UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the period ended December 31, 2008
[ ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period ___________ to ___________
Commission File Number 000-52278
SHADOW MARKETING INC.
(Exact name of registrant as specified in its charter)
Nevada 26-1281852
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
17365 S.W. 13th Street
Pembroke Pines, Florida 33029
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: 954-562-3017
1823 West 7th Avenue, Suite 210, Vancouver, British Columbia, Canada, V6J 5K5
(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 [ ]
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
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
Shadow Marketing Inc.
(A Development Stage Company)
Balance Sheets
(Expressed in US Dollars)
- --------------------------------------------------------------------------------
December 31, June 30,
2008 2008
-------- --------
(Unaudited) (Audited)
ASSETS
CURRENT ASSETS
Cash $ 2,318 $ 558
-------- --------
TOTAL ASSETS $ 2,318 $ 558
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 8,650 $ 13,230
Due to related party 40,209 29,359
-------- --------
TOTAL CURRENT LIABILITIES 48,859 42,589
-------- --------
STOCKHOLDERS' EQUITY (DEFICIENCY)
Common stock, $0.001 par value
Authorized: 200,000,000 shares -- --
Issued and outstanding:
7,445,000 and 7,445,000 shares, respectively 7,445 7,445
Additional paid-in capital 17,055 17,055
Deficit accumulated during the development stage (71,041) (66,531)
-------- --------
TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY) (46,541) (42,031)
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) $ 2,318 $ 558
======== ========
See notes to financial statements.
2
Shadow Marketing Inc.
(A Development Stage Company)
Statements of Operations
(Expressed in US Dollars)
(Unaudited)
- --------------------------------------------------------------------------------
Cumulative during
the development stage
Three months ended December 31, Six months ended December 31, (September 19, 2003 to
------------------------------- ------------------------------- December 31,
2008 2007 2008 2007 2008)
---------- ---------- ---------- ---------- ----------
REVENUE
Advertising revenue $ -- $ -- $ -- $ -- $ 576
---------- ---------- ---------- ---------- ----------
Total Revenue -- -- -- -- 576
========== ========== ========== ========== ==========
EXPENSES
Magazine publication costs -- -- 16,755
General and administrative 2,717 8,156 4,510 9,628 54,862
---------- ---------- ---------- ---------- ----------
Total Costs and Expenses 2,717 8,156 4,510 9,628 71,617
---------- ---------- ---------- ---------- ----------
NET LOSS (2,717) $ (8,156) $ (4,510) $ (9,628) $ (71,041)
========== ========== ========== ========== ==========
NET LOSS PER SHARE
Basic and diluted (0.00) $ (0.00) $ (0.00) $ (0.00)
========== ========== ========== ==========
NUMBER OF COMMON SHARES USED
TO COMPUTE LOSS PER SHARE
Basic and Diluted 7,445,000 7,445,000 7,445,000 7,445,000
========== ========== ========== ==========
See notes to financial statements.
3
Shadow Marketing Inc.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficiency)
For the period September 19, 2003 (inception) to December 31, 2008
(Expressed in US Dollars)
- --------------------------------------------------------------------------------
Deficit
Common Stock, Accumulated Total
$0.001 Par Value Additional During the Stockholders'
---------------------- Paid-in Development Equity
Shares Amount Capital Stage (Deficiency)
------ ------ ------- ----- ------------
Net loss for the Period
September 19, 2003 to
June 30, 2004 -- $ -- $ -- $ (12) $ (12)
--------- --------- --------- --------- ---------
Balance, June 30, 2004 -- -- -- (12) (12)
Shares sold at $0.001 per share
in December 2004 6,000,000 6,000 -- 0 6,000
Shares sold at $0.01 per share
in March 2005 1,400,000 1,400 12,600 0 14,000
Shares sold at $0.10 per share
in April 2005 45,000 45 4,455 0 4,500
Net loss for the year
ended June 30, 2005 -- -- -- (16,967) (16,967)
--------- --------- --------- --------- ---------
Balance, June 30, 2005 7,445,000 7,445 17,055 (16,979) 7,521
Net loss for the year
ended June 30, 2006 -- -- -- (20,385) (20,385)
--------- --------- --------- --------- ---------
Balance, June 30, 2006 7,445,000 7,445 17,055 (37,364) (12,864)
Net loss for the year
ended June 30, 2007 -- -- -- (8,372) (8,372)
--------- --------- --------- --------- ---------
Balance, June 30, 2007 7,445,000 7,445 17,055 (45,736) (21,236)
Net loss for the year
ended June 30, 2008 -- -- -- (20,795) (20,795)
--------- --------- --------- --------- ---------
Balance, June 30, 2008 7,445,000 7,445 17,055 (66,531) (42,031)
Unaudited:
Net loss for the three months
ended September 30, 2008 -- -- -- (1,793) (1,793)
--------- --------- --------- --------- ---------
Balance, September 30, 2008 7,445,000 $ 7,445 $ 17,055 $ (68,324) $ (43,824)
Net loss for the three months
ended December 31, 2008 -- -- -- (2,717) (2,717)
--------- --------- --------- --------- ---------
Balance, December 31, 2008 7,445,000 $ 7,445 $ 17,055 $ (71,041) $ (46,541)
========= ========= ========= ========= =========
See notes to financial statements.
