SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACTS OF 1934
For the quarterly period ended September 30, 1999
Anthem Recording, Inc.
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(Exact name of small business issuer as specified in its charter)
California 33-0835561
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11423 WEST BERNARDO COURT, SAN DIEGO, CALIFORNIA 92127
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(Address of principal executive offices)
(858) 675-4445
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(Registrant's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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
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As of September 30, 1999, the issuer had 10,000,000 shares of common stock,
$.001 Par Value, outstanding.
Transitional Small Business Disclosure format: Yes No x
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<PAGE>
ANTHEM RECORDING, INC.
Form 10-QSB
September 30, 1999
INDEX
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PART I FINANCIAL INFORMATION PAGE NO.
ITEM 1 FINANCIAL STATEMENTS
Consolidated Balance Sheets:
September 30, 1999 3
Consolidated Statements of Income: 4
Three-Month Periods Ended
August 31, 1999 and 1998
Notes to Consolidated Financial Statements 4
Research and Development 5
Employees 5
Management Discussion 6
PART II OTHER INFORMATION 8
ITEMS 1-6
Exhibit 10
<PAGE>
Anthem Recording West Inc.
11423 W. Bernardo Ct.
Suite 100
San Diego, CA 92127-1639
BALANCE SHEET
(unaudited)
For the months ended 09/30/99
CURRENT ASSETS ASSETS
CASH IN BANK $ 25,663.44
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TOTAL CURRENT ASSETS $ 25,663.44
FIXED ASSETS
COPYRIGHTS OF 36 SONGS 51,000.00
START-UP COSTS 2,083.00
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53,083.00
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TOTAL ASSETS $78,746.44
LIABILITIES and EQUITY
CAPITAL OR EQUITY
CAPITAL STOCK $ 105,000.00
NET PROFIT or LOSS (26,253.56)
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TOTAL CAPITAL OR EQUITY $ 78,746.44
-----------
TOTAL LIABILITIES and EQUITY $78,746.44
3
<PAGE>
Anthem Recording West Inc.
11423 W. Bernardo Ct.
Suite 100
San Diego, CA 92127-1639
<TABLE>
<CAPTION>
STATEMENT OF INCOME
( unaudited )
From 07/01/99 For the 9 Months
To 09/30/99 Ending 09/30/99
OPERATING EXPENSE
<S> <C> <C> <C> <C>
BANK CHARGES $ 0.00 100.00% $ 153.56 0.00%
CONSULTANT - ED BRACKEN 3,000.00 0.00% 8,000.00 0.00%
CONSULTANT - DAVID SPOON 3,000.00 0.00% 8,000.00 0.00%
CONSULTANT - CHRIS LUCIDI 0.00 100.00% 3,000.00 0.00%
OFFICE EXPENSES 100.00 0.00% 100.00 0.00%
PROFESSIONAL SERVICES-LEGAL 5,000.00 0.00% 5,000.00 0.00%
PROFESSIONAL SERVICES-ACCOU 2,000.00 0.00% 2,000.00 0.00%
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TOTAL OPERATING EXPENSE 13,100.00 0.00% 26,253.56 0.00%
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NET INCOME or (LOSS) $(13,100.00) 0.00% $(26,253.56) 0.00%
</TABLE>
NOTE 1 - UNAUDITED INTERIM INFORMATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Regulation
S-B. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three-month period ended September 30, 1999
are not necessarily indicative of the results that may be expected for the year
ending December 31, 2000.
4
<PAGE>
ITEM 2.
Plan of Operations
The Company has formulated a plan of operations for the next twelve months as
detailed below. The Company intends to use the net proceeds of its revenues and
credit line, if and when established, to improve its services, Web site
advertising and promotions.
In the Company's opinion, proceeds from possible future equity funding and loans
will satisfy its cash requirements for the next twelve months. The Company has
financed its operations since inception from the sale of equity. During the next
six months certain funds will need to be raised. The Company has no engineering,
management or similar report that has been prepared or provided for external use
by the issuer or underwriter.
By the end of fiscal 2000, the Company plans to have successfully introduced its
services and eliminated any contractual complications concerning its business.
