U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 333-83351
BRONZE MARKETING, INC.
(Exact name of registrant as specified in its charter)
NEVADA 87-0578370
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
426 South 1000 East, Salt Lake City, Utah 84106
(Address of principal executive offices)
(801) 537-1257
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since
last report)
Check whether the issuer (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 report(s), YES [X] NO [ ]
and (2) has been subject to such filing requirements for the past 90 days.
YES [ ] NO [X]
The number of $.001 par value common shares outstanding at September 30, 1999:
1,000,000
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
See attached.
<PAGE>
BRONZE MARKETING, INC.
[A Development Stage Company]
UNAUDITED BALANCE SHEET
ASSETS
September 30,
1999
___________
CURRENT ASSETS:
Cash in bank $ 578
Inventory on consignment 23,450
___________
Total Current Assets 24,028
___________
$ 24,028
___________
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Advances from shareholders $ 20,800
___________
Total Current Liabilities 20,800
___________
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value,
1,000,000 shares authorized,
no shares issued and outstanding -
Common stock, $.001 par value,
24,000,000 shares authorized,
1,000,000 shares issued and
outstanding 1,000
Capital in excess of par value 34,476
(Deficit) accumulated during the
development stage (32,248)
___________
Total Stockholders' Equity 3,228
___________
$ 24,028
___________
The accompanying notes are an integral part of this unaudited financial
statement.
1
<PAGE>
BRONZE MARKETING, INC.
[A Development Stage Company]
UNAUDITED STATEMENTS OF OPERATIONS
For the For the
Three Month Nine Month From Inception
Period Ended Period Ended on May 1,
September 30, September 30, 1997 Through
_________ _________ _________ _________ September 30,
1999 1998 1999 1998 1999
_________ _________ _________ _________ ______________
REVENUE:
Sales Royalties $ - $ - $ - $ - $ 2,079
_________ _________ _________ _________ ______________
Total Revenues - - - - 2,079
_________ _________ _________ _________ ______________
EXPENSES:
General and
Administrative 4,455 2,682 6,246 2,992 11,622
Bad debt expense -
related party - - 25,860 - 25,860
_________ _________ _________ _________ ______________
Total Expenses 4,455 2,682 32,106 2,992 37,482
_________ _________ _________ _________ ______________
LOSS FROM OPERATIONS (4,455) (2,682) (32,106) (2,992) (35,403)
OTHER INCOME:
Interest Income -
related party - 644 1,267 1,910 3,821
_________ _________ _________ _________ ______________
LOSS BEFORE INCOME TAXES (4,455) (2,038) (30,839) (1,082) (31,582)
CURRENT TAX EXPENSE - - - - -
DEFERRED TAX EXPENSE - - - - -
_________ _________ _________ _________ ______________
LOSS FROM CONTINUING
OPERATION BEFORE CHANGE
IN ACCOUNTING PRINCIPLE (4,455) (2,038) (30,839) (1,082) (31,582)
CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING
PRINCIPLE - - (666) - (666)
_________ _________ _________ _________ _____________
NET LOSS $ (4,455) $ (2,038) $(31,505) $ (1,082) $(32,248)
_________ _________ _________ _________ _____________
LOSS PER COMMON SHARE:
Continuing operations $ (.00) $ (.00) $ (.03) $ (.00) $ (.03)
Cumulative effect of
change in accounting
principle - - (.00) - (.00)
_________ _________ _________ _________ _____________
Net Loss Per Common
Share $ (.00) $ (.00) $ (.03) $ (.00) $ (.03)
_________ _________ _________ _________ _____________
The accompanying notes are an integral part of these unaudited financial
statements.
2
<PAGE>
BRONZE MARKETING, INC.
