UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the transition period from to
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Commission File Number: 000-33305
Reel Staff, Inc.
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(Exact name of small business issuer as specified in its charter)
Nevada 95-4863690
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1069 South Alfred Street, Los Angeles, California 90035
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(Address of principal executive offices)
(323) 359.1531
(Issuer's Telephone Number)
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practical date. As of May 13, 2001, there were
5,673,750 shares of the issuer's $.001 par value common stock issued and
outstanding.
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1
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
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REEL STAFF, INC.
FINANCIAL STATEMENTS
MARCH 31, 2002
2
REEL STAFF, INC.
CONTENTS
PAGE
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Financial Statements (Unaudited)
Balance Sheet 4
Statement of Operations 5
Statement of Changes in Stockholders' Deficit 6
Statement of Cash Flows 7
Notes to Financial Statements 8
3
REEL STAFF, INC.
BALANCE SHEET
MARCH 31, 2002
(UNAUDITED)
ASSETS
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Current assets
Cash $ 943
Prepaid expenses 24,969
Accounts receivable, net of allowance of $-0- ---
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Total current assets 25,912
Other assets ---
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Total assets $ 25,912
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LIABILITIES AND STOCKHOLDERS' DEFICIT
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Current liabilities
Accounts payable and accrued expenses $ 12,830
Note payable 25,000
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Total current liabilities 37,830
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Stockholders' Deficit
Preferred stock, $.001 par value;
Authorized shares -- 5,000,000
Issued and outstanding share -- 0
---
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Common stock, $.001 par value;
Authorized shares-- 50,000,000
Issued and outstanding shares-- 5,673,750 5,674
Additional paid-in capital 12,161
Accumulated deficit (29,753)
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Total stockholders' deficit (11,918)
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Total liabilities and stockholders' deficit $ 25,912
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See accompanying notes to financial statements.
4
REEL STAFF, INC.
STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2002
(UNAUDITED)
Revenues
Production staffing $ 1,293
Post-production staffing
---
Less: returns and allowances
---
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Net revenues
1,293
Operating expenses
Consulting services ---
Legal and professional fees 10,190
Occupancy 500
Office supplies and expense 487
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Total operating expenses 11,177
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Loss from operations (9,884)
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Provision for income tax expense (benefit) ---
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Net loss/comprehensive loss $ (9,884)
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Net loss/comprehensive loss per common share ---
basic and diluted $ (---)
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Weighted average of common shares --- basic and diluted 5,673,750
============
See accompanying notes to financial statements.
5
REEL STAFF, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
MAY 21, 2001 (INCEPTION) THROUGH MARCH 31, 2002
(UNAUDITED)
Common Stock Additional
----------------------------- Paid-In Accumulated
Shares Amount Capital Deficit Total
------------- ----------- ----------- ------------ ------------
Balance, May 21, 2001 --- $ --- $ --- $ --- $ ---
Issuance of common stock,
May 22, 2001 5,500,000 5,500 --- --- 5,500
Issuance of common stock,
May 28, 2001 10,000 10 190 --- 200
Issuance of common stock,
June 13, 2001 345,000 345 6,555 --- 6,900
Issuance of common stock,
June 17, 2001 30,000 30 570 --- 600
Issuance of common stock,
June 28, 2001 228,750 229 4,346 --- 4,575
Redemption of stock
November 15, 2001 (440,000) (440) --- --- (440)
Net loss/comprehensive loss --- --- --- (19,869) (19,869)
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Balance, December 31, 2001 5,673,750 5,674 11,661 (19,869) (2,534)
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Cost of occupancy
contributed by officer --- --- 500 --- 500
Net loss/comprehensive loss --- --- --- (9,884) (9,884)
Balance, March 31, 2002 5,673,750 $ 5,674 $ 12,161 $ (29,753) $ (11,918)
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See accompanying notes to financial statements.
6
REEL STAFF, INC.
STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2002
(UNAUDITED)
Cash flows from operating activities
Net loss $ (9,884)
Adjustments to reconcile net loss to net cash used
in operating activities
Cost of consulting services paid with common stock ---
Cost of legal services paid with common stock ---
Occupancy cost contributed by officer ---
Changes in operating assets and liabilities
(Increase) decrease in prepaid expenses (24,969)
Increase (decrease) in accounts payable
and accrued expenses 32,830
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Net cash used by operating activities (1,523)
Cash flows from investing activities ---
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Net cash used by investing activities ---
Cash flows from financing activities ---
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Net cash provided by financing activities ---
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Net decrease in cash (1,523)
Cash, beginning of period 2,466
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Cash, end of period $ 943
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Supplemental disclosure of cash flow information
Income taxes paid $ ---
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Interest paid $ ---
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See accompanying notes to financial statements.
7
REEL STAFF, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2002
(UNAUDITED)
NOTE 1 - NATURE OF OPERATIONS
Reel Staff, Inc. (the "Company") provides production and
post-production staffing services to film, video, and television production
companies. The Company was incorporated in the state of Nevada on May 21, 2001
and is headquartered in Los Angeles, California.
NOTE 2 - BASIS OF PRESENTATION
The unaudited financial statements included herein have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310(b)
of Regulation S-B. 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 months ended March 31, 2002 are
not necessarily indicative of the results that may be expected for the year
ended December 31, 2002. For further information, these financial statements and
the related notes should be read in conjunction with the Company's audited
financial statements for the period ended December 31, 2001 included in the
Company's annual report on Form 10-KSB.
NOTE 3 - COMMON STOCK
On May 22, 2001, the Company issued 3,900,000 shares of its common
stock to its officers and founders for consulting services and 1,600,000 shares
of its common stock to various individuals for legal services rendered in
connection with the initial organization costs incurred. Since there was no
readily available market value at the time the services were rendered, par value
of $0.001 per share was considered as a reasonable estimate of fair value by all
parties.
On May 28, 2001, the Company issued 10,000 shares of its common stock
to an individual for consulting and design services. Since the Company had
prepared a Private Placement Memorandum Offering (as described in the following
paragraph), the Company utilized the value of its common stock associated with
that offering of $0.02 per share. This amount was considered a reasonable
estimate of fair value between the Company and the individual.
On June 30, 2001, the Company completed a "best efforts" offering of
its common stock pursuant to the provisions of Section 4(2) of the Securities
Act of 1933 and Rule 506 of Regulation D promulgated by the Securities and
Exchange Commission. In accordance with the Private Placement Memorandum
Offering, which was initiated on May 25, 2001, the Company issued 603,750 shares
of its common stock at $0.02 per share for a total of $12,075 from June 13th -
June 30th 2001.
NOTE 4 - RELATED PARTY TRANSACTIONS
On May 22, 2001, the Company issued 3,900,000 shares of its common
stock to it current officers for services as described in Note 3.
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Item 2. Plan of Operation
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This following information specifies certain forward-looking statements of
management of the company. Forward-looking statements are statements that
estimate the happening of future events and are not based on historical fact.
Forward-looking statements may be identified by the use of forward-looking
terminology, such as "may", "shall", "will", "could", "expect", "estimate",
"anticipate", "predict", "probable", "possible", "should", "continue", or
similar terms, variations of those terms or the negative of those terms. The
forward-looking statements specified in the following information have been
compiled by our management on the basis of assumptions made by management and
considered by management to be reasonable. Our future operating results,
however, are impossible to predict and no representation, guaranty, or warranty
is to be inferred from those forward-looking statements.
The assumptions used for purposes of the forward-looking statements specified in
the following information represent estimates of future events and are subject
to uncertainty as to possible changes in economic, legislative, industry, and
other circumstances. As a result, the identification and interpretation of data
and other information and their use in developing and selecting assumptions from
and among reasonable alternatives require the exercise of judgment. To the
extent that the assumed events do not occur, the outcome may vary substantially
from anticipated or projected results, and, accordingly, no opinion is expressed
on the achievability of those forward-looking statements. We cannot guaranty
that any of the assumptions relating to the forward-looking statements specified
in the following information are accurate, and we assume no obligation to update
any such forward-looking statements.
We provide staffing services to film, video and television production companies.
Our staffing services consist of production services but we intend to expand
those services to include postproduction work as well as talent and casting
services. The services, skills and labor offered by us will generally include
production assistants, as well as film and video crews, such as back line
technicians, carpenters, lighting designers, lighting technicians, riggers,
sound designers, stage and scenery designers and other skilled laborers.
