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 June 30, 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,
June 30, 2000 and December 31, 1999 (Audited)............................ 4
Statements of Operations, for the three and six
Months Ended June 30, 2000 and 1999...................................... 5
Statements of Cash Flows, for the six
Months Ended June 30, 2000 and 1999...................................... 6
Statements of Stockholders' Equity (Deficit)............................. 7
Notes to Financial Statements ........................................... 8 & 9
2
<PAGE>
PART I - FINANCIAL INFORMATION
REPORT OF INDEPENDENT PUBLIC ACCOUNTANT
Board of Directors
Promos, Inc.
I have reviewed the accompanying Balance Sheet of Promos, Inc. as of June 30,
2000 and the related statements of income and cash flows for the six month
periods ended June 30, 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 of 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
Janet Loss, C.P.A., P.C.
August 9, 2000
3
<PAGE>
<TABLE>
<CAPTION>
PROMOS, INC.
BALANCE SHEETS
Audited
June 30, December 31,
2000 1999
------- -----------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ............................................. $ 16,489 $ 21,587
Accounts receivable, net of
Allowance of for doubtful accounts
$0 and $839 ........................................................... 50,200 10,641
Prepaid Expenses ...................................................... 680 680
Receivable, Stockholder ............................................... 637 0
-------- --------
Total Current Assets ............................................. 68,006 32,908
-------- --------
Fixed assets at cost, net
Of accumulated depreciation
Of $1,678 and $1,600 .................................................. 1,516 0
Security Deposit ................................................. 260 260
-------- --------
Total Assets .......................................................... $ 69,782 $ 33,168
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable ...................................................... $ 23,177 $ 2,960
Sales and Payroll Taxes Payable ....................................... 1,264 1,487
Corporate Income Taxes Payable ........................................ 5,931 2,194
Bank's Line of Credit,
Current Portion .................................................. 4,980 6,711
-------- --------
Total Current Liabilities ............................................. 35,352 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) ...................................... 12,611 (2,003)
-------- --------
Total Stockholders' Equity ............................................ 34,430 19,816
-------- --------
Total Liabilities and
Stockholders' Equity .................................................. $ 69,782 $ 33,168
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
PROMOS, INC.
STATEMENTS OF OPERATIONS
For The Three For the Six
Months Ended Months Ended
June 30 June 30
2000 1999 20001999
---- ---- --------
<S> <C> <C> <C> <C>
REVENUES:
Sales ....................................... $ 61,821 $ 31,212 $ 86,295 $ 57,309
------------ ------------ ------------ ------------
COSTS OF GOODS SOLD:
Purchases and freight ....................... 31,734 9,791 44,186 18,672
------------ ------------ ------------ ------------
GROSS PROFIT ............................. 30,087 21,421 42,109 38,637
------------ ------------ ------------ ------------
OPERATING EXPENSES:
Advertising ................................. 0 16 271 920
Auto Expenses ............................... 325 182 482 287
Auto Rental ................................. 1,210 1,210 2,250 2,420
Delivery and Postage ........................ 213 185 392 251
Dues and subscriptions ...................... 140 197 344 327
Depreciation Expense ........................ 47 80 78 160
Employee Benefits ........................... 1,297 1,080 2,060 1,600
Filing and Transfer Fees .................... 759 0 759 0
Insurance Expense ........................... 110 216 325 431
Legal and accounting ........................ 1,235 195 2,485 290
Licenses and Taxes .......................... 156 500 957 959
Office Supplies and Expenses ................ 1,223 40 1,602 844
Officer's Salary ............................ 1,800 3,500 6,300 10,500
Rent and Maintenance ........................ 1,009 943 2,017 2,299
Samples ..................................... 224 127 458 432
Telephone Expenses .......................... 711 1,808 1,248 3,172
Travel and Entertainment .................... 795 925 1,526 1,684
------------ ------------ ------------ ------------
Total Operating Expenses ............... 11,254 11,204 23,554 26,576
------------ ------------ ------------ ------------
NET INCOME BEFORE
OTHER (EXPENSES) ............................ 18,833 10,217 18,555 12,061
------------ ------------ ------------ ------------
OTHER INCOME AND (EXPENSES):
Interest Income ............................. 111 9 220 18
Interest (Expense) .......................... (261) (232) (425) (344)
------------ ------------ ------------ ------------
Total Other Income and
(Expenses) ............................... (150) (223) (205) (326)
------------ ------------ ------------ ------------
Net Income (Loss) before Provision
For Income Taxes ......................... $ 18,683 $ 9,994 $ 18,350 $ 11,735
------------ ------------ ------------ ------------
Provision for Income Taxes .................. 3,736 2,129 3,736 2,477
------------ ------------ ------------ ------------
NET INCOME (LOSS) ........................... $ 14,947 $ 7,865 $ 14,614 $ 9,258
============ ============ ============ ============
Net Income Per share ..................... .001 .001 .001 .001
============ ============ ============ ============
NUMBER OF SHARES OUTSTANDING ................ 10,033,600 10,000,000* 10,033,600 10,000,000*
============ ============ ============ ============
</TABLE>
* Adjusted for an 8,000 for 1 forward split on August 30, 1999. The accompanying
notes are an integral part of the financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
PROMOS, INC.