[A Development Stage Company]
UNAUDITED STATEMENTS OF CASH FLOWS
For the
Nine Month From Inception
Period Ended on May 1,
September 30, 1997 Through
___________________ September 30,
1999 1998 1999
_________ _________ ______________
Cash Flows From Operating Activities:
Net loss $(31,505) $ (1,082) $(32,248)
Adjustments to reconcile net loss to
net cash used by operating activities:
Bad debt expense - related party 25,860 - 25,860
Amortization expense - 150 334
Effect of change in accounting
principle 666 - 666
Change in assets and liabilities
(Increase) in interest receivable -
related party (1,267) (1,910) (3,821)
Increase in accounts payable - 10 -
_________ _________ ______________
Net Cash (Used) by Operating
Activities (6,246) (2,832) (9,209)
_________ _________ ______________
Cash Flows From Investing Activities:
(Increase) in notes receivable -
related party - - (36,489)
(Increase) in advances - related party - (9,000) (9,000)
Payment of organization costs - - (1,000)
_________ _________ ______________
Net Cash (Used) by Investing
Activities - (9,000) (46,489)
_________ _________ ______________
Cash Flows From Financing Activities:
Proceeds from common stock issuance - - 40,400
Proceeds from advance from shareholder 6,800 10,500 20,800
Payment of stock offering costs - - (4,924)
_________ _________ ______________
Net Cash Provided by Financing
Activities 6,800 10,500 56,276
_________ _________ ______________
Net Increase in Cash 554 (1,332) 578
Cash at Beginning of Period 24 1,682 -
_________ _________ ______________
Cash at End of Period $ 578 $ 350 $ 578
_________ _________ ______________
[Continued]
3
<PAGE>
BRONZE MARKETING, INC.
[A Development Stage Company]
UNAUDITED STATEMENTS OF CASH FLOWS [Continued]
For the
Nine Month From Inception
Period Ended on May 1,
September 30, 1997 Through
___________________ September 30,
1999 1998 1999
_________ _________ ______________
Supplemental Disclosures of Cash Flow
Information:
Cash paid during the period for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
Supplemental Schedule of Noncash Investing and Financing Activities:
For the period ended September 30, 1999:
The Company expensed its remaining organizational costs of
$666 in accordance with Statement of Position 98-5.
The Company's receivables and advances from related parties in
the amount of $49,310 were converted for inventory in the
amount of $23,450. Bad debt expense of $25,860 was recorded
for the remainder.
The accompanying notes are an integral part of these unaudited financial
statements.
4
<PAGE>
BRONZE MARKETING, INC.
[A Development Stage Company]
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - The Company was organized under the laws of the
State of Nevada on May 1, 1997. The Company initially engaged in
the business of providing inventory financing to facilitate the
marketing of bronze artwork and sculptures created by a relative
of the Company's President. The Company received royalties from
the sale of the inventory. However, during 1999 the Company
restructured its business plans and currently plans to market and
sell bronze artwork and sculptures which are created by the
relative. The Company has, at the present time, not paid any
dividends and any dividends that may be paid in the future will
depend upon the financial requirements of the Company and other
relevant factors. The Company has not generated significant
revenues and is considered a development stage company as defined
in Statement of Financial Accounting Standards (SFAS) No. 7.
Interim Financial Statements - The accompanying interim financial
statements have been prepared by the Company without audit. In
the opinion of management, all adjustments (which include only
normal recurring adjustments) necessary to present fairly the
financial position, results of operations and cash flows at
September 30, 1999 and for all the periods presented have been
made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted.
It is suggested that these condensed financial statements be read
in conjunction with the financial statements and notes thereto
included in the Company's December 31, 1998 audited financial
statements. The results of operations for the periods ended
September 30, 1999 and 1998 are not necessarily indicative of the
operating results for the full year.
Organization Costs - Organization costs, which reflect amounts
expended to organize the Company, amounted to $1,000 and were
expensed in accordance with Statement of Position 98-5,
"Reporting on the Costs of Start-Up Activities". Amortization
expense for the nine months ended September 30, 1999 was $666.
Revenue Recognition - The Company recognizes revenue from
royalties in the period when the underlying sales take place.
Revenue from sales are recognized in the period the sales take
place.
