b) whether we are able to manage our planned growth efficiently and operate profitable operations, (c) whether we are able to generate sufficient revenues or obtain financing to sustain and grow our operations, (d) whether we are able to successfully fulfill our primary requirements for cash.   We assume no obligation to update forward-looking statements, except as otherwise required under the applicable federal securities laws.





Recent Developments





On April 4, 2011, the Company filed with the Secretary of State of Florida an amendment to its articles of incorporation to fix the terms of the Company’s preferred stock, par value $0.001 (“Preferred Stock”).  The Preferred Stock shall have a stated value of $3.00 per share and may be converted by the holder into the Company’s Common Stock after two years from its issuance at a 25% discount to the preceding twenty-day average closing price of the Company’s Common Stock.  Upon a Change of Control Event, however, or an equity raise for the company, or its subsidiaries, of $20 million or greater, and at the discretion of the new control party or equity party, the Preferred Stock may be (a) redeemed for cash plus 8% per annum accrued interest rate from its issuance, (b) converted using a 50% to the preceding twenty-day average closing price of the Company’s Common Stock prior to the change of control event or equity infusion as described above or (c) a combination of (a) and (b).





On April 26, 2011, Bubba the Love Sponge Clem was appointed as a member of the Company’s Board of Directors to fill a vacancy due to the resignation of John Stanton.  His appointment was effective immediately.  Mr. Stanton resigned to focus his attention on his other business ventures. Mr. Stanton will continue to guide emerging technology companies and corporate turnarounds and serve as Chairman of Bulova Technologies Group and AlternaFuels, Inc.





Mr. Clem, 45, is a radio personality and is the host of The Bubba the Love Sponge Show on Radioio, the Company’s internet radio service.  There are no arrangements or understandings between Mr. Clem or any other persons pursuant to which Mr. Clem was appointed as a director.  Mr. Clem does not have any family relationships with any of the Company’s other directors or executive officers.








Critical Estimates and Judgments





The preparation of the Company’s financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management evaluates its estimates and judgments, including those related to receivables and accrued expenses. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable based on the circumstances. Actual results may differ from these estimates under different assumptions or conditions. The most significant accounting estimates inherent in the preparation of the Company’s financial statements include estimates as to the appropriate carrying value of the Company’s intangible assets, the amount of stock compensation, and the amount of accrued liabilities that are not readily attainable from other sources. These accounting policies are described at relevant sections in this discussion and analysis and in the notes to the consolidated financial statements.







16






The discussion in this report contains forward-looking statements that involve risks and uncertainties. The Company’s future actual results may differ materially from the results discussed herein, including those in the forward-looking statements.




Results of Operations





The following table presents the percentage of period-over-period dollar change for the line selected items in the Company’s Consolidated Statements of Operations for the quarters ended June 30, 2011 and 2010.  These comparisons of financial results are not necessarily indicative of future results.





Three Months ended June 302011



2010

% ChangeSales

$
473,321


$
191,544

147%Cost of goods sold


220,935



102,343

116%Gross profit


252,386



89,201

183%Operating expenses:Selling and general and administrative


564,724



336,067

68%Depreciation and amortization


18,277



27,457

(33%)Total expenses


583,001



363,524

60%Net operating income


(330,615)



(274,323)

21%Interest (income) expense


(69,151)



6,738

1,126%Net income (loss) before income taxes


(261,464)



(281,061)

(7%)





Three Months Ended June 30, 2011 and 2010





Revenue





Revenue increased by $281,777, or 147%, for the three months ended June 30, 2011 to $473,321 compared to $191,544 for the three months ended June 30, 2010.  Revenue consists primarily of subscription and advertising fee revenue. The increase in revenue is due to the successful launch of Radioio Live.





General and administrative





We incurred $564,724 and $336,067 of administrative expenses attributable to the services performed through ioWorldMedia and its Subsidiaries for the three months ended June 30, 2011 and 2010, respectively.   Administrative expenses for the three months ended June 30, 2011 increased by $228,657 or 68% as compared to the same period in 2010. The increase in the Administrative expenses was primarily due to one-time charges for the issuance of restricted common shares to directors for years of service and for services performed by other individuals for the Company.  There were also increased professional fees related to regulatory compliance and promotion of the Company.





