UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
[ x ]
QUARTERLY REPORT UNDER SECTION
13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
for the
quarterly period ended
June 30,
2008
[ ]
TRANSITION REPORT UNDER SECTION 13 OR
15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
for the
transition period from _____to _____
Commission
File Number:
000-52753
PLAYBOX (US)
INC.
(Name of
issuer as specified in its charter)
NEVADA
|
N/A
|
(State
or other jurisdiction of incorporation or
|
(IRS
Employer Identification No.)
|
organization)
|
|
Suite 3.19, 130 Shaftesbury
Avenue, London, England WID 5EU
(Address
of principal executive offices)
+44 (0) 20 7031
1187
Issuer's
telephone number
Indicate
by check mark whether the registrant (1) 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.
Yes
[ x ] No[ ]
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer,”
“non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
Large
accelerated filer
o
|
Accelerated
filer
o
|
Non-accelerated
filer
o
|
Smaller
reporting company
x
|
(Do
not check if a smaller reporting company)
|
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
Yes
[ x ] No[ ]
Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date.
29,663,293
shares of common stock as of August 15, 2008.
FORWARD-LOOKING
STATEMENTS
This
quarterly report on Form 10-Q contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. These forward-looking
statements involve risks and uncertainties, including statements regarding our
capital needs, business plans and expectations. Such forward-looking statements
involve risks and uncertainties regarding our ability to achieve commercial
levels of sales of our PLAYBOX online music application, our ability to
successfully market our PLAYBOX online music application, our ability to
continue development and upgrades to the PLAYBOX online music application,
availability of funds, government regulations, common share prices, operating
costs, capital costs and other factors. Forward-looking statements are made,
without limitation, in relation to our operating plans, our liquidity and
financial condition, availability of funds, operating costs and the market in
which we compete. Any statements contained herein that are not statements of
historical facts may be deemed to be forward-looking statements. In some cases,
you can identify forward-looking statements by terminology such as “may”,
“will”, “should”, “expect”, “plan”, “intend”, “anticipate”, “believe”,
“estimate”, “predict”, “potential” or “continue”, the negative of such terms or
other comparable terminology. Actual events or results may differ materially. In
evaluating these statements, you should consider various factors, including the
risks outlined below, and, from time to time, in other reports we file with the
SEC. These factors may cause our actual results to differ materially from any
forward-looking statement. We disclaim any obligation to publicly update these
statements, or disclose any difference between our actual results and those
reflected in these statements. The information constitutes forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Given these uncertainties, readers are cautioned not to place undue
reliance on such forward-looking statements.
|
PLAYBOX (US)
INC.
|
|
Quarterly Report On Form
10-Q
|
For The Quarterly Period
Ended
|
June 30,
2008
|
|
|
PART I – FINANCIAL INFORMATION
|
Page
|
|
Financial Statements
|
4
|
|
Management’s Discussion and Analysis
|
13
|
|
Quantitative
and Qualitative Disclosures About Market Risk
|
20
|
Item 4.
|
Controls and Procedures
|
20
|
PART II – OTHER INFORMATION
|
|
|
Legal Proceedings
|
21
|
Item 1a.
|
Risk
Factors
|
21
|
|
Unregistered Sales of Equity Securities and Use of
Proceeds
|
21
|
|
Defaults Upon Senior Securities
|
21
|
|
Submission of Matters to a Vote of Securities
Holders
|
21
|
|
Other Information
|
21
|
|
Exhibits
|
21
|
PART
I – FINANCIAL INFORMATION
The
following unaudited consolidated financial statements of Playbox (US) Inc. (the
“Company”) are included in this Quarterly Report on Form 10-Q:
|
Page
|
|
|
Consolidated Balance Sheets as at June 30, 2008
(unaudited) and September 30, 2007 (audited)
|
F-2
|
|
|
Consolidated Statements of Operations for the
three and nine months ended June 30, 2008 and 2007 and for the period from
incorporation (August 21, 2003) to June 30, 2008
|
F-3
|
|
|
Consolidated Statements of Cash Flows for the
three and nine months ended June 30, 2008 and 2007 and for the period from
incorporation (August 21, 2003) to June 30, 2008
|
F-4
|
|
|
Notes to Consolidated Financial Statements
|
F-5
|
Playbox
(US) Inc.
|
|
(A
Development Stage Company)
|
|
Consolidated
Balance Sheets
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
As
of
|
|
|
As
of
|
|
|
|
June
30, 2008
|
|
|
September
30, 2007
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
Cash
|
|
$
|
13,643
|
|
|
$
|
5,909
|
|
Accounts
receivable
|
|
|
1,391
|
|
|
|
322
|
|
Total
Current Assets
|
|
$
|
15,033
|
|
|
$
|
6,231
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
98,374
|
|
|
$
|
100,207
|
|
Accrued
liabilities
|
|
|
3,041
|
|
|
|
35,646
|
|
Due
to related parties
|
|
|
325,631
|
|
|
|
201,231
|
|
Total
Current Liabilities
|
|
|
427,045
|
|
|
|
337,084
|
|
|
|
|
|
|
|
|
|
|
Long
Term Liabilities
|
|
|
|
|
|
|
|
|
Loan
payable
|
|
|
0
|
|
|
|
18,100
|
|
Total
Long Term Liabilities
|
|
|
0
|
|
|
|
18,100
|
|
|
|
|
|
|
|
|
|
|
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: 29,663,293 (June 30,
2008)
|
|
|
29,663
|
|
|
|
28,845
|
|
28,845,139 (September 30, 2007)
|
|
|
|
|
|
|
|
|
Obligation
to issue shares
|
|
|
2,000
|
|
|
|
-
|
|
Additional
paid-in capital
|
|
|
3,105,212
|
|
|
|
2,906,055
|
|
Accumulated
Comprehensive Loss
|
|
|
(11,944
|
)
|
|
|
(12,168
|
)
|
Deficit
- Accumulated during the development stage
|
|
|
(3,536,943
|
)
|
|
|
(3,271,685
|
)
|
|
|
|
(412,012
|
)
|
|
|
(348,953
|
)
|
|
|
$
|
15,033
|
|
|
$
|
6,231
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these consolidated financials
statements.
|
|
Playbox
(US) Inc.
