UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2005
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ________________ to _________________
Commission file number 0-50742
SIGN MEDIA SYSTEMS, INC.
-----------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
FLORIDA 02-0555904
- ----------------------------------- ----------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2100 19th Street, Sarasota FL 34234
-----------------------------------------------------------------------------
(Address of principal executive offices)
(941) 330-0336
-----------------------------------------------------------------------------
(Issuer's telephone number)
-----------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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: 8,460,000 Common Shares no par value
as of March 31, 2005
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [ X ]
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements.
The information required by Item 310(b) of Regulation S-B is attached hereto as
Exhibit One.
Item 2. Management's Discussion and Analysis or Plan of Operation.
THE FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF
THE COMPANY SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND
NOTES THERETO INCLUDED ELSEWHERE IN THIS REPORT.
THIS DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES, AND THE COMPANY'S ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS,
INCLUDING, BUT NOT LIMITED TO COMPETITION AND OVERALL MARKET AND ECONOMIC
CONDITIONS.
RESULTS OF CONTINUING OPERATIONS
Three Months Ended
March 31
2004
2005 (restated)
Revenue $ 22,271 $ 282,600
Cost of Revenue 2,507 55,144
---------------- -------------
Gross profit 19,764 227,456
Operating and
Other Expenses 189,765 180,026
---------------- -------------
Income (Loss) from
continuing operations $(170,302) $ 47,338
================ =============
Gross profit margin 89% 80%
Earnings per share
of common stock $ (0.020) $ 0.006
The Company generated $22,271 of revenue, $19,764 of gross profit, $(170,302) of
net loss from continuing operations and $(0.020) in net loss per
weighted-average common share from continuing operations for the three months
ended March 31, 2005.
For total operations, net loss for the three months ended March 31, 2005, was
$(170,302) or $(0.020) in net loss per weighted-average common share with
8,460,000 weighted average common shares outstanding compared with a earnings of
$47,338 or $0.006 in earnings per weighted-average common with 8,222,222
weighted average common shares outstanding for the three months ended March 31,
2004.
Revenue for the three months ended March 31, 2005, decreased $260,329 from the
same period last year. Cost of goods sold for the three months ended March 31,
2005, decreased $207,692 from the same period last year. Operating and other
expenses for the three months ended March 31, 2005, increased $9,739 from the
same period last year. Income from continuing operations for the three months
ended March 31, 2005, decreased $217,640 from the same period last year.
Earnings per weighted-average common share was $(0.020) for the three months
ended March 31, 2005, based on weighted-average common shares outstanding of
8,460,000, and earnings per weighted-average common share was $0.006 for the
three months ended March 31, 2004 based upon weighted-average common shares
outstanding of 8,222,222.
MANAGEMENT'S DISCUSSION
The Company attributes the decrease in revenue, cost of goods sold, gross profit
and income form continuing operations to decreases in sales primarily due to the
timing of the placement of orders from the Company's primary dealer. The Company
expects sales to increase in its second quarter of 2005 and that sales for the
year to increase compared to sales in 2004. The Company's primary emphases is to
expand sales nation wide.
The Company will require significant capital to implement both its short term
and long-term business strategies. However, there can be no assurance that such
additional capital will be available or, if available, that the terms will be
favorable to the Company. The absence of significant additional capital whether
raised through a public or private offering or through other means, including
either private debt or equity financings, will have a material adverse effect on
the Company's operations and prospects.
The Company's operations have consumed and will continue to consume substantial
amounts of capital, which, up until now, have been largely financed internally
through cash flows, from loans from related parties, and private investors. The
Company expects capital and operating expenditures to increase. Although the
Company believes that it will be able to attract additional capital through
private investors and as a result thereof its cash reserves and cash flows from
operations will be adequate to fund its operations through the end of calendar
year 2006, there can be no assurance that such sources will, in fact, be
adequate or that additional funds will not be required either during or after
such period. No assurance can be given that any additional financing will be
available or that, if available, it will be available on terms favorable to the
Company. If adequate funds are not available to satisfy either short or
long-term capital requirements, the Company may be required to limit its
operations significantly or discontinue its operations. The Company's capital
requirements are dependent upon many factors including, but not limited to, the
rate at which it develops and introduces its products and services, the market
acceptance and competitive position of such products and services, the level of
promotion and advertising required to market such products and services and
attain a competitive position in the marketplace, and the response of
competitors to its products and services.
