SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2005
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT OF 1934
From the transition period from ____________ to ___________.
Commission File Number 0-22236
SKREEM ENTERTAINMENT CORPORATION
(Exact name of small business issuer as specified in its charter)
Delaware 33-0565710
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
11637 Orpington Street, Orlando, Florida 32817
(Address of principal executive offices)
(407) 207-0400
(Issuer's telephone number)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) 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:
Yes |X| No |_|
Class Shares Outstanding Date
Common, $.001 par value 23,107,856 September 30, 2005
TABLE OF CONTENTS
SKREEM ENTERTAINMENT CORPORATION
Part I. Financial Information
Item 1. Consolidated Financial Statements
Unaudited Consolidated Condensed Balance Sheet - September 30, 2005 3
Unaudited Consolidated Condensed Statements of Operations for the six
and three months ended September 30, 2005 and 2004 and for the period
from inception, August 19, 1999, to September 30, 2005 4
Unaudited Consolidated Condensed Statement of Changes in Shareholders' Deficit
for the period from inception, August 19, 1999, to September 30, 2005 6
Unaudited Consolidated Condensed Statements of Cash Flows for the six months ended
September 30, 2005 and 2004 and for the period from inception, August 19, 1999, to
September 30, 2005 7
Notes to the Unaudited Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis or Plan of Operation 10
Item 3. Controls and Procedures 12
Part II. Other Information
Item 1. Legal Proceedings 12
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits 12
Signatures 14
Certifications 14
SKREEM ENTERTAINMENT CORPORATION
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEET
September 30, 2005
ASSETS
Current assets:
Cash and Cash equivalents $ 11,799
Prepaid expenses and deposits 26,708
---------------
Total current assets 38,507
Property and equipment, net 8,916
---------------
Total assets $ 47,423
===============
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued liabilities $ 241,601
Related party payable 9,254
Deferred revenue 25,808
Accrued interest - shareholder and affiliates 139,202
Notes payable - shareholder 1,328,000
Notes payable - affiliates 933,620
Notes payable - other 50,000
---------------
Total current liabilities 2,727,485
---------------
Shareholders' deficit:
Preferred shares - $0.001 par value; 1,000,000
authorized, no shares issued or outstanding -
Common shares - $0.001 par value; 50,000,000
authorized; 23,107,856 shares issued and
outstanding 23,108
Additional paid - in capital 1,860,823
Losses accumulated in the development stage (4,563,993)
---------------
Total shareholders' deficit (2,680,062)
---------------
Total liabilities and shareholders' deficit $ 47,423
===============
The accompanying notes are an integral part of these consolidated
condensed financial statements
3
SKREEM ENTERTAINMENT CORPORATION
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS For the Six Months
Ended September 30, 2005 and 2004 and for the Period From Inception, August 19,
1999, to September 30, 2005
Six Months Ended Inception to
September 30, September 30, September 30,
2005 2004 2005
-------------------- -------------------- --------------------
Revenues $ 24,397 $ - $ 148,185
Expenses
Operating (564,505) (584,161) (2,975,368)
General and administrative (217,660) (180,710) (1,216,481)
Impairment of loan receivable - - (130,000)
-------------------- -------------------- --------------------
Total expenses (782,165) (764,871) (4,321,849)
-------------------- -------------------- --------------------
Loss from operations (757,768) (764,871) (4,173,664)
Interest expense (77,092) (26,940) (390,329)
-------------------- -------------------- --------------------
Net loss $ (834,860) $ (791,811) $ (4,563,993)
==================== ==================== ====================
Weighted Average Shares Outstanding -
basic and diluted 23,107,856 26,421,825
==================== ====================
Loss Per Share -
basic and diluted $ (0.04) $ (0.03)
==================== ====================
The accompanying notes are an integral part of these consolidated
condensed financial statements
4
SKREEM ENTERTAINMENT CORPORATION
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS For the Three Months
Ended September 30, 2005 and 2004 and for the Period From Inception, August 19,
1999, to September 30, 2005
