SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2002
-------------------
[ ] 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. 000-27621
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STUDIO BROMONT INC.
-------------------
(Exact name of Registrant as specified in its charter)
FLORIDA 95-4720231
------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2300 W. SAHARA AVE., SUITE 500
LAS VEGAS, NEVADA 89102
------------------------------------ -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (514)891-9070
-------------
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12 (g) of the Act: 50,000,000 SHARES
OF COMMON STOCK
Check whether the issuer (l) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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. [ X ] Yes [ ]
No
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
Revenues for 2002 were $NIL
The aggregate market value of the voting stock held by non-affiliates computed
by reference to the last reported sale price of such stock as of December 31,
2002 is: $959,239
The number of shares of the issuer's Common Stock outstanding as of December 31,
2002 is 13,703,416
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
PART I
------
ITEM 1. DESCRIPTION OF BUSINESS
HISTORY
The Company ("We" or "Our") was incorporated on July 17, 1992, under the laws of
the state of Florida. The initial name of the Company was American Financial
Seminars, Inc.
Since its inception, the Company has sought out various business opportunities,
none of which have been successful over a sustained period of time. On February
22, 2001, 3838421 Canada Inc., a Canadian corporation ("3838421"), sold,
transferred and assigned to the company its exclusive worldwide license to use
and commercialize the client software known as the Gnotella Client ("Gnotella")
and its associated trademark license. The business operations of the Company
from February 22, 2001, through approximately December 17, 2001, was
commercializing Gnotella and promoting peer-to-peer computing generally. On or
around December 2001, the development of Gnotella ceased and the Company began
looking for other businesses or products that had potential for profit. The
Company retained its rights in Gnotella and could restart development of
Gnotella again in the future if the Company can obtain sufficient financing and
the Company determines that it is in their best interest.
On or around February 2002, the Company entered into a plan of reorganization
with Studio Bromont, Inc. If the plan had been consummated, the business
operations of Studio Bromont Inc. would have become the business operations of
the Company. The plan of reorganization was never closed, and on or around March
2002, the plan expired according to its terms and was never consummated.
In contemplation of the transactions set forth in the plan, the Company changed
its name to Studio Bromont, Inc. and that remains the name of the Company as of
the date of this filing.
The Company's present business continues to consist of seeking to acquire
products or businesses that the have the potential for profit.
GENERAL
The business objectives discussed herein are extremely general and are not
intended to be restrictive on the discretion of the Company's management. Due
primarily to the Company's limited capital, management anticipates that it may
be able to participate only in the acquisition of one potential business
venture.
SELECTION OF A BUSINESS
The Company anticipates various referral sources for possible business
acquisitions including its officers and directors, professional advisors,
securities broker-dealers, venture capitalists, members of the financial
community, and others who may present unsolicited proposals. The Company will
not engage in any general solicitation or advertising for a business
opportunity, but instead rely on the personal contacts of its officers,
directors, and their affiliates, as well as indirect associations
2
between them and other business and professional people. By relying on "word of
mouth," the Company may be limited in the number of potential acquisitions it
can identify.
While it is not presently anticipated that the Company will engage unaffiliated
professional firms specializing in business acquisitions or reorganizations,
such firms may be retained if management deems it in the Company's best
interest.
The Company will not restrict its search to any particular business, industry,
or geographical location. Management reserves the right to evaluate and enter
into any type of business in any location. The Company may participate in a
newly organized business venture, a more established company entering a new
phase of growth, or a company in need of additional capital to overcome existing
financial problems. Participation in a new business venture entails greater
risks since its management, in many instances, has not proved its ability, the
market for the business' products or services has not likely been established,
and the profitability of the business will be unknown and not capable of being
predicted accurately. If the Company participates in a more established firm
with existing financial problems, it may be subjected to risk because the
financial resources of the Company may not be adequate to eliminate or reverse
the circumstances leading to such financial problems.
The officers and directors will supervise the analysis of any new potential
business acquisitions. To the extent possible, in analyzing prospective
businesses, management will consider the following factors: (a) the available
technical, financial, and managerial resources of the business; (b) the
business' working capital and other prospects for the future; (c) the nature of
the business' present and expected competition; (d) the quality and experience
of management services which may be available and the depth of that management;
(e) the potential for further research, development, or exploration; (f) the
potential for profit; (g) the perceived public recognition or acceptance of
products, services, or trade or service marks; and (h) name identification.