Item 3. Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures
The term "disclosure controls and procedures" is defined in Rules 13a-15(e) and
15d-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). This term refers to the controls and procedures of a company that are
designed to ensure that information required to be disclosed by a company in the
reports that it files under the Exchange Act is recorded, processed, summarized,
and reported within the required time periods. Our Chief Executive Officer and
our Chief Financial Officer have evaluated the effectiveness of our disclosure
controls and procedures as of the end of the period covered by this annual
report. They have concluded that, as of that date, our disclosure controls and
procedures were effective at ensuring that required information will be
disclosed on a timely basis in our reports filed under the Exchange Act.
(b) Changes in Internal Control over Financial Reporting
No change in our internal control over financial reporting (as defined in Rules
13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the period
covered by this report that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings.
There are no pending or threatened legal proceedings against the Company or any
of its subsidiaries.
Item 2. Changes in Securities.
NONE
Item 3. Defaults Upon Senior Securities
NONE
Item 4. Submission of Matters to a Vote of Security Holders.
NONE
Item 5. Other Information.
NONE
Item 6. Exhibits and Reports on Form 8-K.
INDEX TO EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------------------------------------------------------
1 SIGN MEDIA SYSTEMS, INC. FINANCIAL STATEMENTS
31.01 Section 302 Certifications
32.01 Section 906 Certifications
The Company filed no Forms 8K for the quarter ended March 31, 2005.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SIGN MEDIA SYSTEMS, INC.
(Registrant)
Date May 23, 2004 /s/Antonio F. Uccello, III
------------ -----------------------------
Antonio F. Uccello, III
Chief Executive Officer
Chairman of the Board
EXHIBIT 1
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED
MARCH 31, 2005 AND 2004
==============================================================================
SIGN MEDIA SYSTEMS, INC.
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Condensed Consolidated Balance Sheet (Unaudited) as of March 31, 2005
Condensed Consolidated Statements of Income (Operations) for the
Three Months Ended March 31, 2005 and 2004 (Unaudited)
Condensed Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 2005 and 2004 (Unaudited)
Notes to Condensed Consolidated Financial Statements
SIGN MEDIA SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 2005
(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 10,873
Accounts receivable 543,238
Inventory 85,572
---------------
Total current assets 639,683
Property and equipment, net 130,124
----------------
Other assets 4,000
---------------
TOTAL ASSETS $ 773,807
===============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Current portion of long-term debt $ 13,815
Accounts payable and accrued expenses 260,700
Due to related parties 109,761
Liability for stock to be issued 224,900
---------------
Total current liabilities 609,176
Long-term debt, net of current portion 51,184
Due to related parties 169,236
---------------
TOTAL LIABILITIES 829,596
---------------
STOCKHOLDERS' EQUITY
Common stock, no par value, 100,000,000 shares
authorized and 8,460,000 shares issued and
outstanding at March 31, 2005 5,000
Additional paid-in capital 795,139
Accumulated deficit (855,928)
---------------
Total stockholders' equity (deficit) (55,789)
---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 773,807
===============
The accompanying notes
are an integral part of these condensed consolidated financial statements.
SIGN MEDIA SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (OPERATIONS)
FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004 (UNAUDITED)
2005 2004
(restated)
---------------------------
REVENUE - net of discounts $ 22,271 $ 282,600
COST OF GOODS SOLD 2,507 55,144
----------------------------
GROSS PROFIT 19,764 227,456
----------------------------
OPERATING EXPENSES
Professional fees 20,610 21,357
General and administrative expenses 157,263 154,169
Depreciation 11,892 4,500
-----------------------------
Total operating expenses 189,765 180,026
-----------------------------
NET INCOME (LOSS) BEFORE OTHER INCOME (EXPENSE) (170,001) 47,430
OTHER INCOME (EXPENSE)
Interest income 2 -
Interest expense (303) (92)
----------------------------
Total Other Income (Expense) (301) (92)
-----------------------------
NET INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES (170,302) 47,338
Provision for income taxes - -
-----------------------------
NET INCOME (LOSS) APPLICABLE TO COMMON SHARES $ (170,302) $ 47,338
=============================
NET INCOME (LOSS) PER BASIC AND DILUTED SHARES $ (0.020) $ 0.006
=============================
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 8,460,000 8,222,222
=============================
The accompanying notes are an integral part of these condensed consolidated
financial statements.