4
SHADOW MARKETING INC.
(A Development Stage Company)
Statements of Cash Flows
(Expressed in US Dollars)
(Unaudited)
- --------------------------------------------------------------------------------
Cumulative during
the development stage
Six months ended December 31, (September 19, 2003 to
------------------------------- December 31,
2008 2007 2008)
-------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (4,510) $ (9,628) $(71,041)
Changes in operating assets and liabilities
Accounts payable and accrued liabilities (4,580) 180 8,650
-------- -------- --------
NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES (9,090) (9,448) (62,391)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Loans from related party 10,850 13,344 40,209
Proceeds from sales of common stock -- -- 24,500
-------- -------- --------
NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES 10,850 13,344 64,709
-------- -------- --------
INCREASE (DECREASE) IN CASH 1,760 3,896 2,318
CASH, BEGINNING OF PERIOD 558 439 --
-------- -------- --------
CASH, END OF PERIOD $ 2,318 $ 4,335 $ 2,318
======== ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $ -- $ -- $ --
-------- -------- --------
Income taxes paid $ -- $ -- $ --
-------- -------- --------
See notes to financial statements.
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SHADOW MARKETING INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2008
(Unaudited)
- --------------------------------------------------------------------------------
1. INTERIM FINANCIAL STATEMENTS
The unaudited financial statements as of December 31, 2008 and for the three
months and six months ended December 31, 2008 and 2007, and for the period
September 19, 2003 (inception) to December 31, 2008 have been prepared in
accordance with accounting principles generally accepted in the United States
for interim financial information and with instructions to Form 10-Q. In the
opinion of management, the unaudited financial statements have been prepared on
the same basis as the annual financial statements and reflect all adjustments,
which include only normal recurring adjustments, necessary to present fairly the
financial position as of December 31, 2008 and the results of operations and
cash flows for the periods ended December 31, 2008 and 2007. The financial data
and other information disclosed in these notes to the interim financial
statements related to these periods are unaudited. The results for the six
months ended December 31, 2008 is not necessarily indicative of the results to
be expected for any subsequent quarter of the entire year ending June 30, 2009.
The balance sheet at June 30, 2008 has been derived from the audited financial
statements at that date.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States have been condensed or omitted pursuant to the Securities
and Exchange Commission's rules and regulations. These unaudited financial
statements should be read in conjunction with our audited financial statements
and notes thereto for the year ended June 30, 2008 as included in our report on
Form 10-K.
2. ORGANIZATION AND BUSINESS OPERATIONS
Shadow Marketing Inc. (the "Company") was incorporated in the State of Nevada on
September 19, 2003. The Company is a Development Stage Company as defined by
Statement of Financial Accounting Standards ("SFAS") No. 7. During the year
ended June 30, 2005, the Company started to publish "Up & Over", a magazine
planned to contain articles focusing on the purchase, training, and care of
sports horses. In the year ended June 30, 2006, the first issue was published
and distributed to outlets without charge. Although the Company plans to publish
three to four issues per year, it has not published and distributed a second
issue due to a lack of working capital.