The decision to participate in a specific business may be based on management's
analysis of the quality of the other firm's management and personnel, the
anticipated acceptability of new products or marketing concepts, the merit of
technological changes, and other factors which are difficult, if not impossible,
to analyze through any objective criteria. It is anticipated that the results of
operations of a specific firm may not necessarily be indicative of the potential
for the future because of the requirement to substantially shift marketing
approaches, expand significantly, change product emphasis, change or
substantially augment management, and other factors.
The Company will analyze all available factors and make a determination based on
a composite of available facts, without reliance on any single factor. The
period within which the Company may participate in a business cannot be
predicted and will depend on circumstances beyond the Company's control,
including the availability of businesses, the time required for the Company to
complete its investigation and analysis of prospective business, the time
required to prepare appropriate documents and agreements provided for the
Company's participation, and other circumstances.
ACQUISITION OF A BUSINESS
In implementing a structure for a particular business acquisition, the Company
may become a party to a merger, consolidation, or other reorganization with
another corporation or entity; joint venture;
3
license; purchase and sale of assets; or purchase and sale of stock, the exact
nature of which can not be predicted. Notwithstanding the above, the Company
does not intend to participate in a business through the purchase of minority
stock positions. The Company is unable to acquire a business with cash.
Therefore, any acquisition would have to be in exchange for Company stock. When
and if the transaction is completed, it is likely that the present management
and shareholders of the Company will not be in control of the Company. In
addition, a majority or all of the Company's directors may, as part of the terms
of the acquisition transaction, resign and be replaced by new directors without
a vote of the Company's shareholders.
It is anticipated that any securities issued in any such reorganization would be
issued in reliance on exemptions from registration under applicable federal and
state securities laws. In some circumstances, however, as a negotiated element
of the transaction, the Company may agree to register such securities. In the
event the Company registers such securities, the Company would incur substantial
expenses to register the securities. The issuance of substantial additional
securities and their potential sale into any trading market may have a
depressive effect on such market.
The Company will comply with all federal and state disclosure laws in connection
with the acquisition of any target company. If possible, the Company also
intends to provide shareholders with information including audited financial
statements regarding a target company even if it is not required. However, in
some circumstances, time constraints and the best interests of shareholders may
prohibit such disclosure.
OPERATION OF BUSINESS AFTER ACQUISITION
The Company's operation following its acquisition of a business will be
dependent on the nature of the business and the interest acquired. It is
expected that the business will present various risks, which cannot be predicted
at the present time.
GOVERNMENT REGULATION
It is impossible to predict the government regulation, if any, to which the
Company may be subject until it has acquired an interest in a business. The use
of assets and/or conduct of business which the Company may acquire could subject
it to environmental, public health and safety, land use, trade, or other
governmental regulations. In selecting a business in which to acquire an
interest, management will endeavor to ascertain, to the extent of the limited
resources of the Company, the effects of such government regulation on the
prospective business of the Company. In certain circumstances, however, such as
the acquisition of an interest in a new or start-up business activity, it may
not be possible to predict with any degree of accuracy the impact of government
regulation. The inability to ascertain the effect of government regulation on
prospective business activity will make the acquisition of an interest in such
business a higher risk.
COMPETITION
The Company will be involved in intense competition with other business
entities, many of which will have a competitive edge over the Company by virtue
of their stronger financial resources and prior experiences in business. There
is no assurance that the Company will be successful in obtaining suitable
investments.
4
GNOTELLA
As mentioned previously, the Company continues to own certain rights with
respect to the commercialization of Gnotella software, though the exact status
of and value of those rights may be subject to dispute. It is certain, however,
that at the present time there is no development or promotion of Gnotella on
behalf of the Company. It remains uncertain whether any development and
promotion will commence in the future.
Gnotella is a real time peer-to-peer online search and file-sharing program run
from a user's desktop as a servent (a server and a client in a peer-to-peer
network). Gnotella allows users to interface directly with each other with no
intermediate or central authority. Users access and download Gnotella, which
installs onto their computers. Once installed and executed on a computer
connected to the Internet, the software locates other computers utilizing
Gnotella or compatible software, and connects to one or more such computers, as
determined by the user.
The totality of computers connected to each other utilizing Gnotella or
compatible software is known as the Gnutella Network. Once connected, a user can
search the Gnutella Network for files matching his or her search criteria, and
download the files located onto his or her own computer. Gnotella allows users
to search for and share any type of digital file, including without limitation,
word processing, audio, video, text, spreadsheets, and software. A user can
typically connect to and search thousands to tens of thousands of peers in the
network, and can gain access to terabytes of information.
