UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[ X ] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the period ended September 30, 2006
[ ]Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act
of 1934
For the transition period to
Commission File Number 333-131168
SHADOW MARKETING INC.
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(Exact name of small Business Issuer as specified in its charter)
Nevada Pending
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1823 West 7th Avenue, Suite 210
Vancouver, British Columbia, Canada V6J 5K5
(Address of principal executive offices) (Postal or Zip Code)
Issuer's telephone number, including area code: 604-805-6340
None
(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 Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the issuer 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 shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ X ] No [ ]
State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: 7,445,000 SHARES OF $0.001 PAR VALUE
COMMON STOCK OUTSTANDING AS OF FEBRUARY 14, 2007.
SHADOW MARKETING, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
DECEMBER 31, 2006
(UNAUDITED)
SHADOW MARKETING, INC.
(A Development Stage Company)
Balance Sheets
(Expressed in US Dollars)
DECEMBER 31 June 30
2006 2006
(UNAUDITED) (Audited)
ASSETS
CURRENT ASSETS
Cash $ 5,239 $ 1,736
TOTAL ASSETS $ 5,239 $ 1,736
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 14,648 $ 14,600
Due to related party 12,525 -
TOTAL CURRENT LIABILITIES 27,173 14,600
STOCKHOLDER'S EQUITY (DEFICIENCY)
Common stock, $0.001 par value
Authorized: 75,000,000 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 (46,434) (37,364)
TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY) (21,934) (12,864)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) $ 5,239 $ 1,736
See notes to financial statements
SHADOW MARKETING, INC.
(A Development Stage Company)
Statement of Operations
(Expressed in US Dollars)
Cumulative
during the
development
Three months ended Six months ended stage (September
December 31 December 31 19, 2003 to
2006 2005 2006 2005 December 31
(unaudited) (unaudited) (unaudited) (unaudited) 2006 (unaudited)
Revenue
Advertising revenue $ 576 $ - $ 576 $ - $ 576
Total Revenue 576 - 576 - 576
Costs and Expenses
Magazine publication costs - 919 - 919 16,755
General and administrative 8,623 418 9,070 936 30,255
Total Costs and Expenses 8,623 1,137 9,070 1,855 47,010
Net Loss $ (8,623) $ (761) $ (9,070) $(1,279) $ (46,434)
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
SHADOW MARKETING, INC.
(A Development Stage Company)
Statement of Stockholders' Equity (Deficiency)
For the Period September 19, 2003 (Inception) to December 31, 2006
(Expressed in US Dollars)
Deficit
Accumulated Total
Common Stock, $0.001 Addition During the Stockholders
Par Value 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 - - 6,000
Shares sold at $0.01 per share
in March 2005 1,400,000 1,400 12,600 - 14,000
Shares sold at $0.10 per share
in April 2005 45,000 45 4,455 - 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 three months
ended September 31, 2006 - - - ( 447) ( 447)
Balance, September 31, 2006 7,445,000 $ 7,445 $ 17,055 $ (37,811) $ (13,311)
Net loss for the three months
ended December 31, 2006 - - - ( 8,623) ( 8,623)
Balance, December 31, 2006 7,445,000 $ 7,445 $ 17,055 $ (46,434) $ (21,934)
See notes to financial statements
SHADOW MARKETING, INC.
(A Development Stage Company)
Statement of Cash Flows
(Expressed in US Dollars)
Cumulative
during the
development
Six months ended stage (September
December 31, 2006 19, 2003 to
2006 2005 December 31,
(unaudited) (unaudited) 2006 (unaudited)
Cash Flows from Operating Activities
Net Income (loss) $ (9,070) $ (1,279) $ (46,434)
Changes in operating assets and liabilities:
Accounts payable and accrued liabilities 48 (3,140) 14,648
Net cash provided by (used for) operating activities (9,022) (4,419) (31,786)
Cash Flows from Financing Activities
Loan from related party 12,525 - 12,521
Proceeds from sales of common stock - - 24,500
Net cash provided by (used for) financing activities 12,525 - 37,025
Increase (decrease) in cash 3,503 (4,419) 5,239
Cash, beginning of period 1,736 12,521 -
Cash, end of period $ 5,239 $ 8,102 $ 5,239
Supplemental disclosures of cash flow information:
Interest paid $ - $ - $ -
Income taxes paid $ - $ - $ -
See notes to financial statements
SHADOW MARKETING, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2006
(UNAUDITED)
1. INTERIM FINANCIAL STATEMENTS
The unaudited financial statements as of December 31, 2006 and for the three
and six months ended December 31, 2006 and 2005, and for the period September
19, 2003 (inception) to December 31, 2006 have been prepared in accordance
with accounting principles generally accepted in the United States for
interim financial information and with instructions to Form 10-QSB. 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, 2006 and the results
of operations and cash flows for the periods ended December 31, 2006 and
2005. 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 three month period ended December 31, 2006 is not necessarily
indicative of the results to be expected for any subsequent quarter of the
entire year ending June 30, 2007. The balance sheet at June 30, 2006 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, 2006 as included in
our report on Form 10-KSB.