|
|
(A
Development Stage Company)
|
|
Statements
of Operations
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative
|
|
|
From
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporation
|
|
|
|
For
the Three
|
|
|
For
the Three
|
|
|
For
the Nine
|
|
|
For
the Nine
|
|
|
August
21, 2003
|
|
|
|
Months
Ended
|
|
|
Months
Ended
|
|
|
Months
Ended
|
|
|
Months
Ended
|
|
|
through
|
|
|
|
June
30, 2008
|
|
|
June
30, 2007
|
|
|
June
30, 2008
|
|
|
June
30, 2007
|
|
|
June
30, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$
|
-
|
|
|
$
|
149
|
|
|
$
|
-
|
|
|
$
|
439
|
|
|
$
|
1,364
|
|
Cost
of Sales
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
777
|
|
Gross
Margin
|
|
|
0
|
|
|
|
149
|
|
|
|
0
|
|
|
|
439
|
|
|
|
587
|
|
General
and Administrative Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounting
and auditing
|
|
|
8,485
|
|
|
|
16,217
|
|
|
|
40,571
|
|
|
|
56,267
|
|
|
|
264,807
|
|
Bank
charges
|
|
|
56
|
|
|
|
51
|
|
|
|
798
|
|
|
|
496
|
|
|
|
2,030
|
|
Consulting
and technical support
(Note
3)
|
|
|
3,973
|
|
|
|
30,059
|
|
|
|
115,783
|
|
|
|
88,884
|
|
|
|
263,183
|
|
Depreciation
|
|
|
-
|
|
|
|
172
|
|
|
|
-
|
|
|
|
552
|
|
|
|
1,887
|
|
Development
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
29,152
|
|
Filing
fees
|
|
|
1,449
|
|
|
|
57
|
|
|
|
2,969
|
|
|
|
2,532
|
|
|
|
8,226
|
|
Intellectual
property
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,500,000
|
|
Investor
relations
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
18,000
|
|
|
|
18,000
|
|
Legal
|
|
|
5,272
|
|
|
|
6,154
|
|
|
|
30,462
|
|
|
|
24,093
|
|
|
|
120,463
|
|
Marketing
and public relations
|
|
|
7,513
|
|
|
|
|
|
|
|
7,513
|
|
|
|
-
|
|
|
|
38,838
|
|
Office
and miscellaneous
|
|
|
3581
|
|
|
|
530
|
|
|
|
4,275
|
|
|
|
4,190
|
|
|
|
18,265
|
|
Rent
|
|
|
2,977
|
|
|
|
2,978
|
|
|
|
9,013
|
|
|
|
8,783
|
|
|
|
47,263
|
|
Salaries
and benefits
|
|
|
24,702
|
|
|
|
99
|
|
|
|
54,042
|
|
|
|
11,645
|
|
|
|
211,311
|
|
Transfer
agent fees
|
|
|
1,920
|
|
|
|
50
|
|
|
|
2,050
|
|
|
|
135
|
|
|
|
4,090
|
|
Travel
and entertainment
|
|
|
474
|
|
|
|
9
|
|
|
|
474
|
|
|
|
865
|
|
|
|
4,038
|
|
|
|
|
60,402
|
|
|
|
56,376
|
|
|
|
267,951
|
|
|
|
216,442
|
|
|
|
3,531,554
|
|
|
|
|
(60,402
|
)
|
|
|
(56,227
|
)
|
|
|
(267,951
|
)
|
|
|
(216,003
|
)
|
|
|
(3,530,967
|
)
|
Loss
from Operations
|
Other
Income (Expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
exchange (loss) gain
|
|
|
(334
|
)
|
|
|
(7,138
|
)
|
|
|
2,585
|
|
|
|
(6,558
|
)
|
|
|
(6,817
|
)
|
Interest
income (expense)
|
|
|
108
|
|
|
|
13
|
|
|
|
108
|
|
|
|
21
|
|
|
|
842
|
|
Net
Loss
|
|
$
|
(60,627
|
)
|
|
$
|
(63,352
|
)
|
|
$
|
(265,258
|
)
|
|
$
|
(222,540
|
)
|
|
$
|
(3,536,942
|
)
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
|
|
|
|
Loss
per Share – Basic and Diluted
|
|
|
|
29,284,483
|
|
|
|
28,225,139
|
|
|
|
28,991,053
|
|
|
|
28,561,476
|
|
|
|
|
|
Weighted
Average Shares Outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
|
(60,627
|
)
|
|
|
(63,352
|
)
|
|
|
(265,258
|
)
|
|
|
(222,540
|
)
|
|
|
(3,536,942
|
)
|
Foreign
currency translation adjustment
|
|
|
(1,689
|
)
|
|
|
(1,084
|
)
|
|
|
224
|
|
|
|
4,875
|
|
|
|
(11,943
|
)
|
|
|
|
(62,316
|
)
|
|
|
(64,436
|
)
|
|
|
(265,034
|
)
|
|
|
(217,665
|
)
|
|
|
(3,548,885
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
|
|
Playbox
(US) Inc.
|
|
(A
Development Stage Company)
|
|
Statements
of Cash Flow
|
|
(Unaudited)
|
|
|
|
For
the Nine Months Ending June 30,2008
|
|
|
For
the Nine Months Ending June 30,2007
|
|
|
Cumulative
from Incorporation August 21, 2003 to June 30, 2008
|
|
Operating
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
$
|
(265,258
|
)
|
|
$
|
(222,540
|
)
|
|
$
|
(3,536,942
|
)
|
Items
not involving cash:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
-
|
|
|
|
552
|
|
|
|
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
|
|
|
(1,069
|
)
|
|
|
620
|
|
|
|
(1,391
|
)
|
Accounts
payable
|
|
|
(1,833
|
)
|
|
|
27,258
|
|
|
|
45,798
|
|
Accrued
liabilities
|
|
|
(32,605
|
)
|
|
|
(16,806
|
)
|
|
|
(5,821
|
)
|
Net
cash flows used in operations
|
|
|
(250,765
|
)
|
|
|
(210,916
|
)
|
|
|
(940,384
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
|
|
-
|
|
|
|
-
|
|
|
|
32,170
|
|
Amounts
due to related parties
|
|
|
124,400
|
|
|
|
101,145
|
|
|
|
325,631
|
|
Loan
from related party
|
|
|
-
|
|
|
|
-
|
|
|
|
159,064
|
|
Loan
payable
|
|
|
(18,100
|
)
|
|
|
14,100
|
|
|
|
-
|
|
Convertible
promissory note issuance
|
|
|
20,000
|
|
|
|
-
|
|
|
|
20,000
|
|
Share
issuances for cash
|
|
|
131,975
|
|
|
|
80,000
|
|
|
|
300,368
|
|
Net
cash flows from financing activities
|
|
|
258,275
|
|
|
|
195,245
|
|
|
|
837,233
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect
of exchange rate changes
|
|
|
224
|
|
|
|
(4,875
|
)
|
|
|
(11,943
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in Cash
|
|
|
7,734
|
|
|
|
(20,546
|
)
|
|
|
13,643
|
|
Cash
- Beginning
|
|
|
5,909
|
|
|
|
26,433
|
|
|
|
-
|
|
Cash
- Ending
|
|
$
|
13,643
|
|
|
$
|
5,887
|
|
|
$
|
13,643
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Cash Flow Information
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
paid for:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
Taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Interest
Paid
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
|
|
Playbox
(US) Inc.
|
(Formerly
Boyd Holdings Inc.)
|
(A
Development Stage Company)
|
Notes
to Consolidated Financial Statements
|
June
30, 2008
|
US
Funds
|
|
1.
Basis of Presentation
Organization
Playbox
(US) Inc. (the “Company” or "Boyd") was incorporated on April 1, 2005 under the
laws of the State of Nevada, under the name of Boyd Holdings Inc. On April 12,
2006, the Company changed its name to Playbox (US) Inc.