There have been downloads of Gnotella version 0.9.8 from users in 121 countries
on five continents. Despite the wide usage of the software as previously made
available to the Internet public by the Company, the software was distributed
basically free of charge. The Company was ultimately unsuccessful in developing
a revenue structure that would return to the Company revenues sufficient to
continue to develop and provide the software to the public.
EMPLOYEES
As of the date of this report, we have no employees other than our sole officer
and director.
SUBSIDIARIES
We currently have no subsidiaries.
PATENTS AND TRADEMARKS
We hold an exclusive worldwide license to use and commercialize together with
its trademark license. There is no expiration on the license or the trademark.
5
ITEM 2. DESCRIPTION OF PROPERTY
We maintain our head office address at at 2300 West Sahara Ave., Suite 500, Las
Vegas, Nevada 89102. We pay no rent for the use of this address. We are not the
owner or lessee of any real property.
ITEM 3. LEGAL PROCEEDINGS
We are not a party to any material legal proceedings and to our knowledge, no
such proceedings are threatened or contemplated.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to the shareholders for a vote during the fiscal year
ended December 31, 2002.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS
MARKET INFORMATION
Our common stock is quoted on the NASD Over-the-Counter Bulletin Board at the
present time under the symbol SBRTE. On May 8, 2003, our stock's closing price
was $0.07 per share. This price, however, is an inter-dealer price without
retail mark-up, mark-down or commission and may not represent an actual
transaction. The high and the low trades for the 52 week range ended May 8, 2003
were $0.02 to $0.17. These prices are closing prices and appear as approximate
figures.
The Securities Exchange Commission has adopted rules that regulate broker-dealer
practices in connection with transactions in penny stocks. Penny stocks are
generally equity securities with a price of less than $5.00, other than
securities registered on certain national securities exchanges or quoted on the
Nasdaq system, provided that current price and volume information with respect
to transactions in such securities is provided by the exchange or system. The
penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from those rules, deliver a standardized risk
disclosure document prepared by the Commission, which: (a) contains a
description of the nature and level of risk in the market for penny stocks in
both public offerings and secondary trading; (b) contains a description of the
broker's or dealer's duties to the customer and of the rights and remedies
available to the customer with respect to a violation to such duties or other
requirements of Securities' laws; (c) contains a brief, clear, narrative
description of a dealer market, including bid and ask prices for penny stocks
and significance of the spread between the bid and ask price; (d) contains a
toll-free telephone number for inquiries on disciplinary actions; (e) defines
significant terms in the disclosure document or in the conduct of trading in
penny stocks; and (f) contains such other information and is in such form as the
Commission shall require by rule or regulation. The broker-dealer also must
provide, prior to effecting any transaction in a penny stock, the customer: (a)
with bid and offer quotations for the penny stock; (b) the compensation of the
broker-dealer and its salesperson in the transaction; (c) the number of shares
to which such bid and ask prices apply, or other comparable information relating
to the depth and liquidity of the market
6
for such stock; and (d) monthly account statements showing the market value of
each penny stock held in the customer's account. In addition, the penny stock
rules require that prior to a transaction in a penny stock not otherwise exempt
from those rules; the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the
purchaser's written acknowledgment of the receipt of a risk disclosure
statement, a written agreement to transactions involving penny stocks, and a
signed and dated copy of a written suitably statement.
These disclosure requirements may have the effect of reducing the trading
activity in the secondary market for our stock if it becomes subject to these
penny stock rules. Therefore, if our common stock becomes subject to the penny
stock rules, stockholders may have difficulty selling those securities.
The quotations reflect inter-dealer prices, without retail mark-up, markdown or
commission and may not represent actual transactions. The source of the
quotation information is Yahoo Finance.
DIVIDENDS
We have not declared any dividends since our incorporation. There are no
dividend restrictions that limit our ability to pay dividends on our common
stock in our Articles of Incorporation or Bylaws. Chapter 607 of Title 36 of the
Florida Statutes does provide limitations our ability to declare dividends.
Section 607.06401 of Chapter 607 prohibits us from declaring dividends where,
after giving effect to the distribution of the dividend:
1. we would not be able to pay its debts when they became due in the usual
course of business; or
2. our total assets would be less than the sum of its total liabilities plus
the amount that would be needed, if we were to be dissolved at the time of
distribution, to satisfy the preferential rights upon dissolution of
stockholders whose preferential rights are superior to those receiving the
distribution.