Three Months Ended Inception to
September 30, September 30, September 30,
2005 2004 2005
-------------------- -------------------- --------------------
Revenues $ 1,637 $ - $ 148,185
Expenses
Operating (201,682) (345,989) (2,975,368)
General and administrative (111,493) (87,160) (1,216,481)
Impairment of loan receivable - - (130,000)
-------------------- -------------------- --------------------
Total expenses (313,175) (433,149) (4,321,849)
-------------------- -------------------- --------------------
Loss from operations (311,538) (443,149) (4,173,664)
Interest expense (40,585) (15,950) (390,329)
-------------------- -------------------- --------------------
Net loss $ (352,123) $ (449,099) $ (4,563,993)
==================== ==================== ====================
Weighted Average Shares Outstanding -
basic and diluted 23,107,856 26,597,618
==================== ====================
Loss Per Share -
basic and diluted $ (0.02) $ (0.02)
==================== ====================
The accompanying notes are an integral part of these consolidated
condensed financial statements
5
SKREEM ENTERTAINMENT CORPORATION
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS' DEFICIT
For the period from inception, August 19, 1999, to September 30, 2005
Losses
Accumulated
Additional During the
Common Stock Paid-In Development
Shares Amount Capital Stage Total
---------------- ------------ ----------------- ----------------- ------------------
Balance at Inception,
August 19,1999 - $ - $ - $ - $ -
Issuance of common stock 20,000 20 - - 20
Net loss - - - (84,021) (84,021)
---------------- ------------ ----------------- ----------------- ------------------
Balance at December 31, 1999 20,000 20 - (84,021) (84,001)
Net loss - - - (230,879) (230,879)
---------------- ------------ ----------------- ----------------- ------------------
Balance at December 31, 2000 20,000 20 - (314,900) (314,880)
Net loss - - - (494,816) (494,816)
---------------- ------------ ----------------- ----------------- ------------------
Balance at December 31, 2001 20,000 20 - (809,716) (809,696)
Net loss - - - (384,590) (384,590)
---------------- ------------ ----------------- ----------------- ------------------
Balance at December 31, 2002 20,000 20 - (1,194,306) (1,194,286)
Reclassification of
debt to equity 43,000 43 1,581,940 1,581,983
Net loss - - - (736,364) (736,364)
---------------- ------------ ----------------- ----------------- ------------------
Balance at December 31, 2003 63,000 63 1,581,940 (1,930,670) (348,667)
Effect of issuance of common
stock and recapitalization
in a reverse acquisition
transaction 25,943,925 25,944 (25,944) - -
Net loss - - - (205,994) (205,994)
---------------- ------------ ----------------- ----------------- ------------------
Balance at March 31, 2004 26,006,925 $ 26,007 $ 1,555,996 $ (2,136,664) $ (554,661)
Proceeds from issuance of
common stock 603,856 604 301,324 - 301,928
Cancellation of shares (3,502,925) (3,503) 3,503 - -
Net loss - - - (1,592,469) (1,592,469)
---------------- ------------ ----------------- ----------------- ------------------
Balance at March 31, 2005 23,107,856 23,108 1,860,823 (3,729,133) (1,845,202)
Net loss - - - (834,860) (834,860)
---------------- ------------ ----------------- ----------------- ------------------
Balance at September 30, 2005 23,107,856 $ 23,108 $ 1,860,823 $ (4,563,993) $ (2,680,062)
================ ============ ================= ================= ==================
The accompanying notes are an integral part of these unaudited
consolidated condensed financial statements
6
SKREEM ENTERTAINMENT CORPORATION
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS For the Six Months
Ended September 30, 2005 and 2004 and for the Period From Inception, August 19,
1999, to September 30, 2005
Six Months Ended Inception to
September 30, September 30, September 30,
2005 2004 2005
------------------ ------------------ ------------------
Cash Flows from Operating Activities:
Net loss $ (834,860) $ (791,811) $ (4,563,993)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation expense 1,819 3,831 42,699
Impairment of loan receivable - - 130,000
Accrued interest converted to equity - - 208,405
Expenses paid by shareholder and affiliate 35,000 - 88,026
Changes in operating assets and liabilities:
Decrease in accounts receivable 114,257 - -
Decrease (Increase) in prepaid expenses and deposits 8,908 (1,515) (26,687)
Increase (decrease) in accounts payable and
accrued liabilities 177,555 13,105 250,855