3. DUE TO RELATED PARTY
The due to related party is due a Company officer and director, does not bear
interest, and is due on demand.
4. STOCKHOLDERS' EQUITY
The Company has not adopted a stock option plan and has not issued any stock
options or other common stock equivalents.
5. INCOME TAXES
The provision for (benefit from) income taxes differs from the amount computed
by applying the statutory United States federal income tax rate of 35% to income
(loss) before income taxes. The sources of the difference follow:
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SHADOW MARKETING INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2008
(Unaudited)
- --------------------------------------------------------------------------------
Period from
September 19, 2003
Six Months Six Months (Date of
Ended Ended Inception) to
December 31, December 31, December 31,
2008 2007 2008
-------- -------- --------
Expected tax at 35% $ (1,578) $ (3,370) $(24,864)
Increase in valuation allowance 1,578 3,370 24,864
-------- -------- --------
Income tax provision $ -- $ -- $ --
======== ======== ========
Significant components of the Company's deferred income tax assets are as
follows:
December 31, June 30,
2008 2008
-------- --------
Net operating loss carryforward $ 24,864 $ 23,286
Valuation allowance (24,864) (23,286)
-------- --------
Net deferred tax assets $ -- $ --
======== ========
Based on management's present assessment, the Company has not yet determined it
to be more likely than not that a deferred tax asset of $24,864 at December 31,
2008 attributable to the future utilization of the net operating loss
carryforward of $71,041 will be realized. Accordingly, the Company has provided
a 100% allowance against the deferred tax asset in the financial statements. The
Company will continue to review this valuation allowance and make adjustments as
appropriate. The $71,041 net operating loss carryforward expires $ 12 in year
2024, $16,967 in year 2025, $20,385 in year 2026, $8,372 in year 2027, $20,795
in year 2028, and $4,510 in year 2029.
Current United States income tax laws limit the amount of loss available to
offset against future taxable income when a substantial change in ownership
occurs. Therefore, the amount available to offset future taxable income may be
limited.
6. COMMITMENTS AND CONTINGENCIES
Rental agreement - The Company has been using office space provided by an
officer and director at no cost to the Company.
Conflicts of interest - Officers and directors of the Company are involved in
other business activities and may, in the future, become involved in other
business opportunities. If a specific business opportunity becomes available,
they may face a conflict in selecting between the Company and their other
business interests. The Company has not formulated a policy for the resolution
of such conflicts.
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FORWARD-LOOKING STATEMENTS
This Form 10-Q includes "forward-looking statements" within the meaning of the
"safe-harbor" provisions of the Private Securities Litigation Reform Act of
1995. Such statements are based on management's current expectations and are
subject to a number of factors and uncertainties that could cause actual results
to differ materially from those described in the forward-looking statements.
All statements other than historical facts included in this report, including
without limitation, statements under "Plan of Operation", regarding our
financial position, business strategy, and plans and objectives of management
for the future operations, are forward-looking statements.
Although we believe that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such expectations will
prove to have been correct. Important factors that could cause actual results to
differ materially from our expectations include, but are not limited to, market
conditions, competition and the ability to successfully complete financing.
ITEM 2. PLAN OF OPERATION
OVERVIEW
We were incorporated pursuant to the laws of Nevada on September 19, 2003.
During the year ended June 30, 2005, we published the first issue of our
magazine, "Up & Over". The first edition was distributed to retailers without
charge and it has not yet been determined whether a market exists for the
magazine.
CASH REQUIREMENTS
We will continue to attempt to raise funds necessary for the publication of
additional issues of Up & Over Magazine, at an anticipated cost of $15,000 per
issue. Subject to financing, we would anticipate publishing up to four issues
for a potential aggregate cost of $60,000. However, during the current and most
recently completed fiscal years, we have been unsuccessful in raising funds for
operations.
In addition, we are reviewing other potential acquisitions in various business
sectors with a view to enhancing stockholder value. Currently, we are in the
process of completing a due diligence investigation of various opportunities.
However, there is no guarantee that we will be able to reach any agreement to
acquire any assets.