Inventory - Inventory is carried at the lower of cost or market
using the First In, First Out method. [See Note 2]
Loss Per Share - The Company computes loss per share in
accordance with Statement of Financial Accounting Standards
(SFAS) No. 128 "Earnings Per Share," which requires the Company
to present basic earnings per share and dilutive earning per
share when the effect is dilutive. [See Note 5]
Income Taxes - The Company accounts for income taxes in
accordance with Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes." This statement requires an
asset and liability approach for accounting for income taxes.
Cash and Cash Equivalents - For purposes of the financial
statements, the Company considers all highly liquid debt
investments purchased with a maturity of three months or less to
be cash equivalents.
5
<PAGE>
BRONZE MARKETING, INC.
[A Development Stage Company]
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Continued]
Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that effect the
reported amounts of assets and liabilities, the disclosures of
contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimated by management.
NOTE 2 - INVENTORY
At September 30, 1999, inventory consisted of finished bronze
sculptures valued at $23,450, acquired from a relative of the
President of the Company [See Note 7]. The Inventory is held on
consignment by an art gallery and the Sculptor in the states of
Utah, Wyoming and New York.
NOTE 3 - CAPITAL STOCK
Common Stock - During May 1997, in connection with its
organization, the Company issued 900,000 shares of its previously
authorized, but unissued common stock. Total proceeds from the
sale of stock amounted to $5,400 (or $.006 per share).
Public Offering of Common Stock - During 1997 the company made a
public offering of 100,000 shares of its previously authorized,
but unissued common stock. This offering was exempt from
registration with the Securities and Exchange Commission under
Rule 504 of Regulation D as promulgated under the Securities Act
of 1933, as amended. The offering price of $.35 per share was
arbitrarily determined by the Company. The offering was managed
by the Company without any underwriter. The shares were offered
and sold by an officer of the Company, who received no sales
commissions or other compensation in connection with the
offering, except for reimbursement of expenses actually incurred
on behalf of the Company in connection with the offering. Total
proceeds from the sale of stock amounted to $35,000. The Company
incurred stock offering costs of $4,924 in connection with the
stock offering. The stock offering costs have been netted
against the proceeds of the public stock offering as a reduction
to capital in excess of par value.
Preferred Stock - The Company has authorized 1,000,000 shares of
preferred stock, $.001 par value, with such rights, preferences
and designations and to be issued in such series as determined by
the Board of Directors. No shares are issued and outstanding at
September 30, 1999.
NOTE 4 - INCOME TAXES
The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109 "Accounting
for Income Taxes". SFAS No. 109 requires the Company to provide
a net deferred tax asset/liability equal to the expected future
tax benefit/expense of temporary reporting differences between
book and tax accounting methods and any available operating loss
or tax credit carryforwards. The Company has available at
September 30, 1999, an operating loss carryforward of
approximately $32,000, which may be applied against future
taxable income and which expires in various years through 2019.
6
<PAGE>
BRONZE MARKETING, INC.
[A Development Stage Company]
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 4 - INCOME TAXES [Continued]
The amount of and ultimate realization of the benefits from the
operating loss carryforward for income tax purposes is dependent,
in part, upon the tax laws in effect, the future earnings of the
Company, and other future events, the effects of which cannot be
determined. Because of the uncertainty surrounding the
realization of the loss carryforward the Company has established
a valuation allowance equal to the amount of the loss
carryforward and, therefore, no deferred tax asset has been
recognized for the loss carryforward. The net deferred tax asset
is approximately $11,000 as of September 30, 1999, with an
offsetting valuation allowance at September 30, 1999 of the same
amount. The change in the valuation allowance for the nine
months ended September 30, 1999 is approximately $10,300.
