U.S. 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 under Section 13 or 15(d) of the Exchange Act
For the transition period from ____________ to ____________
Commission File No. 0-30584
BLUE MOON GROUP, INC.
---------------------
(Exact name of small business issuer as specified in its charter)
DELAWARE 16-1636770
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State or Other Jurisdiction of (I.R.S.Employer
Incorporation or Organization) Identification No.)
4890 GARLAND BRANCH RD., DOVER, FL 33527
----------------------------------------
(Address of Principal Executive Offices)
(813) 707-1535
--------------
(Issuers Telephone Number, Including Area Code)
N/A
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(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
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), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the last practicable date.
Common Stock, $.0001 par value per share, 4,124,823 shares were issued and
outstanding at November 6, 2003
Transitional Small Business Disclosure Format (check one)
Yes [ ] No [X]
BLUE MOON GROUP, INC.
INDEX TO FORM 10-QSB
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet as of September 30, 2003 4
Statements of Operations for the nine months and three months 5
ended September 30, 2003 and September 30, 2002
Statements of Stockholders Equity for the nine months ended September 6
30, 2003 and September 30, 2002
Statements of Cash Flows for the nine months and three months ended 7
September 30, 2003 and September 30, 2002
Notes to Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial Condition and 12
Results of Operations
Item 3. Controls and Procedures 15
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Submissions of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
2
FORWARD LOOKING STATEMENTS
When used in this report, the words "may, will, expect, anticipate,
continue, estimate project or intend" and similar expressions identify
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E Securities Exchange Act of 1934 regarding events,
conditions and financial trends that may effect our future plan of operation,
business strategy, operating results and financial position. Current
stockholders and prospective investors are cautioned that any forward-looking
statements are not guarantees of future performance and are subject to risks and
uncertainties and that actual results may differ materially from those included
within the forward-looking statements as a result of various factors. Such
factors are described under the headings "Business-Certain Considerations,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," and the financial Statements and their associated notes.
Important factors that may cause actual results to differ from
projections include, for example:
o the success or failure of management's efforts to implement
their business strategy;
o our ability to protect our intellectual property rights;
o our ability to compete with major established companies;
o our ability to attract and retain qualified employees; and
o other risks which may be described in future filings with the
SEC.
3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BLUE MOON GROUP, INC.
BALANCE SHEET
SEPTEMBER 30, 2003
(UNAUDITED)
September 30,
ASSETS 2003
------------
Current Assets
Cash and cash equivalents $ 247,234
Accounts receivable - trade 60,565
Loans receivable - trade 409,624
Inventories 28,521
------------
Current Assets 745,944
Property and equipment, net 223,444
Intellectual assets, net 31,500
Goodwill 10,000
Music library (Note 2) 6,100,995
Publishing and copyrights 131,250
------------
Total Assets $ 7,243,133
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 322,263
Accrued payroll and expenses 248,770
Judgements payable 92,166
Notes payable 562,568
------------
Current Liabilities 1,225,767
------------
Total Liabilities 1,225,767
Stockholders' Equity
Preferred stock, .001 par value;
5,000,000 shares authorized, 0 issued and outstanding --
Common stock, .001 par value;
50,000,000 shares authorized, 4,124,823
issued and outstanding (Note 5) 4,125
Additional paid-in capital 15,603,282
Retained earnings (9,590,041)
------------
Total Stockholders' Equity 6,017,366
------------
Total Liabilities and Stockholders' Equity $ 7,243,133
============
The accompanying notes are an integral part of these financial statements
4
BLUE MOON GROUP, INC.
STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS AND THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(UNAUDITED)
For the nine months For the three months
ended September 30, ended September 30,
-------------------------- --------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
Revenue
Sales $ 32,565 $ -- $ 32,565 $ --
----------- ----------- ----------- -----------
Total Revenue 32,565 -- 32,565 --
----------- ----------- ----------- -----------
Cost of Sales 6,012 -- 6,012 --
----------- ----------- ----------- -----------
Gross profit 26,553 -- 26,553 --
----------- ----------- ----------- -----------
Operating expenses
Administrative expenses 2,777,013 146,205 738,308 6,483
Salaries and payroll taxes 109,248 -- 42,258 --
Professional and outside services 134,270 135,900 42,800 --
Debt settlement 308,000 -- 308,000 --
Amortization and depreciation 30,254 14,430 10,084 4,810
----------- ----------- ----------- -----------
Total Operating Expense 3,358,785 296,535 1,141,450 11,293
----------- ----------- ----------- -----------
Loss from operations (3,332,232) (296,535) (1,114,897) (11,293)
----------- ----------- ----------- -----------
Other income and expense
Forgiveness of debt 108,379 61,821 -- 61,821
Interest expense (42,925) (27,716) (16,178) (3,656)
Loss on investments (5,440) (5,440)
Loss on disposal of property and equipment (108,166) -- -- --
----------- ----------- ----------- -----------
Total other income and expense (48,152) 34,105 (21,618) 58,165
----------- ----------- ----------- -----------
Loss before income taxes (3,380,384) (262,430) (1,136,515) 46,872
----------- ----------- ----------- -----------
Provision (benefit) of income taxes -- -- -- --
----------- ----------- ----------- -----------
Net loss $(3,380,384) $ (262,430) $(1,136,515) $ 46,872
=========== =========== =========== ===========
Net loss per common share (Note 6) $ (0.91) $ (0.37) $ (0.29) $ 0.06
=========== =========== =========== ===========
Weighted average shares outstanding 3,702,167 700,057 3,948,953 728,098
=========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements
5
BLUE MOON GROUP, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(UNAUDITED)
Common Stock
-------------------------- Paid in Accumulated
Shares Amount Capital Deficit Total
----------- ----------- ----------- ----------- -----------
Balance at December 31, 2001 629,955 $ 630 $10,733,542 $(2,150,080) $ 8,584,092
Issuance of Stock 98,143 $ 98 329,797 -- 329,895
Net Loss -- -- -- (262,430) (262,430)
----------- ----------- ----------- ----------- -----------
Balance at September 30, 2002 728,098 $ 728 $11,063,339 $(2,412,510) $ 8,651,557
=========== =========== =========== =========== ===========
Balance at December 31, 2002 1,906,316 $ 1,906 $13,332,179 $(6,209,657) $ 7,124,428
Issuance of Stock 2,218,507 2,219 2,271,103 -- 2,273,322
Net Loss -- -- -- (3,380,384) (3,380,384)
----------- ----------- ----------- ----------- -----------
Balance at September 30, 2003 4,124,823 $ 4,125 $15,603,282 $(9,590,041) $ 6,017,366
=========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements
6
BLUE MOON GROUP, INC.
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS AND THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(UNAUDITED)
For the nine months For the three months
ended September 30, ended September 30,
-------------------------- --------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
Cash Flows From Operating Activities
Net income (loss) $(3,380,384) $ (262,430) $(1,136,515) $ 46,872
Adjustments to reconcile net loss to net
cash used by operating activities
Amortization and depreciation 30,254 14,430 10,084 4,810
Issuance of stock for services (196,308) 151,505 -- --
Changes in operating assets and liabilities (net
of effects from acquisition of business):
Accounts receivable (32,565) -- (32,565) --
Loans receivable - trade (226,000) (9,390) -- (9,390)
Marketable securities 7,800 7,800
Inventory 1,479 -- 6,012 --
Prepaid expenses 1,298,687 -- 430,437 --
Accounts payable 83,761 -- 6,049 --
Royalties payable -- (19,621) -- (17,826)
Accrued expenses 30,121 (150,728) 47,426 (107,822)
----------- ----------- ----------- -----------
Net cash flow used by operating activities (2,383,155) (276,234) (661,272) (83,356)
----------- ----------- ----------- -----------
Cash flows from investing activities
Acquisition of property, plant and equipment (3,620) (31,000) (3,134) --
----------- ----------- ----------- -----------
Net cash used by investing activities (3,620) (31,000) (3,134) --
----------- ----------- ----------- -----------
Cash flows from financing activities
Proceeds from issuance of debt 166,878 128,844 67,640 83,356
Proceeds from issuance of stock 2,467,131 -- 844,000 --
Common stock issued for repayment of debt -- 178,390 -- --
----------- ----------- ----------- -----------
Net cash provided by financing activities 2,634,009 307,234 911,640 83,356
----------- ----------- ----------- -----------
Net increase (decrease) in cash
and cash equivalents 247,234 -- 247,234 --
Cash at beginning of period -- -- -- --
----------- ----------- ----------- -----------
Cash at end of period $ 247,234 $ -- $ 247,234 $ --
=========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements
7
BLUE MOON GROUP, INC.
