NEVADA
|
N/A
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(State
or other jurisdiction of incorporation or
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(IRS
Employer Identification No.)
|
organization)
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Large
accelerated filer o
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Accelerated
filer o
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Non-accelerated
filer o
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Smaller
reporting company x
|
(Do
not check if a smaller reporting company)
|
PART
I – FINANCIAL
INFORMATION
|
|
|
Financial Statements
|
4
|
|
Management’s Discussion
and Analysis
|
10
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Controls and Procedures
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18
|
|
PART
II – OTHER
INFORMATION
|
|
|
Legal Proceedings
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20
|
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Unregistered Sales of Equity Securities and Use of
Proceeds
|
20
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Defaults Upon Senior Securities
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20
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Submission of Matters to a Vote of Securities
Holders
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20
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Other Information
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20
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Exhibits
|
20
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Item 1.
|
Financial
Statements
|
Page
|
|
Restated
Consolidated Balance Sheets as at March 31,
2008 (unaudited) and September 30, 2007 (audited)
|
F-2
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Restated
Consolidated Statements of Operations for
the three and six months ended March 31, 2008 and 2007 and for the period from incorporation (August 21,
2003) to March 31, 2008
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F-3
|
Restated
Consolidated Statements of Cash Flows for
the six months ended March 31, 2008 and 2007 and for the period from
incorporation (August 21, 2003) to March 31, 2008
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F-4
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Restated
Notes to Consolidated Financial Statements
|
F-5
|
Playbox
(US) Inc.
|
||||||||
(A
Development Stage Company)
|
||||||||
Consolidated
Balance Sheets
|
||||||||
(Unaudited)
|
||||||||
As
of
|
||||||||
March
31, 2008
|
As
of
|
|||||||
(Restated)
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September
30, 2007
|
|||||||
ASSETS
|
||||||||
Current
Assets
|
||||||||
Cash
|
$ | 4,145 | $ | 5,909 | ||||
Accounts
receivable
|
691 | 322 | ||||||
Total
Current Assets
|
$ | 4,836 | $ | 6,231 | ||||
LIABILITIES
|
||||||||
Current
Liabilities
|
||||||||
Accounts
payable
|
$ | 142,658 | $ | 100,207 | ||||
Accrued
liabilities
|
42,674 | 35,646 | ||||||
Due
to related parties
|
270,364 | 201,231 | ||||||
Amounts
owing pursuant to agreement for acquisition of Delta Music
Limited
|
199,540 | 0 | ||||||
Total
Current Liabilities
|
655,236 | 337,084 | ||||||
Long
Term Liabilities
|
||||||||
Loan
payable
|
30,810 | 18,100 | ||||||
Total
Long Term Liabilities
|
30,810 | 18,100 | ||||||
TOTAL
LIABILITIES
|
686,046 | 355,184 | ||||||
STOCKHOLDERS’
DEFICIENCY
|
||||||||
Capital
Stock
|
||||||||
Preferred
Stock
|
||||||||
Authorized: 5,000,000
shares with $0.001 par value. Issued: Nil
|
- | - | ||||||
Common
Stock
|
||||||||
Authorized:
100,000,000 common shares with $0.001 par value
|
||||||||
Issued: 28,845,139
(March 31, 2008)
|
28,845 | 28,845 | ||||||
28,845,139
(September 30, 2007)
|
||||||||
Obligation
to issue shares
|
70,000 | - | ||||||
Additional
paid-in capital
|
2,906,055 | 2,906,055 | ||||||
Accumulated
Other Comprehensive Income (Loss)
|
(10,255 | ) | (12,168 | ) | ||||
Deficit
accumulated during the development stage
|
(3,675,856 | ) | (3,271,685 | ) | ||||
(681,210 | ) | (348,953 | ) | |||||
$ | 4,836 | $ | 6,231 | |||||
The
accompanying notes are an integral part of these consolidated financials
statements.
|
Playbox
(US) Inc.
