U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Mark One)
|X| Quarterly Report Under to Section 13 or 15(d) of the Securities Exchange Act
of 1934 For the Quarterly Period Ended June 30, 2002
|_| Transition Report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the transition period from ______ to ______
Commission File No. 333-40444
BODYGUARD RECORDS. COM, INC.
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(Exact Name of Small Business Issuer as Specified in its charter)
Delaware 22-1637978
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
56 Colfax Avenue, Clifton, New Jersey 07015
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(Address of Principal Executive Offices)
(973) 655-0388
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(Issuer's Telephone Number Including Area Code)
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registration 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 ISSUES 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 Section 12,13 or 15(d) of the Exchange Act after
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 Stock, $.001 Par Value, 1,002,000 shares
BODYGUARD RECORDS.COM, INC.
Index
PART I FINANCIAL INFORMATION
PAGE NO.
ITEM 1. Financial Statements 2
Condensed Balance Sheet 2
Condensed Statement of Operations 3
Condensed Statements of Cash Flow 4
Notes to Condensed Financial Statements 4
ITEM 2. Management's Discussion and Analysis or
Plan of Operations 5
ITEM 3. Control and Procedures 5
PART II OTHER INFORMATION
ITEM 5. Other Information 6
ITEM 6. Exhibits and Reports on Form 8-K 7
BODYGUARD RECORDS.COM
CONDENSED BALANCE SHEET (UNAUDITED)
JUNE 30, 2002
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ASSETS
CURRENT ASSETS:
Cash $ 1,592
Accounts receivable 10,935
Inventory 17,001
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Total Current Assets 29,527
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FIXED ASSETS 3,786
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OTHER ASSETS:
Security deposit 100
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Total Other Assets 100
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$ 33,413
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LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES:
Current portion of note payable $ 170,000
Current portion of note payable - related party 360,000
Accounts payable and accrued expenses 157,822
Accrued interest - related party 42,034
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Total Current Liabilities 729,856
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COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIENCY:
Preferred stock, $0.01 par value, 2,000,000
shares authorized, none issued and outstanding -
Common stock, $0.001 par value, 20,000,000
shares authorized, 900,000 issued and outstanding 900
Additional paid-in capital 595,700
Accumulated deficit (1,293,043)
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Total Stockholders' Deficiency (696,443)
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$ 33,413
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See accompanying notes.
2
BODYGUARD RECORDS.COM
CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
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For the Three For the Three
Months Ended Months Ended
June 30, 2002 June 30, 2001
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NET SALES $ 5,942 $ 154,845
LESS: SALES RETURNS AND ALLOWANCES 18,088 -
COST OF SALES 286 24,311
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GROSS PROFIT (12,432) 130,534
OPERATING EXPENSES:
Officer's compensation 37,500 37,500
Rent and utilities 3,679 6,000
Insurance - 973
Artist expenses 175 40,320
Promotion expenses 47,925 60,041
Production expense 175 -
Office supplies 3,500 665
Advertising 801 16,479
Studio supplies 1,890 -
Professional fees 30,550 22,631
Travel - 5,933
Telephone 859 2,683
Auto expense - 597
Entertainment 150 683
Website design 225 1,795
Depreciaiton 240 -
Bank charges 444 2,050
Repairs and maintenance 79 689
Miscellaneous expenses - 45
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Total Operating Expenses 128,192 199,084
OPERATING LOSS (140,624) (68,550)
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OTHER EXPENSE:
Other income (5,000) -
Interest expense 17,906 7,157
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TOTAL OTHER EXPENSE 12,906 7,157
NET LOSS BEFORE PROVISION FOR INCOME TAXES (153,530) (75,707)
PROVISION FOR INCOME TAXES 340 -
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NET LOSS $ (153,870) $ (75,707)
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NET LOSS PER COMMON SHARE $ (0.17) $ (0.08)
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WEIGHTED AVERAGE NUMBER
COMMON SHARES OUTSTANDING 900,000 900,000
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See accompanying notes.
3
BODYGUARD RECORDS.COM
STATEMENT OF CASH FLOWS (UNAUDITED)
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For the Three For the Three
Months Ended Months Ended
June 30, 2002 June 30, 2001
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CASH FLOWS PROVIDED BY (USED FOR):
OPERATING ACTIVITIES:
Net loss $ (153,870) $ (75,707)
Adjustments to reconcile net income to net cash
used for operating activities:
Increase in additional paid-in capital for
donated professional services 5,000 -
Increase in notes payable for payment of fees
by third party 20,000 -
Additional paid-in capital in exchange for
officer's salaries 37,500 37,500
Depreciation 240 -
Changes in certain assets and liabilities:
(Increase) decrease in:
Accounts receivable, net 2,740 (78,530)
Inventories (6,945) (28,528)
Security deposits - (100)
Prepaid expenses - 1,247
Increase (decrease) in:
Accounts payable and accrued expenses 72,556 (736)
Accrued interest - related party 11,386 -
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Net Cash Used for Operating Activities (11,393) (144,854)
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FINANCING ACTIVITIES:
Proceeds received on notes payable 10,000 145,000
NET INCREASE IN CASH
CASH:
Beginning of period 2,985 6,991
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End of period $ 1,592 $ 7,137
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See accompanying notes.