In order to implement the strategic plan and meet the Company's anticipated
working capital needs, the Company estimates that it will require an additional
$100,000 in capital.
Despite low cash reserves, additional funds may be required in order to proceed
with the business plan outlined above. These funds would be raised through
additional private placements or other financial arrangements including debt or
equity. There is no assurance that such additional financing will be available
when required in order to proceed with the business plan or that the Company's
ability to respond to competition or changes in the market place or to exploit
opportunities will not be limited by lack of available capital financing. If the
Company is unsuccessful in securing the additional capital needed to continue
operations within the time required, the Company will not be in a position to
continue operations and the stockholders may lose their entire investment.
Special Note Regarding Forward-Looking Statements
Certain statements in this report and elsewhere (such as in other filings by the
Company with the Securities and Exchange Commission ("SEC"), press releases,
presentations by the Company of its management and oral statements) may
constitute 'forward-looking statements " within the meaning of the Private
Securities Litigation Reform Act of 1995. Words such as "expects,"
"anticipates," "intends," "plans," "believes," "seeks," "estimates," and
"should," and variations of these words and similar expressions, are intended to
identify these forward-looking statements. The Company's actual results could
differ materially from those anticipated in these forward-looking statements.
Factors that might cause or contribute to such differences include, among
others, competitive pressures, the growth rate of the music industry, constantly
changing technology and market acceptance of the Company's products and
services. The Company undertakes no obligation to publicly release the result of
any revisions to these forward-looking statements, which may be made to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
Research and Development
Since its inception, the Company has devoted significant time and some financial
resources to research and development activities to develop its current products
and services. The Company anticipates that a portion of its ongoing operations
will continue to include research and development activities. Research and
development expenditures are expected to increase in 2000. There is no assurance
that the Company will successfully develop these services, or that competitors
will not develop services sooner or services that are superior to the Company's
service offerings.
Employees
As of September 15, 1999, the Company has one full-time employee who is
primarily engaged in marketing and sales. Because the Company is in a
developmental stage, two part-time consultants provide services to the Company
in the areas of ongoing support research and development and financial
consulting. The Company makes use of additional outside consultants and
independent contractors to perform various functions, such as legal matters,
programming, engineering, development, and accounting. The Company believes this
approach not only allows it to limit expenses, but also provides maximum
flexibility to react to a changing market environment. The Company's employees
are not represented by a labor union. The Company believes that its employee
relations are good.
5
<PAGE>
The Company's executive offices are located at 11423 West Bernardo Court, San
Diego, California 92127 in an approximately 300 square foot space. This space,
which houses all of the Company's current operations, is leased on a
month-to-month rental agreement. The monthly base rental payment under the
agreement is approximately $250.
The Company expects to have two full-time employees by the end of 2000. The
President will perform a multitude of company functions. A full-time office
manager will be added in the second year, which would include bookkeeping, as
well as accounts receivable and payable.
Management Discussion
BUSINESS
The Company is a development stage company. The Company was incorporated in
California on January 4, 1999, as "Anthem Recording West, Inc., Inc.", with
authorized capital of fifty million (50,000,000) shares of common stock, par
value $0.001 per share. There have been no amendments to the Company's charter.
On January 31, 1999, the Company commenced an offering, pursuant to Regulation D
of the Securities Act of 1933 (the "Act"), Rule 504, of up to 2,100,000 shares
of its common stock at a price of $0.05 per share. This offering was conducted
in order to raise money for working capital and inventory and was broken down as
follows: $51,000 for purchase of existing business and song rights, $12,000 for
officers salaries, $10,000 for legal fees, $7,500 for consulting fees, $5,000
for song production, $5,000 for musician talent search, $5,000 for multimedia
promotions, $3,000 for incorporation expenses, $2,500 for travel expenses,
$2,000 for stock transfer agent, and $2,000 for accounting fees. On March 31,
1999, this offering was completed with all shares being sold and issued for a
total of $105,000 being received by the Company. A Form D was filed on March 31,
1999.
The consumer may access the Company at their corporate headquarters, located at
11423 West Bernardo Court, San Diego, California 92127 or by phone or at (858)
675-4445 or by fax at (858) 675-4443.