|
||||||||||||||||||||
(A
Development Stage Company)
|
||||||||||||||||||||
Consolidated
Statements of Operations
|
||||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||
Cumulative
|
||||||||||||||||||||
From
|
||||||||||||||||||||
Incorporation
|
||||||||||||||||||||
For
the Three
|
For
the Three
|
For
the Six
|
For
the Six
|
August
21,2003
|
||||||||||||||||
Months
Ended
|
Months
Ended
|
Months
Ended
|
Months
Ended
|
to
|
||||||||||||||||
March
31, 2008
|
March
31, 2007
|
March
31, 2008
|
March
31, 2007
|
March
31, 2008
|
||||||||||||||||
(Restated)
|
(Restated)
|
(Restated)
|
||||||||||||||||||
Sales
|
$- | $146 | $- | $290 | $1,364 | |||||||||||||||
Cost
of Sales
|
- | - | - | - | 777 | |||||||||||||||
Gross
Margin
|
- | 146 | - | 290 | 587 | |||||||||||||||
General
and Administrative Expenses
|
||||||||||||||||||||
Accounting
and auditing
|
10,056 | 10,931 | 32,086 | 40,050 | 256,322 | |||||||||||||||
Bank
charges
|
476 | 219 | 742 | 445 | 1,974 | |||||||||||||||
Consulting and technical support
(Note
3)
|
79,907 | - | 111,811 | 58,825 | 259,211 | |||||||||||||||
Depreciation
|
- | 169 | - | 380 | 1,887 | |||||||||||||||
Development
|
199,540 | - | 199,540 | - | 228,692 | |||||||||||||||
Filing
fees
|
1,520 | 1,070 | 1,520 | 2,475 | 6,777 | |||||||||||||||
Intellectual
property
|
- | - | - | - | 2,500,000 | |||||||||||||||
Investor
relations
|
- | 18,000 | - | 18,000 | 18,000 | |||||||||||||||
Legal
|
7,466 | 8,061 | 25,190 | 17,939 | 115,192 | |||||||||||||||
Marketing
and public relations
|
- | - | - | - | 31,325 | |||||||||||||||
Office
and miscellaneous
|
694 | 840 | 694 | 3,660 | 14,684 | |||||||||||||||
Rent
|
2,968 | 2,931 | 6,036 | 5,805 | 44,286 | |||||||||||||||
Salaries
and benefits
|
25,179 | 32,411 | 29,340 | 11,546 | 186,609 | |||||||||||||||
Transfer
agent fees
|
130 | - | 130 | 85 | 2,170 | |||||||||||||||
Travel
and entertainment
|
- | 9 | - | 856 | 3,564 | |||||||||||||||
327,936 | 74,641 | 407,089 | 160,066 | 3,670,693 | ||||||||||||||||
(327,936 | ) | (74,495 | ) | (407,089 | ) | (159,776 | ) | (3,670,106 | ) | |||||||||||
Loss
from Operations
|
||||||||||||||||||||
Other
Income (Expense)
|
||||||||||||||||||||
Foreign
exchange (loss) gain
|
4,223 | 519 | 2,918 | 580 | (6,484 | ) | ||||||||||||||
Interest
income (expense)
|
- | (7 | ) | - | 8 | 734 | ||||||||||||||
Net
Loss
|
$(323,713 | ) | $(73,983 | ) | $(404,171 | ) | $(159,188 | ) | $(3,675,856 | ) | ||||||||||
$(0.01 | ) | $0.00 | $(0.01 | ) | $(0.01 | ) | ||||||||||||||
Loss
per Share – Basic and Diluted
|
||||||||||||||||||||
28,845,139 | 28,525,139 | 28,845,139 | 28,525,139 | |||||||||||||||||
Weighted
Average Shares Outstanding
|
||||||||||||||||||||
Comprehensive
Loss
|
||||||||||||||||||||
Net
Loss
|
(323,713 | ) | (73,983 | ) | (404,171 | ) | (159,188 | ) | (3,675,856 | ) | ||||||||||
Foreign
currency translation adjustment
|
(10,160 | ) | (149 | ) | 1,913 | (3,001 | ) | (10,255 | ) | |||||||||||
(333,873 | ) | (74,132 | ) | (402,258 | ) | (162,189 | ) | (3,686,111 | ) | |||||||||||
The
accompanying notes are an integral part of these consolidated financials
statements.
