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 September 30, 2004
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ________________ to _______________
000-50454
(Commission file number)
DIGIBLUE MEDIA, INC.
--------------------
(Exact name of small business issuer as specified in its charter)
Nevada 75-3016844
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
2175 rue de la Montagne, Suite 311 Montreal, Quebec, Canada H3G 1Z8
(Address of principal executive offices)
(514) 886-6557
--------------
(Issuer's telephone number)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
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 registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
The number of shares of common stock outstanding as of November 15, 2004 was
10,350,000.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
1
DIGIBLUE MEDIA, INC.
(DBA NEVADA DIGIBLUE MEDIA, INC.)
(A DEVELOPMENT STAGE COMPANY)
Index
PAGE
NUMBER
PART I. FINANCIAL INFORMATION 2
Item 1. Financial Statements 2
Balance Sheet as of September 30, 2004 (unaudited) 2
Statements of Operations for the
three and nine months ended September 30, 2004 and 2003 and
from December 10, 2001 (inception) to September 30, 2004(unaudited) 3
Statement of Stockholders' Equity from December 10, 2001
(inception) to September 30, 2004 4
Statements of Cash Flows for the
nine months ended September 30, 2004 and 2003 and from
December 10, 2001 (inception) to September 30, 2004(unaudited) 5
Notes to Financial Statements (unaudited) 6
Item 2. Management's Discussion and Analysis or Plan of Operations 11
Item 3. Controls and Procedures 14
PART II. OTHER INFORMATION 15
Item 1. Legal Proceedings 15
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits 15
SIGNATURES 17
CERTIFICATIONS 18
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DIGIBLUE MEDIA, INC.
(DBA NEVADA DIGIBLUE MEDIA, INC.)
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
SEPTEMBER 30,
2004
--------------------
(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 13,187
--------------------
TOTAL CURRENT ASSETS 13,187
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $1,881 627
OPTION TO PURCHASE TECHNOLOGY 50,000
--------------------
TOTAL ASSETS $ 63,814
====================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 14,013
Accrued expenses 38,360
--------------------
TOTAL CURRENT LIABILITIES 52,373
COMMITMENTS AND CONTINGENCIES -
STOCKHOLDERS' EQUITY
Common stock; $0.001 par value; 50,000,000 shares
authorized; 10,350,000 shares issued and outstanding 10,350
Additional paid-in capital 223,150
Deficit accumulated during the development stage (222,059)
--------------------
TOTAL STOCKHOLDERS' EQUITY 11,441
--------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 63,814
====================
The accompanying notes are an integral part of these financial statements.
3
DIGIBLUE MEDIA, INC.
(DBA NEVADA DIGIBLUE MEDIA, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
CUMULATIVE FROM
THREE MONTHS ENDED NINE MONTHS ENDED DECEMBER 10,
SEPTEMBER 30, SEPTEMBER 30,SEPTEMBER 30, SEPTEMBER 30, 2001 (INCEPTION) TO
2003 2004 2003 2004 SEPTEMBER 30, 2004
------------ ---------- ----------- ------------ ----------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
REVENUE -- FROM RELATED PARTY $ - $ - $ 30,500 $ - $ 53,500
------------ ---------- ----------- ------------ ----------------
COSTS AND EXPENSES
Contract costs - - 6,370 43,000 53,460
General and administrative costs 14,269 9,251 37,547 116,595 222,099
------------ ---------- ----------- ------------ ----------------
TOTAL OPERATING EXPENSES 14,269 9,251 43,917 159,595 275,559
------------ ---------- ----------- ------------ ----------------
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES (14,269) (9,251) (13,417) (159,595) (222,059)
PROVISION FOR INCOME TAXES - - - - -
------------ ---------- ----------- ------------ ----------------
NET INCOME (LOSS) $ (14,269) $ (9,251) $ (13,417) $ (159,595) $ (222,059)
============ ========== =========== ============ ================
NET INCOME (LOSS) PER SHARE:
BASIC AND DILUTED $ (0.00) $ (0.00) $ (0.00) $ (0.02)
============ ========== =========== ============
WEIGHTED AVERAGE SHARES OUTSTANDING:
BASIC AND DILUTED 4,350,000 10,350,000 4,350,000 10,021,533
============ ========== =========== ============
The accompanying notes are an integral part of these financial statements.