By letter
of intent dated April 18, 2005 and a Share Exchange Agreement ("Agreement")
dated May 23, 2005 and as amended June 30, 2005 with PlayBOX MEDIA LIMITED
("PlayBOX"), a United Kingdom corporation, wherein Boyd agreed to issue to the
shareholders of Playbox 12,000,000 Boyd shares in exchange for the 2,085,000
shares that constituted all the issued and outstanding shares of Playbox. On
March 24, 2006, Playbox completed the reverse acquisition (“RTO”) under the
Agreement with Boyd. Immediately before the date of the RTO, Boyd had
100,000,000 common shares authorized and 5,705,139 shares of common stock issued
and outstanding. Pursuant to the RTO, all of the 2,085,000 issued and
outstanding shares of common stock of Playbox were exchanged for 12,000,000 Boyd
shares on an approximate 5.755 to 1 basis.
PlayBOX
was incorporated on August 21, 2003 and is a technology and marketing company,
headquartered in London, England. The accompanying financial statements are the
historical financial statements of PlayBOX.
The major
asset of Playbox is the worldwide license (the “License”) to exploit software
that provides an integrated music interface and music collection manager running
on Windows, Linux and Macintosh operating systems. This software is currently
being marketed to both the end-user music listener and to record industry
companies to enable such companies to embed this software into their websites in
order to provide seamless access to on-line music for sale. The software has
also been developed to enable the end-user to control their music collection
being managed by the Playbox software wirelessly from commonly used devices such
as the listeners’ music system or cell phone and to be able to synchronize their
music cross-platform with portable music players (iPod, MP3 player, or
PDA).
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-QSB of Regulation S-B. 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 nine
months ended June 30, 2008 are not necessarily indicative of the results that
may be expected for the year ending September 30, 2008
2.
|
Significant
Accounting Policies
|
|
The
following is a summary of significant accounting policies used in the
preparation of these financial statements.
|
|
a)
|
Basis
of Consolidation
|
|
|
These
consolidated financial statements include the accounts of PlayBOX MEDIA
LIMITED since its incorporation on August 21, 2003 and Playbox (US) Inc.
since the reverse acquisition on March 24, 2006. All intercompany balances
and transactions have been eliminated.
|
|
b)
|
Use
of Estimates
|
|
|
The
preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make certain estimates and assumptions that affect the
reported amounts and timing of revenues and expenses, the reported amounts
and classification of assets and liabilities, and disclosure of contingent
assets and liabilities. These estimates and assumptions are based on the
Company’s historical results as well as management’s future expectations.
The Company’s actual results could vary materially from management’s
estimates and assumptions.
|
|
c)
|
Development
Stage Company
|
|
|
The
Company is a development stage company as defined by SFAS No. 7. The
Company is devoting substantially all of its present efforts to establish
a new business. All losses accumulated since inception have been
considered as part of the Company’s development stage
activities.
|
|
d)
|
Cash
and Cash Equivalents
|
|
|
Cash
equivalents consist of highly liquid instruments purchased with an initial
maturity of three months or less.
|
|
e)
|
Revenue
Recognition
|
|
|
Revenues
are recognized when all of the following criteria have been met under SAB
No. 104, “
Revenue
Recognition in Financial Statements
”: persuasive evidence of an
agreement exists; delivery has occurred or services have been rendered;
the fee is fixed or determinable; and collectibility is reasonably
assured.
|
|
|
Revenue
arises from the following sources: creation of web-based music interfaces;
provision of hosting and bandwidth services; and revenue share
services.
|
|
|
Revenues
from the creation of web-based music interfaces come from set-up fees
based on the number of tracks to be uploaded and the number of hours of
development time to complete the interface and are recognized when all of
the following SAB No. 104 criteria are met: a web-based interface
development agreement is signed with an estimate of the total cost based
on agreed upon specifications. Revenue from the development of web-based
interfaces is recognized in accordance with the completed performance
method. Under this method, revenue is recognized at the completion of the
web-based interface as the service transaction taken as a whole can be
deemed to have taken place on completion of the development.
Collectability is reasonably assured as the Company receives the agreed
set-up fee prior to allowing access to the web- based
interface.
|
|
|
Revenues
from the provision of hosting and bandwidth services come from a one time
hosting set-up fee and monthly fees based on disk space and bandwidth to
be provided and are recognized when all of the following SAB No. 104
criteria are met: a website hosting agreement is signed with an initial
term of six months and from month to month thereafter until terminated by
either party. Each agreement has a hosting price structure where prices
can be determined.
|
|
|
Revenue
from the one time set-up fee is deferred and recognized over the initial
term of six months and revenue received from monthly fees is recognized at
the end of the month, when hosting services, server bandwidth and customer
support was made available to the client for the month. Collectability is
reasonably assured as the Company receives a one time set-up fee prior to
the provision of the services. Monthly fees are received in advance of
each month, which is recorded as deferred revenue, and are recognized when
the monthly service is rendered.
|
|
|
Revenues
from the revenue share services element come from a set revenue share
percentage of music download purchases, as set out in each customer’s
agreement and are recognized when all of the following SAB No. 104
criteria are met: a distributor agreement is signed with initial and
renewal terms determined on a case-by-case basis. Revenue is recognized
when the minimum revenue share threshold of British Pounds Sterling
(“GBP”) 100, every payment period, is achieved. If the revenue share is
less than GBP 100, payments shall be carried over to the next due payment
date. Collectability is reasonably assured as the Company collects its
revenue share directly from the secure online payment system which it
utilizes prior to transferring net revenues to the
customer.
|
|
f)
|
Foreign
Currency Translations
|
|
|
The
Company’s functional currency is GBP. The Company’s reporting currency is
the U.S. dollar. All transactions initiated in other currencies are
re-measured into the functional currency as follows:
|
|
|
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 prevailing rate on the date of the
transaction.
|
|
|
Gains
and losses on re-measurement are included in determining net income for
the period
|
|
|
Translation
of balances from the functional currency into the reporting currency is
conducted as follows:
|
|
|
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 prevailing on the date of the
transaction.
|
|
|
|
Translation
adjustments resulting from translation of balances from functional to
reporting currency are accumulated as a separate component of
shareholders’ equity as a component of comprehensive income or loss. Upon
sale or liquidation of the net investment in the foreign entity the amount
deferred will be recognized in income.
|
|
g)
|
Income
Taxes
|
|
|
Income
taxes are accounted for using the asset and liability method. Deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying
amounts of assets and liabilities and their respective tax bases and
operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period
that includes the enactment date. A valuation allowance is provided for
deferred tax assets when it is more likely than not that such assets will
not be recovered.
|
|
h)
|
Fair
Value of Financial Instruments
|
|
|
The
Company’s financial instruments consist of cash, accounts receivable,
accounts payable, accrued liabilities and amounts due to related parties.