Notes to Financial Statements
for the nine months and three months ended September 30, 2003 and 2002
Note 1 - Organization
In October 2002, the Company reincorporated in the State of Delaware and changed
its name to Blue Moon Group, Inc. The predecessor, Open Door Records, Inc.
("Open Door") was incorporated in the State of Rhode Island on November 20,
1997. In September 1999, Open Door merged with Genesis Media Group, Inc., a New
Jersey corporation. The surviving entity of this merger was renamed Open Door
Online, Inc., a New Jersey corporation. In October 2002, the Company acquired
Nebulous Records, Inc., a Florida corporation formed in February 2002.
Note 2 - Summary of Significant Accounting Policies
The summary of significant accounting policies of Blue Moon Group, Inc. is
presented to assist in understanding the Company's financial statements. The
financial statements and notes are representations of the Company's management.
Management is responsible for their integrity. The accounting policies conform
to generally accepted accounting principles and have been consistently applied
in the preparation of the financial statements. The results of operations for
the interim periods shown in this report are not necessarily indicative of
results to be expected for the fiscal year ending December 31, 2003.
Line of Business
- ------------------
Blue Moon Group, Inc. is an entity designed to provide traditional sales of
recorded music from artists who have contracted the Company to provide
distribution. The Company will also generate revenue from promotions, artist
recording sessions and the sales of other prerecorded music.
Revenue Recognition
- ---------------------
Revenue is recognized when product is shipped with an offset for possible
returns. Additional revenue is recorded when recording or promotional contracts
are billed upon completion of the services.
Equipment and Depreciation
- ---------------------
Depreciation has been provided on a straight-line basis for financial accounting
purposes using the straight-line method over the shorter of the asset's
estimated life or the lease term. The estimated useful lives of the assets are
as follows:
Record and production equipment 5-7 Years
Website development 5-7 Years
Leasehold improvements 3-10 Years
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BLUE MOON GROUP, Inc.
Notes to Financial Statements
for the nine months and three months ended September 30, 2003 and 2002
Note 2 - Summary of Significant Accounting Policies (continued)
Impairment
- --------------
The Company has adopted SFAS No. 121 "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of" which requires
that long-lived assets to be held and used be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable.
In September 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible
Assets. This statement establishes accounting and reporting standards for
goodwill and intangibles for years commencing after December 15, 2001. Whether
already acquired or subsequently acquired after the effective date, companies
are required to identify intangibles with finite lives and those with indefinite
lives. Those intangibles with finite lives are to be amortized over the
estimated useful lives of the assets while those with indefinite lives are not
to be amortized. Each intangible or goodwill asset should be analyzed at least
annually for impairment where the carrying value is in excess of the fair value
of the intangibles and in excess of the implied fair value in the case of
goodwill assets. The asset's carrying value is to be reduced by a charge to
income if the fair value is lower than the carrying value. The Company has not
determined the effect of this new standard.
Master Music Library
- --------------------
The master music library consists of original and digitized masters of
well-known artists. The Company has the right to produce, sell, distribute or
otherwise profit from its utilization of this library subject to industry
standard royalty fees to be paid to artists as copies of the product are sold or
distributed. The Company will amortize the library on a unit sold basis in
accordance with SFAS 50 that relates the capitalized costs to estimated net
revenue to be realized. When anticipated sales appear to be insufficient to
fully recover the basis, a provision against current operations will be made for
anticipated losses. To date the Company has not utilized the library.
Comprehensive Net Loss
- ---------------------
There is no difference between the Company's net loss as reported for any of the
periods reported herein and the Company's comprehensive loss, as defined by the
Statement of Financial Accounting Standards No. 130.
