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May 15, 2012

Financial Status of Shane McMahon's Company - YOU on Demand

The financial status of Shane McMahon's company, YOU on Demand (YOD) is best described as "shaky". Although YOD has signed several deals with content distributers recently, the 10Q quarterly report filed May 15, 2012 tells the real story.

Shane initially invested $4 million dollars in YOD 2009. He loaned YOD $3 million dollars on May 10, 2012. The report also states the following:

We anticipate that we may need to raise additional funds to fully implement our business model and related strategies. The fact that we have incurred significant continuing losses and have relied on debt and equity financings to fund our operations to date, could raise substantial doubt about our ability to continue as a going concern.

The 'going concern' concept directs accountants to prepare financial statements on the assumption that the business is not about to go broke or be liquidated (i.e. where the business closes and sells all the assets for whatever price they can get. In other words the company is not financially stable.

YOD has also had problems with proper financial controls:
As required by Rule 13a-15 under the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2012. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of March 31, 2012, and as of the date that the evaluation of the effectiveness of our disclosure controls and procedures was completed, our disclosure controls and procedures were not effective to satisfy the objectives for which they are intended. However, during 2011, the Company hired two US
GAAP and SEC qualified internal personnel, one in the US and one in China, to oversee its financial reporting operations. Subsequent to March 31, 2012, our US based employee resigned from the company to pursue another opportunity. During the interim period, another internal employee with US GAAP and SEC experience temporarily filled the position on a full time basis. The company anticipates hiring a permanent replacement during the second quarter. The interim employee will remain in a supporting role to provide additional control support. With these individuals in place and with the additional personnel to be added, we expect that
within the next quarter our internal controls will be effective.

YOD reported gross profit loss of 45%. The full report can be viewed here.

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