NOTE 5 - LOSS PER SHARE
The following data show the amounts used in computing loss per
share and the weighted average number of shares of common stock
outstanding for the periods presented:
For the For the
Three Month Nine Month From Inception
Period Ended Period Ended on May 1,
September 30, September 30, 1997 Through
_________ _________ _________ _________ September 30,
1999 1998 1999 1998 1999
_________ _________ _________ _________ ______________
Loss from continuing
operations available
to common shareholders
(Numerator) $ (4,455) $ (2,038) $(30,839) $ (1,082) $(31,584)
_________ _________ _________ _________ ______________
Cumulative effect of
change in change in
accounting principle
(Numerator) $ - $ - $ (666) $ - $ (666)
_________ _________ _________ _________ ______________
Weighted average number
of common shares
outstanding during the
period used in loss per
share (Denominator) 1,000,000 1,000,000 1,000,000 1,000,000 987,991
_________ _________ _________ _________ ______________
Dilutive loss per share was not presented, as the Company had no
common equivalent shares for all periods presented that would
effect the computation of diluted loss per share.
During 1999, the Company adopted Statement of Position 98-5 and
accordingly expensed its remaining organization costs of $666.
This has been reflected as a cumulative effect of change in
accounting principle.
7
<PAGE>
BRONZE MARKETING, INC.
[A Development Stage Company]
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 6 - GOING CONCERN
The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles, which
contemplate continuation of the Company as a going concern.
However, the Company has incurred losses since its inception and
has not yet been successful in establishing profitable
operations. These factors raise substantial doubt about the
ability of the Company to continue as a going concern. In this
regard, management is proposing to raise any necessary additional
funds not provided by operations through loans and/or through
additional sales of its common stock. There is no assurance that
the Company will be successful in raising this additional capital
or achieving profitable operations. The financial statements do
not include any adjustments that might result from the outcome of
these uncertainties.
NOTE 7 - RELATED PARTY TRANSACTIONS
Management Compensation - The Company has not paid any
compensation to its officers and directors as the services
provided by them to date have only been nominal.
Office Space - The Company has not had a need to rent office
space. An officer/shareholder of the Company is allowing the
Company to use her office as a mailing address, as needed, at no
expense to the Company.
Advances From Shareholders - During 1999, a shareholder of the
Company advanced a total of $6,800 to the Company. The advances
are due upon demand and do not accrue interest.
During 1998, a shareholder of the Company advanced a total of
$10,500 to the Company. The advances are due upon demand and do
not accrue interest.
During 1997, two shareholders of the Company advanced a total of
$3,500 to the Company. The advances are due upon demand and do
not accrue interest.
Note Receivable/Advances - The Company had entered into an
arrangement with a relative of the Company's President, who is a
freelance artist and who has an inventory of original bronze
sculptures which are being re-produced and marketed in limited
editions. The Company raised capital to provide financing to
produce limited edition bronze sculptures which were placed in
art studios and galleries on consignment. Upon the ultimate sale
of the sculptures the Company was to receive the casting costs
plus an amount from 3 to 7 percent of the underlying sales
proceeds depending upon the level of sales achieved. During
1997, the Company received royalty payments of $2,079 based on
sales.
On January 1, 1998, the above marketing arrangement was amended
to include the conversion of the advances to a note receivable
for $36,489. Specific sculptures were also identified as
collateral for the note. The note matures on January 1, 2000 but
provided for payments as specific sculptures were sold. The note
also provided for interest at 7% per annum. Interest income of
$3,821 was accrued on the note receivable as of June 30, 1999.
During 1998 the Company made additional advances for the
production of sculptures totaling $9,000 The advances were made
to an entity owned by a relative of the Company's President. No
interest has been accrued on the additional advances. No
payments were received on the advances.
8
<PAGE>
BRONZE MARKETING, INC.
[A Development Stage Company]
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 7 - RELATED PARTY TRANSACTIONS [Continued]
On September 1, 1999, the Company entered into an agreement with
a relative of the Company's president which supercedes and amends
the above agreements. The terms of the new agreement provides for
the Company to take ownership of the remaining sculpture
inventory as payment in full on the advances, notes receivable
and accrued interest, which totaled $49,310. The inventory was
valued at $23,450 by the Company, which took into account the
carry-over basis of the inventory and expected future realization
of the inventory [See Note 2] The excess of $25,860 was recorded
as bad debt expense.
