SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 1O-QSB
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 2000.
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
------------ ------------
Commission File No. 0-27943
Promos, Inc.
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(Exact Name of Small Business Issuer as specified in its charter)
Colorado 84-1209909
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(State or other (IRS Employer File Number)
jurisdiction of
incorporation)
6000 E. Evans, Suite 2-020
Denver, Colorado 80222
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(Address of principal executive offices) (zip code)
(303) 758-3537
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(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) had filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
The number of shares outstanding of Registrant's common stock, par value
$.0000001 per share, as of March 31, 2000 were 10,033,600 common shares.
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. Financial Statements.
PROMOS, INC.
INDEX TO FINANCIAL STATEMENTS
TABLE OF CONTENTS
ITEM PAGE
- ---- ----
Report of Certified Public Accountant ................................... 3
Balance Sheets,
March 31, 2000 and December 31, 1999 .................................... 4 & 5
Statements of Operations, for the three
Months Ended March 31, 2000 and March 31, 1999 .......................... 6
Statements of Cash Flows, for the three months
Ended March 31, 2000 and March 31, 1999 ................................. 7
Statements of Stockholders' Equity (Deficit) ............................ 8
Notes to Financial Statements ........................................... 9 & 10
2
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANT
Board of Directors
Promos, Inc.
I have reviewed the accompanying Balance Sheets of Promos, Inc. as of March 31,
2000 and the related statements of income and cash flows for the three month
periods ended March 31, 2000 and 1999. These financial statements are the
responsibility of the Company's management.
I conducted my review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally or applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, I do not express such an opinion.
Based on my review, I am not aware of any material modifications that should be
made to the financial statements referred to above for them to be in conformity
with generally accepted accounting principles.
/s/ Janet Loss, C.P.A., P.C.
Janet Loss, C.P.A., P.C.
May 5, 2000
3
<PAGE>
<TABLE>
<CAPTION>
PROMOS, INC.
BALANCE SHEETS
Audited
March 31, December 31,
ASSETS 2000 1999
------ ------- ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ..................................... $19,651 $21,587
Accounts receivable, net of
Allowance of for doubtful accounts
$0 and $839 ................................................... 6,827 10,641
Prepaid Expenses .............................................. 680 680
Receivable, Stockholder ....................................... 631 0
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Total Current Assets ..................................... 27,789 32,908
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Fixed assets at cost, net
Of accumulated depreciation
Of $1,631 and $1,600 .......................................... 907 0
Security Deposit .............................................. 260 260
------- -------
Total Assets ............................................. $28,956 $33,168
======= =======
4
<PAGE>
<CAPTION>
PROMOS, INC.
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
<S> <C> <C>
Accounts Payable .............................................. $ 5,187 $ 2,960
Sales and Payroll Taxes Payable ............................... 722 1,487
Corporate Income Taxes Payable ................................ 2,194 2,194
Bank's Line of Credit,
Current Portion .......................................... 1,370 6,711
-------- --------
Total Current Liabilities ..................................... 9,473 13,352
-------- --------
LONG TERM LIABILITIES: ........................................ 0 0
-------- --------
STOCKHOLDERS' EQUITY:
Preferred Stock, 10,000,000 shares
of non-voting authorized, par value
of $0.01 per share, none issued ............................... 0 0
Common stock, par value of $.001,
per share, 50,000,000 shares authorized,
10,033,600 shares issued and
outstanding ................................................... 10,034 10,034
Additional Paid-in-Capital .................................... 11,785 11,785
Retained earnings (Deficit) ................................... (2,336) (2,003)
-------- --------
Total Stockholders' Equity .................................... 19,483 19,816
-------- --------
Total Liabilities and
Stockholders' Equity .......................................... $ 28,956 $ 33,168
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
PROMOS, INC.
STATEMENTS OF OPERATIONS
For the Three
Months Ended March 31,
2000 1999
---- ----
<S> <C> <C>
REVENUES:
Sales ............................................................... $ 24,474 $ 26,097
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COSTS OF GOODS SOLD:
Purchases and freight ............................................... 12,452 8,881
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GROSS PROFIT ..................................................... 12,022 17,216
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OPERATING EXPENSES:
Advertising ......................................................... 271 904
Auto Expenses ....................................................... 157 105
Auto Rental ......................................................... 1,040 1,210
Delivery and Postage ................................................ 179 66
Dues and subscriptions .............................................. 204 130
Depreciation Expense ................................................ 31 80
Employee Benefits ................................................... 763 520
Insurance Expense ................................................... 215 215
Legal and accounting ................................................ 1,250 95
Licenses and Taxes .................................................. 801 459
Office Supplies and Expenses ........................................ 379 804
Officer's Salary .................................................... 4,500 7,000
Rent and Maintenance ................................................ 1,008 1,356
Samples ............................................................. 234 305
Telephone Expenses .................................................. 537 1,364
Travel and Entertainment ............................................ 731 759
------------ ------------
Total Operating Expenses ....................................... 12,300 15,372
------------ ------------
NET INCOME (LOSS) BEFORE
OTHER (EXPENSES) .................................................... (278) 1,844
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OTHER INCOME AND (EXPENSES):
Interest Income ..................................................... 109 9
Interest (Expense) .................................................. (164) (112)
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Total Other Income and
(Expenses) ....................................................... (55) (103)
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Net Income (Loss) before
Provision for Income Taxes ....................................... (333) 1,741
Provision for Income Taxes .......................................... 0 348
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NET INCOME (LOSS) ................................................... $ (333) $ 1,393
============ ============
Net Income (Loss)per share ....................................... N/A N/A
============ ============
NUMBER OF SHARES OUTSTANDING ........................................ 10,033,600 10,000,000(1)
============ ============
</TABLE>
(1) Adjusting for an 8,000 for 1 forward split on August 30, 1999.