Unless otherwise noted, it is management’s opinion that this Company is
not exposed to significant interest or credit risks arising from these
financial instruments. The fair value of these financial instruments
approximate their carrying values, unless otherwise
noted.
|
|
i)
|
Segment
Reporting
|
|
|
SFAS
No. 131, "
Disclosures
about Segments of an Enterprise and Related Information
,” changed
the way public companies report information about segments of their
business in their quarterly reports issued to stockholders. It also
requires entity-wide disclosures about the products and services an entity
provides, the material countries in which it holds assets and reports
revenues and its major customers. The Company currently operates in two
segments, Western Europe and United States.
|
|
j)
|
Stock-Based
Compensation
|
|
|
Effective
January 1, 2006, the Company adopted the provisions of Statement of
Financial Accounting Standards (“SFAS”) No. 123(R), “
Share-Based Payment
”,
which establishes accounting for equity instruments exchanged for employee
services. Under the provisions of SFAS 123(R), stock-based compensation
cost is measured at the grant date, based on the calculated fair value of
the award, and is recognized as an expense over the employees’ requisite
service period (generally the vesting period of the equity grant). Before
January 1, 2006, the Company accounted for stock-based compensation to
employees in accordance with Accounting Principles Board Opinion No. 25,
“Accounting for Stock Issued to Employees,” and complied with the
disclosure requirements of SFAS No. 123, “Accounting for Stock-Based
Compensation”.
|
|
|
The
Company adopted FAS 123(R) using the modified prospective method, which
requires the Company to record compensation expense over the vesting
period for all awards granted after the date of adoption, and for the
unvested portion of previously granted awards that remain outstanding at
the date of adoption. As the Company had no invested stock options
outstanding on the adoption date the financial statements for the periods
prior to January 1, 2006 have not been restated to reflect the fair value
method of expensing share-based compensation. Adoption of SFAS No. 123(R)
does not change the way the Company accounts for share-based payments to
non-employees, with guidance provided by SFAS 123 (as originally issued)
and Emerging Issues Task Force Issue No. 96-18, “
Accounting for Equity
Instruments That Are Issued to Other Than Employees for Acquiring, or in
Conjunction with Selling, Goods or Services
”.
|
|
k)
|
Comprehensive
Income
|
|
|
SFAS
No. 130,
"Reporting
Comprehensive Income,"
establishes standards for reporting and
display of comprehensive income and its components in a full set of
general-purpose financial statements.
|
|
l)
|
Loss
per Share
|
|
|
The
Company computes net loss per share in accordance with SFAS No. 128,
“
Earnings per
Share
”, which requires presentation of both basic and diluted loss
per share (“LPS”) on the face of the statement of operations. Basic LPS is
computed by dividing the net loss available to common shareholders by the
weighted average number of outstanding common shares during the period.
Diluted LPS gives effect to all potentially dilutive common shares
outstanding including convertible debt, stock options and share purchase
warrants, using the treasury stock method. The computation of diluted LPS
does not assume conversion, exercise or contingent exercise of securities
that would have an anti-dilutive effect on LPS. The diluted LPS equals the
basic LPS since the potentially dilutive securities are
anti-dilutive.
|
|
m)
|
Recently
Adopted Accounting Standards
|
|
|
|
|
|
In
December 2007, the FASB issued SFAS No. 160, “
Non-controlling Interests in
Consolidated Financial Statements
”. This Statement amends ARB 51 to
establish accounting and reporting standards for the non-controlling
(minority) interest in a subsidiary and for the deconsolidation of a
subsidiary. It clarifies that a non-controlling interest in a subsidiary
is an ownership interest in the consolidated entity that should be
reported as equity in the consolidated financial statements. The Company
has not yet determined the impact, if any, that SFAS No. 160 will have on
its consolidated financial statements. SFAS No. 160 is effective for the
Company’s fiscal year beginning October 1, 2009
.
|
|
|
In
December 2007, the FASB issued SFAS 141R,
Business Combinations
.
SFAS 141R replaces SFAS 141. The statement retains the purchase method of
accounting for acquisitions, but requires a number of changes, including
changes in the way assets and liabilities are recognized in the purchase
accounting. It changes the recognition of assets acquired and liabilities
assumed arising from contingencies, requires the capitalization of
in-process research and development at fair value, and requires the
expensing of acquisition-related costs as incurred. The statement will
apply prospectively to business combinations occurring in the Comapnys
fiscal year beginning October 1, 2009. We are evaluating the impact
adopting SFAS 141R will have on our financial
statements.
|
3.
|
Intellectual
Property
|
|
On
March 31, 2006 the Company acquired from its majority stockholder, the
PlayBOX Technology by issuing 10,000,000 common shares. The PlayBOX
Technology is an integrated music interface and music collection manager
running on Windows, Linux and Macintosh operating systems. The acquisition
is a related party transaction. The value assigned was $2,500,000, being
equal to the most recent share transaction of the Company of $0.25 per
share. This amount was written-off as the Company determined the PlayBOX
Technology was impaired in accordance with paragraph 34 of SOP 98-1 and
FASB 144, “
Accounting
for the Impairment or Disposal of Long-Lived
Assets
.”
|
4.
|
Related
Party Balances and Transactions
|
|
a)
|
The
amounts due and/or accrued to related parties of $209,060 for the nine
months ended June 30, 2008 are non-interest bearing, unsecured and due on
demand. Included in due to related parties are amounts owing to a
corporate shareholder, two separate companies with directors in common
with a corporate shareholder, and to a company with an officer in common
with a corporate shareholder.
|
|
b)
|
During
the nine months ended June 30, 2008, the Company has accrued $9,013 for
rent to a company with directors in common with a corporate shareholder of
the Company.
|
|
c)
|
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 June 30, 2008, $54,042 (GBP27,083)
has been accrued.
|
|
The
above transactions, occurring in the normal course of operations, are
measured at the exchange amount, which is the amount of consideration
established, and agreed to by the related parties.
|
5.
|
Capital
Stock
|
|
The
Company’s capitalization is 100,000,000 common shares with a par value of
$0.001 per share and 5,000,000 preferred shares with a par value of
$0.001.
|
|
a)
|
On
April 21, 2008, the Company received $100,000 (GBP 49,192), from an
unrelated party, for 2,000,000 common shares at $0.05 per share. As of
July 24, 2008, the shares had not been issued.
|
|
b)
|
On
May 8, 2008, the Company issued 538,154 common shares at $0.06 per share
in full settlement of a $31,975 loan and accrued interest with
Karada Ltd., an unrelated third party.
|
|
c)
|
On
May 8, 2008, the Company issued 80,000 common shares at $0.25 per share in
full settlement of the $20,000 convertible debenture with The Capai
Trust.
|
|
d)
|
On
May 29, 2006, the Company issued 200,000 common shares in fulfillment of a
Consulting agreement dated November 5, 2007 with Westport Strategic
Partners Inc.
|
6.
|
Going
Concern
|
|
The
accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern, which contemplates,
among other things, the realization of assets and satisfaction of
liabilities in the normal course of business. As at June 30, 2008, the
Company has an accumulated deficit of $3,536,943 and has incurred an
accumulated operating cash flow deficit of $940,384 since incorporation.
The Company intends to continue funding operations through equity
financing arrangements, which may be insufficient to fund its capital
expenditures, working capital and other cash requirements for the next
fiscal year.
Thereafter,
the Company will be required to seek additional funds, either through
equity financing, to finance its long-term operations. The successful
outcome of future activities cannot be determined at this time, and there
is no assurance that, if achieved, the Company will have sufficient funds
to execute its intended business plan or generate positive operating
results. In response to these conditions, management intends to raise
additional funds through future private placement offerings.