4
BODYGUARD RECORDS.COM
NOTES TO FINANCIAL STATEMENTS - UNAUDITED
JUNE 30, 2002
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NOTE 1 - BASIS OF PRESENTATION:
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The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and item 310(b) of Regulation SB. Accordingly, they do not include
all the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
fair presentation have been included. For further information, refer to the
financial statements and footnotes thereto included in the Company's Form 10-KSB
(for the fiscal year ended March 31, 2002) as filed with the Securities and
Exchange Commission.
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NOTE 2 - NET INCOME (LOSS) PER COMMON SHARE:
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Net income (loss) per share was computed based on the weighted average number of
common shares and common share equivalents outstanding if dilutive during the
period.
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NOTE 3 - GOING CONCERN:
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As shown in the accompanying financial statements, the Company has a history of
significant operating losses and as of June 30, 2002, current liabilities exceed
current assets by $700,329 and total liabilities exceed total assets by
$696,443. These factors, as well as the uncertain conditions the Company faces
regarding the delinquency of accounts payable and loans payable, raise
substantial doubt about the Company's ability to continue as a going concern.
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NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
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The significant accounting policies followed by the company are set forth in
Note 2 to the company's financial statements contained in the March 31, 2002
Form 10-KSB.
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NOTE 5 - SUBSEQUENT EVENTS:
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On August 21, 2002, the Company successfully closed on the sale of an aggregate
of 102,000 shares of its common stock, as part of the Company's initial public
offering that became effective on February 11, 2002. The majority of the
proceeds of $255,000 were used to repay principal and accrued interest due to
four non-affiliated note holders.
4
BODYGUARD RECORDS.COM, INC.
ITEM 2. Management's Discussion and Analysis or Plan of Operations
Certain information included in this Quarterly Report may be deemed to include
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended, that involve risk and uncertainty. Such risks and uncertainties
include the Registrant's ability to successfully compete in the marketplace, to
raise capital, to generate enough working capital, including through outside
investments, sale of tax credits or otherwise, to fund operations and to pay its
liabilities when due, to negotiate arrangements with its creditors, to generate
revenue and sell tax credits, to protect its proprietary property and to attract
and retain key employees. Further, the results of operation for the interim
period covered by this Quarterly Report are not necessarily indicative of
results of operation for a full year or any other period and there can be no
assurance that the Registrant's recent favorable revenue trends will continue.
In addition, certain statements may involve risk and uncertainty if they are
preceded by, followed by, or that include the words "intends," "estimates,"
"believes," "expects," "anticipates," "should," "could," or similar expressions,
and other statements contained herein regarding matters that are not historical
facts. Although we believe that our expectations are based on reasonable
assumptions, we can give no assurance that our expectations will be achieved. We
do not undertake any obligation to release publicly any revisions to such
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
The following discussion should be read in conjunction with the Registrant's
financial statements and notes to those statements and other financial
information appearing in this Quarterly Report.
Management's Discussion and Analysis of Financial Condition and results of
Operations
Results of Operations
The following discussion and analysis should be read in conjunction with the
Registrant's March 31, 2002, audited financial statements and notes thereto.
Three Months Ended June 30, 2002, Compared with Three Months Ended June 30, 2001
Net sales decreased $148,903 or 138% to $5,942 for the three months ended June
30, 2002. This decrease was attributable to the Registrant's limited working
capital to promote new talent as well as the unexpected early cancellation of
the Quiet Riot Tour.
Operating expenses decreased by $33,392 or 21% to $128,192 for the three months
ended June 30, 2002. This decrease was also attributable to the Registrant's
limited working capital.
Other income (expense) increased by $5,749 or44.55% to $12,960 for the three
months ended June 30, 2002. This increase was principally attributable to
interest expense relative to outstanding notes payable.
For the three months ended June 30, 2002, there was no provision for income
taxes except for minimum state taxes, as the Registrant had net operating losses
to offset net income.
Net loss increased by $115,660 to ($153,870) for the three months ended June 30,
2002 from ($38,207) for the three months ended June 30, 2001. This increase was
principally attributable to the costs and expenses attendant upon the
commencement of operations.
