UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2008
¨ 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 333-123169
AMERICAN MEDIA SYSTEMS CO.
(Exact name of registrant as specified in its charter)
Nevada | 87-0736406 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
5190 Neil Road, Suite 430, Reno Nevada 89502
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (866) 651-2219
Indicate by check mark whether the registrant (1) has filed all reports required 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.Yesx No¨
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 definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer¨ Accelerated filer¨
Non-accelerated filer¨ Smaller reporting companyx
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes¨ Nox
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¨ No¨
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the Issuer's classes of common equity, as of the latest practicable date: Common, $0.00001 par value per share: 10,000,000 outstanding as of November 11, 2008.
Item 1. Financial Statements.
September 30 | December 31 | ||||
2008 | 2007 | ||||
(unaudited) | (audited) | ||||
CURRENT ASSETS | |||||
Cash | $ 436,376 | $ 446,598 | |||
Account receivable | - | - | |||
Sales taxes recoverable | 1,806 | 3,135 | |||
Prepaid expenses | 4,910 | - | |||
443,092 | 449,733 | ||||
EQUIPMENT | 17,399 | 20,906 | |||
TOTAL ASSETS |
| $ 460,491 | $ 470,639 | ||
CURRENT LIABILITIES | |||||
Accrued liabilities | $ 5,871 | $ - | |||
Accounts payable | 3,848 | 3,560 | |||
Loan payable | 1,000 | 1,000 | |||
| Advances from related parties (Note 3) | 129,851 | 86,651 | ||
Total Liabilities | 140,570 | 91,211 | |||
Going concern - Note 1 | |||||
Common stock - Note 4 | |||||
Authorized: | |||||
50,000,000 shares, $0.00001 par value; | |||||
Issued and outstanding: | |||||
10,000,000 common shares | 100 | 100 | |||
ADDITIONAL PAID-IN CAPITAL | 494,300 | 494,300 | |||
DONATED CAPITAL | 67,876 | 67,876 | |||
ACCUMULATED OTHER COMPREHENSIVE INCOME | 653 | 653 | |||
DEFICIT | (243,008) | (183,501) | |||
TOTAL STOCKHOLDERS' EQUITY | 319,921 | 379,428 | |||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 460,491 | $ 470,639 | |||
REVENUE | $ - | $ - | $ - | $ 1,830 | ||||
COST OF GOODS SOLD | - |
| - |
| - |
| - | |
GROSS PROFIT | - |
| - |
| - |
| 1,830 | |
GENERAL AND ADMINISTRATIVE EXPENSES | ||||||||
Advertising | - | - | - | - | ||||
Audit fees | - | 1,443 | 5,871 | 2,378 | ||||
Bank charges and interest | 73 | 104 | 1,214 | 292 | ||||
Consulting fees | 16,585 | 13,950 | 43,755 | 41,120 | ||||
Depreciation | 1,169 | 1,527 | 3,507 | 4,581 | ||||
Loss (gain) on foreign exchange | 719 | (2,235) | 1,485 | (4,284) | ||||
Legal fees | - | - | 410 | 642 | ||||
Office | - | 47 | - | 47 | ||||
Rent | 250 | - | 250 | 250 | ||||
Telephone and communication | 1 | 50 | 9 | (575) | ||||
Transfer agent fees | 629 | 1,268 | 3,006 | 2,043 | ||||
| Website and software maintenance | - |
| - |
| - |
| 130 |
|
| 19,426 |
| 16,154 |
| 59,507 |
| 46,624 |
NET LOSS | (19,426) |
| (16,154) |
| (59,507) |
| (44,794) | |
Basic and diluted net loss per share | $ (0.00) |
| $ (0.01) |
| $ (0.01) |
| $ (0.02) | |
Weighted average shares outstanding | 10,000,000 |
| 2,000,000 |
| 10,000,000 |
| 2,000,000 | |
|
| |||||
OPERATING ACTIVITIES | ||||||
Loss from operations | $ (59,507) | $ (44,794) | ||||
Items not requiring cash outlay | ||||||
Depreciation | 3,507 | 4,581 | ||||
Cash provided by (used in) changes in operating assets and liabilities | ||||||
Prepaid expenses | (4,910) | - | ||||
Accounts payable | 288 | (3,205) | ||||
Sales taxes payable | 1,329 | (314) | ||||
Accrued liabilities | 5,871 | (5,314) | ||||
Corporate income taxes payable | - | (1,644) | ||||
Net cash used in operating activities | (53,422) |
| (50,690) | |||
FINANCING ACTIVITIES | ||||||
Advanced from a related party | 43,200 | 41,104 | ||||
Net cash provided by financing activities | 43,200 | 41,104 | ||||
Increase in cash and cash equivalents | (10,222) | (9,586) | ||||
Cash and cash equivalent - beginning of the period | 446,598 |
| 63,155 | |||
Cash and cash equivalent - end of the period | $ 436,376 |
| $ 53,569 | |||
Supplemental Disclosure | ||||||
Interest expense | $ 16 | $ 16 | ||||
Taxes | $ - | $ - | ||||
| Foreign exchange (gain) loss | $ 1,485 |