At the present time, we have no shareholders who have rights preferential to
those of the common shareholders.
Section 607.0623 of Chapter 607 allows the board of directors to issue shares of
stock pro rata to the Company's shareholders as a share dividend.
RECENT SALES OF UNREGISTERED SECURITIES
We did not sell of any shares of its common stock during the fiscal year ended
December 31, 2002.
7
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
PLAN OF OPERATIONS
Our principal asset is a license to use and commercialize the client software
known as "Gnotella" ("Gnotella"). For most of the fiscal year ended December 31,
2001, our business plan called for the development of upgrades to Gnotella and
the establishment of a broad user base for the software. During December, 2001,
three of the four members of the board of directors of the Company resigned
their positions and further development and promotion of Gnotella ceased. Since
that time, the remaining director has sought new business opportunities for the
Company.
RESULTS OF OPERATIONS FOR FISCAL YEAR ENDED DECEMBER 31, 2002
We did not earn any revenue for the fiscal year ended December 31, 2002 and have
not earned any revenue since our inception on July 17, 1992. We do not
anticipate earning revenues until we are able to secure financing which will
enable us to pursue other business opportunities.
We incurred total expenses of $579,570 for the fiscal year ended December 31,
2002, compared to expenses of $424,880 in the previous fiscal year. Our expenses
for the fiscal year ended December 31, 2002 consisted of: (a) administrative
expenses in the amount of $78,929; (b) Payment to consultants and salaries in
the amount of $469,519; and (c) $31,122 in loss of assets.
Our net loss for the fiscal year ended December 31, 2002 was $579,570, compared
to a net loss of $424,880 in the previous fiscal year. Our net loss is entirely
attributable to our expenses.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 2002, we had no current assets and current liabilities of
$641,980. For the next 12 months, we will continue to seek out business
opportunities that we can engage and/or operating companies that we can acquire.
We therefore believe the Company will need to raise as much as $900,000 by
selling common shares or by borrowing in order to have sufficient capital to
meet its needs for the next 12 months. The Company attempted without success to
raise sufficient capital to vigorously pursue its business during 2001.
Accordingly, there is significant doubt as to whether we will be able to raise
the $900,000. Therefore the day to day operations of the Company are contingent
upon our creditors allowing us to proceed without immediate payment of our
obligations and upon our ability to raise sufficient monies to sustain minimal
operations while we search for a business opportunity. It is impossible to know
at this point whether we will be successful in this attempt.
It should also be noted that the Company is obligated to satisfy the costs
associated with filing the required reports under the Exchange Act of 1934. It
appears at the present time that these costs will also have to be met through
the continued sale of stock or by borrowing additional funds. The Company's
current operating plan is to (i) handle the administrative and reporting
requirements of a public company; and (ii) search for potential business,
products, technologies and companies for acquisition.
8
FORWARD LOOKING STATEMENTS
Many statements made in this report are forward-looking statements that are not
based on historical facts. Because these forward-looking statements involve
risks and uncertainties, there are a number of factors that could cause actual
results to differ materially from those expressed or implied by these
forward-looking statements. The forward-looking statements made in this report
relate only to events as of the date on which the statements are made.
9
ITEM 7. FINANCIAL STATEMENTS
Page
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Independent Auditor's Report F-1
Financial Statements:
Consolidated Balance Sheet as of December 31, 2002 F-2
Consolidated Statement of Operations For the Years F-3
Ended December 31, 2002 and December 31, 2001 and
the Period July 17, 1992 (date of inception) to
December 31, 2002
Consolidated Statement of Changes in Stockholders' F-4
Equity for the Period July 17, 1992 (Date of
Inception) to December 31, 2002
Consolidated Statements of Cash Flows For the F-5
Years Ended December 31, 2002 and 2001 and
the Period July 17, 1992 (date of inception) to
December 31, 2002
Notes to Consolidated Financial Statements F-6 - F-8
10
SELLERS AND ANDERSEN L.L.C. 941 East 3300 South,
------------------------------ Suite 202
Certified Public Accountants Salt Lake City, Utah 84106
and Business Consultants
Member SEC Practice Section Telephone 801 486-0096
of the AICPA
Fax 801 486-0098
Board of Directors
Studio Bromont, Inc.