Net income (loss)





The Company had consistent activities as a provider of Internet radio content during the three months ended June 30, 2011 and 2010, which resulted in general and administrative expenses attributable to this operation.  The Company is in the process of developing and expanding the Internet radio operation.  This process requires the addition of listeners and increasing the variety of content.  This process also requires securing other sources of revenue such as advertisers.  Consequently, the Company anticipates incurring losses through the rest of 2011 as it builds out its operations.  As a result of its ramping up operations as an Internet radio provider, in addition to the one-time charges outlined in the above General and administrative section, the Company realized a net loss of $261,464 during the three months ended June 30, 2011, a decrease of $19,597 or 7% as compared to a net loss of $281,061 during the same period in 2010.





17





Six months Ended June 30, 2011 and 2010





The following table presents the percentage of period-over-period dollar change for the line selected items in the Company’s Consolidated Statements of Operations for the six months ended June 30, 2011 and 2010.  These comparisons of financial results are not necessarily indicative of future results.





Six Months ended June 302011



2010

% ChangeSales

$
766,472


$
373,191

105%Cost of goods sold


371,088



197,915

88%Gross profit


395,384



175,276

126%Operating expenses:Selling and general and administrative


931,962



618,846

51%Depreciation and amortization


36,322



54,914

(34%)Total expenses


968,284



673,760

44%Net operating income


(572,900)



(498,484)

15%Interest (income) expense


(63,256)



14,353

541%Net income (loss) before income taxes


(509,644)



(512,837)

(1%)





Revenue





Revenue increased by $393,281, or 105%, for the six months ended June 30, 2011 to $766,472 compared to $373,191 for the six months ended June 30, 2010.  Revenue consists primarily of subscription and advertising fee revenue. The increase in revenue is due to the successful launch of Radioio Live.





General and administrative





We incurred $931,962 and $618,846 of administrative expenses attributable to the services performed through ioWorldMedia and its Subsidiaries for the six months ended June 30, 2011 and 2010, respectively.   Administrative expenses for the six months ended June 30, 2011 increased by $313,116 or 51% as compared to the same period in 2010. The increase in the Administrative expenses was primarily due to one-time charges for the issuance of restricted common shares to directors for years of service and for services performed by other individuals for the Company.  There were also increased professional fees related to regulatory compliance and promotion of the Company.





Net income (loss)





The Company had consistent activities as a provider of Internet radio content during the six months ended June 30, 2011 and 2010, which resulted in general and administrative expenses attributable to this operation.  The Company is in the process of developing and expanding the Internet radio operation.  This process requires the addition of listeners and increasing the variety of content.  This process also requires securing other sources of revenue such as advertisers.  Consequently, the Company anticipates incurring losses through the rest of 2011 as it builds out its operations.  As a result of its ramping up operations as an Internet radio provider, in addition to the one-time charges outlined in the General and administrative section previously, the Company realized a net loss of $509,644 during the six months ended June 30, 2011, a decrease of $3,193 or 1% as compared to a net loss of $512,837 during the same period in 2010.








Liquidity and capital resources





We have generated operating losses since inception. We have incurred net losses of $509,644 and $512,837 for the six months ended June 30, 2011 and 2010. We may continue to experience net operating losses. Historically, we have relied upon outside investor funds to maintain our operations and develop our business. We anticipate raising additional capital within the next twelve months from investors for working capital as well as business expansion and we can provide no assurance that additional investor funds will be available on terms acceptable to us. If we are unable to obtain additional financing to meet our working capital requirements, we may have to curtail our business.   Revenue increased by $393,281 or 105%, in the six months ended June 30, 2011 to $766,472 compared to $373,191 for the six months ended June 30, 2010.







18




For the six months ended June 30, 2011, we had negative working capital of $620,719, as compared to $6,770,306 at June 30, 2010. During the six months ended June 30, 2011 we experienced cash flow from operations of $232,970, as compared to a negative cash flow of $368,763 during the same period in 2010.





Net cash provided by operating activities in the six months ended June 30, 2011 was $232,970 compared to net cash used for operating activities of $368,763 for the comparable period in 2010.   Net cash used in investing activities in the six months ended June 30, 2011 was $10,904.





Net cash provided by financing activities in the six months ended June 30, 2011 was $195,928 as compared to $481,932 during the same period in 2010.





Item 3.Quantitative and Qualitative Disclosures About Market Risk.





Not Applicable





Item 4.  Controls and Procedures.





The Company’s management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.





Evaluation of Internal Controls over Financial Reporting





Our management is responsible for establishing and maintaining adequate “internal control over financial reporting”, as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act. Our system of internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external reporting purposes in accordance with GAAP.





Because of its inherent limitations, internal control over financial reporting may not prevent or detect every misstatement. An evaluation of effectiveness is subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may decrease over time.