| $ (4,284) | ||
NOTE 1 - BASIS OF PRESENTATION AND CONTINUANCE OF OPERATIONS
These unaudited financial statements have been prepared in accordance with the instructions to SEC Form 10-Q. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been condensed or omitted pursuant to such instructions. These unaudited interim financial statements should be read in conjunction with the audited financial statements and notes thereto as at December 31, 2007.
The Company does not generate sufficient cash flow from operations to fund its activities and has therefore relied principally upon the issuance of securities for financing. The Company intends to continue relying upon the issuance of securities to finance its operations and development activities, however there can be no assurance it will be successful in raising the funds necessary to maintain operations, or that a self-supporting level of operations will ever be achieved. The likely outcome of these future events is indeterminable. These factors together raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustment to reflect the possible future effect on the recoverability and classification of the assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.
In the opinion of the Company's management, all adjustments considered necessary for a fair presentation of these unaudited financial statements have been included and all such adjustments are of a normal, recurring nature. Operating results for the nine-month period ended September 30, 2008 are not necessarily indicative of the results that can be expected for the year ended December 31, 2008.
NOTE 2 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In December 2007, the FASB issued SFAS 141(revised 2007), Business Combinations ("SFAS 141R"). SFAS 141R will significantly change the accounting for business combinations in a number of areas including the treatment of contingent consideration, contingencies, acquisition costs, IPR&D and restructuring costs. In addition, under SFAS 141R, changes in deferred tax asset valuation allowances and acquired income tax uncertainties in a business combination after the measurement period will impact income tax expense. SFAS 141R is effective for fiscal years beginning after December 15, 2008. The Company is currently evaluating the impact of SFAS 141(R) on its financial statements but does not expect it to have a material effect.
In December 2007, the FASB issued SFAS 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51 ("SFAS 160"). SFAS 160 will change the accounting and reporting for minority interests, which will be recharacterized as noncontrolling interests (NCI) and classified as a component of equity. This new consolidation method will significantly change the account with minority interest holders. SFAS 160 is effective for fiscal years beginning after December 15, 2008. The Company is currently evaluating the impact of SFAS 141(R) on its financial statements but does not expect it to have a material effect.
In March 2008, the FASB issued SFAS No. 161 "Disclosure About Derivative Instruments and Hedging Activities-an amendment to FASB Statement 133" (SFAS 161). SFAS 161 requires enhanced disclosures about derivatives and hedging activities and the reasons for using them. SFAS 161 is effective for fiscal years beginning after November 15, 2008, the year beginning April 1, 2009 for the Company. The Company is currently reviewing the provisions of SFAS 161 on its financial statements but does not expect it to have a material effect.
NOTE 3 - RELATED PARTY TRANSACTIONS AND BALANCES
A) During the nine month period ended September 30, 2008 the Company incurred $40,755 ($41,120 in 2007) in consulting fees from A.J. Vesak Ltd., a company wholly owned by its President.
B) The due to Related Parties is a debt without interest or stated repayment terms.
The transaction between the Company and the related party were consummated at the price agreed upon by the parties.
NOTE 4 - COMMON STOCK
Effective January 27, 2006, the Company completed a two shares for one share stock split. Effective September 29, 2006, the Company completed a one share for two shares stock consolidation. The Company's share transactions disclosed in these financial statements have been restated retroactively to reflect the above stock transactions.