Las Vegas, Nevada
We have audited the accompanying balance sheet of Studio Bromont, Inc.
(development stage company) at December 31, 2002 and the statements of
operations, stockholders' equity, and cash flows for the years ended December
31, 2002 and 2001 and the period July 17, 1992 (date of inception) to December
31, 2002. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion based on these financial
statements.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management as well as evaluating the overall
financial statements presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Studio Bromont, Inc. at
December 31, 2002 and the results of operations, and cash flows for the years
ended December 31, 2002 and 2001 and the period July 17, 1992 (date of
inception) to December 31, 2002, in conformity with accounting principles
generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue to grow as a going concern. The Company does not have the
necessary working capital to service its debt for its planned activity, which
raises substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are described in Note 5. These
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ Sellers and Andersen LLC
May 21, 2003
Salt Lake City, Utah
F-1
STUDIO BROMONT INC.
(Development Stage Company)
BALANCE SHEET
December 31, 2002
================================================================================
ASSETS
CURRENT ASSETS
Cash $ -
-------
Total Current Assets $ -
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 666,512
---------
Total Current Liabilities 641,980
---------
STOCKHOLDERS' DEFICIENCY
Common stock
50,000,000 shares authorized
at $0.001 par value;
13,703,416 shares issued
and outstanding 13,703
Capital in excess of par value 627,808
Deficit accumulated during the
Development stage (1,308,023)
-----------
Total Stockholders' Deficiency (666,512)
-----------
$ -
=============
The accompanying notes are an integral part of these financial statements.
F-2
STUDIO BROMONT INC.
(Development Stage Company)
STATEMENT OF OPERATIONS
For the Years Ended December 31, 2002 and 2001 and the
Period July 17, 1992 (date of inception) to December 31, 2002
================================================================================
Dec 31, Dec 31, Jul 17, 1992 to
2002 2001 Dec 31, 2002
--------------------------------------------------------------------------------
REVENUES $ - $ - $ -
----------- ---------- ------------
EXPENSES
Administrative 66,681 140,434 313,186
Depreciation & amortization 14,738 14,738
Consultants & salaries 469,519 306,488 948,977
536,200 461,660 1,276,901
----------- ---------- ------------
OTHER EXPENSES
Loss of assets 31,122 - 31,122
----------- ---------- ------------
NET LOSS $ (567,322) $(461,660) $(1,308,023)
=========== ========== ============
NET LOSS PER COMMON SHARE
Basic $ (.05) $ (.05)
----------- ----------
AVERAGE OUTSTANDING SHARES
Basic (stated in 1,000s) 11,775 9,668
----------- ----------
The accompanying notes are an integral part of these financial statements.
F-3
STUDIO BROMONT INC.
(Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Period July 17, 1992 (Date of Inception)
to December 31, 2002
================================================================================
Common Stock Capital in
--------------- Excess of Accumulated
Shares Amount Par Value Deficit
--------------------------------------------------------------------------------------------
Balance July 17, 1992
(date of inception) - $ - $ - $ -
Issuance of common stock
for services at $0.001 1,000,000 1,000 1,500 -
Net operating loss for the period
ended December 31, 1992 - - - (2,500)
Issuance of common stock for cash
at $.05 - net of issuance costs 2,500,000 2,500 116,825 -
Contribution to capital - expenses - - 1,500 -
Net operating loss for the year
ended December 31, 1998 - - - (120,450)
Issuance of common stock for cash
at $0.005 - net of issuance costs 5,000,000 5,000 18,667
Net operating loss for the year ended
December 31, 1999 - - - (32,490)
Net operating loss for the year ended
December 31, 2000 - - - (123,601)
Issuance of common stock for
software rights 1,168,224 1,168 (1,168) -
Net operating loss for the year ended
December 31, 2001 - - - (461,660)
Issuance of common stock for services
at $.10 - June 21, 2002 4,035,192 4,035 399,484 -
Contribution to capital - expenses - - 91,000 -
Net operating loss for the year ended
December 31, 2002 - - - (567,322)
Balance December 31, 2002 13,703,416 $13,703 $ 627,808 $(1,308,023)
========== ======= ========== ============
The accompanying notes are an integral part of these financial statements.
F-4
STUDIO BROMONT INC.