Increase in interest payable to affiliates 54,309 26,602 139,182
(Decrease) Increase in deferred revenue (9,520) - 25,808
------------- ------------------ ------------------
Net cash used by operating activities (452,532) (749,788) (3,705,705)
------------- ------------------ ------------------
Cash Flows From Investing Activities
Payments for purchase of property and equipment (864) (11,441) (51,615)
Loan receivable - - (130,000)
------------- ------------------ ------------------
Net cash used by investing activities (864) (11,441) (181,615)
Cash Flows From Financing Activities
Proceeds from issuance of common stock - 301,928 301,928
Proceeds from notes payable - other - 250,000 365,000
Proceeds from notes payable - shareholder 448,000 230,000 1,328,000
Proceeds from notes payable - affiliate - 50,000 2,424,191
Principal payments on notes payable - other (50,000) (2,142) (315,000)
Principal payments on notes payable - shareholder 15,000 - (125,000)
Principal payments on notes payable - affiliate - (65,000) (80,000)
------------- ------------------ ------------------
Net cash provided by financing activities 413,000 764,786 3,899,119
Net increase (decrease) in cash and cash equivalents (40,396) 3,557 11,799
Cash and cash equivalents, beginning of period 52,195 2,915 -
------------- ------------------ ------------------
Cash and cash equivalents, end of period $ 11,799 $ 6,472 $ 11,799
============= ================== ==================
The accompanying notes are an integral part of these unaudited
consolidated condensed financial statements
7
SKREEM ENTERTAINMENT CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
Note 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements of Skreem
Entertainment Corporation have been prepared in accordance with accounting
principles generally accepted in the United States of America for interim
financial information and with the instructions to Form 10QSB and Item 310(b) of
Regulation S-B. They do not include all of the information and footnotes
required by accounting principles generally accepted in the United States of
America for complete financial statements. In the opinion of management, all
adjustments, consisting only of normal recurring adjustments, considered
necessary for a fair presentation, have been included in the accompanying
unaudited consolidated financial statements. Operating results for the periods
presented are not necessarily indicative of the results that may be expected for
the full year.
These unaudited consolidated financial statements should be read in conjunction
with the consolidated financial statements and footnotes, which are included as
part of consolidated financial statements as of March 31, 2005 included in the
Company's Form 10KSB.
Note 2 - ACCOUNTING POLICY FOR REVENUE RECOGNITION
Revenue is recognized in accordance with Staff Accounting Bulletin No. 104 (SAB
104) when persuasive evidence of an arrangement exists, the price to the buyer
is fixed or determinable; delivery has occurred or services have been rendered
or the license period has begun; and collect ability is reasonably assured.
Revenue from the distribution of recordings under license and distribution
agreements is recognized as earned under the criteria established by Statement
of Financial Accounting Standard No 50. Revenue is generally recognized when the
Company receives an "accounting" of recordings sold with payment from the
licensee. In the event the Company has not received an "accounting" from the
licensee and if the Company has information related to the licensed use of
recordings that would result in the revenue being fixed and determinable, and
collection is reasonably assured, then revenue is recognized in the periods in
which the license revenue is earned. Minimum guarantees (advances) received from
licensees are recorded as deferred revenue and are amortized over the
performance period, which is generally the period covered by the agreement.
Note 3 - NOTES PAYABLE
Shareholder
During the quarter ended June 30, 2005, Jeffrey D. Martin, a major stockholder
loaned the Company $219,000. The note is payable on demand and bears interest at
the rate of 8% per annum. Interest on this note begins to accrue on July 1,
2005.
During the quarter ended September 30, 2005, Jeffrey Martin loaned the Company
$264,000. The note is payable on demand and bears interest at 8% per annum. The
note is secured by assets of the Company and interest on the note begins to
accrue on October 1, 2005.