9
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION & ANALYSIS OR PLAN OF OPERATIONS
The Company was incorporated May 1, 1997. Upon inception, the Company
issued 900,000 shares of common stock to its founding stockholders. On May
22, 1997, the Company commenced a public offering of up to 100,000 shares of
its common stock, in reliance upon Rule 504 of Regulation D, promulgated by
the U.S. Securities & Exchange Commission under the Securities Act of 1933.
The offering closed in July, 1997. The Company sold 100,000 shares,
increasing the total issued and outstanding common stock to 1,000,000 shares.
In July, 1999, the Company filed a registration statement on Form SB-2 with
the U.S. Securities & Exchange Commission under the Securities Act of 1933, to
register the distribution and exercise of warrants. This registration
statement was declared effective on October 27, 1999. At that time the
Company became subject to the information requirements of the Securities
Exchange Act of 1934. Accordingly, the Company will file annual and quarterly
reports and other information with the Commission, starting with this report
on Form 10-QSB. No securities have yet been sold pursuant to the offering.
PLAN OF OPERATIONS.
Bronze Marketing was incorporated on May 1, 1997, has not generated
significant revenues from operations and is still considered a development
stage company. Management's plan of operation for the next twelve months is to
use any funds received from exercise of warrants to provide financing for the
creation of additional works of art and increased marketing exposure of the
artworks, and also to provide general working capital during the next twelve
months. There are no specific capital commitments and the timing of
expenditures will depend upon the receipt of additional funds from warrant
exercise or elsewhere, none of which is assured. Cash flows will also depend
upon the timing of sale of the artwork, which is also not assured, and receipt
of the proceeds from these sales. There were no sales royalties generated or
received during 1998 or 1999, because there have not been any sales of the
existing artwork. As a result, Bronze Marketing took ownership of the
remaining sculpture inventory as payment in full of the advances, notes
receivable and accrued interest owed to it, which totaled $49,310 at June 30,
1999. If necessary to provide liquidity, management may auction or
liquidate the existing inventory of sculptures in which Bronze Marketing has
acquired an interest through online auctioning of the pieces using Internet
sites that feature online auctions of sculptures and other art. Management
believes this will allow Bronze Marketing to liquidate the existing inventory
as promptly as possible, if that becomes necessary. Management believes the
existing inventory can be auctioned for half or more of its retail value, and
has discounted the inventory on the books to $23,450 or half its retail value.
As soon as possible after Bronze Marketing receives the proceeds from these
sales and/or receives additional funds from warrant exercise, management will
use the funds to pay for the casting cost of additional limited edition
copies, but only of those sculptures which management and the artist believe
have the best market potential, based on indications of interest received.
Management believes that with the additional funding it could receive from
warrant exercise in this offering, Bronze Marketing could provide sufficient
financing for more copies of artwork to be made and placed on consignment to
increase marketing exposure. Management is hopeful that increased marketing
exposure will result in increases in sales sufficient to generate enough
revenue to Bronze Marketing to become profitable. However, we are not assured
of this nor do we know how much may be raised from warrant exercise, because
we do not know if all or any minimum number of the warrants will be exercised.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(a) None.
(b) None.
(c) See Part I, Item 1 (financial statements) and Item 2 (management's
discussion) for financial information and a discussion regarding
use of proceeds.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None
<PAGE>
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.
BRONZE MARKETING, INC.
Date: December 7, 1999 by: /s/ Heather Hamby
Heather Hamby, President & Director
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF BRONZE MARKETING, INC. FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 578
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 23,450
<CURRENT-ASSETS> 24,028
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 24,028
<CURRENT-LIABILITIES> 20,800
<BONDS> 0
0
0
<COMMON> 1,000
<OTHER-SE> 2,228
<TOTAL-LIABILITY-AND-EQUITY> 24,028
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 32,106
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (30,839)
<INCOME-TAX> 0
<INCOME-CONTINUING> (30,839)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (666)
<NET-INCOME> (31,505)
<EPS-BASIC> (.03)
<EPS-DILUTED> (.03)
</TABLE>