(Development Stage Company)
STATEMENT OF CASH FLOWS
For the Years Ended December 31, 2002 and 2001 and the
Period July 17, 1992 (date of inception) to December 31, 2002
=============================================================================
DEC 31, DEC 31, JUL 17, 1992 TO
2002 2001 DEC 31, 2002
--------------------------------------------------------------------------------
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss $(567,322) $(461,660) $(1,308,023)
Adjustments to reconcile net
loss to net cash provided
by operating activities
Changes in accounts payables 41,681 97,789 193,786
Contributions to
capital - expenses 91,000 - 92,500
Capital stock issued as
payment for expenses 403,519 - 406,019
Depreciation and amortization - 14,738 -
Equipment abandoned 31,122 - -
Net Increase (Decrease) in
Cash Flows from Operations - (349,133) (615,719)
-------- --------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase equipment - (45,440) -
-------- --------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from loans - 161,774 240,996
Proceeds from common
stock subscriptions - 231,731 374,723
-------- --------- ---------
Net Change in Cash - (1,068) -
Cash at Beginning of Period - 1,068 -
-------- --------- ---------
Cash at End of Period $ - $ - $ -
===================================================================================
SCHEDULE OF NONCASH OPERATING ACTIVITIES
Contributions to capital - expenses - 2000-2002 $ 92,500
------
stock issued as payment for expenses 1992-2002 406,019
-------
The accompanying notes are an integral part of these financial statements.
F-5
STUDIO BROMONT, INC.
( Development Stage Company )
NOTES TO FINANCIAL STATEMENTS
December 31, 2002
================================================================================
1. ORGANIZATION
The Company was incorporated under the laws of the State of Florida on July 17,
1992 with authorized common stock of 50,000,000 shares at $0.001 par value.
Since its inception the Company has made several name changes resulting in the
present name.
The Company was organized for the purpose of marketing a software license known
as "Gnotella", however, in late 2001 this activity was abandoned and the Company
has remained inactive after that date.
The Company is in the development stage.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Methods
-------------------
The Company recognizes income and expenses based on the accrual method of
accounting.
Dividend Policy
----------------
The Company has not yet adopted a policy regarding payment of dividends.
Income Taxes
-------------
On December 31, 2002, the Company had a net operating loss carry forward of
$1,283,491. The amount of carryforward that may be available to offset future
profits has not been determined and therefore no provision for a tax benefit has
been provided.
The loss carryforward expires starting in 2007 through 2023.
Basic and Diluted Net Income (Loss) Per Share
----------------------------------------------------
Basic net income (loss) per share amounts are computed based on the weighted
average number of shares actually outstanding. Diluted net income (loss) per
share amounts are computed using the weighted average number of common shares
and common equivalent shares outstanding as if shares had been issued on the
exercise of the common share rights unless the exercise becomes antidilutive and
then only the basic per share amounts are shown in the report.
F-6
STUDIO BROMONT, INC.
(Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 2002
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
Statement of Cash Flows
--------------------------
For the purposes of the statement of cash flows, the Company considers all
highly liquid investments with a maturity of three months or less to be cash
equivalents.
Financial and Concentrations Risk
------------------------------------
The Company does not have any concentration or related financial credit risk.
Revenue Recognition
--------------------
Revenue is recognized on the sale and delivery of a product or the completion of
a service provided.
Advertising and Market Development
-------------------------------------
The company expenses advertising and market development costs as incurred.
Estimates and Assumptions
---------------------------
Management uses estimates and assumptions in preparing financial statements in
accordance with accounting principles generally accepted in the United States of
America. Those estimates and assumptions affect the reported amounts of the
assets and liabilities, the disclosure of contingent assets and liabilities, and
the reported revenues and expenses. Actual results could vary from the estimates
that were assumed in preparing these financial statements.
Financial Instruments
----------------------
The carrying amounts of financial instruments, including accounts payable, are
considered by management to be their estimated fair values.
Recent Accounting Pronouncements
----------------------------------
The Company does not expect that the adoption of other recent accounting
pronouncements will have a material impact on its financial statements.
Reclassifications
-----------------
Certain reclassifications have been made to the 2001 financial statements to
conform with 2002 presentation.
F-7
STUDIO BROMONT, INC.
(Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 2002
4. RELATED PARTY TRANSACTIONS
Officer-directors have acquired % of the common stock outstanding
and have made demand no interest loans to the Company of $141,574.
