UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2003
[ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission file number: ____________
GAMESTATE ENTERTAINMENT, INC.
(formerly LANWERX ENTERTAINMENT, INC./LUNA MEDICAL TECHNOLOGIES, INC)
_______________________________________________________________________________
(Exact name of registrant as specified in its charter)
Nevada | 98-0207745 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
900 - 555 Burrard Street, Vancouver, British Columbia, Canada V7X 1M8
(604) 692-2810
_______________________________________________________________________________
(Address and telephone number of registrant’s principal executive offices and principal
place of business)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), or (2) has been subject to such filing requirements for the past 90 days.
Yes
[ X ]
No
[ ]
The number of outstanding common shares, $ .001 par value, of the Registrant at:
September 30, 2003: 16,461,920
GAMESTATE ENTERTAINMENT, INC.
(formerly LANWERX ENTERTAINMENT, INC./LUNA MEDICAL TECHNOLOGIES, INC.)
(A Development Stage Company)
FINANCIAL STATEMENTS
AS AT SEPTEMBER 30, 2003
INDEX
Auditor’s Review
Notice to Reader
Interim Balance Sheet
Interim Statements of Operations
Interim Statements of Shareholders’ Equity/(Deficit)
Interim Cash Flow Statements
Notes to Interim Financial Statements
Management Discussion and Analysis
CHARTERED
1100 – 1177 West Hastings Street
ACCOUNTANTS
Vancouver, BC V6E 4T5
MacKay LLP
Tel: 604-687-4511
Fax: 604-687-5805
Toll Free: 1-800-351-0426
www.MacKayLLP.ca
November 12, 2003
Our file No. 823 01233
Mr. Gord McDougall
Mr. Cameron King
GameState Entertainment, Inc.
(formerly LanWerX Entertainment, Inc.)
(formerly Luna Medical Technologies Inc.)
210 – 2323 Quebec Street
Vancouver BC V6E 3C9
Dear Sirs:
Re:
Interim Quarterly financial statements for GameState Entertainment, Inc.
(formerly LanWerX Entertainment Inc. / Luna Medical Technologies Inc.)
We have performed a limited review of the interim financial statements of the Company for the quarter ended September 30, 2003. Our limited review was solely to conform to the US Securities Exchange Commission Item 310(b) of Regulation S-B and should not be used or referred to for any other purpose.
We have not issued a report for the limited review. If, in any filing with the SEC, the company states that the interim financial statements have been reviewed by an independent public accountant, a report must be filed with the interim financial statements.
Yours truly,
MacKay LLP
“Sean Gilbert”
Sean Gilbert, CA
Partner
NOTICE TO READER
I have compiled the interim balance sheet of GameState Entertainment, Inc. as at September 30, 2003, the interim statements of operations, the interim statement of shareholders’ equity/(deficit), and the interim cash flow statements for the six months ended from information provided by the company’s management. I have not audited, reviewed, or otherwise attempted to verify the accuracy or completeness of such information. Readers are cautioned that these statements may not be appropriate for their purposes.
“Tracey St. Denis”
Certified General Accountant
Vancouver, British Columbia
November 7, 2003
GAMESTATE ENTERTAINEMENT, INC.
(formerly LANWERX ENTERTAINMENT, INC./LUNA MEDICAL TECHNOLOGIES, INC.)