4
DIGIBLUE MEDIA, INC.
(DBA NEVADA DIGIBLUE MEDIA, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
DEFICIT
ACCUMULATED TOTAL
ADDITIONAL COMMON DURING THE STOCKHOLDERS'
COMMON STOCK PAID-IN STOCK FOR DEVELOPMENT EQUITY
SHARES AMOUNT CAPITAL SERVICES STAGE (DEFICIT)
--------- --------- ---------- ---------- --------- ----------
Balance at December 10, 2001 (inception),
as effected for 3:1 stock split - $ - $ - $ - $ - $ -
Issuance of common stock for cash and
services - December 2001 1,500,000 1,500 8,500 (9,000) - 1,000
Net loss for the period from inception -
(December 10, 2001) to December 31, 2001 - - - - (1,000) (1,000)
--------- --------- ---------- ---------- --------- ----------
Balance at December 31, 2001 1,500,000 1,500 8,500 (9,000) (1,000) -
Issuance of common stock for cash - February 2002 2,250,000 2,250 12,750 - - 15,000
Issuance of common stock for cash - May 2002 600,000 600 3,400 - - 4,000
Amortization of services - - - 7,500 - 7,500
Net loss - - - - (4,757) (4,757)
--------- --------- ---------- ---------- --------- ----------
Balance at December 31, 2002 4,350,000 4,350 24,650 (1,500) (5,757) 21,743
Amortization of services - - - 1,500 - 1,500
Net loss - - (56,707) (56,707)
--------- --------- ---------- ---------- --------- ----------
Balance at December 31, 2003 4,350,000 4,350 24,650 - (62,464) (33,464)
Issuance of common stock for cash - January 2004 (unaudited) 6,000,000 6,000 194,000 - - 200,000
Contributed capital -- office space (unaudited) - - 4,500 - - 4,500
Net loss (unaudited) - - - (159,595) (159,595)
--------- --------- ---------- ---------- --------- ----------
Balance at September 30, 2004 (unaudited) 10,350,000 $ 10,350 $ 223,150 $ - $(222,059) $ 11,441
========= ========= ========== ========== ========= ==========
The accompanying notes are an integral part of these financial statements.
5
DIGIBLUE MEDIA, INC.
(DBA NEVADA DIGIBLUE MEDIA, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
CUMULATIVE FROM
NINE MONTHS ENDED DECEMBER 10,
SEPTEMBER 30, SEPTEMBER 30, 2001 (INCEPTION) TO
2003 2004 SEPTEMBER 30, 2004
-------------- ---------------- -------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
CASH FLOW FROM OPERATING ACTIVITIES:
Net income (loss) $ (13,417) $ (159,595) $ (222,059)
Adjustment to reconcile net income (loss) to net cash
used in operating activities:
Amortization of common stock for services 1,500 - 9,000
Depreciation expense 627 627 1,881
Allowance for doubtful accounts 8,250 16,500
Capital contribution - office rent 4,500 4,500
Changes in assets and liabilities:
Accounts receivable - from related party (21,500) - (16,500)
Other receivables 370 - -
Cost and estimated earnings in excess of
billings on uncompleted contracts 2,000 - -
Accounts payable and accrued expenses 28,343 7,566 52,373
-------------- ---------------- -------------------
Net cash used in operating activities (2,077) (138,652) (154,305)
-------------- ---------------- -------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment - - (2,508)
Purchase of Oled Systems, Inc. - (50,000) (50,000)
-------------- ---------------- -------------------
Net cash used in investing activities - (50,000) (52,508)
-------------- ---------------- -------------------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock - 200,000 220,000
-------------- ---------------- -------------------
Net cash provided by financing activities - 200,000 220,000
-------------- ---------------- -------------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (2,077) 11,348 13,187
CASH AND CASH EQUIVALENTS, Beginning of period 15,143 1,839 -
-------------- ---------------- -------------------
CASH AND CASH EQUIVALENTS, End of period $ 13,066 $ 13,187 $ 13,187
============== ================ ===================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $ - $ - $ -
============== ================ ===================
Income taxes paid $ - $ - $ -
============== ================ ===================
The accompanying notes are an integral part of these financial statements.