On December 15, 2007 the Company completed a $400,000 financing pursuant to an SB-2 registration statement declared effective by the Securities and Exchange Commission on July 5, 2007. 8,000,000 shares of Common Stock were issued.
There are no shares subject to warrants, options or other agreements as at September 30, 2008.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation.
Forward-Looking Statements
This Form 10-Q includes certain statements that may be deemed to be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements in this Form 10-Q, other than statements of historical facts, that address activities, events or developments that we expect, believe or anticipate will or may occur in the future, including operating costs, future capital expenditures (including the amount and nature thereof), and other such matters are forward-looking statements. Although we believe the expectations expressed in such forward-looking statements are based on reasonable assumptions within the bounds of our knowledge of our business, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Because our stock is a penny stock, each time we refer to the Litigation Reform Act, the safe harbor does not apply.
Factors that could cause actual results to differ materially from those in forward-looking statements include: the change of business focus; continued availability of capital and financing; general economic, market or business conditions; acquisition opportunities or lack of opportunities; changes in laws or regulations; risk factors listed from time to time in our reports filed with the Securities and Exchange Commission; and other factors.
American Media Systems Co is a Nevada company incorporated on December 6, 2004. We are a startup film and production company that specializes in television and feature film aerial cinematography. On May 31, 2006 we sold our instructional DVD segment.
Employees and Consultants
The Registrant has no employees. The company's CEO, A.J. Vesak is retained as a consultant.
Management's Discussion and Analysis of Financial Condition and Results of Operations.
During the nine months ending September 30, 2008 we did not realized sales as compared $1,830 for the first nine months of 2007 and we realized a gross margin of $nil (2007 - $1,830). Our revenues in 2007 were generated from aerial film and production.
During the nine months ending September 30, 2008, we incurred a loss from operations of $59,507 (2007 - loss of $44,794). The major components of expenses faced by the company during the ninex months were consulting fees of $43,755 (2007 - $41,120), audit fees of $5,871 (2007 - $2,378), and depreciation of $3,507 (2007 - $4,581). The balance of our expenses during the nine months have been transfer agent fees of $3,006 (2007 - $2,043), loss on foreign exchange of $ 1,485 (2007 - gain of $ 4,284) bank and interest charges of $1,214 (2007 - $292), and legal fees of $410 (2007 - $642),
As of September 30, 2008 the Company had current assets of $443,092 compared to $449,733 balance December 31, 2007. Current assets consist of cash of $433,376 (2007 - $446,598), sales tax recoverable of $1,806 (2007 - $3,135), and prepaid expenses of $ 4,910 (2007 - $nil). As of September 30, 2008 the Company has current liabilities of $140,570 compared to $91,211 at December 31, 2007. The current liabilities consist of $1,000 in loan payable (December 31, 2007 - $1,000), $3,848 accounts payable (December 31, 2007 - $3,560), accrued liabilities of $5,871 (December 31, 2007 - $nil) and $129,851 due to a related party (December 31, 2007 - $86,651). There is no long-term debt. The Company may in the future invest in short-term investments from time to time but there can be no assurance that these investments will result in profit or loss.
Our future growth and success will be dependent on our ability to develop new markets and to grow the customer base for our aerial cinematography services. If we cannot succeed in developing new markets and grow our customer base then our prospects for growth are substantially undermined.
Plan of Operations
Our plan of operations for the next 12 months is to continue our business of providing aerial cinematography services to the film and advertising industries and to diversify into government and corporate sectors. We feel that we are well positioned to take advantage of any growth in the local film industry. To pursue these objectives we completed a financing in December of 2007 pursuant to an SB-2 registration statement declared effective by the Securities and Exchange Commission on July 7, 2007. We raised a total of $400,000 and issued 8,000,000 shares of common stock. The funds will be utilized to pay general working capital expenses such as, but not limited to, office, audit and legal fees. We will also utilize the funds to market our services by customizing our corporate awareness DVD to specific sectors within the economy. We will target those sectors that we believe are poised for growth and could benefit the greatest from our services. We anticipate that this work will require additional consulting, l egal, and travel and related expenses as we continue expanding our customer base.