(A Development Stage Company)
INTERIM BALANCE SHEET
AS AT SEPTEMBER 30, 2003 WITH AUDITED FIGURES AT MARCH 31, 2003
(Unaudited – See Notice to Reader)
(Stated in US Dollars)
| | September 30, 2003 | March 31, 2003 |
ASSETS
CURRENT ASSETS | | |
Cash | $ 5,301 | $ - |
Prepaid expenses and deposits | 1,250 | - |
CAPITAL ASSETS (Notes 2(ii) and 3) | | |
Computer equipment | 69,329 | - |
Computer software | 9,578 | - |
Office equipment | 9,946 | - |
OTHER | | |
Goodwill (Notes 2(iii)) | 111,147 | - |
LIABILITIES AND SHAREHOLDERS’ EQUITY/(DEFICIT)
CURRENT LIABILTIES | | |
Accounts payable | $ 66,651 | $ 60,584 |
Accrued expenses | - | 6,500 |
Loan payable (Note 4) | 26,746 | - |
Convertible notes payable (Note 5) | 51,047 | 36,288 |
Advances from shareholders (Notes 6, 8, and 10) | 298,867 | 316,091 |
Total Liabilities | 443,311 | 419,463 |
SHAREHOLDERS’ EQUITY/(DEFICIT) | | |
Preferred shares, 5,000,000 shares authorized, $0.001 par value; | | |
no shares issued and outstanding (Note 7) | | |
Common shares, 50,000,000 shares authorized, $0.001 par value; | | |
16,461,920 and 33,095,660 shares issued and outstanding respectively (Note 8) | 23,662 | 33,096 |
Additional paid-in capital | 818,893 | 534,459 |
Accumulated deficit | (1,079,315) | (987,018) |
Total Shareholders’ Equity/(Deficit) | (236,760) | (419,463) |
Total Liabilities and Shareholders’ Equity/(Deficit) | $ 206,551 | $ - |
Approved by the Directors:
“Cameron King”
__________________________________________
Cameron King, Director
“Gordon McDougall”
__________________________________________
Gordon McDougall, Director
The accompanying notes are an integral part of these financial statements.
GAMESTATE ENTERTAINEMENT, INC.
(formerly LANWERX ENTERTAINMENT, INC./LUNA MEDICAL TECHNOLOGIES, INC.)
(A Development Stage Company)
INTERIM STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND SIX MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(Unaudited – See Notice to Reader)
(Stated in US Dollars)
| | Three months ended September 30, | Six months ended September 30, |
REVENUES | | | | |
Game centre revenue | $ 1,225 | $ - | $ 1,225 | $ - |
EXPENSES | | | | |
Auditing and accounting | 1,219 | 5,075 | 1,219 | 5,075 |
Bank charges and interest | 6,203 | 3,636 | 11,862 | 6,028 |
Consulting | 9,605 | - | 9,605 | - |
Foreign exchange loss | 1,107 | - | 1,107 | - |
Legal | 4,395 | 8,666 | 4,769 | 15,115 |
Management fees | 30,000 | - | 60,000 | - |
Office supplies and stationery | 687 | - | 758 | - |
Parking | 186 | - | 186 | - |
Promotional expenses | 730 | - | 730 | - |
Regulatory fees | - | - | 307 | - |
Rent | 573 | - | 573 | - |
Telephone | 235 | - | 235 | - |
Travel | 2,171 | - | 2,171 | - |
NET LOSS FOR THE PERIOD | $ (55,886) | $ (17,377) | $ (92,297) | $ (26,218) |
NET LOSS PER COMMON SHARE | $ (0.01) | $ (0.00) | $ (0.02) | $ (0.00) |
WEIGHTED AVERAGE NUMBER OF BASIC AND DILUTED COMMON SHARES OUTSTANDING |
4,416,988 |
16,593,167 |
4,416,988 |
16,593,167 |
The accompanying notes are an integral part of these financial statements.
GAMESTATE ENTERTAINEMENT, INC.
(formerly LANWERX ENTERTAINMENT, INC./LUNA MEDICAL TECHNOLOGIES, INC.)
(A Development Stage Company)
INTERIM STATEMENT OF SHAREHOLDERS’ EQUITY/(DEFICIT)
AS AT SEPTEMBER 30, 2003
(Unaudited – See Notice to Reader)
(Stated in US Dollars)
| | Common
Number of Shares | Shares
Amount |
Additional Paid-In Capital |
Share Subscriptions Receivable |
Comprehensive Income |
Accumulated Deficit | Total Shareholders’ Equity/ (Deficit) |
Balance, March 31, 2001 | 8,095,660 | $ 8,096 | $ 434,459 | $ - | $ - | $ (759,459) | $ (316,904) |
| | | | | | | | |
Net loss for the year ended | | | | | | | |
March 31, 2002 | - | - | - | - | - | (71,389) | (71,389) |
Balance, March 31, 2002 | 8,095,660 | 8,096 | 434,459 | - | - | (830,848) | (388,293) |
Issuance of common shares in exchange for debt at $0.005 per share |
25,000,000 |
25,000 |
100,000 |
- |
- |
- |
125,000 |
| | | | | | | | |
Net loss for the year ended | | | | | | | |
March 31, 2003 | - | - | - | - | - | (156,170) | (156,170) |
Balance, March 31, 2003 | 33,095,660 | 33,096 | 534,459 | - | - | (987,018) | (419,463) |
| | | | | | | | |
Share consolidation of 1 new for 50 old | (32,433,740) | (32,434) | 32,434 | - | - | - | - |
| | | | | | | | |
Issuance of common shares in exchange for debt at $0.005 per share |
15,000,000 |
15,000 |
60,000 |
- |
- |
- |
75,000 |
| | | | | | | | |
Issuance of common shares in exchange for assets $0.25 per share |
800,000 |
8,000 |
192,000 |
- |
- |
- |
200,000 |
| | | | | | | | |
Net loss for the period ended | | | | | | | |
September 30, 2003 | - | - | - | - | - | (92,297) | (92,297) |
Balance, September 30, 2003 | 16,461,920 | $ 23,662 | $ 818,893 | $ - | $ - | $ (1,079,315) | $ (236,760) |
The accompanying notes are an integral part of these financial statements.