6
DIGIBLUE MEDIA, INC.
(DBA NEVADA DIGIBLUE MEDIA, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - ORGANIZATION
Nature of Business
Digiblue Media, Inc. (the "Company") is currently a development stage company
under the provisions of Statement of Financial Accounting Standards ("SFAS") No.
7 and was incorporated under the laws of the State of Nevada on December 10,
2001. The Company plans to design and develop specialized software programs for
potential customers.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
contemplate continuation of the Company as a going concern. However, the Company
has no established source of revenue. This matter raises substantial doubt about
the Company's ability to continue as a going concern. These financial statements
do not include any adjustments relating to the recoverability and classification
of recorded asset amounts, or amounts and classification of liabilities that
might be necessary should the Company be unable to continue as a going concern.
Management plans to take the following steps that it believes will be sufficient
to provide the Company with the ability to continue in existence: Management
intends to continue to raise additional financing through issuance of debt and
equity instruments or other means and develop customer relations to complete its
business plan.
Interim Financial Statements
In the opinion of the Company's management, the accompanying unaudited financial
statements of the Company contain all adjustments (consisting of normal
recurring accruals) necessary to present fairly the financial position of the
Company as of September 30, 2004, and the results of its operations and cash
flows for the three and nine month periods ended September 30, 2004 and 2003.
The operating results of the Company on a quarterly basis may not be indicative
of operating results for the full year.
The accompanying unaudited financial statements are presented in accordance with
the requirements for Form 10-QSB and Article 10 of Regulation S-X and Regulation
S-B. Accordingly, they do not include all the disclosures normally required by
generally accepted accounting principles. Reference should be made to the
Digiblue Media, Inc.'s Form 10-KSB for the year ended December 31, 2003, for
additional disclosures including a summary of the Company's accounting policies,
which have not significantly changed.
Fair Value of Financial Instruments
The estimated fair values of cash and cash equivalents, none of which are held
for trading, accounts receivable, accounts payable and accrued expenses
approximate their carrying value because of the short term maturity of these
instruments or the stated interest rates are indicative of market interest
rates.
Use of Estimates
The preparation of 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 disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the reported periods. Actual results could materially differ from those
estimates.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly
liquid investments purchased with original maturities of three months or less to
be cash equivalents.
7
Property and Equipment
Computer equipment is valued at cost. Depreciation is computed on the
straight-line method over the estimated useful life of the of equipment of three
years.
Stock-Based Compensation
SFAS No. 123, "Accounting for Stock-Based Compensation," encourages, but does
not require, companies to record compensation cost for stock-based employee
compensation plans at fair value. The Company has chosen to continue to account
for stock-based compensation using the intrinsic value method prescribed in
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees," and related interpretations. Accordingly, compensation expense for
stock options is measured as the excess, if any, of the quoted market price of
the Company's common stock (at the date of the grant), less the amount an
employee must pay to acquire the stock.
Revenue Recognition
The Company's only source of revenue was under a contract with a shareholder of
the Company to create a software program. It was the only contract for the
Company since its inception. During the first quarter of 2004, the Company
incurred difficulty in providing services relating to the contract and was
released from providing any additional services thereon. In consideration for
this release, the Company paid the shareholder $43,000 in April 2004.