Affiliates
During the quarter ended June 30, 2005, the Company borrowed $15,000 from Am-Pac
Investments. The note is payable on demand and bears interest at a rate of 8%
per annum. Interest on this note begins to accrue on July 1, 2005. Am-Pac
Investments is 100% owned by Jeffrey D. Martin, a major shareholder of the
company.
8
SKREEM ENTERTAINMENT CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
Note 4 - GOING CONCERN
The accompanying consolidated condensed financial statements have been prepared
on a going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company
sustained losses of $834,860 for the six months ended September 30, 2005. The
Company had an accumulated deficit of $4,563,993 at September 30, 2005. These
factors raise substantial doubt about the ability of the Company to continue as
a going concern for a reasonable period of time. The Company is highly dependent
on its ability to continue to obtain investment capital and loans from a major
shareholder and an affiliate in order to fund the current and planned operating
levels. The financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the amounts and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern. The Company's continuation as a going
concern is dependent upon its ability to continue receiving investment capital
from a shareholder and an affiliate and obtaining loans to complete promotion of
the Company's artists, continue production of music and achieve a level of
success that will enable it to sustain its operations. No assurance can be given
that the Company will be successful in these efforts.
Note 5 - BUSINESS MANAGEMENT AGREEMENT
On June 14, 2005, the Company entered into a business management agreement with
Mr. Andy Lai for services performed in certain countries in Asia and shall
continue in perpetuity until written notice of termination is given by either
party. Mr. Lai shall act as Business Manager and services shall include contract
negotiations, securing recordings distribution, arranging live performances and
tours, securing of sponsorships, as well as other business activities that are
necessary for the advancement of the artists that are represented by the
Company. The Company agrees to compensate Mr. Lai ten percent (10%) of the net
revenues collected as a direct result of his negotiations in Asia and should the
Company through its own resources enter into a recording or distribution
agreement with a major company and the agreement includes certain countries in
Asia, Mr. Lai shall be compensated five percent (5%) of the net revenues
resulting from said agreement. The Company has not recorded any transactions
related to this agreement.
Note 6 - DISTRIBUTION AGREEMENT
During April 2005, the Company entered into a 5.5 year Distribution and Service
Agreement with Cheyenne Records GMbH (Cheyenne). The agreement grants Cheyenne
certain exclusive rights to distribute and sell recordings of the artist "Pat
Moe" in Germany, Switzerland and Austria. Cheyenne shall receive a distribution
and service fee of 30% to 36% of all net receipts (gross receipts less Value
Added Tax of approximately 16%). In addition, Cheyenne will perform certain
services including booking commercial concerts and concert tours, securing
personal appearances of "Pat Moe", securing advertising, endorsements, and
related activities of "Pat Moe" and music publishing /sub publishing throughout
the territory. In consideration for these services, except music publishing/sub
publishing, Cheyenne shall receive 15-30% of all net receipts. The
Company/Cheyenne shall split music publishing revenues on a 75%/25% basis. The
Company has not recorded any revenue related to this agreement.
Note 7 - LICENSE AGREEMENT
On September 6, 2005, the Company entered into a 5.5 year license agreement with
Planet Records Italy (Planet). The license agreement grants Planet the exclusive
rights for an Album (TBA Title) by "3rd Wish" in Italy. Under the license
agreement the Company is to receive a royalty rate of 20% of net sales. The
Company grant Planet a digital download distribution license agreement that will
include all digital and wireless platforms on a non-exclusive basis in Italy
only and will be split on a 60/40 basis.
9
Note 8 -SUBSEQUENT EVENTS
On October 28, 2005, the Company entered into a Music Publishing Agreement, a
Personal Management Agreement, and an Exclusive Artist Recording Agreement with
Willie Bivins Jr, an artist also known as "Willie Will".
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Plan of Operation
The Company plans to continue operations by developing current acts into
successful music performing and recording acts. The Company currently is
actively promoting two acts, "3rd Wish" and "Pat Moe". These two acts will tour,
perform, make public appearances, and continue to record as opportunities are
located. The Company is uncertain as to when these acts may enter the U.S.
market. As of September 30 2005, neither of the Company's acts have received
gold records for album sales.