GAMESTATE ENTERTAINEMENT, INC.
(formerly LANWERX ENTERTAINMENT, INC./LUNA MEDICAL TECHNOLOGIES, INC.)
(A Development Stage Company)
INTERIM CASH FLOW STATEMENTS
FOR THE THREE MONTHS AND SIX MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(Unaudited – See Notice to Reader)
(Stated in US Dollars)
| | Three months ended September 30, | Six months ended September30, |
OPERATING ACTIVITIES | | | | |
Net loss for the period | $ (55,886) | $ (17,377) | $ (92,297) | $ (26,218) |
Changes in non-cash working capital items | | | | |
Accounts receivable | 10,000 | - | - | - |
Prepaid expenses | (1,250) | - | (1,250) | - |
Accounts payable | 5,694 | 7,118 | 6,067 | 6,953 |
Cash provided/(used) by operating activities | (41,442) | (10,259) | (87,480) | (19,265) |
FINANCING ACTIVITIES | | | | |
Short-term loans repaid | - | - | - | (30,000) |
Convertible notes payable issued | - | - | 10,000 | 30,000 |
Accrued interest on convertible notes not paid | 2,612 | 1,800 | 4,759 | 2,400 |
Loan advanced | 26,702 | - | 26,702 | - |
Accrued interest on loan not paid | 44 | - | 44 | - |
Advances from shareholders | 23,804 | 8,459 | 57,776 | 16,865 |
Accrued expenses | (6,500) | - | (6,500) | - |
Cash provided/(used) by financing activities | 46,662 | 10,259 | 92,781 | 19,265 |
CASH INCREASE/(DECREASE) | 5,220 | - | 5,301 | - |
| | | | | |
CASH, BEGINNING OF PERIOD | 81 | - | - | - |
CASH, END OF PERIOD | $ 5,301 | $ - | $ 5,301 | $ - |
SUPPLEMENTAL DISCLOSURE: | | | | |
Interest paid | $ - | $ - | $ - | $ - |
Income taxes paid | $ - | $ - | $ - | $ - |
| | | | | |
NON-CASH ACTIVITIES: | | | | |
Issued stock for reduction in debt | $ 75,000 | $ - | $ 75,000 | $ 125,000 |
The accompanying notes are an integral part of these financial statements.
GAMESTATE ENTERTAINEMENT, INC.
(formerly LANWERX ENTERTAINMENT, INC./LUNA MEDICAL TECHNOLOGIES, INC.)
(A Development Stage Company)
NOTES TO INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 2003
(Unaudited – See Notice to Reader)
1.
ORGANIZATION AND DESCRIPTION OF THE BUSINESS
GameState Entertainment, Inc. (formerly LanWerX Entertainment, Inc. and before that Luna Medical Technologies, Inc.), (the “Company”) was incorporated on January 19, 1999 under the laws of the State of Nevada for the purpose of engaging in any lawful activity. On May 31, 1999 the Company amended its articles of incorporation to reflect the name change to Luna Medical Technologies, Inc. On May 19, 2003, the company changed its name to LanWerX Entertainment, Inc. and on Sepember 24, 2003 changed its name to GameState Entertainment, Inc.
On September 23, 2003 the Company acquired all the assets, goodwill, trademarks, and intellectual property of the Netopia Internet Café, a computer LAN game centre with 50 high-speed computer terminals and each having the latest game software. Netopia has been operating on the campus of the University of British Columbia in Vancouver, British Columbia, Canada since January 2002. The Company acquired all the assets in exchange for 800,000 common shares, with a deemed value of $200,000.