Company Background
The Company is in the publishing industry. The Company feels that by finding new
and original material in the market, that has not yet been represented, it can
be successful. This theory has resulted in the Company conducting several
different interviews with potential clients. Spanning from Florida to
California, and Seattle to Phoenix, there has been a flood of maturing and
talented writers looking for assistance in their respective careers. The Company
has engaged in negotiations with five of these such talents since inception.
Contracts and funds are being contemplated to be committed for such projects as
re-mixing of original materials, demo CDs and writing enhancements for existing
material. In the process of funding the freshest talent available, the Company
has on various occasions retained the services of consultants within a city in
order to locate the best candidates recording in the more obscure music studios.
The purpose of this strategy for the Company is to take full advantage of the
largest pool of overlooked talent residing in various cities throughout the
country. The most significant and prestigious recording studious deal primarily
with established talents and musical acts with enormous financial backing. This
reduces their own financial loss in any matter they may pursue. The opportunity
to cultivate, in the earliest stages, talents and music, songs and bands create
the highest profit potential for the Company. The Company follows the same
business model that would be employed by professional sports, such as
professional football, baseball, basketball, and hockey.
As the sports industry expanded its popularity, the so-called "talent scouts"
looked to the long term college athletes in order to determine the best up and
coming talent, but after a short while, the potential pool dried up from over
extensive scouting. The answer to this problem, from which professional sports
have been able to launch its extreme popularity jump, was to find talent in the
earlier stages, i.e.: early college, high school, and the like. The Company is
utilizing this business model from the sports industry in the music and talent
industry. Utilizing this "scouting" aspect, the Company can sift through people
and talents that deserve an opportunity to reach their fullest potential.
6
<PAGE>
The Company has discovered what it believes to become excellent talent at the
perfect time. Revenues from a single Beatles' song, charted, but not in the top
ten, from the publishing value, have generated over $100,000,000. The value
placed on that song continues to climb as each year passes. When the Company
finds, enhances, and promotes that talent to its fullest potential, the
profitability of the Company becomes closer to inevitable. The Company believes
that it has engaged with groups and individuals that will bring the Company to
the place of publishing recognition. This window of opportunity, engaged with
raw and explosive talent has required the Company to use both its financial
resources as well as it is various industry contacts. Many of these contacts
have a self-value due to the nature of the music business. Without hesitation,
the combination of contacts and actual expenditures create for the Company,
limitless opportunities to generate income and to establish profit for the
shareholders. While no business can guarantee success, the music business is a
forum that is continually expanding, growing and developing, thereby giving the
Company the potential to achieve financial rewards.
Currently, the contracts that the Company is using range from letters of intent
to offer to contracts of song representation. The purpose of these or any other
contracts is to establish in writing what has been agreed upon orally.
Regardless of the debate, whether of not non-complete contracts in real estate
of holographic wills are acceptable, aren't specifically in the State of
California, A.S.C.A.P. and all other music industry regulators require written
form of agreement. This of course for the purpose of eliminating lawsuits and
general disagreements, which result in the loss of billions of dollars and are
ultimately passed on to the public in the form of higher consumer prices. The
other purpose for the Company to maintain cintracts in to keep an orderly system
of tracking and filing clients.
The method of production is one of the key advantages that the Company has over
the general competition. In association with the Company's studio, temporarily
located in Phoenix, Arizona, the Company offers 24-hour availability and
priority in song development and production. The quality and song production
emitting from the Phoenix studio has earned it several significant awards and
acknowledgements in the music industry. From having musical equipment (also
referred to as "gear") that is state-of-the- art, the Phoenix studio has been
awarded as one of the best recording studios by Mix Magazine, one of the Fore
most authorities on recording production studio. In addition to local and state
acknowledgement, this studio has also placed songs on the charts of Billboard
Magazine, the single greatest authority on song activity in the world
A major Component of Production is the marketing of the songs and talent.