The countries in which the Company is currently promoting its acts are as
follows:
Pat Moe 3rd Wish
-------- ----------
Germany, Switzerland, Austria Germany, Switzerland and Austria
UK, Eire, Australia, New Zealand, France
Andorra, Monaco, Belgium, Russia, Azerbaijan,
Armenia, Georgia, Moldova
Kazakstan, Krygyzstan, Tajikistan, Uzbekistan,
Turkmenistan,
Ukraine, Republic of Belarus, Lithuania,
Latvia, Estonia,
Israel, Portugal
Italy
The Company's cash balance is insufficient to satisfy the Company's cash
requirements for the next 12 months. The Company believes it can satisfy it's
cash requirements for 6 months with current cash and additional debt from a
major shareholder. The Company is dependent on continued receipt of revenues and
will need outside funding from the sale of shares or debt financing in order to
continue operations beyond that.
The Company does not anticipate acquiring any significant equipment during the
next twelve months.
The Company does not anticipate any significant changes in the number of
employees in the next twelve months. The Company has two full time employees.
The Company has entered into various license agreements that grant certain
exclusive rights to sell and distribute certain recordings by "3rd Wish".
Approximately 95% of the Company's revenue for the years ended March 31, 2005
came from the Cheyenne Records agreement. The remaining contracts represent,
individually, less than 1% of revenue. The table below sets forth the parties,
material terms, and territories covered by these license agreements:
Party(Licensee) Territories
Cheyenne Records Germany, Switzerland and Austria
Our agreement with Cheyenne Records provide that Cheyenne will market and sell
3rd Wish's recordings for a period of 5 years beginning in March 2004. Cheyenne
will retain approximately 25% to 45% of revenue from distribution and sales and
the Company will pay the costs of production. The term of the contract is 5.5
years from May 2004.
Three 8 Music Limited UK, Eire
Our agreement with Three 8 provides that they will receive royalties from 3rd
Wish's first three singles released. Royalties are 19% on record sales and 50%
on third party licensing. The term of the contract is 15 years from October
2004.
Shock Records Pty Ltd Australia, New Zealand
Our agreement with Shock Records provides for royalties of 18-22% on album sales
and 50% to Shock for third party licensing. The term of the contract is
approximately 5 years from January 2005.
NRJ Music France, Andorra, Monaco, Belgium
Our agreement with NRJ provides for royalties of 13-22% for record sales. The
Company will bear the costs of production, the term is 5 years from January
2005.
11
Megaliner Records Russia, Azerbaijan, Armenia, Georgia,
Moldova, Kazakstan, Kyrgyzstan,
Tajikistan, Uzbekistan, Turkmenistan,
Ukraine, Republic of Belarus, Lithuania,
Latvia, Estonia
Our agreement with Megaliner provides Megaliner with 20% of income from record
sales and 60% of third party licensing and broadcasting revenue. The term is
three years.
NMC Music Ltd. Israel
The Company will receive royalties of approximately 18% of all record net sales.
The contract expires in December 2009.
Vidisco Portugal
The Company will receive a royalty of approximately 18% of all record net sales.
The contract expires in January of 2010.
Planet Records Italy
The Company will receive royalty of approximately 20% of all record net sales.
The contract term is 5.5 years.
Revenue is recognized in accordance with Staff Accounting Bulleting No. 104 (SAB
104) when persuasive evidence of an arrangement exists, the price to the buyer
is fixed or determinable; delivery had occurred or services have been rendered
or the license period has begun; and collect ability is reasonably assured.
Revenue from the distribution of recordings under license and distribution
agreements is recognized as earned under the criteria established by Statement
of Financial Accounting Standard No. 50. Revenue is generally recognized when
the Company receives an "accounting" of recordings sold with payment from the
licensee. In the event the Company has not received an "accounting" from the
licensee and if the Company has information related to the licensed use of
recordings that would result in the revenue being fixed and determinable, and
collection is reasonably assured, then revenue is recognized in the periods in
which the license revenue is earned. Minimum guarantees (advances) received from
licensees are recorded as deferred revenue and are amortized over the
performance period, which is generally the period covered by the agreement.