These
factors, among others, raise substantial doubt about the Company's ability
to continue as a going concern. The accompanying consolidated financial
statements do not include any adjustments that might result from the
outcome of this uncertainty.
|
7.
|
Subsequent
Event
|
|
On
July 2, 2008, the “Company” received notice of termination of the Share
Purchase Agreement entered into by and between the Company and Laurence
Adams and Jacqueline for the proposed acquisition of U.K based Delta Music
Limited, a United Kingdom company. The terms of the Share Purchase
Agreement allowed either party to terminate if the acquisition
contemplated thereunder had not occurred prior to June 30,
2008.
|
|
Management’s Discussion and
Analysis
|
The
following discussion of our financial condition, changes in financial condition
and results of operations for the nine month period ended June 30, 2008 should
be read in conjunction with our unaudited consolidated interim financial
statements and related notes for the nine month period ended June 30,
2008.
Overview
of Our Business
PlayBOX
(US) Inc. (“we” or the “Company”) was incorporated on April 1, 2005 as Boyd
Holdings Inc. under the laws of the State of Nevada. We operate through our
wholly-owned subsidiary, PlayBOX Media Limited (“PlayBOX UK”). We changed our
name to “PlayBOX (US) Inc.” effective April 12, 2006 to reflect our acquisition
of PlayBOX UK and its business. PlayBOX UK was incorporated on August 21, 2003
under the laws of the United Kingdom.
We are
the owner of an online music hosting and downloading application targeted at
unsigned music acts and small- to medium-sized record labels enabling them to
establish their own music downloading or hosting services. The application is
offered with a number of supplemental services such as hosting, streaming,
e-commerce and digital rights management (DRM) using the latest MP3 and Windows
Multimedia technology. We pool these services together to offer our clients a
cost-effective and professional platform on which to sell and promote their
music products.
Our
PlayBOX online music application consists of four dynamic interfaces, namely
White Label, Aggregator, Bespoke and Jukebox that provide an interface between
artists and content owners and their listeners via the Internet. The White Label
interface provides artists a way to offer their music for sale to listeners via
the Internet by enabling them to download individual songs either directly from
our website or from the artist’s own website. The Aggregator interface allows
small- to medium-sized record labels with a music catalogue of at least 50
tracks who wish to sell their tracks via an online downloading store with
e-commerce, tracking, reporting and billing functions built in. The interface
can be operated as a stand-alone website, or can be integrated into the client’s
existing website. For our Bespoke interface, we hire independent web designers
to create specialized interfaces for particular clients with unique needs and
requirements quickly and cheaply. Finally, our PlayBOX Jukebox interface
provides music listeners with a unique way to listen to their music and to
manage their music collections visually on their personal computer. The PlayBOX
Jukebox also lets users submit their personal ratings of the music they have
stored on the Jukebox, and the Jukebox can even recommend other music that will
match the user’s taste.
We have
completed the development of the PlayBOX online music application. However, we
have only commenced the process of commercializing our technology and we have
had very minimal sales to date. While we have achieved initial sales, these
sales cannot be viewed as significant in relation to our operating expenses.
Furthermore, we are presently not earning any revenues. Accordingly, we are in
the early development stage of our business. Further, we will require additional
financing in order to complete commercialization of our PlayBOX online music
application. As a result of our limited financing, our operations during the
past year have been scaled back to reflect our limited financial resources.
Accordingly, we have not advanced our business to the extent that we had planned
during the past year. We have recently brought in a director of business
strategy, Mr. Harry Maloney, to assist us in securing additional clients and
advancing our business operations.
We have
earned only minimal revenues to date. Our plan of operations, as described
below, is to generate revenues from the sales of one or more of the interfaces
comprising our online music application. Our ability to pursue our plan of
operations has been limited during the past year and will be limited during the
coming year to the extent that we have not had and will not have sufficient
funds with which to pursue our plan of operations.
Our
principal executive office is located at Suite 3.19, 130 Shaftesbury Avenue,
London, England, W1D 5EU. Our telephone number is +44(0)20 7031 1187 and our fax
number is +44(0)20 7031 1199.
Prospective
Acquisition of Delta Leisure Group, Plc.
On July
2, 2008, Playbox (US), Inc. (the “Company”) received notice of termination of
that certain Share Purchase Agreement entered into by and between the Company
and Laurence Adams and Jacqueline Adams (collectively “Adams”), as reported on
Form 8-K and filed with the Securities and Exchange Commission on April 3, 2008.
The terms of the Share Purchase Agreement allowed either party to terminate if
the acquisition contemplated thereunder had not occurred prior to June 30,
2008.
Plan
Of Operations
Our plan
of operations for the next twelve months is to continue to seek out acquisition
partners and to continue to commercialize and generate revenues from
our PlayBOX online music application, subject to our achieving additional
financing. We plan to complete the following objectives within the time periods
and budgets specified with respect to our Playbox business, subject to our
achieving the necessary financing:
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.
|
|
|
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.
|
These
planned expenditures with respect to our Playbox business total approximately
$111,000 over the next twelve months.
In
addition, we anticipate incurring the following general and administrative
expenses totaling approximately $64,000:
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 $40,000 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.
|
Further
more, we expect to incur the following administrative costs of approximately
$200,000 to:
1.
|
expand
our executive management team in order to add a chief financial
officer;
|
|
|
2.
|
move
our principal office to a dedicated serviced office from our current
shared office premises; and
|
|
|
3.
|
bring
our management compensation packages up to date and regularize payments
under these compensation
arrangements.
|
We may
also seek to identify additional possible acquisitions in the music and
technology industry. Acquisitions would be directed at bolstering our present
technology offering and content owners to give us a larger repertoire of music
to distribute through our digital channel. In any event, our ability to complete
any prospective acquisitions will be subject to our achieving the necessary
financing to complete such acquisitions. There is no assurance that we will
identify any possible acquisition targets who would agree to be acquired by us
or that we will be able to raise the necessary funds to complete any
acquisitions if we are able to enter into acquisition agreements. The amounts
budgeted in our plan of operations do not include any amounts for the
identification of possible acquisitions, the negotiation of any letters of
intent or acquisition agreements or due diligence or other associated
expenses.
We had
cash of $13,643 and working capital deficit of $412,012 as at June 30, 2008.
Based on our plan of operations outlined above, we anticipate that our planned
expenditures over the next twelve months to be in the amount of approximately
$375,000 which will exceed our cash reserves and working capital. As a result,
our cash and working capital is not sufficient to enable us to undertake our
plan of operations over the next twelve months without our obtaining additional
financing. We anticipate based on our current cash and working capital deficit
and our planned expenses that we will not be able to fund our operations beyond
the next few months without additional financing. We anticipate that we will
require financing in the amount of approximately $800,000 in order to carry out
our plan of operations for the next twelve months.
We
anticipate continuing to rely on equity sales of our common shares in order to
continue to fund our business operations. Issuances of additional shares will
result in dilution to our existing stockholders. We believe that debt financing
will not be an alternative for funding of our planned activities as we do not
have tangible assets to secure any debt financing.
We have
not entered into any financing agreements and we cannot provide investors with
any assurance that any financing we obtain will be sufficient to fund our plan
of operations. At this time, all potential investors and all discussions are
taking place outside of the United States. In the absence of such financing, we
may not be able to continue our plan of operations beyond the next few months
and our business plan will fail. If we do not continue to obtain additional
financing, we will be forced to abandon our plan of operations and our business
activities.