Note 3 - Property and Equipment
Depreciation and amortization for the nine months and three months ended
September 30, 2003 and 2002 were $30,254 and $14,430 and $10,084 and $4,810,
respectively.
9
BLUE MOON GROUP, Inc.
Notes to Financial Statements
for the nine months and three months ended September 30, 2003 and 2002
Note 3 - Property and Equipment (continued)
Property plant and equipment consist of the following:
September 30,
2003 2002
--------- ---------
Production equipment $ 220,179 $ 124,305
Office equipment, furniture and fixtures 36,232 10,376
--------- ---------
256,411 134,681
Less accumulated depreciation (32,967) (92,266)
--------- ---------
$ 223,444 $ 42,415
========= =========
Note 4 - Stock Transactions - Related Party
During 2002 and 2003, the President of the Company has been a lender of funds to
the Company. As of December 31, 2002 and September 30, 2003, the outstanding
balances due him are $48,007 and $203,844, including interest expense of $1,877
and $3,099 respectively. The interest rate is 7% per annum.
Note 5 - Income Taxes
At September 30, 2003, the Company has approximately $6,547,000 and $2,398,000
of net operating losses available to offset future federal income tax liability.
There is no certainty as to the timing of such recognition nor that the Company
will be able to fully utilize these differences. For financial purposes, as
valuation allowance of $1,453,000 and $113,000 have been recognized to offset
the deferred tax assets related to federal and state losses recorded for the
nine months ended September 30, 2003 and 2002.
The components of deferred tax assets and liabilities are as follows:
September 30,
2003 2002
----------- -----------
Tax effects of carryfoward benefits:
Net operating loss carryforward $ 2,815,000 $ 1,031,000
----------- -----------
Net deferred income tax assets before valuation allowance 2,825,000 1,031,000
Less valuation allowance (2,815,000) (1,031,000)
----------- -----------
Net deferred tax asset $ -- $ --
=========== ===========
Income tax benefits for the nine months ended September 30, 2003 and 2002
include the following components:
Tax effects of carryforward benefits:
Net operating loss carryforwards $ 1,453,000 $ 113,000
Tax effects of carryforwards:
Tax effects of future taxable differences and
carryforwards 1,453,000 113,000
Less deferred tax asset valuation allowance (1,453,000) (113,000)
----------- -----------
Net deferred tax asset $ -- $ --
=========== ===========
10
BLUE MOON GROUP, Inc.
Notes to Financial Statements
for the nine months and three months ended September 30, 2003 and 2002
Note 5 - Income Taxes (continued)
Realization of the net deferred tax assets is dependent on generating sufficient
taxable income prior to their expiration. Tax effects are based on a 9.0% state
and 34.0% federal income tax rates for a net combined rate of 43%. The tax
effects of the acquired business combination have not been recognized in the
current or prior periods but will be recognized in future periods, at which time
if the current period taxable income is insufficient to offset such charges for
tax purposes, the effect will be available to the Company over the succeeding 20
years. The realized net operating losses expire as follows:
2019 $ 606,000
2020 878,000
2021 652,000
2022 1,010,000
2023 3,380,000
-----------
Total $ 6,626,000
===========
Note 6 - Common Stock
The outstanding stock of the Company, as adjusted, was 4,124,823 shares and
728,098 shares at September 30, 2003 and 2002, respectively.
Note 7 - Earnings per Common Share
Earnings per share of common stock have been computed based on the weighted
average number of shares outstanding. The weighted average number of shares used
to compute the earnings per share at September 30, 2003 and 2002 was 3,702,167
and 700,057, respectively.
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
FOR THE THREE MONTH'S ENDED SEPTEMBER 30, 2003 AND SEPTEMBER 30, 2002
SALES
Sales recorded for the quarter ending at September 30, 2003 totaled
$32,565. No sales were reported in the quarterly period ended September 30,
2002. Product has been assigned to various warehouses for distribution in the
fourth quarter. Distribution from these locations are expected to occur during
the fourth quarter in time for holiday sales, which are expected to be brisk.
COST OF SALES
Cost of sales are normally primarily represented by costs for
recordings, promotions and CD fulfillment operations and royalties. Cost of
sales recorded for the quarter ending at September 30, 2003 totaled $6,012. No
cost of sales was reported in the quarterly period ended September 30, 2002.