5. GOING CONCERN
The Company will need additional working capital to service its debt and to be
successful in its planned activity which raises substantial doubt about its
ability to continue as a going concern. Continuation of the Company as a going
concern is dependent upon obtaining additional working capital and the
management of the Company has developed a strategy, which it believes will
accomplish this objective through additional equity funding, and long term
financing, which will enable the Company to operate in the coming year.
F-8
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNING AND
FINANCIAL DISCLOSURE
We have had no disagreements with our independent auditors on accounting or
financial disclosures.
PART III
--------
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following information sets forth the name of the sole officer and director
of the Company, his present positions with the Company, and his biographical
information.
Name Office(s) Held
---------------- ------------------
Rodger Brulotte Director and CEO
TERM OF OFFICE
Directors of the Company are appointed for a one year term to hold office until
the next annual meeting of the holders of the Company's common stock or until
removed from office in accordance with the Company's by-laws. Officers of the
Company are appointed by the Company's board of directors and hold office until
removed by the Company's board of directors.
RODGER BRULOTTE
Prior to joining the Company, Mr. Brulotte worked with the Montreal Expos
baseball team for over 30 years. During this time, he played many different
roles from promotions coordinator to radio broadcaster. As promotions
coordinator, Mr. Brulotte managed the Expos' social events and implemented the
very first ticket sales department done by phone in the United States and
Canada. Mr. Brulotte also worked closely with Harrison Erickson, the company
responsible for the conception of the Sesame Street characters, to develop the
Expos' mascot, Youppie. During his time with the Expos, Mr. Broulotte also was a
part of the team recognized for the best marketing of the year in 1980 in Major
League Baseball. Mr. Broulotte became a broadcaster for the Expos in 1984 for
the Montreal French radio networks.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive officers and
directors, and persons who beneficially own more than ten percent of the
Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors and
greater than ten percent shareholders are required by SEC regulation to furnish
the Company with copies of all Section 16(a) forms they file. Based on its
review of the copies of such forms received by it, the Company believes that
during the fiscal year ended December 31, 2002 all such filing requirements
applicable to its officers and directors were complied with exception that
reports were filed late by the following persons:
11
--------------------------------------------------------------------------------
NUMBER TRANSACTIONS KNOWN FAILURES
OF LATE NOT TIMELY TO FILE A
Name and REPORTS REPORTED REQUIRED FORM
Principal Position
--------------------------------------------------------------------------------
Rodger Brulotte, CEO
and Director None None None
--------------------------------------------------------------------------------
ITEM 10. EXECUTIVE COMPENSATION
The table below summarizes all compensation awarded to, earned by, or paid to
our executive officers by any person for all services rendered in all capacities
to us for the fiscal year ended December 31, 2002 and the fiscal year ended
December 31, 2001.
ANNUAL COMPENSATION LONG TERM COMPENSATION
--------------------------------------------------------------------------------
Other All
Annual Other
Com- Restrict- Com-
pen- ed Warr- pen-
sa- Stock ants & LTIP sa-
Name Title Year Salary Bonus tion Awarded Options payouts($)tion
--------------------------------------------------------------------------------
Rodger CEO 2001 0 0 0 0 0 0 0
Brulotte and
Director
--------------------------------------------------------------------------------
2002 0 0 0 0 0 0 0
--------------------------------------------------------------------------------
STOCK OPTION GRANTS
We did not grant any stock options to our sole officer and director during our
most recent fiscal year ended December 31, 2002.
12
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the number of
shares of our common stock owned beneficially as of December 31, 2002 by: (i)
each person (including any group) known to us to own more than five percent (5%)
of any class of our voting securities, (ii) each of our directors, and (iii)
officers and directors as a group. Unless otherwise indicated, the shareholders
listed possess sole voting and investment power with respect to the shares
shown.
================================================================================
Name and address Number of Shares Percentage of
Title of class of beneficial owner of Common Stock Common Stock(1)
================================================================================
Common Stock 383421 Canada Inc. 1,168,224 12.1%
1170 Peel Floor 6 Shares
c/o: Peter Martin
Montreal, QC,
Canada H3V 4S8
--------------------------------------------------------------------------------
Common Stock Crosswinds Holdings Inc. 1,500,000 15.5%
Providence House Shares
East Hill Street
Nassau, Bahamas
--------------------------------------------------------------------------------
Common Stock AS-B & CIE S.A. 2,500,000 25.9%
9 rue des Alpes Shares
P.O. Box 1023
CH-1211 Geneve 1
Switzerland
--------------------------------------------------------------------------------
Common Stock Robert Lockwood 900,000 9.3%
12746 Campbell Place Shares
Surrey, BC,
Canada V3V 6C8
--------------------------------------------------------------------------------
Common Stock All Officers and
Directors as a Group 0 0%
(1 person) Shares
--------------------------------------------------------------------------------
(1) Based on 13,703,416 shares of our common stock issued and outstanding as of
December 31, 2002.