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.
SHADOW MARKETING, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2006
(UNAUDITED)
4. STOCKHOLDERS' EQUITY
On March 3, 2006, the Securities and Exchange Commission ("SEC") "declared
effective" the Company's registration statement on Form SB-2 to register
3,445,000 shares of Company common stock owned by 32 stockholders of the
Company.
The Company has not adopted a stock option plan and has not issued any stock
options or other common stock equivalents.
5. INCOME TAXES
No provisions for income taxes have been recorded since the Company has
incurred losses since inception.
Based on management's present assessment, the Company has not yet determined
it to be more likely than not that a deferred tax asset attributable to the
future utilization of net operating loss carryforwards as of December 31,
2006 will be realized. Accordingly, the Company has provided a 100%
allowance against the deferred tax asset in the financial statements at
December 31, 2006. The Company will continue to review this valuation
allowance and make adjustments as appropriate. The net operating loss
carryforward expires $12 in year 2024, $16,967 in year 2025, $20,385 in year
2026, and $9,070 in year 2027.
Current United States tax laws limit the amount of loss available to be
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.
FORWARD-LOOKING STATEMENTS
This Form 10-QSB 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 Form, 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. 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, 2006, our current assets consisted of $5,239 in cash. With these
funds, we will only be able to satisfy our cash requirements for approximately
three months, provided we do not publish any additional issues of Up & Over
Magazine commences.
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
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,
2006. We incurred operating expenses in the amount of $576 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, 2006. 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.
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 three-month period
ended December 31, 2006.
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 14, 2007
Shadow Marketing Inc.
/s/ Greg Fedun
- ------------------------------
Greg Fedun, President
/s/ Christopher Paterson
- ------------------------------
Christopher Paterson
Principal accounting officer and
principal financial officer
Exhibit 31.1
CERTIFICATION
I, Greg Fedun, President and Chief Executive Officer of Shadow Marketing Inc.,
certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Shadow Marketing
Inc.;
2. Based on my knowledge, this report does not contain any
untrue statement of material fact or omit to state a material fact
necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible
for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-
15(e)) and internal control over financial reporting (as defined
in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant
and have:
a) designed such disclosure controls and procedures, or caused
such disclosure control and procedures to be designed under
our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities,
particularly during the period in which this report is being
prepared;
b) designed such internal control over financial reporting, or
caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting
and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
c) evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered
by this report based on such evaluation;
d) disclosed in this report any change in the registrant's
internal control over financial reporting that occurred
during the registrant's most recent fiscal quarter (the
registrant's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely
to materially affect, the registrant's internal control over
financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting
Date: February 14, 2007
/s/ Greg Fedun
- -------------------------------------------
Greg Fedun, President and C.E.O.
Principal Executive Officer
Exhibit 31.2
CERTIFICATION
I, Christopher Paterson, C.F.O. and principal accounting officer of Shadow
Marketing Inc., certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Shadow Marketing
Inc.;
2. Based on my knowledge, this report does not contain any
untrue statement of material fact or omit to state a material fact
necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible
for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-
15(e)) and internal control over financial reporting (as defined
in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant
and have:
a) designed such disclosure controls and procedures, or caused
such disclosure control and procedures to be designed under
our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities,
particularly during the period in which this report is being
prepared;
b) designed such internal control over financial reporting, or
caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting
and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
c) evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered
by this report based on such evaluation;
d) disclosed in this report any change in the registrant's
internal control over financial reporting that occurred
during the registrant's most recent fiscal quarter (the
registrant's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely
to materially affect, the registrant's internal control over
financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting
Date: February 14, 2007
/s/ Christopher Paterson
- ----------------------------------
Christopher Paterson
Principal Financial Officer
Principal Accounting Officer
Exhibit 32.1
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 of Shadow Marketing Inc. (the "Company")
on Form 10-QSB for the period ended December 31, 2006 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), the
undersigned, in the capacities and on the dates indicated below, hereby
certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that to his knowledge:
1. The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
Date: February 14, 2007
/s/ Greg Fedun
- -------------------------------------------
Greg Fedun, President and C.E.O.
(Principal Executive Officer)
Exhibit 32.2
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 of Shadow Marketing Inc. (the "Company")
on Form 10-QSB for the period ended December 31, 2006 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), the
undersigned, in the capacities and on the dates indicated below, hereby
certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that to his knowledge:
1. The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.
Date: February 14, 2007
/s/ Christopher Paterson
- ---------------------------------------
Christopher Paterson
Principal Financial Officer
Principal Accounting Officer