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
PROMOS, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
For the Three Months Ended March 31, 2000
Common Total
Stock Additional (Deficit) Stockholders'
Number of Common Stock Paid-in Retained Equity
Shares Amount Capital Earnings (Deficit)
--------- ------------ ---------- -------- -------------
<S> <C> <C> <C> <C> <C>
Balance
January 1, 2000 ................... 10,033,600 $ 10,034 $ 11,785 $ (2,003) $ 19,816
Net (loss) for
the three
months ended
March 31, 2000 .................... 0 0 0 (333) $ (333)
---------- ---------- ---------- ---------- ----------
Balance March
31, 2000 .......................... 10,033,600 $ 10,034 $ 11,785 $ (2,336) $ 19,483
========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
<TABLE>
<CAPTION>
PROMOS, INC.
STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2000 and 1999
2000 1999
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) ........................................ $ (333) $ 1,393
Adjustments to Reconcile
Net (Loss) to Cash Flow From
Operating Activities:
Depreciation ............................................. 31 80
Decrease in Accounts
Receivable ........................................... 3,814 201
Increase in Receivable,
Stockholder .......................................... (631) 0
Increase in Payables ....................................... 1,462 (2,258)
Increase (Decrease) in Bank's
Line of Credit ........................................ (5,341) 565
-------- --------
Cash Provided (Used) By
Operating Activities ..................................... (998) (19)
-------- --------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Increase in Fixed Assets ................................. (938) 0
-------- --------
Net Increase (Decrease) in Cash ........................ (1,936) (19)
-------- --------
CASH, BEGINNING OF PERIOD ..................................... 21,587 746
-------- --------
CASH, END OF PERIOD ........................................... $ 19,651 $ 727
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
PROMOS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE I - ORGANIZATION AND HISTORY
The Company is a Colorado corporation and has been incorporated since September
24, 1992. The business purpose of this corporation is to engage in the sale of
promotional products to other business companies.
NOTE II - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Method
The company record income and expenses on the accrual method.
Cash and Cash Equivalents
Cash and cash equivalents includes cash on hand, cash on deposit and highly
liquid investments with maturities generally of three months or less.
Sales and Expenses
Sales and expenses are recorded using the accrual basis of accounting.
Fixed Assets and Accumulated Depreciation
Fixed assets consists of office equipment and are stated at cost less
accumulated depreciation which is provided for by charges to operations over the
estimated useful lives of the assets. The assets are depreciated over five
years.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles 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
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Offering Costs
Offering costs of $13,031 associated with the Company's private offerings have
been charged to the proceeds of the offering.
9
<PAGE>
NOTE III - AGING OF ACCOUNTS RECEIVABLE AND PAYABLE
The percentage aging of trade accounts receivable and accounts payable at March
31, 2000 is as follows:
Accounts Receivable Accounts Payable
Current 40% 100%
30-60 days 30%
over 60 days 30%
Bad Debt Policy
The Company uses the direct write-off method for its allowance for doubtful
accounts.
NOTE IV - LEASES AND OTHER COMMITMENTS
The Company leases its premises for $366.00 per month and currently has a two
year lease from March 1, 1999 through February 28, 2001.
NOTE V - RELATED PARTY TRANSACTIONS
The Company has incurred salary expenses of $4,500.00 and $7,000.00 for March
21, 2000 and 1999, respectively to its president. The Company also pays auto
rental for its president, this is currently $403.38 per month.
NOTE VI - LINE OF CREDIT
The Company has obtained a line of credit for $35,000.00. The interest rate
varies and is approximately 10.50 percent.
10
<PAGE>
ITEM 2. Managements Discussion and Analysis of Financial Condition and Results
of Operations.
The following discussion contains forward-looking statements regarding our
Company, its business, prospects and results of operations that are subject to
certain risks and uncertainties posed by many factors and events that could
cause our actual business, prospects and results of operations to differ
materially from those that may be anticipated by such forward-looking
statements. Factors that may affect such forward-looking statements include,
without limitation: our ability to successfully develop new products for new
markets; the impact of competition on our revenues, changes in law or regulatory
requirements that adversely affect or preclude clients from using our products
for certain applications; delays our introduction of new products or services;
and our failure to keep pace with emerging technologies.