================================================================================
Except as otherwise noted, it is believed that all persons have full voting and
investment power with respect to the shares indicated. Under the rules of the
Securities and Exchange Commission, a person (or group of persons) is deemed to
be a beneficial owner of a security if he or she, directly or indirectly, has or
shares the power to vote or to direct the voting of such security, or the power
to
13
dispose of or to direct the disposition of such security. Accordingly, more than
one person may be deemed to be a beneficial owner of the same security. A person
is also deemed to be a beneficial owner of any security, which that person has
the right to acquire within 60 days, such as options or warrants to purchase the
Common Stock of the Company.
CHANGE IN CONTROL
We are not aware of any arrangement that might result in a change in control of
our company in the future.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None of the following parties has, since the beginning of the fiscal year ended
December 31, 2002 had any material interest, direct or indirect, in any
transaction with us or in any presently proposed transaction that has or will
materially affect us:
- Any of our directors or officers;
- Any person proposed as a nominee for election as a director;
- Any person who beneficially owns, directly or indirectly, shares
carrying more than 10% of the voting rights attached to our
outstanding shares of common stock;
- Any of our promoters;
- Any relative or spouse of any of the foregoing persons who has the
same house as such person.
PART IV
-------
ITEM 13. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
EXHIBITS REQUIRED BY ITEM 601 OF FORM 8-K
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
--------------------------------------------------------------------------------
99.1 Certifications of Chief Executive Officer and Chief
Financial Officer pursuant to pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 (1)
--------------------------------------------------------------------------------
(1) Filed as an Exhibit to this Annual Report on Form 10-KSB
--------------------------------------------------------------------------------
REPORTS ON FORM 8-K
The company did not submit any reports on Form 8-K for the fiscal year ended
December 31, 2002.
14
ITEM 14. CONTROLS AND PROCEDURES.
As required by Rule 13a-15 under the Securities Exchange Act of 1934 (the
"Exchange Act"), we carried out an evaluation of the effectiveness of the design
and operation of our disclosure controls and procedures within the 90 days prior
to the filing date of this report. This evaluation was carried out under the
supervision and with the participation of our Chief Executive Officer and Chief
Financial Officer, Mr. Rodger Brulotte. Based upon that evaluation, our Chief
Executive Officer and Chief Financial Officer concluded that our disclosure
controls and procedures are effective in timely alerting management to material
information relating to us required to be included in our periodic SEC filings.
There have been no significant changes in our internal controls or in other
factors that could significantly affect internal controls subsequent to the date
we carried out our evaluation.
Disclosure controls and procedures are controls and other procedures that are
designed to ensure that information required to be disclosed our reports filed
or submitted under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Securities and Exchange
Commission's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed in our reports filed under the Exchange Act is
accumulated and communicated to management, including our Chief Executive
Officer and Chief Financial Officer, to allow timely decisions regarding
required disclosure.
15
SIGNATURES
In accordance with the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
STUDIO BROMONT INC.
By: /s/ Rodger Brulotte
----------------------
Rodger Brulotte
Sole Director,
Principal Executive Officer,
Principal Financial Officer, and
Principal Accounting Officer
Date: May 16, 2003
16
CERTIFICATIONS
I, Rodger Brulotte, Chief Executive Officer and Chief Financial Officer of
Studio Bromont, Inc. (the "Registrant"), certify that;
(1) I have reviewed this annual report on Form10-KSB of Studio Bromont, Inc.;
(2) Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
(3) Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the Registrant as of, and for, the periods presented in this annual report.
(4) The Registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the Registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;
b) evaluated the effectiveness of the Registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
(5) The Registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the Registrant's auditors and the audit
committee of Registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the Registrant's ability to
record, process, summarize and report financial data and have
identified for the Registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrant's internal
controls; and
(6) The Registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other facts that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: May 16, 2003 /s/ Rodger Brulotte
------------------------------
(Signature)
CHIEF EXECUTIVE OFFICER AND
CHIEF FINANCIAL OFFICER
17