The financial statements include all activity of the Company.
As a result of the change in business (see note 10) cumulative from inception figures have not been presented as management does not consider that these figures would provide meaningful information.
The Company maintains an office in Vancouver, British Columbia. The Company has elected a fiscal year-end of March 31.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies is presented to assist the reader in understanding the Company’s financial statements. The financial statements and notes are a representation of the Company’s management which is responsible for their integrity and objectivity.
(i)
Accounting Method
The Company’s financial statements are prepared using the accrual method of accounting.
(ii)
Capital assets are recorded at historical cost. In the year of acquisition, one-half of normal rates of amortization are used. The declining-balance method is used for the assets at the following annual rates:
Computer equipment
30%
Computer software
20%
Office equipment
20%
(iii)
Goodwill
Goodwill and any other long-lived assets to be held and used by the Company are continually reviewed to determine whether any events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. For long-lived assets to be held and used, the Company bases its evaluation on such impairment indicators as nature of the assets, the future economic benefit of the assets, any historical or future profitability measurements, as well as other external market conditions or factors that may be present. In the event that facts and circumstances indicate that the carrying amount of an asset may not be recoverable and an estimate of future undiscounted cash flows is less than the carrying amount of the asset, an impairment loss will be recognized.
(iv)
Loss Per Share
Basic loss per share was computed by dividing the net loss by the weighted average number of shares outstanding during the period. The weighted average number of shares was calculated by taking the number of shares outstanding and weighting them by the amount of time that they were outstanding. Diluted loss per share is the same as basic loss per share, as the inclusion of common stock equivalents would be anti-dilutive.
(v)
Provision for Taxes
At March 31, 2003, the Company had net operating losses of approximately $979,000 that may be offset against operating income through 2016. At September 30, 2003, the Company incurred a net loss of $92,297. No provision for taxes or tax benefits has been reported in the financial statements as there is not a measurable means of assessing future profits or losses.
(vi)
Use of Estimates
The process of preparing financial statements requires the use of estimates and assumptions regarding certain types of assets, liabilities, revenues, and expenses. Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements. Accordingly, upon settlement, actual results may differ from estimated amounts.
(vii)
Advertising
Advertising costs are charged to operations in the year incurred.
(viii)
Cash and Cash Equivalents
The Company considers all highly liquid investments with maturity of three months or less at the date of acquisition to be cash equivalents.
(ix)
Derivative Instruments
At September 30, 2003, the Company had not engaged in any transactions that would be considered derivative instruments or hedging activities.
(x)
Compensated Absences
The Company has no employees. At such time as the Company hires personnel, its employees will be entitled to paid vacation, paid sick days, and personal days off depending on job classification, length of service, and other factors. The Company’s policy will be to recognize the cost of compensated absences when actually paid to employees.
(xi)
Foreign Currency Transactions
All figures presented are in US dollars. Foreign currency transactions are translated to US dollars using the exchange rate in effect at the time of the transaction.
(xii)
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements, the Company incurred a net loss of $92,297 for the six month period ended September 30, 2003, and has negative working capital. The Company has recently completed a major transaction, which will, if successful, mitigate these factors which raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence. Management intends to seek additional capital from new debt and equity issuances that will provide funds needed to increase liquidity, fund internal growth, and fully implement its business plan.
(xiii)
Fair Value of Financial Instruments
The carrying amounts of cash, accounts receivable, prepaid expenses and deposits, accounts payable, accrued expenses, loan payable, convertible notes payable, and advances from shareholders approximate their fair value.
3.
CAPITAL ASSETS
As at September 30, 2003 no amortization was recorded on the capital assets acquired from Netopia Internet Café on September 23, 2003 as the amount of amortization was considered insignificant for the 7 day period.
4.
LOAN PAYABLE
A loan facility of $100,000 has been provided by an arm’s length third party with $26,702 advanced to the Company as at September 30, 2003. The loan is due in three years from the date of the first advance being September 11, 2006 with interest only payable quarterly at 8% per annum, simple interest.
5.