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
For the Six Months Ended June 30, 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 income for the six months
ended June 30, 2000 .................... 0 0 0 14,614 $ 14,614
---------- ---------- ---------- ---------- ----------
Balance June
30, 2000 ................................ 10,033,600 $ 10,034 $ 11,785 $ 12,611 $ 34,430
========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
PROMOS, INC.
STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2000 and 1999
2000 1999
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) ................................ $ 14,614 $ 9,258
Adjustments to Reconcile
Net (Loss) to Cash Flow From
Operating Activities:
Depreciation ..................................... 78 160
Decrease in Accounts
Receivable ................................... (39,559) (8,768)
Increase in Receivable,
Stockholder .................................. (637) 0
Increase in Payables ............................... 23,731 1,441
Increase (Decrease)in Bank's
Line of Credit ................................ (1,731) (2,818)
-------- --------
Cash Provided (Used)By
Operating Activities ............................. (3,504) (727)
-------- --------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Increase in Fixed Assets ......................... (1,594) 0
-------- --------
Net Increase (Decrease) in Cash ................ (5,098) (727)
-------- --------
CASH, BEGINNING OF PERIOD ............................. $ 21,587 $ 1,463
-------- --------
CASH, END OF PERIOD ................................... $ 16,489 $ 736
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<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.
8
<PAGE>
NOTE III - AGING OF ACCOUNTS RECEIVABLE AND PAYABLE
The percentage aging of trade accounts receivable and accounts payable at June
30, 2000 is as follows:
Accounts Receivable Accounts Payable
Current 45% 100%
30-60 days 37%
over 60 days 18%
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 $6,300.00 and $10,500.00 for June
30, 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.
9
<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 increased from $31,212 for the three months ended June 30,
1999 to $61,821 for the three months ended June 30, 2000. Our revenues increased
from $57,309 for the six months ended June 30, 1999 to $86,295 for the six
months ended June 30, 2000. The increase was primarily due to work on 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 $30,087 for the three months ended June
30, 2000, a increase from $21,421 for the three months ended June 30, 1999.
Gross profit from operations was $42,109 for the six months ended June 30, 2000,
a slight decrease from $38,637 for the six months ended June 30, 1999.
Our operating expenses were steady at $11,254 for the three months ended
June 30, 2000 compared to $11,204 for the three months ended June 30, 1999. Our
operating expenses were slightly lower at $23,554 for the six months ended June
30, 2000 compared to $26,576 for the six months ended June 30, 1999. The major
components of operating expenses are office salaries and associated payroll
costs, general and health insurance costs, rent and telephone expenses.
Net income was $14,947 for the three months ended June 30, 2000, a increase
from $7,865 for the three months ended June 30, 1999. Net income was $14,614 for
the six months ended June 30, 2000, an increase from $9,258 for the six months
ended June 30, 1999. Earnings per share were constant for all periods at $.001
per share.
While our revenues have been higher for the second fiscal quarter and the
first half of 2000 as compared to the second fiscal quarter and first half of
1999, our operations have been essentially at the same level. We believe that we
may continue to see an increase in revenue as the fiscal year progresses.
However, it is too early to know whether or not we will be profitable this year.
10
<PAGE>
Liquidity and Capital Resources
Cash at the end of the period increased significantly to $16,489 for the
six months ended June 30, 2000, compared to $736 for the six months ended June
30, 1999.
Accounts receivable increased for the six months ended June 30, 2000 to
$39,559, compared to an increase of $8,768 for the six months ended June 30,
1999.
Prepaid Expenses remained constant for both reporting periods at $680.
Accounts payable increased for the six months ended June 30, 2000 to
$23,731 compared to $1,441 for the six months ended June 30, 1999.
We were profitable for the second fiscal quarter and first half of 1999 and
2000. Our operating expenses were relatively the same during both periods. The
variation in revenues on client projects continue to account 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 have also looked for an
acquisition candidate during the second fiscal quarter, 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.
11
<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.
12
<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: 8/21/00 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: 8/21/00 By: /s/ Stephan R. Levy
-----------------------------
Stephan R. Levy
Treasurer and Director
Dated: 8/21/00 By: /s/ Judith F. Harayda
-----------------------------
Judith F. Harayda
Director
13