As well, we anticipate spending an additional $15,000 on administrative costs
such as accounting and auditing fees, legal fees and fees incurred in our
compliance with reporting obligations.
Total expenditures over the next 12 months are therefore expected to be $75,000.
SOURCES AND USES OF CASH
At December 31, 2008 our current assets consisted of $2,318 in cash. With these
funds, we will only be able to satisfy our cash requirements for approximately
one month, provided we do not publish any additional issues of Up & Over
Magazine.
Accordingly, we will have to raise additional funds in the next twelve months in
order to sustain and expand our operations. We currently do not have a specific
plan of how we will obtain such funding; however, we anticipate that additional
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funding will be in the form of equity financing from the sale of our common
stock. We have and will continue to seek to obtain short-term loans from our
directors, although no future arrangement for additional loans has been made. We
do not have any agreements with our directors concerning these loans. We do not
have any arrangements in place for any future equity financing.
EVENTS, TRENDS AND UNCERTAINTIES
The continuing development of our business will depend upon our ability to
attract subjects for our magazine articles, as well as advertisers. Future
advertising may be affected by events and trends such as general economic
conditions, alternative means of advertising and the circulation of our
magazine.
In order to increase our revenue in the future, we will have to increase our
advertising rates and eventually charge a cover price for our magazine once we
establish a market for it. In order to justify higher rates, we will need to
increase our magazine circulation by reaching agreements with magazine
distributors. We have not entered into any distribution agreements to date and
cannot be assured that we will be able to do so.
RESULTS OF OPERATIONS
We did not earn any revenues during the six-month period ended December 31,
2008. We incurred operating expenses in the amount of $2,717 for the period
consisting entirely of general and administrative costs.
We have not attained profitable operations and are dependent upon obtaining
financing to pursue activities. For these reasons, there is substantial doubt
that we will be able to continue as a going concern.
ITEM 3. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS
We evaluated the effectiveness of our disclosure controls and procedures as of
December 31, 2008. This evaluation was conducted by Greg Fedun, our chief
executive officer and Christopher Paterson, our principal accounting officer.
Disclosure controls are controls and other procedures that are designed to
ensure that information that we are required to disclose in the reports we file
pursuant to the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported.
LIMITATIONS ON THE EFFECTIVE OF CONTROLS
Our management does not expect that our disclosure controls or our internal
controls over financial reporting will prevent all error and fraud. A control
system, no matter how well conceived and operated, can provide only reasonable,
but no absolute, assurance that the objectives of a control system are met.
Further, any control system reflects limitations on resources, and the benefits
of a control system must be considered relative to its costs. These limitations
also include the realities that judgments in decision-making can be faulty and
that breakdowns can occur because of simple error or mistake. Additionally,
controls can be circumvented by the individual acts of some persons, by
collusion of two or more people or by management override of a control. A design
of a control system is also based upon certain assumptions about potential
future conditions; over time, controls may become inadequate because of changes
in conditions, or the degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and may not be detected.
9
CONCLUSIONS
Based upon their evaluation of our controls, Greg Fedun, our chief executive
officer and Christopher Paterson, our principal accounting officer, have
concluded that, subject to the limitations noted above, the disclosure controls
are effective providing reasonable assurance that material information relating
to us is made known to management on a timely basis during the period when our
reports are being prepared. There were no changes in our internal controls that
occurred during the quarter covered by this report that have materially
affected, or are reasonably likely to materially affect our internal controls.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not a party to any pending legal proceeding. Management is not
aware of any threatened litigation, claims or assessments.
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 REPORT ON FORM 8-K
31.1 Certification pursuant to Rule 13a-14(a) under the Securities
Exchange Act of 1934
31.2 Certification pursuant to Rule 13a-14(a) under the Securities
Exchange Act of 1934
32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
We did not file any current reports on Form 8-K during the six-month period
ended December 31, 2008.
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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.
February 4, 2009
Shadow Marketing Inc.
/s/ Greg Fedun
- ------------------------------------
Greg Fedun, President and Chief
Executive Officer
/s/ Christopher Paterson
- ------------------------------------
Christopher Paterson
Principal Accounting Officer and
Principal Financial Officer
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