UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB Amendment No. 1
[ ] QUARTERLY REPORT UNDER SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period
ended March 31, 2003
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _______ to ____________
Commission file number : 000-50090
MAGIC COMMUNICATIONS, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 13-3926203
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
5 West Main Street, Elmsford, New York 10523
(Address of principal executive offices)
(914) 345-0800
(Issuer's telephone number)
Check whether the registrant (1) filed all reports required to be filed by
Section l3 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. 1Yes [X] No
[] State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 2,500,000 shares of Common
Stock as of July 14, 2003.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [ X ]
1 Except that this Form 10-QSB is being filed late.
Magic Communications, Inc.
FORM 10-QSB
Quarterly Period Ended March 31, 2003
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Balance Sheet March 31, 2003 (Unaudited).................................2
Statements Of Operations Three Months
Ended March 31, 2003 and 2002............................................3
Statement of Cash Flows Three Months
Ended March 31, 2003 and 2002............................................4
Notes To Financial Statements............................................5
Item 2. PLAN OF OPERATIONS.......................................6
Item 3. CONTROLS AND PROCEDURES..................................7
PART II OTHER INFORMATION.........................................8
Item 1. Legal Proceedings........................................8
Item 2. Changes In Securities And Use Of Proceeds................8
Item 3. Defaults Upon Senior Securities..........................8
Item 4. Submission Of Matters To A Vote of Security Holders......8
Item 5. Other Information........................................8
Item 6. Exhibits And Reports On Form 8-K.........................8
SIGNATURES .........................................................9
CERTIFICATIONS .......................................................10-11
1
MAGIC COMMUNICATIONS, INC.
BALANCE SHEET
MARCH 31, 2003
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash $ 8,842
------------------
TOTAL CURRENT ASSETS 8,842
EQUIPMENT, net 52,106
SECURITY DEPOSITS 15,400
DUE FROM RELATED PARTY 3,000
------------------
$ 79,348
==================
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 51,459
Due to related parties 67,306
------------------
TOTAL CURRENT LIABILITIES 118,765
STOCKHOLDERS' DEFICIT:
Common stock, $.0001 par value;
authorized 50,000,000 shares;
issued and outstanding 2,500,000 shares 250
Preferred stock, $.0001 par value;
authorized 1,000,000 shares;
issued and outstanding -0- shares -
Additional paid-in capital 5,903
Accumulated deficit (45,570)
------------------
TOTAL STOCKHOLDERS' DEFICIT (39,417)
------------------
$ 79,348
==================
The accompanying notes are an integral part of the financial statements
2
MAGIC COMMUNICATIONS, INC.
STATEMENTS OF OPERATIONS
For the Three Months Ended March 31,
--------------------------------------------
2003 2002
---------------------- ------------------
(Unaudited) (Unaudited)
NET SALES $ 25,630 $ 16,915
---------------------- ------------------
OPERATING EXPENSES:
Depreciation 4,320 4,320
Salaries 6,000 5,400
Equipment lease 1,559 5,142
Professional fees 9,909 3,775
General and administrative 11,253 6,708
---------------------- ------------------
TOTAL OPERATING EXPENSES 33,041 25,345
---------------------- ------------------
NET LOSS $ (7,411)$ (8,430)
====================== ==================
BASIC AND DILUTED NET LOSS PER SHARE $ (0.00)$ (0.00)
====================== ==================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic and Diluted 2,500,000 2,500,000
====================== ==================
The accompanying notes are an integral part of the financial statements
3
MAGIC COMMUNICATIONS, INC.
STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31,
----------------------------------------------
2003 2002
---------------------- ---------------------
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (7,411) $ (8,430)
---------------------- ---------------------
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Depreciation 4,320 4,320
Changes in assets and liabilities:
Accounts payable and accrued expenses 11,933 3,546
---------------------- ---------------------
TOTAL ADJUSTMENTS 16,253 7,866
---------------------- ---------------------
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES 8,842 (564)
---------------------- ---------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES - -
---------------------- ---------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES - -
---------------------- ---------------------
NET INCREASE (DECREASE) IN CASH 8,842 (564)
CASH, BEGINNING OF PERIOD - 564
---------------------- ---------------------
CASH, END OF PERIOD $ 8,842 $ -
====================== =====================
The accompanying notes are an integral part of the financial statements.
4
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and the instructions to Form 10-QSB. Accordingly, they do not include all
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
considered necessary for a fair presentation have been included. Operating
results for the three months ended March 31, 2003 are not necessarily indicative
of results that may be expected for the year ending December 31, 2003. For
further information, refer to the audited financial statements and footnotes
thereto included in the Company's Form 10-KSB for the year ended December 31,
2002.
NOTE 2. GOING CONCERN
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplates continuation of the
Company as a going concern. However, the Company has incurred recurring losses
resulting in a stockholders' deficit of ($39,417) and working capital deficit of
($109,923) at March 31, 2003. In addition, the Company's only asset is cash of
$8,842. These factors raise substantial doubt about the Company's ability to
continue as a going concern. The accompanying financial statements do not
include any adjustments relating to the recoverability and classification of
recorded assets, or the amounts and classification of liabilities that might be
necessary in the event the Company cannot continue in existence.