Results of Operations for the Six Months Ended September 30, 2005 as Compared to
the Six Months Ended September 30, 2004.
Revenues - The Company recorded revenue of $24,397 for the six months ended
September 30, 2005. The revenue for the period consists of earnings from
licensing agreements to distribute "3rd Wish's" music of $23,415 and live
performances of $982. There was no revenue during the six months ended September
30, 2004.
Operating Expenses - Operating expenses for the six months ended September 30,
2005 were $564,505, a decrease of $19,656 or 3% from $584,161 for the
corresponding period of September 30, 2004. The decrease is primarily due to a
decrease in overall music and production costs of approximately $120,000,
decrease in advertising of $61,404, which were offset by tour expenses of
$41,777 that were not incurred for the six months ended September 30, 2004 and
an overall increase in travel and support for Artists in Germany of
approximately $115,000.
General and Administrative Expenses - General and administrative expense
increased by $36,950 or 20% to $217,660 for the six months ended September 30,
2005. This increase is primarily attributable to an increase of $13,233 in
professional fees, and increase of $11,591 in payroll expense, and increase of
$7,887 in insurance expense and an overall increase in other general and
administrative expense of $4,239.
Interest Expense - Interest expense increased by $50,152 or 186% to $77,092 for
the six months ended September 30, 2005 from $26,940 for the corresponding
period of the prior year. This increase is attributable to having additional
debt outstanding during the six months ended September 30 2005.
Results of Operations for the Three Months Ended September 30, 2005 as Compared
to the Three Months Ended September 30, 2004
Revenues - The Company recorded revenue of $1,637 for the three months ended
September 30, 2005. The revenue for this period consists of earnings from
licensing agreements to distribute 3rd Wish's music and live performances. There
was no revenue during the three months ended September 30, 2004.
Operating expenses - Operating expenses for the three months ended September 30,
2005 were $ 201,682, a decrease of $ 144,307 or 42% from the $345,989 for the
corresponding period ended September 30, 2004. The decrease is primarily due to
a $76,085 decrease in advertising and promotion expenses, a $20,518 decrease in
travel expense, a $93,874 decrease in video shoot expense, a $7,828 decrease in
support for artist in Germany, which were offset by a $34,165 increase in show
expense and a $14,348 increase in web design and maintenance.
General and Administrative Expenses - General and administrative expenses
increased by $24,333 or 28% to $111,493 for the three months ended September 30,
2005 from $87,160 for the corresponding period ended September 30, 2004. This
increase is primarily attributable to an increase of $5,755 in professional
fees, an increase of $8,977 in payroll expense, an increase of $4,912 in
insurance expense and an overall increase in other general and administrative
expenses of $4,689.
Interest Expense - Interest expense increased by $24,635 or 154% to $40,585 for
the three months ended September 30, 2005 from $15,950 for the corresponding
period of the prior year. This increase is attributable to having additional
debt outstanding during the three months ended September 30, 2005.
13
Liquidity and Capital Resources
As of September 30, 2005, the Company had cash of $11,799 and a deficit in
working capital of $2,688,978. This compares with cash of $52,195 and a deficit
in working capital of $1,855,073 as of March 31, 2005.
Cash used in operations decreased by $297,256 to $452,532 for the six months
ended September 30, 2005 from $749,788 for the corresponding period of the prior
year. The decrease is principally attributable to an increase in the net loss of
$43,049, expenses paid by shareholder of $35,000, decrease in accounts
receivable of $114,257, decrease in prepaid expense of $8,908, increase in
accounts payable and accrued liabilities of $177,555, an increase in interest
payable to affiliates of $54,309 and a decrease in deferred revenue of $9,520.
Cash used by investing activities for the six months ended September 30, 2005
was $864 for the purchase of computer equipment. For the six months ended
September 30, 2004 the Company used $11,441 for the purchase of equipment.