|
Playbox
(US) Inc.
|
||||||||||||
(A
Development Stage Company)
|
||||||||||||
Consolidated
Statements of Cash Flow
|
||||||||||||
For
the Six Months Ending March 31, 2008
|
For
the Six Months Ending
March
31,2007
|
Cumulative
from Incorporation
August
21, 2003 to March 31, 2008
|
||||||||||
(Restated)
|
(Restated)
|
|||||||||||
Operating
|
||||||||||||
Net
Loss
|
$(404,171 | ) | $(159,188 | ) | $(3,675,856 | ) | ||||||
Items
not involving cash:
|
||||||||||||
Depreciation
|
- | 380 | 1,887 | |||||||||
Shares
for consulting services
|
50,000 | - | 56,085 | |||||||||
Shares
for intellectual property
|
- | - | 2,500,000 | |||||||||
Changes
in non-cash working capital items:
|
||||||||||||
Accounts
receivable
|
(369 | ) | -199 | (691 | ) | |||||||
Accounts
payable
|
42,451 | 80,150 | 90,082 | |||||||||
Accrued
liabilities
|
7,028 | (6,201 | ) | 33,812 | ||||||||
Amounts
owing pursuant to agreement for acquisition of Delta Music
Limited
|
199,540 | - | 199,540 | |||||||||
Net
cash flows used in operations
|
(105,521 | ) | (85,058 | ) | (795,141 | ) | ||||||
Investing
|
||||||||||||
Cash
acquired on purchase –
|
- | - | 130,626 | |||||||||
Playbox
Media Limited
|
||||||||||||
Acquisition
of property and equipment
|
- | - | (1,887 | ) | ||||||||
Net
cash flows from investing activities
|
0 | 0 | 128,739 | |||||||||
Financing
|
||||||||||||
Due
to Boyd Holdings Inc.
|
- | 66,932 | 32,170 | |||||||||
Amounts
due to related parties
|
69,134 | - | 270,365 | |||||||||
Loan
from related party
|
- | - | 159,064 | |||||||||
Loan
payable
|
12,710 | - | 30,810 | |||||||||
Convertible
promissory note issuance
|
20,000 | - | 20,000 | |||||||||
Share
issuances for cash
|
- | - | 168,393 | |||||||||
Net
cash flows from financing activities
|
101,844 | 66,932 | 680,802 | |||||||||
Effect
of exchange rate changes
|
1,913 | (3,068 | ) | (10,255 | ) | |||||||
Change
in Cash
|
(1,764 | ) | (21,194 | ) | 4,145 | |||||||
Cash
- Beginning
|
5,909 | 26,433 | - | |||||||||
Cash
- Ending
|
$4,145 | $5,239 | $4,145 | |||||||||
Supplemental
Cash Flow Information
|
||||||||||||
Cash
paid for:
|
||||||||||||
Income
Taxes
|
$- | $- | $- | |||||||||
Interest
Paid
|
$- | $- | $- | |||||||||
The
accompanying notes are an integral part of these consolidated financials
statements.
|
Playbox
(US) Inc.
|
(A
Development Stage Company)
|
Notes
to the Consolidated Financial Statements
|
March
31, 2008
|
(Unaudited)
|
(RESTATED)
|
1.
|
Basis
of Presentation
|
|
Unaudited Interim Consolidated Financial
Statements
|
||
The
accompanying unaudited interim consolidated financial statements have been
prepared in accordance with United States generally accepted accounting
principals for interim financial information and with the instructions to
Form 10-Q. They do not include all information and footnotes required by
generally accepted accounting principles for complete financial
statements. However, except as disclosed herein, there have been no
material changes in the information disclosed in the notes to the
consolidated financial statements for the year ended September 30, 2007
included in the Company’s 10-KSB filed with the Securities and Exchange
Commission. The unaudited interim consolidated financial statements should
be read in conjunction with those consolidated financial statements
included in the 10-KSB. In the opinion of management, all adjustments
considered necessary for a fair presentation, consisting solely of normal
recurring adjustments, have been made. Operating results for the six
months ended March 31, 2008 are not necessarily indicative of the results
that may be expected for the year ending September 30,
2008.
|
||
2.
|
Restatement
of Previously Issued Financial Statements
|
|
The
Company has restated its balance sheet as of March 31, 2008, and the
related statements of operations, stockholders’ equity, and cash
flows.