Presentation
of Financial Information
Effective
March 24, 2006, we acquired 100% of the issued and outstanding shares of PlayBOX
UK by issuing 12,000,000 shares of our common stock. Notwithstanding its legal
form, our acquisition of PlayBOX UK has been accounted for as a reverse
acquisition, since the acquisition resulted in the former shareholders of
PlayBOX UK owning the majority of our issued and outstanding shares. Because
Boyd Holdings Inc. (now PlayBOX (US) Inc.) was a newly incorporated company with
nominal net non-monetary assets, the acquisition has been accounted for as an
issuance of stock by PlayBOX UK accompanied by a recapitalization. Under the
rules governing reverse acquisition accounting, the results of operations of
PlayBOX (US) Inc. are included in our consolidated financial statements
effective March 24, 2006. Our date of inception is the date of inception of
PlayBOX UK, being August 21, 2003, and our financial statements are presented
with reference to the date of inception of PlayBOX UK. Financial information
relating to periods prior to March 24, 2006 is that of PlayBOX UK.
CRITICAL
ACCOUNTING POLICIES
Development
Stage Company
We are a
development stage company as defined by Financial Accounting Standards No. 7. We
are presently devoting all of our present efforts to establishing a new
business. All losses accumulated since inception have been considered as part of
our development stage activities.
Revenue
Recognition
Revenues
are recognized when all of the following criteria have been met under SAB No.
104, “
Revenue Recognition in
Financial Statements
”: persuasive evidence of an agreement exists;
delivery has occurred or services have been rendered; the fee is fixed or
determinable; and collectability is reasonably assured.
Revenue
arises from the following sources: creation of web-based music interfaces;
provision of hosting and bandwidth services; and revenue share
services.
Revenues
from the creation of web-based music interfaces come from set-up fees based on
the number of tracks to be uploaded and the number of hours of development time
to complete the interface and are recognized when all of the following SAB No.
104 criteria are met: a web-based interface development agreement is signed with
an estimate of the total cost based on agreed upon specifications. Revenue from
the development of web-based interfaces is recognized in accordance with the
completed performance method. Under this method, revenue is recognized at the
completion of the web-based interface as the service transaction taken as a
whole can be deemed to have taken place on completion of the development.
Collectability is reasonably assured as the Company receives the agreed set-up
fee prior to allowing access to the web-based interface.
Revenues
from the provision of hosting and bandwidth services come from a one time
hosting set-up fee and monthly fees based on disk space and bandwidth to be
provided and are recognized when all of the following SAB No. 104 criteria are
met: a website hosting agreement is signed with an initial term of six months
and from month to month thereafter until terminated by either party. Each
agreement has a hosting price structure where prices can be
determined.
Revenue
from the one time set-up fee is deferred and recognized over the initial term of
six months and revenue received from monthly fees is recognized at the end of
the month, when hosting services, server bandwidth and customer support was made
available to the client for the month. Collectability is reasonably assured as
the Company receives a one time set-up fee prior to the provision of the
services. Monthly fees are received in advance of each month, which is recorded
as deferred revenue, and are recognized when the monthly service is
rendered.
Revenues
from the revenue share services element come from a set revenue share percentage
of music download purchases, as set out in each customer’s agreement and are
recognized when all of the following SAB No. 104 criteria are met: a distributor
agreement is signed with initial and renewal terms determined on a case-by-case
basis. Revenue is recognized when the minimum revenue share threshold of British
Pounds Sterling (“GBP”) 100, every payment period, is achieved. If the revenue
share is less than GBP 100, payments shall be carried over to the next due
payment date. Collectability is reasonably assured as the Company collects its
revenue share directly from the secure online payment system which it utilizes
prior to transferring net revenues to the customer.
Foreign
Currency Translations
Our
functional currency is pounds sterling (“£”). Our reporting currency is the U.S.
dollar. All transactions initiated in other currencies are re-measured into the
functional currency as follows:
|
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.
|
Gains and
losses on re-measurement are included in determining net income for the
period.
Translation
of balances from the functional currency into the reporting currency is
conducted as follows:
|
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.
|
Translation
adjustments resulting from translation of balances from functional to reporting
currency are accumulated as a separate component of shareholders’ equity as a
component of comprehensive income or loss. Upon sale or liquidation of the net
investment in the foreign entity the amount deferred will be recognized in
income.
Results
of Operations – Three and nine months ended June 30, 2008 and 2006
References
to the discussion below to fiscal 2008 are to our current fiscal year which will
end on September 30, 2008. References to fiscal 2007 and fiscal 2006 are to our
fiscal years ended September 30, 2007 and 2006, respectively.
Playbox
(US) Inc.
|
(A
Development Stage Company)
|
Statements
of Operations
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Cumulative
|
From
|
|
|
|
|
|
|
|
|
|
Incorporation
|
|
|
For
the Three
|
|
For
the Three
|
|
For
the Nine
|
|
For
the Nine
|
|
August
21, 2003
|
|
|
Months
Ended
|
|
Months
Ended
|
|
Months
Ended
|
|
Months
Ended
|
|
to
|
|
|
June
30, 2008
|
|
June
30, 2007
|
|
June
30, 2008
|
|
June
30, 2007
|
|
June
30, 2008
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
$
|
-
|
$
|
149
|
$
|
-
|
$
|
439
|
$
|
1,364
|
Cost
of Sales
|
|
-
|
|
-
|
|
-
|
|
-
|
|
777
|
Gross
Margin
|
|
0
|
|
149
|
|
0
|
|
439
|
|
587
|
General
and Administrative Expenses
|
|
|
|
|
|
|
|
|
|
|
Accounting
and auditing
|
|
8,485
|
|
16,217
|
|
40,571
|
|
56,267
|
|
264,807
|
Bank
charges
|
|
56
|
|
51
|
|
798
|
|
496
|
|
2,030
|
Consulting
and technical support
(Note
3)
|
|
3,973
|
|
30,059
|
|
115,783
|
|
88,884
|
|
263,183
|
Depreciation
|
|
-
|
|
172
|
|
-
|
|
552
|
|
1,887
|
Development
|
|
-
|
|
-
|
|
-
|
|
-
|
|
29,152
|
Filing
fees
|
|
1,449
|
|
57
|
|
2,969
|
|
2,532
|
|
8,226
|
Intellectual
property
|
|
-
|
|
-
|
|
-
|
|
-
|
|
2,500,000
|
Investor
relations
|
|
-
|
|
-
|
|
-
|
|
18,000
|
|
18,000
|
Legal
|
|
5,272
|
|
6,154
|
|
30,462
|
|
24,093
|
|
120,463
|
Marketing
and public relations
|
|
7,513
|
|
|
|
7,513
|
|
-
|
|
38,838
|
Office
and miscellaneous
|
|
3581
|
|
530
|
|
4,275
|
|
4,190
|
|
18,265
|
Rent
|
|
2,977
|
|
2,978
|
|
9,013
|
|
8,783
|
|
47,263
|
Salaries
and benefits
|
|
24,702
|
|
99
|
|
54,042
|
|
11,645
|
|
211,311
|
Transfer
agent fees
|
|
1,920
|
|
50
|
|
2,050
|
|
135
|
|
4,090
|
Travel
and entertainment
|
|
474
|
|
9
|
|
474
|
|
865
|
|
4,038
|
|
|
60,402
|
|
56,376
|
|
267,951
|
|
216,442
|
|
3,531,554
|
|
|
(60,402)
|
|
(56,227)
|
|
(267,951)
|
|
(216,003)
|
|
(3,530,967)
|
Loss
from Operations
|
Other
Income (Expense)
|
|
|
|
|
|
|
|
|
|
|
Foreign
exchange (loss) gain
|
|
(334)
|
|
(7,138)
|
|
2,585
|
|
(6,558)
|
|
(6,817)
|
Interest
income (expense)
|
|
108
|
|
13
|
|
108
|
|
21
|
|
842
|
Net
Loss
|
$
|
(60,627)
|
$
|
(63,352)
|
$
|
(265,258)
|
$
|
(222,540)
|
$
|
(3,536,942)
|
|
$
|
0.00
|
$
|
0.00
|
$
|
(0.01)
|
$
|
(0.01)
|
|
|
Loss
per Share – Basic and Diluted
|
|
|
29,284,483
|
|
28,225,139
|
|
28,991,053
|
|
28,561,476
|
|
|
Weighted
Average Shares Outstanding
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
Loss
|
|
|
|
|
|
Net
Loss
|
(60,627)
|
|
(63,352)
|
|
(265,258)
|
|
(222,540)
|
|
(3,536,942)
|
Foreign
currency translation adjustment
|
|
(1,689)
|
|
(1,084)
|
|
224
|
|
4,875
|
|
(11,943)
|
|
|
(62,316)
|
|
(64,436)
|
|
(265,034)
|
|
(217,665)
|
|
(3,548,885)
|
|
|
|
|
|
|
|
|
|
|
|
.