Income Taxes
The Company accounts for income taxes under SFAS 109, "Accounting for Income
Taxes." Under the asset and liability method of SFAS 109, deferred tax assets
and liabilities are recognized for the future tax consequences attributable to
differences between the financial statements carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. Under SFAS 109, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period the
enactment occurs. A valuation allowance is provided for certain deferred tax
assets if it is more likely than not that the Company will not realize tax
assets through future operations.
Through September 30, 2004, the Company experienced net losses totaling $222,059
that can be carried forward to offset future taxable income through the year
2014. The net operating losses generated a deferred tax asset of approximately
$73,000, which was adjusted by the Company to zero as the Company does not know
if it will ever benefit from these loss carry forwards.
8
Basic and Diluted Loss Per Share
In accordance with SFAS No. 128, "Earnings Per Share," the basic loss per common
share is computed by dividing net loss available to common stockholders by the
weighted average number of common shares outstanding. Diluted loss per common
share is computed similar to basic loss per common share except that the
denominator is increased to include the number of additional common shares that
would have been outstanding if the potential common shares had been issued and
if the additional common shares were dilutive. As of September 30, 2004, the
Company had no outstanding stock options or other common stock equivalents that
could be converted into shares of Company's common stock.
New Accounting Pronouncements
In December 2003, the Financial Accounting Standards Board (FASB) issued SFAS
132R. This Statement revises employers' disclosures about pension plans and
other postretirement benefit plans. It does not change the measurement or
recognition of those plans required by FASB Statements No. 87,
Employers'Accounting for Pensions, No. 88, Employers' Accounting for Settlements
and Curtailments of Defined Benefit Pension Plans and for Termination Benefits,
and No. 106, Employers' Accounting for Postretirement Benefits Other Than
Pensions. This Statement retains the disclosure requirements contained in FASB
Statement No. 132, Employers' Disclosures about Pensions and Other
Postretirement Benefits, which it replaces. It requires additional disclosures
to those in the original Statement 132 about the assets, obligations, cash
flows, and net periodic benefit cost of defined benefit pension plans and other
defined benefit postretirement plans. The Company adopted the provisions of SFAS
132R in 2004. The adoption of this pronouncement is not expected to have a
material effect on the Company's financial position, results from operations or
cash flows.
Reclassifications
Certain amounts in the 2003 financial statements have been reclassified to
conform to the 2004 presentation.
NOTE 3 - STOCKHOLDERS' EQUITY
The Company is authorized to issue 55,000,000 shares of stock with 5,000,000
shares designated as preferred stock, par value of $0.001, and 50,000,000 shares
designated as common stock, par value of $0.001
Preferred Stock
Preferred Stock, any series, shall have the powers, preferences, rights,
qualifications, limitations and restrictions as fixed by the Company's Board of
Directors in its sole discretion. As of September 30, 2004, the Company's Board
of Directors has not issued any Preferred Stock.
Common Stock
In January 2004, the Company issued 6,000,000 shares of its common stock in
exchange for receiving $200,000 in cash.
Stock Split
The Company declared a 3 for 1 stock split effective as of January 6, 2004. The
financial statements reflected herein have all been restated to give effect to
the stock split as if it occurred at the beginning of each period presented.
NOTE 4 - ACQUISITION
On April 20, 2004, the Company entered into an agreement to acquire all of the
outstanding stock of Oled Systems, Inc., a privately-held New Brunswick
corporation ("Oled"), for $50,000. Oled has the right to acquire Nova-Plasma,
Inc. a Canadian Corporation, which is involved in information technologies and
telecommunications using nanomaterials and devices. This transaction was
accounted for by the purchase method of accounting, as required by SFAS No. 141,
"Business Combinations," and accordingly, the purchase price has been allocated
to the assets acquired and the liabilities assumed based upon the estimated fair
values at the date of acquisition. The allocation of the purchase price as shown
below is preliminary, and may be adjusted upon the completion of an appraisal of
the property and equipment and other future analyses.