SIGN MEDIA SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004 (UNAUDITED)
2005 2004
(restated)
------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (170,302) $ 47,338
------------------------------
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities
Depreciation 11,892 4,500
Changes in assets and liabilities:
(Increase)/decrease in accounts receivable 7,340 24,949
(Increase) in inventory - (8,283)
Decrease in prepaid expenses and other
current assets - 55,144
Increase in accounts payable and accrued expenses 90,711 15,380
-------------------------------
Total adjustments 109,943 91,690
-------------------------------
Net cash provided by (used in) operating activities (60,359) 139,028
-------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment (17,461) (12,687)
-------------------------------
Net cash (used in) investing activities (17,461) (12,687)
-------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds (payments) from long-term debt (4,605) (49,402)
Liability for stock to be issued 24,900 -
Proceeds (payments) to related parties - net 62,046 25,552
-------------------------------
Net cash provided by (used in) financing activities 82,341 (23,850)
-------------------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 4,521 102,491
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 6,352 47,068
-------------------------------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 10,873 $ 149,559
===============================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest. $ - $ 92
===============================
The accompanying notes are an integral
part of these condensed consolidated financial statements.
SIGN MEDIA SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005 AND 2004
NOTE 1- ORGANIZATION AND BASIS OF PRESENTATION
The condensed unaudited interim financial statements included
herein have been prepared by Sign Media Systems, Inc. (the
"Company") without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission (the
"SEC"). Certain information and footnote disclosures normally
included in the financial statements prepared in accordance
with accounting principles generally accepted in the United
States of America have been condensed or omitted as allowed by
such rules and regulations, and the Company believes that the
disclosures are adequate to make the information presented not
misleading. It is suggested that these condensed consolidated
financial statements be read in conjunction with the December
31, 2004 audited financial statements and the accompanying
notes thereto. While management believes the procedures
followed in preparing these condensed financial statements are
reasonable, the accuracy of the amounts are in some respects
dependent upon the facts that will exist, and procedures that
will be accomplished by the Company later that year.
The management of the Company believes that the accompanying
unaudited condensed consolidated financial statements contain
all adjustments (including normal recurring adjustments)
necessary to present fairly the operations and cash flows for
the periods presented.
The Company began business as Go! Agency LLC, a Florida
Limited Liability Company ("Go Agency"). Go Agency was formed
in April 2000, principally to pursue third party truck side
advertising. The principal of Go Agency invested approximately
$857,000 in Go Agency pursuing this business. It became
apparent that a more advanced truck side mounting system would
be required and that third party truck side advertising alone
would not sustain an ongoing profitable business. Go Agency
determined to develop a technologically advanced mounting
system and focused on a different business plan.
SIGN MEDIA SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2005 AND 2004
NOTE 1- ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)
In order to develop the advanced mounting system and to pursue
this new business plan, Go Agency incorporated Sign Media
Systems, Inc. (the "Company" or "SMS") on January 28, 2002
under the laws of the State of Florida. Go Agency and SMS
developed a new and unique truck side mounting system, which
utilizes a proprietary cam lever technology, which allows an
advertising image to be stretched tight as a drum. Effective
January 1, 2003, Go Agency transferred all of its assets
including its interest in the proprietary cam lever
technology, which together had an original cost basis of
$300,000 to SMS. The agreed upon value of the assets $55,702
was exchanged for 7,959,000 shares of the Company's common
stock which was in excess of eighty percent (80%) of the
Company's then issued and outstanding shares of common stock.
In connection with this exchange, SMS assumed $25,765 of Go
Agency's debt, which consisted primarily of a truck loan from
GMAC Finance. Following the exchange, the Company had
8,000,000 shares of common stock issued and outstanding. The
Company has developed and filed an application for a patent on
its mounting systems.