In view of these matters, the continued existence of the Company is dependent
upon its ability to meet its financing requirements and, ultimately, the success
of its planned future operations. There can be no assurance that the Company
will obtain the necessary financing nor that the planned future operations will
be successful.
5
ITEM II. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
Three Months Ended March 31, 2003 vs. Three Months Ended March 31, 2002
Net sales increased from $16,915 in the three months ended March 31, 2002 to
$25,630 in the three months ended March 31, 2003. This increase is directly
attributable to a reduction in telephone expenses when the Company changed its
local service provider. Operating expenses increased from $25,345 or 150% of net
sales to $33,041 or 129% of net sales. The change in operating expenses was due
to the following items: (i) an increase in salaries of $600 from $5,400 in 2002
to $6,000 in 2003; (ii) a decrease in lease payments for phone equipment (leases
expired in March 2002) of $3,583 from $5,142 for the three months ended March
31, 2002 to $1,559 for the three months ended March 31, 2003; (iii) a increase
in general and administrative expenses of $4,545 from $6,708 for the three
months ended March 31, 2002 to $11,253 for the three months ended March 31,
2003; and (v) an increase in professional fees of $6,134 from $3,775 in the
three months ended March 31, 2002 to $9,909 in the three months ended March 31,
2003 associated with additional registration costs. Since sales increased and
operating expenses increased, the Company's net loss decreased from ($8,430) in
the three months ended March 31, 2002 to ($7,411) in the three months ended
March 31, 2003. The number of pay telephones in service during the three months
ended March 31, 2002 and March 31, 2003 were approximately 150 telephones
throughout these periods.
Liquidity and Capital Resources
On March 31, 2003 the Company had only $8,842 cash on hand. It was the opinion
of Management that the lack of funds would not enable the Company to affect its
registration under the Exchange Act and file periodic reports until such time as
it is able to generate revenues/cash flow from its operations. Current funds
having been expended and with managements' assumption that the Company may not
generate sufficient revenues from operations, the Company will (a) be dependent
upon management to fund operations and/or (b) be dependent upon some form of
debt or equity financing, if available, and if available, under terms deemed
reasonable to management The management of the Company has orally committed to
fund the Company on an "as needed" basis for a period of one (1) year, with up
to $50,000 in order to fund operations for such 12 month period. Management has
also verbally committed to further fund up to an additional $50,000 if its'
original estimate for funds needed during such 12 month period proves to be
understated. The funding referred to is not subject to any limitations other
than the dollar amounts indicated. The Company's auditors have included a "going
concern" opinion in their report on the Company's financial statements contained
in the Company's 10-KSB for the year ended December 31, 2002.
Need for Additional Financing
The Company believes that its existing capital will be insufficient to meet the
Company's cash needs, including costs of compliance with the continuing
reporting requirements of the Securities Exchange Act of 1934, as amended. The
Company may rely upon issuance of its securities to pay for services necessary
to meet reporting requirements.
6
Forward-Looking Statements
When used in this form 10-QSB, or in any document incorporated by reference
herein, the words or phrases "will likely result", "are expected to," "will
continue," "is anticipated," "estimate," "project," or similar expressions are
intended to identify "forward looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements are subject to
certain risks and uncertainties including changes in economic conditions in the
Company's market area, changes in policies by regulatory agencies, fluctuations
in interest rates, demand for loans in the Company's market area and
competition, that could cause actual results to differ materially from
historical earnings, if any, and those presently anticipated or projected. The
Company wishes to caution readers not to place undue reliance on any such
Forward- looking statements, which speak only as to the date made. The Company
wishes to advise readers that the factors listed above, or in its 10-SB
Registration Statement Risk Factor Section, could affect the Company's financial
performance and could cause the Company's actual results for future periods to
differ materially from any opinions or statements expressed with respect to
future periods in any current statements. The Company does not undertake, and
specifically disclaims any obligation, to publicly release the result of any
revisions which may be made to any forward-looking statements to reflect events
or circumstances after the date of such statements or to reflect the occurrence
of anticipated or unanticipated events.
Item III. Controls and Procedures.
Our management, under the supervision and with the participation of our chief
executive officer and chief accounting officer, conducted an evaluation of our
"disclosure controls and procedures" (as defined in the Securities Exchange Act
of 1934 (the "Exchange Act") Rules 13a-14(c)). Based on their evaluation, our
chief executive officer and chief accounting officer have concluded that as of
the Evaluation Date, our disclosure controls and procedures are effective to
ensure that all material information required to be filed in this Quarterly
Report on Form 10-QSB has been made known to them in a timely fashion.
There have been no significant changes (including corrective actions with regard
to significant deficiencies or material weaknesses) in our internal controls or
in other factors that could significantly affect these controls subsequent to
the Evaluation Date set forth above.
7
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings. None
Item 2. Changes in Securities. None
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.
Exhibits
(a) 31.1 302 Certification by President
32.1 906 Certification by President
(b) Reports on Form 8-K
None
8
SIGNATURES
In accordance with the requirements of the Securities and Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
MAGIC COMMUNICATIONS, INC.
(Registrant)
/s/ Stephen D. Rogers
By:______________________________
Date: October 20, 2003 Stephen D. Rogers, President
and Chief Accounting Officer
9