The allocation of the purchase price is as follows:
Options to purchase a technology company $ 50,000
--------------
Purchase price $ 50,000
==============
Oled had no operations prior to the acquisition; therefore pro forma information
has not been presented.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
THIS FOLLOWING INFORMATION SPECIFIES CERTAIN FORWARD-LOOKING STATEMENTS OF
MANAGEMENT OF THE COMPANY. FORWARD-LOOKING STATEMENTS ARE STATEMENTS THAT
ESTIMATE THE HAPPENING OF FUTURE EVENTS AND ARE NOT BASED ON HISTORICAL FACT.
FORWARD-LOOKING STATEMENTS MAY BE IDENTIFIED BY THE USE OF FORWARD-LOOKING
TERMINOLOGY, SUCH AS "MAY", "SHALL", "COULD", "EXPECT", "ESTIMATE",
"ANTICIPATE", "PREDICT", "PROBABLE", "POSSIBLE", "SHOULD", "CONTINUE", OR
SIMILAR TERMS, VARIATIONS OF THOSE TERMS OR THE NEGATIVE OF THOSE TERMS. THE
FORWARD-LOOKING STATEMENTS SPECIFIED IN THE FOLLOWING INFORMATION HAVE BEEN
COMPILED BY OUR MANAGEMENT ON THE BASIS OF ASSUMPTIONS MADE BY MANAGEMENT AND
CONSIDERED BY MANAGEMENT TO BE REASONABLE. OUR FUTURE OPERATING RESULTS,
HOWEVER, ARE IMPOSSIBLE TO PREDICT AND NO REPRESENTATION, GUARANTY, OR WARRANTY
IS TO BE INFERRED FROM THOSE FORWARD-LOOKING STATEMENTS.
THE ASSUMPTIONS USED FOR PURPOSES OF THE FORWARD-LOOKING STATEMENTS SPECIFIED IN
THE FOLLOWING INFORMATION REPRESENT ESTIMATES OF FUTURE EVENTS AND ARE SUBJECT
TO UNCERTAINTY AS TO POSSIBLE CHANGES IN ECONOMIC, LEGISLATIVE, INDUSTRY, AND
OTHER CIRCUMSTANCES. AS A RESULT, THE IDENTIFICATION AND INTERPRETATION OF DATA
AND OTHER INFORMATION AND THEIR USE IN DEVELOPING AND SELECTING ASSUMPTIONS FROM
AND AMONG REASONABLE ALTERNATIVES REQUIRE THE EXERCISE OF JUDGMENT. TO THE
EXTENT THAT THE ASSUMED EVENTS DO NOT OCCUR, THE OUTCOME MAY VARY SUBSTANTIALLY
FROM ANTICIPATED OR PROJECTED RESULTS, AND, ACCORDINGLY, NO OPINION IS EXPRESSED
ON THE ACHIEVABILITY OF THOSE FORWARD-LOOKING STATEMENTS. WE CANNOT GUARANTY
THAT ANY OF THE ASSUMPTIONS RELATING TO THE FORWARD-LOOKING STATEMENTS SPECIFIED
IN THE FOLLOWING INFORMATION ARE ACCURATE, AND WE ASSUME NO OBLIGATION TO UPDATE
ANY SUCH FORWARD-LOOKING STATEMENTS.
CRITICAL ACCOUNTING POLICY AND ESTIMATES. Our Management's Discussion and
Analysis of Financial Condition and Results of Operations section discusses our
financial statements, which have been prepared in accordance with accounting
principles generally accepted in the United States of America. The preparation
of these financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. On an on-going basis, management evaluates
its estimates and judgments, including those related to revenue recognition,
accrued expenses, financing operations, and contingencies and litigation.