Off balance-sheet arrangements
We do not have any off balance-sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Recent accounting pronouncements
In December 2007, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard ("SFAS") No. 141(R), "Business Combinations". SFAS 141(R) establishes principles and requirements for how the acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, an any noncontrolling interest in the acquiree, recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase, and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141(R) is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. As such, the Company is required to adopt these provisions at the beginning of the fiscal year ended December 31, 2009. The Company is currently evaluating the impact of SFAS 141(R) on its consolidated financial statements but doe s not expect it to have a material effect.
In December 2007, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard ("SFAS") No. 160, "Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51". SFAS 160 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. As such, the Company is required to adopt these provisions at the beginning of the fiscal year ended December 31, 2009. The Company is currently evaluating the impact of SFAS 160 on its consolidated financial statements but does not expect it to have a material effect.
In March 2008, the FASB issued SFAS No. 161 "Disclosure About Derivative Instruments and Hedging Activities-an amendment to FASB Statement 133" (SFAS 161). SFAS 161 requires enhanced disclosures about derivatives and hedging activities and the reasons for using them. SFAS 161 is effective for fiscal years beginning after November 15, 2008, the year beginning April 1, 2009 for the Company. The Company is currently reviewing the provisions of SFAS 161 to determine any impact for the Company.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
N/A
Item 4. Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures: Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports filed under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. During the quarter covered by this report management made changes to our disclosure controls and procedures in an effort to ensure that all requirements of the Exchange Act are met in future disclosure documents. As of the end of the period covered by this report, the Company carried out an eval uation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based upon and as of the date of that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports the Company files and submits under the Exchange Act is recorded, processed, summarized and reported as and when required.
(b) Changes in Internal Control over Financial Reporting: There were no changes in the Company's internal control over financial reporting identified in connection with the Company evaluation of these controls as of the end of the period covered by this report that could have significantly affected those controls subsequent to the date of the evaluation referred to in the previous paragraph, including any correction action with regard to significant deficiencies and material weakness.
There were no significant changes in the Company's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any significant deficiencies or material weaknesses of internal controls that would require corrective action.
Item 4T. Controls and Procedures
N/A
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
N/A
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
This use of proceeds information is being disclosed pursuant to our SB-2 registration statement file # 333-143464 declared effective on July 7, 2007. The offering commenced on July 8, 2007 and was terminated on December 15, 2007 with 8,000,000 shares of common stock issued and $400,000 raised.
Pursuant to the SB-2 registration statement we registered 8,000,000 shares for sale by the issuer for maximum proceeds of $400,000 of which 8,000,000 shares were sold for total proceeds of $400,000.
There was no underwriter in the offering and no funds have been paid for underwriting discounts or commissions, finders' fees, or to underwriters in connection with the offering.
We have paid total expenses of $975 including legal, audit, and transfer agent fees. All these fees were paid directly by the issuer and none of the fees were paid to a director, officer, 10% security owners, or any individual or firm with insider or related party affiliation with the issuer.
Net proceeds to the issuer after taking account of expense related to the registration statement were $399,025. From the effective date to September 30, 2008 the issuer has used $13,760 for consulting and office expenses of the net offering proceeds.
Item 3. Defaults Upon Senior Securities
None
Item 4. Submissions of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits
3.1 | Articles of Incorporation (1) |
3.2 | Bylaws (1) |
4.1 | Specimen Stock Certificate (1) |
10.1 | Contract with Brand Specialists LLC (1) |
10.2 | Purchase agreement for Craft College intellectual property (1) |
10.3 | Purchase agreement for Mentor Media intellectual property (1) |
10.4 | Contract with Memories Complete (1) |
10.5 | Written representation of verbal agreement with Vancouver Film Studios (1) |
14.1 | Code of ethics (1) |
21.1 | Subsidiaries (1) |
31.1 | Certification of Principal Executive Officer and Principal financial Officer pursuant to Rule 13a-14 and Rule 15 d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended. |
32.1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer and Chief Financial Officer). |
|
|
(1) Incorporated herein by reference from our Form SB-2 registration statement and all amendments thereto filed with the Securities and Exchange Commission, and amendments thereto, SEC file No. 333-123169 or Form 10KSB for the year ended December 31, 2005.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
AMERICAN MEDIA SYSTEMS CO. | ||
Dated: November 11, 2008 | BY: | AJ VESAK |