CONVERTIBLE NOTES PAYABLE
There are five convertible notes payable. Three notes are dated June 1, 2002 totalling $30,000 with interest at 2% per month compounded semi-annually which were due and payable on May 31, 2003. The principal and interest is convertible into common shares at a conversion price of $0.01 per share, at the option of the lender, with the conversion price of $0.01 based on the Company’s share structure as of June 1, 2002.
The remaining two notes are dated May 30, 2003 totalling $10,000 with interest at 12% per annum with a maturity date at December 1, 2003. The principal is convertible into common shares at a conversion price of $0.25 per share on or before December 1, 2003.
6.
ADVANCES FROM SHAREHOLDERS
Advances from shareholders consist of the following at September 30, 2003:
(i)
There was an advance from Campbell Capital Advisory, Inc. totalling $126,909 (March 31, 2003 - $136,760). The amount is unsecured and bears 10% interest per annum. Campbell Capital Advisory, Inc. is a related company under the control of the Company’s secretary (see Notes 9 and 11).
(ii)
There is a note payable to Javelin Enterprises totalling $2,663 (March 31, 2003 - $2,536). The note payable is unsecured, has no stated maturity, and bears 10% interest per annum. Total interest accrued during the six months ended September 30, 2003 was $127. During December of 1999, the Company issued 80,000 common shares as partial satisfaction of the note. Javelin Enterprises is a shareholder of the Company (see Note 11).
(iii)
There was an advance from King Capital Corporation totalling $169,295 (March 31, 2003 – $176,795). The amount is unsecured and bears no interest. King Capital Corporation is a shareholder of the Company and is controlled by the Company’s president (see Notes 9 and 11).
7.
PREFERRED SHARES
The Company is authorized to issue up to 5,000,000 preferred shares with a par value of $0.001 per share. The preferred shares do not carry any pre-emptive or preferential rights to subscribe to any unissued stock or any other securities which the Company may be authorized to issue and does not carry voting rights.
No preferred shares were issued as of September 30, 2003.
8.
COMMON SHARES
The Company is authorized to issue up to 50,000,000 common shares with a par value of $0.001 per share. The voting rights of the common shares are non-cumulative.
Upon incorporation, 7,310,660 common shares were sold, 7,170,000 at $0.001 per share and 140,660 at $0.50 per share.
During the year ended March 31, 2000, the Company issued 630,000 common shares for cash at $0.50 per share. The Company also issued 100,000 common shares in settlement of outstanding debt at $0.50 per share.
During the year ended March 31, 2001, the Company issued 55,000 shares at $0.001 per share for a subscription receivable that was subsequently paid.
During the year ended March 31, 2003, the Company issued 25,000,000 sharesat $0.005 per share for a total of $125,000, for a reduction of debt.
On May 19, 2003 the Company’s shares were consolidated on the basis of 1 new share for 50 old shares.
On July 1, 2003 the Company issued 15,000,000 common shares at $0.005 per share for a total of $75,000 for a reduction of debt to related parties.
On September 23, 2003 the Company issued 800,000 common shares to the sellers of the Netopia Internet Café in exchange for all the assets, goodwill, trademarks, and intellectual property of the business.
9.
WARRANTS AND OPTIONS
The Company issued one warrant with each share of common stock subscribed for during a subscription year in the fall of 1999. The warrants had an exercise price of $1.00 per share which expired on December 1, 2000. As of September 30, 2003, no warrants had been exercised and all warrants have expired.
At September 23, 2003, the Company adopted a formal equity incentive plan with no equity incentive options granted under this plan to date. Prior to this date, the Company issued options to two consultants during the year ended March 31, 2000. The options had no value due to the fact that the exercise price was in excess of the fair market value on the date of grant. On May 8, 2000, the Company cancelled this agreement with the required 30 days notice, and the consultants relinquished their claim to these options.
10.
RELATED PARTIES
The Company’s secretary, Gordon C. McDougall, is also the president and shareholder of Campbell Capital Advisory, Inc. (“CCA”) which had advanced funds to the Company for operations and to retain the services of an attorney. As of September 30, 2003, the Company owes CCA $126,909. (see Notes 7 and 9).
The Company executed a promissory note in favour of a shareholder for funds advanced to the Company. As partial satisfaction of the note, 80,000 common shares were issued. As of September 30, 2003, the balance owing on the note was $2,663 (see Note 7).
As at September 30, 2003, the Company also received an advance from a corporation owned by the president of the Company totalling $169,295 (see Notes 7 and 9).