The
Company had not accounted for a liability which resulted from a Share
Purchase Agreement entered into on March 28, 2008 for the proposed
acquisition of UK based Delta Music Limited (“Delta Music”) – see Note
4.c. for a more detailed description of the acquisition.
Under
the terms of the Agreement, the Company agreed to pay GBP 100,000 (USD
199,540 as of March 31, 2008) to the attorneys of the Sellers to fund
certain expenses to be incurred by the Sellers and Delta Music in
connection with the acquisition regardless of whether or not the
acquisition completed.
The
effects of the restatement are as follows:
· Amendment
to the Balance Sheet to increase current liabilities by USD
199,540
· Amendment
to the Income Statement to increase expenses for “Development Fees” by USD
199,540
· Amendment
to the Statement of Stockholders’ Equity and Cash Flows to reflect the
above changes
|
||
3.
|
Promissory
Note
|
|
On
February 4, 2008, the Company issued a convertible promissory note for a
total amount of $20,000. This note bears interest at 5% per annum and is
repayable by August 4, 2008. On February 5, 2008, this note was converted
to shares at $0.25 per share under a settlement agreement.
|
||
4.
|
Commitments
|
|
a)
|
On
November 5, 2007 the Company entered into a consulting agreement for a
period of one year and thereafter on a month to month basis. In terms of
the agreement the Company must issue the consultant 200,000 of its common
share deemed to be earned at the time the agreement was executed.
|
b)
|
By
Agreement dated December 14, 2007, the Company entered into an Executive
Employment Agreement with Mr. Henry C. Maloney with respect to the
appointment of Mr. Maloney as an executive officer of the Company. The
annual salary for Mr. Maloney’s services is $99,865 (GBP50,000). As of
March 31, 2008, $29,340 (GBP14,583) has been accrued.
|
||
c)
|
The
Company entered into a share purchase agreement March 28, 2008 with
Laurence Adams and Jacqueline Adams for the proposed acquisition of U.K
based Delta Music Limited, a United Kingdom company (“Delta Music”). The
acquisition will be effected through the acquisition of 100% of the issued
share capital of Delta Leisure Group Plc ("Delta Leisure"), a
private company that owns 75% interest of the issued share capital of
Delta Music, and 25% of the share capital of Delta Music. The
consideration for the acquisition will be a combination of cash and shares
of the Company’s common stock, as follows:
|
||
·
|
cash
of 1,400,000 Pounds Sterling payable on closing of the acquisition,
and
|
||
·
|
a
number of shares of the Company’s common stock equal to 10% of the
Company’s common stock, on a fully diluted basis, to be issued on closing
of the acquisition.
|
||
The
acquisition will be subject the completion by the Company of a private
placement financing to raise gross proceeds of no less than $4,000,000 by
no later than June 30, 2008.
|
|||
|
|||
5.
|
Subsequent
Events
|
||
a)
|
On
April 11, 2008, the Company issued 639,647 common shares, pursuant to a
debt settlement agreement with a fair value of $31,982 in full settlement
of the loan payable.
|
||
b)
|
On
April 17, 2008, the Company received $100,000 as total cash consideration
for the private placement of 2,000,000 common
shares.
|
Item 2.
|
Management’s Discussion and
Analysis
|
·
|
cash
of 1,400,000 Pounds Sterling (equal to approximately $2,746,000 as at May
12, 2008) payable on closing of the acquisition,
and
|
·
|
a
number of shares of our common stock equal to 10% of our common stock, on
a fully diluted basis, to be issued on closing of the
acquisition.
|
·
|
the
completion by us of a private placement financing to raise gross proceeds
of no less than $4,000,000, and
|
·
|
the
delivery to us of financial statements of Delta Music and Delta Leisure as
required to enable us to satisfy its reporting obligations under the
Securities Exchange Act of 1934 arising as a result of the completion of
the acquisition.
|
1.