Our internal control over financial reporting includes those policies and procedures that (a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (c) provide reasonable assurance regarding prevention or timely detection of unauthorized use, acquisition, or disposition of our assets that could have a material effect on the consolidated financial statements.





In accordance with Exchange Act Rules 13a-15 and 15d-15, an evaluation was completed under the supervision and with the participation of the Company’s management, including the Company’s Principal Executive Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of June 30, 2011.  Based on that evaluation, the Company’s officers concluded that the Company had a material weakness in its disclosure controls namely, that the Company lacked appropriate resources in the accounting and finance department, including lack of personnel that are appropriately qualified in the areas of U.S. GAAP and SEC reporting.  Despite this weakness, management believes that there are no material inaccuracies or omissions of fact in this quarterly report.





A material weakness is a deficiency or a combination of deficiencies in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. As a result of this evaluation, we concluded that due to our small size and limited resources our internal control over financial reporting was not effective as of June 30, 2011.  Despite this weakness management believes that there are no material inaccuracies or omissions of fact in this quarterly report.





As finances allow, we will add resources to our accounting and finance department to remediate these weaknesses.  The material weaknesses will not be considered remediated until the applicable remedial procedures are tested and management has concluded that the procedures and controls are operating effectively.





Changes in Internal Controls over Financial Reporting





There have been no significant changes to the Company’s internal controls over financial reporting that materially affected, or were reasonably likely to materially affect, our internal controls over financial reporting.





19





PART II - OTHER INFORMATION





Item 1. Legal Proceedings.





From time to time, we may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.





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





In February 2011, the Company issued 1,000,000 million shares of Common Stock to a non-related party for an investment of $200,000.
 
 In April 2011, the Company had the following issuances of unregistered securities:
 
 ·
3,000,000 shares of restricted Common Stock to each of the directors, Thomas Bean, John Stanton, and Alex Edwards, in lieu of any compensation, which would have been received during the previous five years of service through December 31, 2010
 
 ·
2,420,000 shares of restricted Common Stock for services provided by nine individuals since the inception of the Company;
  ·
1,942,905 shares of Common Stock to a related party shareholder, to convert the balance against an unsecured, 5% convertible promissory note held by the related party shareholder, due June 5, 2013; and
  ·
10,000,000 restricted shares of Common Stock to the Bubba Radio Network and related personnel as an obligation of the negotiated contract for providing content and services to Radioio Live.
 
 In June 2011, the Company issued 281,700 restricted shares of Common Stock to 2,817 subscribers who are part of the Bubba Army Early Enlistment subscription program.
  The above-mentioned issuances are exempt from registration by reason of the exemption provided by Rule 506 of Regulation D, relating to sales to accredited investors.


Item 3. Defaults Upon Senior Securities.





None.





Item 4. (Removed and Reserved).








Item 5. Other Information.





Not applicable.






20




Item 6. Exhibits.





Copies of the following documents are included as exhibits to this report pursuant to Item 601 of Regulation S-K.





Exhibit No.

Title of Document3.1

Articles of Incorporation effective as of January 1, 1996, as amended by the Articles of Amendment dated as of January 9, 1996 (incorporated herein by reference to Exhibit Number 3.1 to the Company’s Registration Statement on Form S-1 (File No. 333-00250), filed herewith.3.2

Articles of Amendment to the Articles of Incorporation filed January 10, 1996,  filed herewith.3.3

Bylaws (incorporated herein by reference to Exhibit Number 3.2 to the Company’s Registration Statement on Form S-1 (File No. 333-00250)).3.4

Articles of Amendment of the Articles of Incorporation filed June 1, 2001, filed herewith.3.5

Articles of Amendment of the Articles of Incorporation for Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock filed August 31, 2001, filed herewith.3.6

Amendment to the Articles of Incorporation of Powercerv Corporation dated December 21, 2005 ((incorporated herein by reference to Exhibit Number 3.5 to the Company’s Amendment No. 1 to the Annual Report on Form 10-K filed April 21, 2011 (File No. 000-27574)).3.7

Amendment to the Articles of Incorporation dated April 4, 2011, filed herewith.31.1

Certification of the Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1

Certification of the Principal Executive Officer and Principal Financial Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*





*The Exhibit attached to this Quarterly Report on Form 10-Q/A shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to liability under that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.





21





SIGNATURES





In accordance with the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.




IOWORLDMEDIA, INCORPORATEDDate: August 12, 2011
By:
/s/ Thomas BeanThomas BeanChief Executive Officer, Chief Financial Officer  and Chairman of the Board of Directors(Principal Executive Officer and Principal Financial Officer)