11.
FOREIGN OPERATIONS
The accompanying balance sheet includes the Company’s assets in Canada. Although Canada is considered politically and economically stable, it is always possible that unanticipated events in foreign countries could disrupt the Company’s operations.
GAMESTATE ENTERTAINEMENT, INC.
(formerly LANWERX ENTERTAINMENT, INC./LUNA MEDICAL TECHNOLOGIES, INC.)
(A Development Stage Company)
MANAGEMENT DISCUSSION AND ANALYSIS
FOR THE PERIOD ENDED SEPTEMBER 30, 2003
(Unaudited – See Notice to Reader)
The computer gaming industry is ripe! From a corporate view it looks very similar to the movie and video rental industry. When VCRs were invented, they spawned a cottage video rental industry. In every city and town small independent video rental stores popped up. It was a highly fragmented industry that begged for better service and selection. Along came companies like Blockbuster Entertainment and the industry was never the same. Blockbuster took out costs. They offered a friendly consistent place to rent videos, and once established as the market leader, they start offering a wide range of non-video rental products that boosted their revenues and margins. It was a classic maturing of a market. Management believes that this is precisely the state of the Gaming Center market and GameState is going to attempt to position itself as one of the industry consolidators.
GameState plans to offer a set of services to its clientele that combines the experience of the "Movie Theatre" as well as the convenience and selection of a video rental store. Our gaming centers offer an environment that is exciting and fun to be in. We have a large selection of current and former best selling games. The atmosphere at a GameState center is simply "cool" to be around. While this model is exciting, management is planning on taking it a step further. GameState management plans on building a gaming portal that will allow a gamer to either visit one of our physical centers or play a game against another player who is located anywhere in the world. If the gamer chooses to stay at home and visit the gaming portal on their computer, they will get exactly the same selection of games as well as the capability to compete against another enthusiast over the Internet.
Sales & Marketing Strategy
Growth Strategy
GameState is planning on deploying a 2-prong strategy for growth that includes:
•
Acquisitions,
•
Opening of corporate owned GameState centers.
•
Initially, the company plans on acquiring a number of game centers in the United States, Canada, and Europe within the next 5 years. To date GameState has completed its first acquisition, being the assets of Netopia Game Center of Vancouver, B.C., Canada. This acquisition strategy is intended to provide GameState with critical mass, market intelligence, and recognition as one of the "First Mover's" in the game center market. The company is attempting to achieve a repeatable formula for acquisitions that will include:
•
Acquisition Target Profiling
•
Specific guidelines for post acquisition gaming center financial performance
Marketing Strategy
GameState is a consumer driven business and its marketing strategy is paramount to the success of the business. We plan to deploy a multi-pronged strategy to market GameState to its customers. GameState centers are planned to be located in close proximity to schools, malls, and other places where our target customers are found. We plan on deploying direct marketing campaigns to drive awareness of the gaming center's opening and to offer promotions to drive traffic through the door. We plan on promoting GameState centers as the place to be to our gaming enthusiast clients. At the same time we will market heavily to the parents of our clients that GameState centers are a very good and safe place for their children to be spending their time. We also plan on deploying more traditional marketing tools to communicate our message to parents such as print ads and television.
Target Customers "Gamers"
•
Management believes that the game revolution is fueled by the 14 to 35 year old male.
•
Gamers play independently and on teams.
•
Competitive play is available locally and worldwide via the Internet
•
The Gamers or game playing enthusiasts will gravitate to the "coolest" place with the largest selection of games.
•
Today the IDSA reports that 60 % of Americans, or about 145 million people, play computer & video games. The average age of computer and video game players is increasing (28 yrs old, reports IDSA) becauseeverybody plays games.
•
People who play electronic games are computer literate. They are, on the average, more educated than those that don't play and they have more discretionary income. They embrace technology, often building and upgrading their own systems to keep on the cutting edge. On the average they buy 5-10 times more high-tech gadgetry than those that don't play electronic games. They areearly adopters. They areopinion leaders.
SIGNATURE
The registrant hereby certifies that it meets all of the requirements for filing on Form 10-QSB and that it has duly caused and authorized the undersigned to sign this Quarterly Report in its behalf.
LUNA MEDICAL TECHNOLOGIES, INC.
By: (Signed) CAMERON KING
Chief Executive Officer
Date: November 13, 2003