Liquidity and Capital Resources
June 30, 2002 Compared with March 31, 2002
As of June 30, 2002, the Registrant had an accumulated deficit of $(1,293,043).
The Registrant continues to incur operating losses. The Registrant had negative
working capital of $700,329 and $589,198 as of June 30, 2002, and March 31,
2002, respectively. The increase in negative working capital of $111,131 was
attributable to increases in accounts payable and accrued interest on notes
payable.
Presently, the Registrant attempts to fund its working capital needs from
revenues it receives from the sale of its CD's as well as the proceeds from its
recently completed initial public offering. As of June 30, 2002, the Registrant
had aggregate liabilities of approximating $729,856. The Registrant does not
have sufficient working capital to satisfy such liabilities. The Registrant
intends to utilize its best efforts in locating investors to purchase the unsold
portion of the shares registered in its initial public offering as well as to
consider a business combination with another record company. There can be no
assurance whatsoever that the Registrant will be successful in either of there
endeavors. In the meantime, there can be no assurance that the Registrant's
creditors will not institute one or more actions for the repayment of amounts
due to them. In the event such action(s) are instituted, there can be no
assurance that the Registrant will be able to successfully defend such actions
or pay any judgment that is obtained as a result thereof. The commencement of
any creditor action would have a material adverse effect upon the Registrant.
ITEM 3. Control and Procedures
The President/Chief Financial Officer of the Company has concluded based on
their evaluation as of date within 90 days prior to the date of the filing of
this report, that the Company's disclosure controls and procedures are effective
to ensure that information required be disclosed by the Company in the reports
filed or submitted by it under the Securities Exchange Act of 1934, as
amended(the "Exchange Act"), is recorded, processed, summarized and reported
within the time periods specified in the SEC's rules and forms, and include
controls and procedures designed to ensure that information required to be
disclosed by the Company in such reports is accumulated and communicated to the
Company's management, including the President and Chief Financial Officer, as
appropriate to allow timely decisions regarding required disclosure.
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
such evaluation.
5
PART II
OTHER INFORMATION
ITEM 5. Other Information
Use of Proceeds From Registered Securities
The Registrant's Form SB-2 Registration Statement, No. 333-40444, became
effective on February 11, 2002 (the "Registration Statement"). Pursuant to the
Registration Statement, the Registrant commenced an initial public offering May
2002, seeking to sell a minimum of 100,000 and a maximum of 400,000 shares of
its common stock to the public at $2.50 per share (the "IPO Shares") without the
use of any broker dealers or underwriters (the "Offering"). Prior to the
expiration of 180 days, subscriptions in the amount of $255,000 for an aggregate
of 102,000 IPO Shares were deposited in an escrow account with the Registrant's
transfer agent. On August 21, 2002, the Registrant disbursed $150,000 in
repayment of accrued principal due to four non-affiliated note holders, $72,500
in repayment of accrued interest due to the same four non-affiliated note
holders, $22,700 in payment of certain the expenses of the offering, and the
remaining $9,800 for working capital.
6
ITEM 6.Exhibits and Reports on Form 8-K
(a) Exhibits
99.1 Certification of John Rollo, President of Bodyguard Records.com, Inc.,
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
99.2 Certification of Kenneth Pollendine, Chief Financial Officer of Bodyguard
Records.com, Inc., Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K
Neither before, during or after the three months covered by this Report, through
the date hereof, no report of Form 8-K was filed by the Registrant.
SIGNATURES
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.
Dated: November 14, 2002
Bodyguard Records.com, Inc.
By: /s/ John Rollo
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John Rollo, President
By: /s/ Kenneth Pollendine
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Kenneth Pollendine,
Chief Financial Officer
7
CERTIFICATION
Exhibit 99.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Bodyguard Records.com,
Inc. (the "Registrant") for the three months ended June 30, 2002 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), John
Rollo, President of the Registrant certifies, pursuant to 18 U.S.C. Section 1350
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and (2) To my knowledge, the information
contained in the Report fairly presents, in all material respects, the financial
condition and results of operations of the Registrant.
Date: November 14, 2002
/s/ John Rollo
John Rollo, President
In connection with the Quarterly Report on Form 10-Q of Bodyguard records.com,
Inc. (the "Registrant") for the three months ended June 30, 2002 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"),
Kenneth Pollendine, Chief Financial Officer of the Registrant certifies,
pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and (2) To my knowledge, the information contained in the Report fairly
presents, in all material respects, the financial condition and results of
operations of the Registrant.
Date: November 14, 2002
/s/ Kenneth Pollindine
Kenneth Pollendine,
Chief Financial Officer