SALES AND MARKETING EXPENSE
Sales and marketing expense consists primarily of direct marketing
expenses, promotional activities, salaries and costs related to website
maintenance and development. We anticipate that overall sales and marketing
costs will increase significantly in the future; however, sales and marketing
expense as a percentage of net revenue may fluctuate depending on the timing of
new marketing programs and addition of sales and marketing personnel.
Expenses of $ 0 were incurred for the quarter ended September 30, 2003
and 2002. The lack of expenses is directly relational to the lack of available
cash for promotional expenses.
GENERAL AND ADMINISTRATIVE
General and administrative expense consists primarily of legal and
other administrative costs, fees for outside consultants, and other overhead.
General and administrative expenses were $738,308 for the quarter ended
September 30, 2003, an increase of $731,825 from $6,483 for the quarter ended
September 30, 2002. The increase is attributable to consulting fees of $703,655
and miscellaneous other expenses. The consulting fees were paid for new
contracts to produce music videos and for a music advisory board and additional
activities in the production of musical recordings and for the solicitation of
financing, either in the form of loans or the private placement of Company
stock.
DEPRECIATION EXPENSE
Depreciation and amortization expenses rose to $10,084 from $4,810 in
the quarters ended September 30, 2003 and September 30, 2002, respectively. The
increase is attributed to the addition of equipment from the Nebulous Records
purchase and is lessened by the sale of the Open Door Records equipment that
occurred in the fourth quarter of 2002.
12
INTEREST EXPENSE
Net interest expense for the quarter ended September 30, 2003 was
$16,178. Comparable interest costs for the corresponding quarter ended 2002 was
$3,656. This increase was caused by the increase in outstanding short-term debt
that occurred in fiscal 2003.
RESULTS OF OPERATIONS
FOR THE NINE MONTH'S ENDED SEPTEMBER 30, 2003 AND SEPTEMBER 30, 2002
SALES
Sales recorded for the nine months ending at September 30, 2003 totaled
$32,565. No sales were reported in the quarterly period ended September 30,
2002.
COST OF SALES
Cost of Sales is normally primarily represented by costs for
recordings, promotions and CD fulfillment operations and royalties. Cost of
sales recorded for the nine months ended September 30, 2003 totaled $6,012. No
cost of sales was reported in the nine months ended September 30, 2002.
SALES AND MARKETING EXPENSE
Sales and marketing expense consists primarily of direct marketing
expenses, promotional activities, salaries and costs related to website
maintenance and development. We anticipate that overall sales and marketing
costs will increase significantly in the future; however, sales and marketing
expense as a percentage of net revenue may fluctuate depending on the timing of
new marketing programs and addition of sales and marketing personnel.
Expenses of $ 0 were incurred for the nine months ended September 30,
2003 and 2002. The lack of expenses is directly relational to the lack of
available cash for promotional expenses.
GENERAL AND ADMINISTRATIVE
General and administrative expense consists primarily of salaries,
legal and other administrative costs, fees for outside consultants and other
overhead. General and administrative expenses were $2,777,013 for the nine
months ended September 30, 2003, an increase of $2,630,808 from $146,205 for the
quarter ended September 30, 2002. The increase is attributable to consulting
that rose by $2,675,277 and legal fees that increased $34,485. The consulting
fees were paid for new contracts to produce music videos and for a music
advisory board plus the production costs for newly recorded music and for the
solicitation of financing, either through loans or the private placement of
company stock.
DEPRECIATION EXPENSE
Depreciation and amortization expenses rose to $30,254 from $14,430 in
the nine months ended September 30, 2003 and September 30, 2002, respectively.
The increase is attributed to the addition of equipment from the Nebulous
Records purchase and is lessened by the sale of the Open Door Records equipment
that occurred in the fourth quarter of 2002.