Sign Media Systems Acquisition Company, Inc., ("SMA") an
inactive Florida Corporation and American Powerhouse, Inc.
("API") entered into an Agreement and Plan of Share Exchange
dated November 17, 2003, (the "Share Exchange") pursuant to
which the shareholders of API on November 17, 2003 (the
"Exchange Date") were issued 300,000 shares of common stock of
SMA, no par value, in exchange for one hundred percent (100%)
of the issued and outstanding shares of API. The Share
Exchange called for the resignation of the original officers
and directors, who no longer have any continued involvement in
the Company, and the appointing of a new board and officers.
As of the Exchange Date SMA, became the surviving company.
Simultaneously, Sign Media Systems Acquisition Company, Inc.,
an inactive Florida corporation, was merged into Sign Media
Systems, Inc. per a Plan of Merger that was adopted by the
shareholders of both companies on November 17, 2003.
For accounting purposes, these transactions were accounted for
as a reverse acquisition under the purchase method of
accounting. Accordingly, SMS will be treated as the continuing
entity for accounting purposes, and the condensed consolidated
financial statements presented herein are those of SMS.
SIGN MEDIA SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2005 AND 2004
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The condensed consolidated financial statements include the
accounts of the Company and its wholly owned subsidiary. All
significant intercompany accounts and transactions have been
eliminated in consolidation.
Use of Estimates
The preparation of condensed consolidated financial statements
in conformity with accounting principles generally accepted in
the United States of America requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures of contingent assets
and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
Revenue and Cost Recognition
Currently, the Company has three primary sources of revenue:
(1) The sale and installation of their mounting system
(2) The printing of advertising images to be inserted on
trucks utilizing the Company's mounting systems.
(3) Third party advertising
The Company's revenue recognition policy for these sources of
revenue is as follows. The Company relies on Staff Accounting
Bulletin Topic 13, in determining when recognition of revenue
occurs. There are four criteria that the Company must meet
when determining when revenue is realized or realizable and
earned. The Company has persuasive evidence of an arrangement
existing; delivery has occurred or services rendered; the
price is fixed or determinable; and collectibility is
reasonably assured. Typically, the Company recognizes revenue
when orders are placed and they receive deposits on those
orders. In regard to the revenue recognition of third party
advertising, the Company recognizes the revenue once they have
completed the task for which the consumer paid.
In addition, the Company offers manufacturer's warranties.
These warranties are provided by the Company and not sold.
Therefore, no income is derived from the warranty itself.
Cost is recorded on the accrual basis as well, when the
services are incurred rather than when payment is made.
SIGN MEDIA SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2005 AND 2004
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue Recognition (Continued)
Costs of goods sold are separated by components consistent
with the revenue categories. Mounting systems, printing and
advertising costs include purchases made, and payroll costs
attributable to those components. Payroll costs is included
for sales, engineering and warehouse personnel in cost of
goods sold. Cost of overhead is diminimus. The Company's
inventory consists of finished goods, and unassembled parts
that comprise the framework for the mounting system placed on
trucks for their advertising. All of these costs are included
in costs of goods sold for the three months ended March 31,
2005 and 2004.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments and
other short-term investments with an initial maturity of three
months or less to be cash equivalents.
The Company maintains cash and cash equivalent balances at
several financial institutions that are insured by the Federal
Deposit Insurance Corporation up to $100,000.
Property and Equipment
Property and equipment are stated at cost. Depreciation is
computed primarily using the straight-line method over the
estimated useful life of the assets.
Furniture and fixtures 5 years
Equipment 5 years
Trucks 5 years
Advertising
Costs of advertising and marketing are expensed as incurred.
Advertising and marketing costs were $1,800 and $2,733 for the
three months ended March 31, 2005 and 2004, respectively
Fair Value of Financial Instruments
The carrying amount reported in the balance sheets for cash
and cash equivalents, accounts receivable, accounts payable
and accrued expenses approximate fair value because of the
immediate or short-term maturity of these financial
instruments.
Earnings per Share of Common Stock
Historical net income per common share is computed using the
weighted-average number of common shares outstanding. Diluted
earnings per share (EPS) include additional dilution from
common stock equivalents, such as stock issuable pursuant to
the exercise of stock options and warrants.