Marketing can and will be expressed through all types of media, including but
not limited to print, radio, television, the Internet, and word of mouth. Funds
from the Company have not only been used to find the prospects and talent, but
also to develop the most powerful marketing tools for each particular project so
as to maximize the chances for success. The most popular form of media today is
the Internet, growing at an exceptional rate and occupying the most powerful
audience worldwide. The profit potential for this medium is incredible and most
easily obtainable for the price available. To secure this medium, the Company is
in the process of developing a site and name domain status to best suit the
Company's needs.
Within the marketing venture of the Company lie many aspects, including
packaging and presentation. The presentation of the finished project or
significant demos are important to distinguish themselves from other groups and
individuals. Knowing this, the Company feels it is very important to use the
resources available to promote the prospects in which the Company has an
interest in, sometimes sacrificing short-term losses for long-term gains.
Touring is a vital issue in the advancement of an artist, largely because it
gives the consumer a chance to see their favorite personalities and celebrities
up close rather than simply on an album. The Company plans to utilize the local,
state, circuit, and national venues of touring, pending on the level of growth
the particular music has spanned to. Name awareness is key to the decision of
the type of touring that will take place, and touring will almost definitely
increase the name awareness of the artists in itself. Touring creates many
advantages in the local sector, such as increased airtime on radio stations. The
Company plans to promote the most promising talents heavily and use the success
of these artists to help other artists develop their talent into what could be a
tremendous career.
There is a powerful community of musicians, writers, and talent that allows the
interaction of new talents and materials in the music industry. The Company is
in the process of signing contracts and potential joint ventures with businesses
and groups that offer a substantial opportunity of taking advantage of this pool
of talent.
7
<PAGE>
The music industry is extremely versatile, able to hold a multitude of styles in
an unlimited spectrum of sound. Due to fads and changes in the world's tastes,
there is a constant revolving door around new varieties of music entering and
leaving the industry scene. With this in mind, the Company believes it is best
to be represented by a variety of styles and backgrounds rather than limit
itself to a specific niche. This will allow the artists to prove to the Company
why they are vital to the Company rather than searching the world over to find
someone specific to fill a need in the scope of the Company.
There are two markets to target when developing music talents: the general
public and the music industry. Interestingly the music industry holds a
significant grasp on what the public wants, molding what the companies want the
public to like into radio stations and music stores via request and popularity
lists. Therefore, the music industry has a huge influence on the public
perception of taste. Targeting venues that have an openness and affinity toward
the new are vital to testing the marketability of new artists and their music
styles. In dealing with both the proven style industries as well as the
experimental styles of music, the Company hopes to offer a wide variance of
prospects for the public.
Finally, the Company does not wish to participate in any form of "music" that is
detrimental to society or may cause the public to perceive the Company as
immoral. The Company knows there are numerous forms of music that are enjoyable
and profitable so as to not be forced into signing artists that seem to devalue
themselves as well as anyone they are associated with. This is not the direction
that the Company wishes or plans to pursue at the present time or in the future.
<PAGE>
PART II
Item 1. Legal Proceedings
The Company is not involved in any material legal proceedings or litigation, and
the officers and directors are aware of no other pending litigation, which would
have a material, adverse effect on the Company.
Item 2. Changes in Securities
None
Item 3. Defaults upon senior securities
None
Item 4. Submission of matters to a vote of the security holders
None
Item 5. Other information
None
Item 6. Exhibits and reports on form 8K
EXHIBIT
NUMBER DESCRIPTION LOCATION
- - ------ ----------- --------
27 FINANCIAL DATA SCHEDULE FILED HEREWITH ELECTRONICALLY
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Anthem Recording, Inc.
Dated: February 9, 2000 By: /s/ David Spoon
-----------------------------
President
8
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheets and statements of operations found on pages 3 and 4 of the Company's Form
10-QSB for the quarter ended September 30, 1999, and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> SEP-30-1999
<CASH> 25,663
<SECURITIES> 0
<RECEIVABLES> 2,082
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 78,746
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 78,746
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,178
<INCOME-PRETAX> (820,677)
<INCOME-TAX> 0
<INCOME-CONTINUING> (820,677)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (820,677)
<EPS-BASIC> (.06)
<EPS-DILUTED> (.06)
</TABLE>