|
Revenue
We
achieved our initial sales from the PlayBOX online music application in fiscal
2005. We achieved further initial sales in fiscal 2006 and 2007. Our initial
sales were attributable to sales of web hosting services that we provide to The
Little Bazaar, which is our initial and only current paying customer. Our sales
continue to be insignificant in terms of our overall operating expenses. We did
not generate any sales during the first nine months of fiscal 2008 compared to
$146 generated during the first nine month period of fiscal 2007. Our sales have
been insignificant in terms of our overall operating expenses. There is no
assurance that we will raise the necessary financing to enable us to resume full
business operations achieve significant revenues.
We are
presently not earning any revenues and anticipate that we will not earn revenues
until such time as we are able to complete an acquisition, of which there is no
assurance.
Accounting
and Auditing
Accounting
and auditing expenses are attributable to the preparation and audit of our
financial statements.
Our
accounting and auditing expenses were $40,571 during the first nine months of
fiscal 2008 as compared to $56,267 during the first nine months of fiscal 2007.
Our accounting and auditing expenses were $8,485 during the third quarter of
fiscal 2008 as compared to $16,217 during the third quarter of fiscal 2007.
These fees are attributable mainly to auditing, accounting and regulatory
compliance expenses.
Consulting
and Technical Support
Our
consulting and technical support expenses were $115,783 during the first nine
months of fiscal 2008 as compared to $88,884 during the first nine months of
fiscal 2007. Our consulting and technical support expenses were $3,973 during
the third quarter of fiscal 2008 as compared to $30,059 during the third quarter
of fiscal 2007. Consulting expenses during the third quarter of fiscal 2008 were
attributable to our engaging consultants to assist us in connection with the
Delta Music acquisition transaction and in the process of raising funds to
enable us to complete this acquisition.
Legal
Our legal
expenses are attributable to legal fees paid to our legal counsel in connection
with our statutory obligations as a reporting company under the Exchange Act
including the preparations and filings of our quarterly and annual reports with
the SEC.
Legal
expenses were $30,462 during the first nine months of fiscal 2008 as compared to
$24,093 during the first nine months of fiscal 2007. Our legal expenses were
$5,272 during the third quarter of fiscal 2008 as compared to $6,154 during the
third quarter of fiscal 2007.
Rent
Rent
expense was attributable to amounts paid on account of our rent of shared office
premises in London, England. Our rent expense increased slightly in the first
half of fiscal 2008 as compared to the first half of fiscal 2007 as a result of
a decrease in the foreign exchange rate of the U.S. dollar in terms of the Great
Britain pound.
Salaries
and Wages
By
employment agreement dated August 15, 2003 and amended July 20, 2004, the
Company agreed to pay to the Managing Director $38,450 (GBP24,000) per annum
plus 234,785 shares every three months to a maximum of 1,408,720 common shares.
When the Company accepted a take-over offer, the balance of the 1,408,720 shares
were issued. During the nine months ended June 30, 2008, $Nil was paid to the
Managing Director in cash. The Managing Director waived his annual salary for
the nine months ended June 30, 2008.
Loss
from Operations and Net Loss
Our loss
from operations increased to $267,951 for the first nine months of fiscal 2008
as compared to $216,003 for the first nine months of fiscal 2007. Our loss from
operations increased to $60,402 for the third quarter of fiscal 2008 as compared
to a loss of $56,376 for the third quarter of fiscal 2007.
Liquidity
And Capital Resources
As at
June 30, 2008, we had cash of $13,643 and a working capital deficit of $412,012
and as at September 30, 2007, we had cash of $5,909 and a working capital
deficit of $330,853.
Plan
of Operations
We
estimate that our total expenditures over the next twelve months will be
approximately $375,000, as outlined above under the heading “Plan of
Operations”. We will not be able to complete an acquisition or undertake our
plan of operations over the next twelve months without our obtaining additional
financing. We presently require immediate financing in order that we have the
cash necessary for us to continue our operations. In view of our working capital
deficit, we anticipate that we will require additional financing in the
approximate amount of $800,000 in order to enable us to sustain our operations
for the next twelve months.
Cash
used in Operating Activities
We used
cash of $250,765 in operating activities during the first nine month period of
fiscal 2008 compared to $210,619 during the nine month period of fiscal 2007.
Since inception, we have used cash of $940,348 in operating activities. We have
applied cash generated from financing activities to fund cash used in operating
activities.
Cash
from Investing Activities
We did
not use any cash in investing activities during the first nine month period of
fiscal 2008 nor during the first nine month period of fiscal 2007.
Cash
from Financing Activities
We
generated cash of $258,275 from financing activities during the first nine month
period of fiscal 2008 compared to cash of $195,245 generated from financing
activities during the first nine month period of fiscal 2007.
Going
Concern
We have
not attained profitable operations and are dependent upon obtaining financing to
pursue any extensive business activities. For these reasons our auditors stated
in their report that they have substantial doubt we will be able to continue as
a going concern.
Future
Financings
We
anticipate continuing to rely on equity sales of our common shares in order to
continue to fund our business operations. Issuances of additional shares will
result in dilution to our existing shareholders.
We
believe that debt financing will not be an alternative for funding of our
planned activities because we do not have tangible assets to secure any debt
financing.
Off-Balance
Sheet Arrangements
We have
no significant off-balance sheet arrangements that have or are reasonably likely
to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditu
r
es or capital resources that is material to
stockholders.