Management bases its estimates and judgments on historical experience and on
various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying value of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions. The most significant accounting estimates inherent in
the preparation of our financial statements include estimates as to the
appropriate carrying value of certain assets and liabilities which are not
readily apparent from other sources. These accounting policies are described at
relevant sections in this discussion and analysis and in the notes to the
financial statements included in our Quarterly Report on Form 10-QSB for the
period ended September 30, 2004.
Until our new management joined us during the quarter ended March 31, 2004, we
were a software development and design company in the development stage that
specialized in providing customized software applications to small businesses
and entrepreneurs. Our change in management is described below. In addition, on
April 20, 2004, we entered into an agreement with Oled Systems, Inc., a
privately held New Brunswick corporation ("Oled") and its sole shareholder to
acquire all the outstanding shares of Oled in exchange for $50,000. Oled has the
right to acquire Nova-Plasma Inc., a Canadian corporation, ("NPI") a company
involved in information technologies and telecommunications using nanomaterials
& devices.
We hope to exercise that right to acquire NPI and operate its business, which
encompasses the development and manufacture of organic light emitting diode
displays. NPI was founded in 2001 by three researchers affiliated with the Ecole
Polytechnique of Montreal, and is establishing itself as a provider of
ultra-high barrier technology to the flat panel display (FPD) industry. Since
its inception, NPI has received an investment by Polyvalor and has three patent
pending technologies as part of its intellectual property portfolio. In
addition, NPI has begun establishing relationships with companies in the FPD
industry, including polymer film and component suppliers and display
manufacturers.
Although the FPD market today is dominated by liquid crystal displays (LCDs), in
the estimation of our management, the next major innovation is the use of
organic light emitting diode (OLED) displays. Our management believes that the
advantages offered by OLED displays are that they do not require backlight, and
are lighter, thinner, bringer and consume less power than LCD displays, and can
be cheaper to produce, have a faster response time, a better viewing angle and
can be produced using flexible transparent polymers instead of glass.
10
Our management believes that there is a great potential market available by
utilizing NPI's technology, which is anticipated to allow for the manufacture of
low-cost, lightweight, unbreakable and bendable display screens on flexible
transparent plastic substrates instead of glass screens currently in use. Upon
concluding the acquisition of NPI, we hope to adopt and operate its business as
described above.
LIQUIDITY AND CAPITAL RESOURCES. Our total assets were $63,814 as of September
30, 2004, which consisted of cash of $13,187, property and equipment with a net
value of $627 and the option to purchase NPI which is valued at $50,000. In
January 2004, we issued 6,000,000 shares of our common stock sold pursuant to
our Registration Statement on Form SB-2 in exchange for receiving $200,000. Our
registration statement was declared effective in November 2003. Our cash on hand
will not be sufficient for us to continue current operation for the next twelve
months. We will either have to raise additional capital through the issuance of
debt or equity, or we will need to begin to generate cash from operations.
Our current liabilities as of September 30, 2004 totaled $52,373 of which
$14,013 is accounts payable and $38,360 is accrued expenses. We had no other
liabilities and no long-term commitments or contingencies at September 30, 2004.
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2004.
REVENUE. We have realized no revenues for the three months ended September 30,
2004 and 2003.
OPERATING EXPENSES. For the three months ended September 30, 2004, our total
costs were $9,251, of which we had $0 in contract costs and $9,251 in general
and administrative expenses. Our net loss for the three months ended September
30, 2004 was $9,251. This is in comparison to our operating costs of $14,269 for
the three months ended September 30, 2003, which were represented by $0 in
contract costs and $14,269 in general and administrative expenses. Our net loss
for the three months ended September 30, 2004 was $14,269.
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004.
REVENUE. We have realized no revenues for the nine months ended September 30,
2004, in comparison to the $30,500 we generated from a related party for the
nine months ended September 30, 2003.