|
We
plan to carry out sales and marketing of our PlayBOX online music service
with the objective of securing sales of our White Label interface to music
artists and our Aggregator interface to record labels. Our Bespoke
interfaces will be targeted predominantly towards companies involved in
the music industry. We plan to undertake a number of marketing and
promotional campaigns over the next 12 months with the objective of
establishing sales momentum. We estimate $7,000 per month will be spent on
our proposed marketing campaigns and promotions in that 12-month period,
for anticipated total annual expenditures of $84,000. If we are able to
complete the acquisition of Delta Music, we plan to incorporate Delta
Music’s catalogue of music into our online service using the white label
for Delta Music’s artists and the aggregators for the selection of the
main catalogue.
|
2.
|
We
anticipate spending approximately $10,000 over the next 12 months to
various third parties to run our PlayBOX service. These parties’ elements
are: (i) dedicated server through Open Hosting Ltd., (ii) ePDQ payment
interface, provided by Barclaycard UK, and (iii) the administration of
these elements in the PlayBOX system.
|
3.
|
We
anticipate spending approximately $17,000 over the next twelve months in
continuing the upgrading, development and design of our PlayBOX
system.
|
1.
|
We
anticipate spending approximately $2,000 in ongoing general and
administrative expenses per month for the next twelve months, for a total
anticipated expenditure of $24,000 over the next twelve months. The
general and administrative expenses for the year will consist primarily of
rent and office services, technical support and hosting services and
general office expenses.
|
2.
|
We
anticipate spending approximately $80,000 in complying with our
obligations as a reporting company under the Securities Exchange Act of
1934. These expenses will consist primarily of professional fees
relating to the preparation of our financial statements and completing our
annual report, quarterly report, current report and proxy statement
filings with the SEC.
|
3.
|
We
plan to expand our executive management team in order to add a chief
financial officer.
|
4.
|
We
plan to move our principal office to a dedicated serviced office from our
current shared office premises.
|
5.
|
We
plan to bring our management compensation packages up to date and
regularize payments under these compensation
arrangements.
|
i)
|
Monetary
assets and liabilities at the rate of exchange in effect at the balance
sheet date,
|
|
ii)
|
Non-monetary
assets and liabilities, and equity at historical rates,
and
|
|
iii)
|
Revenue
and expense items at the average rate of exchange prevailing during the
period.
|
ii)
|
Assets
and liabilities at the rate of exchange in effect at the balance sheet
date,
|
|
ii)
|
Equity
at historical rates, and
|
|
iii)
|
Revenue
and expense items at the average rate of exchange prevailing during the
period.
|
Cumulative
|
||||||||||||||||||||
From
|
||||||||||||||||||||
Incorporation
|
||||||||||||||||||||
For
the Three
|
For
the Three
|
For
the Six
|
For
the Six
|
August
21,2003
|
||||||||||||||||
Months
Ended
|
Months
Ended
|
Months
Ended
|
Months
Ended
|
to
|
||||||||||||||||
March
31, 2008
|
March
31, 2007
|
March
31, 2008
|
March
31, 2007
|
March
31, 2008
|
||||||||||||||||
(Restated)
|
(Restated)
|
(Restated)
|
||||||||||||||||||
Sales
|
$- | $146 | $- | $290 | $1,364 | |||||||||||||||
Cost
of Sales
|
- | - | - | - | 777 | |||||||||||||||
Gross
Margin
|
- | 146 | - | 290 | 587 | |||||||||||||||
General
and Administrative Expenses