13
INTEREST EXPENSE
Net interest expense for the nine months ended September 30, 2003 was
$42,925. Comparable interest costs for the corresponding nine months ended 2002
was $27,716. This increase was caused by the increase in outstanding short-term
debt that occurred in fiscal 2003.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2003 we had $247,234 in cash. Sufficient cash to
finance operations for the short term is required. Historically, we have
financed our operations with short-term convertible debt or through the issuance
of equity in the form of our common stock. During the current quarter and the
nine month period ended September 30, 2003, we issued net new debt for cash of
approximately $67,640 and $166,878, respectively. We also were successful in a
private placement of our stock of $250,000 in the three months ended September
30, 2003. Significant increases in capital will be required to fund our
aggressive business plan and support the manufacturing and distribution
requirements of our current artist distribution contracts. While there is no
assurance that we will be successful in raising the required capital all
indications through our current financing negotiations suggest that we will
receive substantial capital.
ACCOUNTS RECEIVABLE
As of September 30, 2003 we had receivables of $32,565 from sales.
RECOUPABLE ARTIST ADVANCES
Our distribution agreements with artists require us to pay certain
costs up front for the artist. These costs, depending on the contract, may
include promotion, production, manufacturing, advertising, travel, etc. All of
these advances are to be received from the sales of the artist recordings before
any payment to the artist is made. In some instances the artist is to receive
50% of the net wholesale price we receive, in others only 25% goes to the
artist. We have no reason to believe that these recoupable costs will not be
received. In the event that the artist's music does not sell successfully to
recoup these costs within six months of the release of the recording we will
take a charge to earnings for these costs. This account contains four artists at
this time. At no time will the Company advance costs that exceed the amount
recoupable from the pre-orders plus $20,000. This method is in compliance with
FASB 50 paragraph 10 relating advances against future royalties.
OPERATIONS
Blue Moon Group, Inc. has completed a total restructuring of its
operations and has changed its product and business mix.
FUTURE PLAN OF OPERATION
Blue Moon Group, Inc. has embarked on a search to find various
entertainment companies whose acquisition would be synergistic with current
operations. The signing of artists to recording and distribution contracts is a
key focus for the immediate revenue generating capacity of the Company. Six new
artists have begun recording for releases in the fourth quarter of 2003 and the
first quarter of 2004. Our millennium CD was released in October 2003 and we
expect brisk sales of this dance CD. Pre-orders have been substantial and have
been delivered to various distribution centers for shipment to the retailers.
The company has been successful in settling old debts and certain
lawsuits. All outstanding legal issues between prior officers who had filed suit
two years ago have been settled. With the suits settled, new high quality
advisory personnel and the upcoming releases of products the company stands
poised to implement its business plan and provide its shareholders the
opportunity for a return on their investments.
14
ITEM 3. CONTROLS AND PROCEDURES
Within the 90 days prior to the date of this quarterly report, we
carried out an evaluation, under the supervision and with the participation of
our management of the effectiveness of the design and operation of our
disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based
upon that evaluation, our management concluded that our disclosure controls and
procedures are effective and timely alerting them to material information
relating to the Company required to be included in our periodic SEC filings.
There were no significant changes in our internal controls or other factors that
could significantly affect these controls subsequent to the date of their
evaluation and there were no corrective actions with regard to significant
deficiencies or material weaknesses.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is involved from time to time in litigation incidental to
its business. Management believes that the outcome of current litigation will
not have a material adverse effect upon the operations or financial condition of
the Company and will not disrupt the normal operations of the Company.
ITEM 2. CHANGES IN SECURITIES
During the quarter ended September 30, 2003 Blue Moon Group, Inc.
issued a net 210,000 restricted common shares for the purchase of services
rendered. These shares were issued with reliance on an exemption from
registration requirements provided in Section 4(2) of the Securities Act of
1933. 100,000 shares were issued on the same reliance for $250,000 in cash.
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
Exhibit 31 Certificate of Chief Executive Officer and Chief
Financial Officer pursuant to Section 302.
Exhibit 32 Certificate of Chief Executive Officer and Chief
Financial Officer pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
Exhibit 99.2 Agreement dated July 18, 2003between Brady Records
Group, Inc. and Blue Moon Group
15
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
BLUE MOON GROUP, INC.
---------------------
(Registrant)
/s/ Michael Muzio
---------------------
Dated: November 12, 2003 Michael Muzio
President
16