Cash provided by financing activities for the six months ended September 30,
2005 was $413,000 from the issuance of promissory notes. This compares with
$764,786 of cash being provided from financing activities during the six months
ended September 30, 2004, $301,928 from the issuance of common stock and the
remainder from promissory notes.
Historically, the Company has been funded by the sale of its shares and loans
from its Shareholders. However, the Company's continuation as a going concern is
dependent upon its ability to continue receiving investment capital and
obtaining loans to complete promotion of the Company's artists, continue
production of music and achieve a level of success that will enable it to
sustain its operations. No assurance can be given that the Company will be
successful in these efforts.
14
ITEM 3. CONTROLS AND PROCEDURES
As of the end of the period covered by this report, we have evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures under the supervision of and with the participation of our Chief
Executive Officer ("CEO") and our Chief Financial Officer ("CFO"). Based on this
evaluation, our management, including our CFO and CEO, concluded that our
disclosure controls and procedures were effective, and that there have been no
significant changes in our internal controls or in other factors that could
significantly affect internal controls subsequent to the evaluation.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEDINGS
None
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
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
15
------ -----------
31.1**Certification of Chief Executive Officer of Skreem Entertainment
Corporation Required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities
Exchange Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
31.2**Certification of Chief Financial Officer of Skreem Entertainment
Corporation Required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities
Exchange Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
32.1**Certification of Chief Executive Officer of Skreem Entertainment
Corporation Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
and Section 1350 Of 18 U.S.C. 63
32.2**Certification of Chief Financial Officer of Skreem Entertainment
Corporation Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
and Section 1350 Of 18 U.S.C. 63
* Previously filed
** To be filed
16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
SKREEM ENTERTAINMENT CORPORATION
Date: November 14, 2005 By: /s/ Charles Camorata
----------------------------
Charles Camorata
Principal Executive Officer
Date: November 14, 2005 By: /s/ Karen Pollino
----------------------------
Karen Pollino
Chief Financial Officer
17
Exhibit31.1
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Charles Camorata, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Skreem
Entertainment Corporation
2. Based on my knowledge, this quarterly 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 quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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
quarterly 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 we 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 quarterly 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
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly 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 function):
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
quarterly report whether or not there were significant changes in internal
controls or in other factors 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.
Dated: November 14, 2005
By: /s/ Charles Camorata
Charles Camorata
Chief Executive Officer
18
Exhibit31.2
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Karen Pollino, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Skreem
Entertainment Corporation
2. Based on my knowledge, this quarterly 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 quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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
quarterly 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 we 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 quarterly 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
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly 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 function):
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
quarterly report whether or not there were significant changes in internal
controls or in other factors 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.
Dated: November 14, 2005
By: /s/ Karen Pollino
Karen Pollino
Chief Financial Officer
19
Exhibit 32.1
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
--------------------------------------------------------------------------------
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS
ADOPTED PURSUANT TO SECTION 906 OF TEHE SARBANES-OXLEY ACT OF 2002
I, Charles Camorata, certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly
Report of Skreem Entertainment Corporation on Form 10-QSB for the quarterly
period ended June 30, 2005 fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 and that information contained
in such Form 10-QSB fairly presents in all material respects the financial
condition and results of operations of Skreem Entertainment Corporation
By: /s/ Charles Camorata
Name: Charles Camorata
Title: Chief Executive Officer
November 14, 2005
20
Exhibit 32.2
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
--------------------------------------------------------------------------------
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS
ADOPTED PURSUANT TO SECTION 906 OF TEHE SARBANES-OXLEY ACT OF 2002
I, Karen Pollino, certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly
Report of Skreem Entertainment Corporation on Form 10-QSB for the quarterly
period ended June 30, 2005 fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 and that information contained
in such Form 10-QSB fairly presents in all material respects the financial
condition and results of operations of Skreem Entertainment Corporation
----------------------------
By: /s/ Karen Pollino
Name: Karen Pollino
Title: Chief Financial Officer
November 14, 2005
21