|
||||||||||||||||||||
Accounting
and auditing
|
10,056 | 10,931 | 32,086 | 40,050 | 256,322 | |||||||||||||||
Bank
charges
|
476 | 219 | 742 | 445 | 1,974 | |||||||||||||||
Consulting and technical support
(Note
3)
|
79,907 | - | 111,811 | 58,825 | 259,211 | |||||||||||||||
Depreciation
|
- | 169 | - | 380 | 1,887 | |||||||||||||||
Development
|
199,540 | - | 199,540 | - | 228,692 | |||||||||||||||
Filing
fees
|
1,520 | 1,070 | 1,520 | 2,475 | 6,777 | |||||||||||||||
Intellectual
property
|
- | - | - | - | 2,500,000 | |||||||||||||||
Investor
relations
|
- | 18,000 | - | 18,000 | 18,000 | |||||||||||||||
Legal
|
7,466 | 8,061 | 25,190 | 17,939 | 115,192 | |||||||||||||||
Marketing
and public relations
|
- | - | - | - | 31,325 | |||||||||||||||
Office
and miscellaneous
|
694 | 840 | 694 | 3,660 | 14,684 | |||||||||||||||
Rent
|
2,968 | 2,931 | 6,036 | 5,805 | 44,286 | |||||||||||||||
Salaries
and benefits
|
25,179 | 32,411 | 29,340 | 11,546 | 186,609 | |||||||||||||||
Transfer
agent fees
|
130 | - | 130 | 85 | 2,170 | |||||||||||||||
Travel
and entertainment
|
- | 9 | - | 856 | 3,564 | |||||||||||||||
327,936 | 74,641 | 407,089 | 160,066 | 3,670,693 | ||||||||||||||||
(327,936 | ) | (74,495 | ) | (407,089 | ) | (159,776 | ) | (3,670,106 | ) | |||||||||||
Loss
from Operations
|
||||||||||||||||||||
Other
Income (Expense)
|
||||||||||||||||||||
Foreign
exchange (loss) gain
|
4,223 | 519 | 2,918 | 580 | (6,484 | ) | ||||||||||||||
Interest
income (expense)
|
- | (7 | ) | - | 8 | 734 | ||||||||||||||
Net
Loss
|
$(323,713 | ) | $(73,983 | ) | $(404,171 | ) | $(159,188 | ) | $(3,675,856 | ) | ||||||||||
$(0.01 | ) | $0.00 | $(0.01 | ) | $(0.01 | ) | ||||||||||||||
Loss
per Share – Basic and Diluted
|
||||||||||||||||||||
28,845,139 | 28,525,139 | 28,845,139 | 28,525,139 | |||||||||||||||||
Weighted
Average Shares Outstanding
|
||||||||||||||||||||
Comprehensive
Loss
|
||||||||||||||||||||
Net
Loss
|
(323,713 | ) | (73,983 | ) | (404,171 | ) | (159,188 | ) | (3,675,856 | ) | ||||||||||
Foreign
currency translation adjustment
|
(10,160 | ) | (149 | ) | 1,913 | (3,001 | ) | (10,255 | ) | |||||||||||
(333,873 | ) | (74,132 | ) | (402,258 | ) | (162,189 | ) | (3,686,111 | ) | |||||||||||
Item 3.
|
Quantitative and Qualitative
Disclosures About Market
Risk
|
Item 4.
|
Controls and
Procedures
|
·
|
we
do not have sufficient segregation of
duties;
|
·
|
we
do not have sufficient documentation for accounting or business
transactions;
|
·
|
we
have noted material weaknesses in the authorization and posting of general
ledger transactions, particularly those related to accruing liabilities
resulting from contractual commitments;
and
|
·
|
we
do not have an Audit Committee;
|
Item 1.
|
Legal
Proceedings
|
Item
1A.
|
Risk
Factors
|
Item 2.
|
Unregistered Sales of Equity
Securities and Use of
Proceeds
|
Item 3.
|
Defaults Upon Senior
Securities
|
Item 4.
|
Submission of Matters to a Vote
of Securities Holders
|
Item 5.
|
Other
Information
|
Item 6. | Other Information | |
Exhibit
No.
|
|
Description
|
31.1
|
Certification
of Chief Executive Officer pursuant to Securities Exchange Act of 1934
Rule 13a-14(a) or 15d-14(a).
|
|
31.2
|
Certification
of Chief Financial Officer pursuant to Securities Exchange Act of 1934
Rule 13a-14(a) or 15d-14(a).
|
|
32.1
|
Certifications
pursuant to Securities Exchange Act of 1934 Rule 13a-14(b) or 15d-14(b)
and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes- Oxley Act of
2002.
|
PLAYBOX (US)
INC.
|
|||
By:
|
/s/
Gideon Jung
|
||
Gideon
Jung
|
|||
Chief
Executive Officer and Chief Financial Officer
|
|||
Date: June
2, 2009
|