Liquidity and Capital Resources. We had cash of $943 as of March 31, 2002. Our
total assets were approximately $25,912 as of March 31, 2002, of which
approximately $24,969 were prepaid expenses. On March 20, 2002, we entered into
a promissory note in the amount of $25,000 with an unrelated party. The note
matures on March 20, 2003, and carries an interest rate of 8% due at maturity.
Our prepaid expenses represent the proceeds from that promissory note. Our total
liabilities were approximately $37,830 as of March 31, 2002, which were
represented by $12,830 for accounts payable and accrued expenses, and $25,000
for that note payable.
Results of Operations.
Revenue. For the three months ended March 31, 2002, we realized revenues of
approximately $1,293 from providing production staffing services. We hope to
generate more revenues as we expand our customer base.
Operating Expenses. For the three months ended March 31, 2002, our total
operating expenses were approximately $11,177. The majority of those expenses
were represented by legal and professional fees of $10,190. We also had $500 in
occupancy expenses and $487 in office supplies and expenses. For the three
months ended March 31, 2002, we experienced a net loss of approximately $9,884.
We anticipate that we will continue to incur significant general and
administrative expenses.
9
Our Plan of Operation for the Next Twelve Months. We generated revenues of
$1,293 for the three month period ending March 31, 2002. In our management's
opinion, to effectuate our business plan in the next twelve months, the
following events must occur:
1. We must continue to provide production-staffing services including
production assistants, coordinators and managers in order to generate
revenues. We have provided services to Alta Vista Pictures, Palomar
Pictures, NBC and various small production companies. Any revenues
generated will be used to increase our marketing activities as well as
expand our operations.
2. We must also increase the number of projects performed for existing
customers. If we perform high quality services and provide competent
staff to our current clients, we believe the number of projects will
increase.
3. We must continue to develop relationships and market our staffing
services. We currently market our services through the relationships
and contacts of our President, Renee McCracken. Ms. McCracken has
contacts in the entertainment industry and we have focused our
marketing activities around those contacts and relationships. We need
to develop additional relationships with various entertainment-related
companies so that we can increase our customer base.
4. We must expand our marketing activities to further develop
relationships with our clients and production companies. We hope to
cultivate our existing and prospective relationships with our clients
so that we can become their primary source for production staff. We
believe that we can develop additional relationships with clients by
diversifying our service offering to include casting services for film,
television, and video productions.
We expect that, in the near term, our operating expenses will increase by
approximately $1,000 per month. We will use the increased expenses for marketing
and promotional activities.
We had cash of $943 and prepaid expenses of $24,969 as of March 31, 2002. In the
opinion of management, available funds will satisfy our working capital
requirements through June 2002. Our forecast for the period for which our
financial resources will be adequate to support our operations involves risks
and uncertainties and actual results could fail as a result of a number of
factors. We anticipate that we may need to raise additional capital to continue
operations. Such additional capital may be raised through public or private
financing as well as borrowings and other sources. We cannot guaranty that
additional funding will be available on favorable terms, if at all. If adequate
funds are not available, then our ability to expand our operations may be
adversely affected. If adequate funds are not available, we hope that our
officers and directors will contribute funds to pay for our expenses, although
we cannot that guaranty that our officers will pay those expenses.
We have also contemplated acquiring a third party, merging with a third party or
pursuing a joint venture with a third party in order to support our development.
We have conducted informal discussions with potential acquisition or merger
candidates, although we have not conducted any formal negotiations. We cannot
guaranty that we will acquire or merge with a third party, or that in the event
we acquire or merge with a third party, such acquisition or merger will increase
the value of our common stock.
We are not currently conducting any research and development activities, other
than the development of our website. We do not anticipate conducting such
activities in the near future. We do not anticipate that we will purchase or
sale of any significant equipment. In the event that we generate significant
revenues and expand our operations, then we may need to hire additional
employees or independent contractors.
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PART II -- OTHER INFORMATION
Item 1. Legal Proceedings.
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Item 2. Changes in Securities.
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None.
Item 3. Defaults Upon Senior Securities
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None.
Item 4. Submission of Matters to Vote of Security Holders
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None.
Item 5. Other Information
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None.
Item 6. Exhibits and Reports on Form 8-K
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None.
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SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Reel Staff, Inc.,
a Nevada corporation
May 13, 2002 By: /s/ Renee McCracken
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Renee McCracken
Its: President, Secretary, Director