Item 3.
|
Quantitative and Qualitative
Disclosures About Market
Risk
|
Item 4.
|
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 as of June 30, 2008, being
the date of our most recently completed quarter. This evaluation was carried out
under the supervision and with the participation of our Chief Executive Officer
and Chief Financial Officer, Mr. Robert Burden. Based upon that evaluation, our
Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures are effective to ensure that information
required to be disclosed by us in the reports that we file or submit under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified by the rules and forms of the SEC.
Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed in our reports filed or
submitted under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the SEC’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 our Chief Financial
Officer, to allow timely decisions regarding required disclosure.
During
the fiscal quarter ended June 30, 2008, there were no changes in our internal
control over financial reporting that have materially affected, or are
reasonably likely to affect, our internal control over financial reporting
during the quarter ended June 30, 2008.
The term
“internal control over financial reporting” is defined as a process designed by,
or under the supervision of, the registrant’s principal executive and principal
financial officers, or persons performing similar functions, and effected by the
registrant’s board of directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles and includes those policies and
procedures that:
(a)
|
Pertain
to the maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of the assets of the
registrant;
|
|
|
(b)
|
Provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the
registrant are being made only in accordance with authorizations of
management and directors of the registrant;
and
|
(c)
|
Provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the registrant’s assets
that could have a material effect on the financial
statements.
|
PART
II – OTHER INFORMATION
We
curre
n
tly are not a party to any material legal proceedings and
to our knowledge, no such proceedings are threatened or
contemplated.
Not re
q
uired as we are a “smaller reporting company”, within the meaning
of the Securities Exchange Act of 1934.
Item 2.
|
Unregistered Sales of Equity
Securities and Use of
Proceeds
|
We did
no
t complete any sales of securities without registration under the
Securities Act of 1933 during the three months ended June 30, 2008.
Item 3.
|
Defaults Upon Senior
Securities
|
Item 4.
|
Submission of Matters to a Vote
of Securities Holders
|
No matters
were submitted to our security holders for a vote during
the three months ended June 30, 2008.
Item 5.
|
Other
Information
|
The
following exhibits are included with this Quarterly Report on Form
10-Q:
Exhibit
|
|
Number
|
Description of
Exhibit
|
3.1
(1)
|
Articles
of Incorporation
|
3.2
(1)
|
Certificate
of Amendment to Articles of Incorporation
|
3.3
(1)
|
By-Laws
|
10.1
(1)
|
Agency
Exploitation Agreement dated March 30, 2004 among PlayBOX UK, HBI Sales
Private Limited, Zacan Holdings Proprietary Limited, ICT/Europetec Limited
and MIR Technologies LLC
|
10.2
(1)
|
Letter
Agreement between PlayBOX UK and Robert Burden regarding appointment of
Robert Burden as Managing Director of PlayBOX UK dated effective April 13,
2004
|
Exhibit
|
|
Number
|
Description of
Exhibit
|
10.3
(1)
|
Employment
Agreement between PlayBOX UK and Robert Burden dated effective May 1,
2004
|
10.4
(1)
|
Service
Agreement dated August 4, 2004 between PlayBOX UK and Outlander
Management
|
10.5
(1)
|
Loan
Agreement dated October 4, 2004 between PlayBOX UK and PlayBOX
Inc.
|
10.6
(1)
|
Debenture
Agreement dated October 4, 2004 between PlayBOX UK and PlayBOX Inc.
evidencing the indebtedness of PlayBOX UK under the Loan
Agreement
|
10.7
(1)
|
Debt
Settlement Agreement dated April 28, 2005 between PlayBOX UK and PlayBOX
Inc.
|
10.8
(1)
|
Share
Exchange Agreement dated May 23, 2005, as amended, among Boyd Holdings
Inc., PlayBOX UK and the stockholders of PlayBOX UK
|
10.9
(1)
|
Closing
Agreement dated March 24, 2006 amongst PlayBOX (US) Inc. and PlayBOX UK
and the shareholders of PlayBOX UK
|
10.10
(1)
|
Asset
Purchase Agreement dated June 30, 2006 between PlayBOX (US) Inc. and
PlayBOX Inc.
|
10.11
(1)
|
Termination
and Release Agreement dated June 30, 2006 among PlayBOX UK, HBI Sales
Private Limited, Zacan Holdings Proprietary Limited, ICT/Europetec Limited
and MIR Technologies LLC
|
10.12
(1)
|
Subscription
agreement between the Company and Annette Cocker dated April 8, 2005
relating to the Company's private offering of 500,000
shares
|
10.13
(1)
|
Form
of subscription agreement relating to our May 31, 2005 private offering of
securities.
|
10.14
(1)
|
Form
of subscription agreement relating to our August 31, 2005 private offering
of securities.
|
10.15
(1)
|
Regulation
S Debt Conversion Agreement dated June 30, 2006 between the Company and
Hillside Investment Corporation.
|
10.16
(2)
|
Form
of subscription agreement relating to our July 14, 2006 private offering
of securities.
|
10.17
(3)
|
Service
Agreement dated July 1, 2005 between PlayBOX UK and Azuracle
Limited
|
10.18
(3)
|
Letter
Agreement dated December 28, 2006 between PlayBOX UK and Robert
Burden
|
10.19
(3)
|
Consulting
Services Agreement dated August 1, 2006 between PlayBOX (US) Inc. and
DeBondo Capital Limited
|
Exhibit
|
|
Number
|
Description of
Exhibit
|
10.20
(4)
|
Form
of subscription agreement relating to our May 25, 2007 private offering of
securities.
|
10.21
(5)
|
Executive
Employment Agreement between the Company and Henry (Harry) C. Maloney
dated December 14, 2007.
|
10.22
(6)
|
Share Purchase Agreement between the Company and
Laurence Adams and Jacqueline Adams dated March 28,
2008
|
31.1
(7)
|
|
31.2
(7)
|
|
32.1
(7)
|
|
(1)
|
Filed
as an exhibit to our registration statement on Form SB-2 filed with the
Securities and Exchange Commission on June 8, 2006.
|
|
|
(2)
|
Filed
as an exhibit to our registration statement on Form SB-2/A (Amendment No.
1) filed with the Securities and Exchange Commission on October 10,
2006.
|
|
|
(3)
|
Filed
as an exhibit to our registration statement on Form SB-2/A (Amendment No.
3) filed with the Securities and Exchange Commission on January 18,
2007.
|
|
|
(4)
|
Filed
as an exhibit to our registration statement on Form SB-2/A (Amendment No.
6) filed with the Securities and Exchange Commission on July 12,
2007.
|
|
|
(5)
|
Filed
as an exhibit to our current report on Form 8-K filed with the Securities
and Exchange Commission on December 20, 2007.
|
|
|
(6)
|
Filed
as an exhibit to quarterly report on Form 10-Q filed with the Securities
and Exchange Commission on May 15, 2008.
|
|
|
(7)
|
Filed
as an exhibit to this quarterly report on Form
10-Q.
|
SIGNATURES
In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
|
PLAYBOX (US)
INC.
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/
Robert Burden
|
|
|
|
Robert
Burden
|
|
|
|
Chief
Executive Officer and Chief Financial Officer
|
|
|
|
Date:
August 15, 2008
|
|