OPERATING EXPENSES. For the nine months ended September 30, 2004, our total
costs were $159,595, of which we had $43,000 in contract costs and $116,595 in
general and administrative expenses. Our net loss for the nine months ended
September 30, 2004 was also $159,595. This is in comparison to our operating
costs of $43,917 for the nine months ended September 30, 2003, which were
represented by $6,370 in contract costs and $37,547 in general and
administrative expenses. Our net loss for the nine months ended September 30,
2004 was $13,417. Because we did not generate revenues for the nine months ended
September 30, 2004, we experienced a greater net loss than the same period
ending in 2003. We anticipate that we will continue to incur significant general
and administrative expenses, but hope to continue generating income after
acquiring the business of NPI as described above.
OUR PLAN OF OPERATION FOR THE NEXT TWELVE MONTHS. From our inception on December
10, 2001 through September 30, 2004, we generated revenues of $53,500 from a
related party. We hope to generate revenues in the next twelve months after
acquiring and beginning to operate the business of NPI as described herein. On
April 20, 2004, we entered into an agreement with Oled Systems, Inc., a
privately held New Brunswick corporation ("Oled") and its sole shareholder to
acquire all the outstanding shares of Oled in exchange for $50,000. Oled has the
right to acquire NPI, a Canadian corporation, a company involved in information
technologies and telecommunications using nanomaterials and devices. We
anticipate that we will use the balance of the funds raised in January 2004 and
revenues generated to develop this business, to fund marketing activities and
for working capital. Our failure to do so will hinder our ability to increase
the size of our operations and generate additional revenues. If we are not able
to generate additional revenues that cover our estimated operating costs, our
business may ultimately fail.
11
We have cash of $13,187 as of September 30, 2004. Our cash on hand will not be
sufficient for us to continue current operation for the next twelve months. We
will either have to raise additional capital through the issuance of debt or
equity, or we will need to begin to generate cash from operations.
We are not currently conducting any research and development activities, other
than the development of our website. We do not anticipate conducting such
activities in the near future, though upon the acquisition of NPI, we may
undertake additional research and development activities. In the event that we
expand acquire NPI, then we may need to hire additional employees or independent
contractors as well as purchase or lease additional equipment. Our management
believes that we do not require the services of independent contractors to
operate at our current level of activity. However, if our level of operations
increases beyond the level that our current staff can provide, then we may need
to supplement our staff in this manner.
OFF-BALANCE SHEET ARRANGEMENTS
There are no off balance sheet arrangements that have or are reasonably likely
to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that are material to investors.
ITEM 3. CONTROLS AND PROCEDURES
As required by SEC rules, we have evaluated the effectiveness of the design and
operation of our disclosure controls and procedures at the end of the period
covered by this report. This evaluation was carried out under the supervision
and with the participation of our management, including our principal executive
officer and principal financial officer. Based on this evaluation, these
officers have concluded that the design and operation of our disclosure controls
and procedures are effective. There were no changes in our internal control over
financial reporting or in other factors that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
Our disclosure controls and procedures are designed to ensure that information
required to be disclosed by us in the reports that we file or submit under the
Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the SEC's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by us in the reports that we
file under the Exchange Act is accumulated and communicated to our management,
including principal executive officer and principal financial officer, as
appropriate, to allow timely decisions regarding required disclosure.
12
Part II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 6. EXHIBITS
REGULATION
S-B NUMBER EXHIBIT
3.1 Articles of Incorporation (1)
3.2 Bylaws (1)
31 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive
Officer and Chief Financial Officer of the Company
32 Section 906 Certification by Chief Executive Officer and Chief
Financial Officer
(1) Incorporated by reference from our Registration Statement on Form SB-2,
filed on October 4, 2002.
13
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.
DIGIBLUE MEDIA, INC.
November 22, 2004 By: /s/ Alain Houle
-----------------------------------------
Alain Houle
President and Chief Executive Officer