SIGN MEDIA SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2005 AND 2004
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Earnings per Share of Common Stock (Continued)
The following is a reconciliation of the computation for basic
and diluted EPS:
March 31
2005 2004
(Restated)
--------- ----------
Net income (loss) $ (170,302) $ 47,338
========== ==========
Weighted-=average common
shares outstanding
Basic 8,460,000 8,222,222
Weighted-average common
stock equivalents
Stock options - -
Warrants - -
---------- ----------
Weighted-average common
shares outstanding
Diluted 8,460,000 8,222,222
--------- ---------
NOTE 3- PROPERTY AND EQUIPMENT
Property and equipment consist of the following at March 31,
2005 and 2004:
2005 2004
-------- --------
Equipment $ 88,923 $ 39,217
Furniture & Fixtures 57,882 35,947
Transportation Equipment 54,620 54,621
-------- --------
201,425 129,785
Less: accum. depreciation 71,301 18,534
-------- --------
Net Book Value $ 130,124 $ 111,251
========= =========
Depreciation expense for the three months ended March 31, 2005
and 2004 was $11,892 and $4,500, respectively.
SIGN MEDIA SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2005 AND 2004
NOTE 4- COMMITMENTS AND CONTINGENCIES
The Company entered into a lease agreement on November 1, 2002
with Hawkeye Real Estate, LLC, a related entity, to lease
warehouse and office space. The lease expires on December 30,
2007, and provides that SMS pay all applicable sales and use
tax, insurance and maintenance. The total minimum rental
commitments at March 31, 2005 under this lease are as follows:
2005 $ 30,000
2006 30,000
2007 38,500
---------
$ 87,500
=========
Rent expense for the three months ended March 31, 2005 and
2004 was $8,025, and $11,781, respectively.
NOTE 5- RELATED PARTY TRANSACTIONS
On January 28, 2002, Sign Media Systems, Inc. was formed as
a Florida Corporation but did not begin business operations
until April 2002. Most of the revenue that Sign Media
Systems, Inc. earned was contract work with Go! Agency, LLC.,
a Florida limited liability company, a related party. Sign
Media Systems, Inc. would contract Go! Agency, LLC. to
handle and complete jobs. There was no additional revenue or
expense added from one entity to the other.
On January 3, 2003, the Company entered into a loan agreement
with Olympus Leasing Company, a related party, and in
connection therewith executed a promissory note with a future
advance clause in favor of Olympus Leasing, whereby Olympus
Leasing agreed to loan the Company up to a maximum of
$1,000,000 for a period of three years, with interest accruing
on the unpaid balance at 18% per annum, payable interest only
monthly, with the entire unpaid balance due and payable in
full on January 3, 2006. As of March 31, 2005 there was
$109,761 due. Other due to related party advances were
$169,256. Due to related parties totaled $278,997 at March 31,
2005.
NOTE 6- LONG-TERM DEBT
Long-term debt consists of two installment notes with GMAC
Finance. As discussed in Note 1, the Company assumed debt from
Go! Agency as of January 28, 2002. On June 18, 2003, the
Company acquired a truck in the amount of $45,761 financed by
GMAC over a period of 5 years. Monthly payments are $763. The
loan carries no interest charges.
SIGN MEDIA SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2005 AND 2004
NOTE 7- PROVISION FOR INCOME TAXES
The net deferred tax assets in the accompanying condensed
consolidated balance sheets include the following components
at March 31, 2005:
[OBJECT OMITTED]
Due to the uncertainty of utilizing the approximate $855,928
in net operating losses, and recognizing the deferred tax
assets, an offsetting valuation allowance has been
established.
NOTE 8- STOCKHOLDERS' EQUITY
As of March 31, 2005 and 2004, there were 100,000,000 shares
of common stock authorized.
As of March 31, 2005 and 2004, there were 8,460,000 shares of
common stock issued and outstanding.
During the three months ended March 31, 2005 the Company did
not have any stock transactions.
NOTE 9- LIABILITY FOR STOCK TO BE ISSUED
As of March 31, 2005 the Company received $224,900 for common
stock to be issued at a later date. Upon issuance of the
common stock the liability will be removed.