When used in this discussion, words such as "believes", "anticipates",
"expects", "intends" and similar expressions are intended to identify
forward-looking statements, but are not the exclusive means of identifying
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date of this
report. Our Company undertakes no obligation to revise any forward-looking
statements in order to reflect events or circumstances that may subsequently
arise. Readers are urged to carefully review and consider the various
disclosures made by us in this report and other reports filed with the
Securities and Exchange Commission that attempt to advise interested parties of
the risks and factors that may affect our business.
Results of Operations
Our revenues decreased from $26,097 for the three months ended March 31,
1999 to $24,474 for the three months ended March 31, 2000. The decrease was
primarily due to the completion of a project.
Costs of goods include all direct costs incurred in the process of
representing clients. The difference between our gross revenues and cost of
goods is our gross profit.
Gross profit from operations was $12,022 for the three months ended March
31, 2000, a decrease from $17,216 for the three months ended March 31, 1999.
Our operating expenses were $12,300 for the three months ended March 31,
2000 compared to $15,372 for the three months ended March 31, 1999. The major
components of operating expenses are office salaries and associated payroll
costs, general and health insurance costs, rent and telephone expenses.
11
<PAGE>
While our revenues have been slightly lower for the first fiscal quarter of
2000 as compared to the first fiscal quarter of 1999, our operations have been
essentially at the same level. We believe that we may see an increase in revenue
as the fiscal year progresses. It is too early to know whether or not we will be
profitable this year.
Liquidity and Capital Resources
Cash at the end of the period increased to $19,651 for the three months
ended March 31, 2000, compared to $727 for the three months ended March 31,
1999.
Accounts receivable decreased for the three months ended March 31, 2000 to
$6,827, compared to $10,641 for the three months ended March 31, 1999.
Prepaid Expenses remained constant for both reporting periods at $680.
Accounts payable increased for the three months ended March 31, 2000 to
$5,187 compared to $2,960 for the three months ended March 31, 1999.
We were profitable for the first fiscal quarter of 1999 but sustained a
small loss in the first fiscal quarter of 2000. Our operating expenses were
relatively the same during both periods. The variation in revenues on client
projects accounts for the difference between a profit and a loss. In any case,
we try to operate with minimal overhead. Our primary activity will be to seek to
expand our client base and, consequently, our revenues. If we succeed in
expanding our client base and generating sufficient revenues, we will again
become profitable. We cannot guarantee that this will ever occur. Our plan is to
build our Company in any manner which will be successful. To that end, we may
also look for an acquisition candidate, although we have concluded no
acquisitions and have spoken with no potential candidates.
We feel that we have inadequate working capital to pursue any business
opportunities other than seeking additional clients or an acquisition candidate.
During the next twelve months, we plan to investigate an offering of our
securities, whether through a private placement or a public offering. At the
present time, we have no firm arrangements with regard to either type of
offering. We do not intend to pay dividends in the foreseeable future.
Year 2000 Compliance
Our IT systems and non-IT systems requiring Year 2000 modification have
been completed. In addition, we do not foresee a need to deal with the
possibility that some suppliers or vendors might fail to provide goods and
services on a timely basis as a result of Year 2000 problems.
12
<PAGE>
PART II- OTHER INFORMATION
ITEM 1. Legal Proceedings
No legal proceedings of a material nature to which we are a party were
pending during the reporting period, and we know of no legal proceedings of a
material nature pending or threatened or judgments entered against any of our
directors or officers in his capacity as such.
ITEM 2. Changes in Securities and Use of Proceeds.
Not applicable
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.
Exhibit No. 27.1- Financial Data Schedule
No reports on Form 8-K were filed as of the most recent fiscal quarter.
13
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Promos, Inc.
Dated: 5/11/00 By: /s/ Judith F. Harayda
-----------------------------
Judith F. Harayda
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
CHIEF FINANCIAL OFFICER
Dated: 5/11/00 By: /s/ Stephan R. Levy
-----------------------------
Stephan R. Levy
Treasurer and Director
Dated: 5/11/00 By: /s/ Judith F. Harayda
-----------------------------
Judith F. Harayda
Director
14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C> <C>
<PERIOD-TYPE> 3-MOS YEAR
<FISCAL-YEAR-END> DEC-31-2000 DEC-31-2000
<PERIOD-START> JAN-01-2000 JAN-01-1999
<PERIOD-END> MAR-31-2000 DEC-31-1999
<CASH> 19,651 21,587
<SECURITIES> 0 0
<RECEIVABLES> 7,458 11,480
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 940 940
<PP&E> 2,538 1,600
<DEPRECIATION> (1,631) (1,600)
<TOTAL-ASSETS> 28,956 33,168
<CURRENT-LIABILITIES> 9,473 13,352
<BONDS> 0 0
0 0
0 0
<COMMON> 10,034 10,034
<OTHER-SE> 9,449 9,782
<TOTAL-LIABILITY-AND-EQUITY> 28,956 0
<SALES> 24,474 0
<TOTAL-REVENUES> 24,474 0
<CGS> 12,452 0
<TOTAL-COSTS> 12,452 0
<OTHER-EXPENSES> 12,300 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 155 0
<INCOME-PRETAX> (333) 0
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (333) 0
<EPS-BASIC> 0 0
<EPS-DILUTED> 0 0
</TABLE>
