UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 2008
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to ______________.
Commission File Number: None
QUANTUM INFORMATION, INC.
Nevada 26-1749145
----------------------------- ---------------------
State or other jurisdiction (IRS) Employer
incorporation Identification Number
13414 South 47th Place
Phoenix, AZ 85044
---------------------------
Address of principal executive offices
(866) 200-0918
--------------------------------
Registrant's telephone number, including area code
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) had been subject to such filing
requirements for the past 90 days.
Yes _________ No ____X_____
-
Indicate by check mark whether the Registrant is a large accelerated filer, and
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check One):
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] 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
Exchange Act Rule 12b-2 of the Exchange Act).
Yes _________ No _____X____
-
Class of Stock No. Shares Outstanding Date
-------------- ---------------------- ----
Common 2,860,000 August 29, 2008
QUANTUM INFORMATION INC.
(A Development Stage Company)
Balance Sheet
ASSETS
July 31, April 30
2008 2008
-------- --------
(Unaudited)
Current Assets
Cash and Cash Equivalents $ 66,233 $ 76,697
Accounts Receivable 12,650 -
Prepaids 1,500 1,500
----------- -----------
80,383 78,197
----------- -----------
Property and Equipment, net
Equipment 23,264 23,264
----------- -----------
TOTAL ASSETS $ 103,647 $ 101,461
=========== ===========
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities
Officer Loan $ - $ 1,750
----------- -----------
Commitments and contingencies (Note 4)
Stockholders' Equity
Common Stock, $0.001 par value, 75,000,000
shares authorized, 2,860,000 shares issued
and outstanding 2,860 2,860
Additional paid-in capital 120,138 120,138
Deficit accumulated in the development stage (19,351) (23,287)
----------- -----------
Total Stockholders' Equity 103,647 99,711
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 103,647 $ 101,461
=========== ===========
1
QUANTUM INFORMATION INC.
(A Development Stage Company)
Statement of Operations
(Unaudited)
For the period
of Inception,
For the three For the three from May 19,
months ended months ended 2005 through
July 31, July 31, July 31,
2007 2008 2008
------------- -------------- ---------------
Revenues
Cinematogrphy - 7,825 11,025
Equipment rental $ - $ 7,825 $ 11,025
------------- ------------- -------------
$ - $ 15,650 $ 22,050
------------- ------------- -------------
Costs and Expenses
Professional Fees - 2,625 22,589
Consulting - -
Occupancy Expense - 3,000 8,930
Other General & Administrative - 6,089 9,882
------------- ------------- -------------
Total Expenses - 11,714 41,401
------------- ------------- -------------
Operating Loss - 3,936 (19,351)
------------- ------------- -------------
Net Income (Loss) $ - $ 3,936 $ (19,351)
============= ============= =============
Basic and Dilutive net loss
per share $ - $ 0.00
============= =============
Weighted average number of
shares outstanding, basic
and diluted - 2,860,000
============= =============
2
QUANTUM INFORMATION INC.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
For the period
of Inception,
For the three For the three from May 19,
months ended months ended 2005 through
July 31, July 31, July 31,
2007 2008 2008
------------- -------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ - $ 3,936 $ (19,351)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation - - 300
Change in operating assets and
liabilities:
(Increase) Decrease in Account
Receivable - (12,650) (12,650)
Increase (Decrease) in prepaids - - (1,500)
------------- -------------- ---------------
Net Cash provided by (used by)
Operating Activities - (8,714) (33,201)
------------- -------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment - - (23,564)
------------- -------------- ---------------
Net Cash (used by) Investing
Activities - - (23,564)
------------- -------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the sale of Common
Stock - - 122,998
Proceeds from loan from officer - (1,750) -
------------- -------------- ---------------
Net Cash provided by Financing
Activities - (1,750) 122,998
------------- -------------- ---------------
NET INCREASE IN CASH - (10,464) 66,233
CASH AT BEGINNING OF PERIOD - 76,697 -
------------- -------------- ---------------
CASH AT END OF PERIOD $ - $ 66,233 $ 66,233
============= ============== ===============
CASH PAID FOR:
Interest $ - $ - $ -
Income Taxes $ - $ - $ -
3
QUANTUM INFORMATION INC.
(A Development Stage Company)
Statement of Stockholders' Equity (Deficit)
(Unaudited)
Accumulated
Additional Deficit During
Common Stock Paid-in Development
Shares Amount Capital Stage Total
------ ------ ---------- --------------- -----
Balances at May 19, 2007 - $ - $ - $ - $ -
Common stock issued for cash on
January 10, 2008 at $0.01 per share 1,800,000 1,800 16,200 18,000
Common stock issued for cash on
February 20, 2008 at $0.10 per share 1,060,000 1,060 103,938 104,998
Net loss for the year ended April 30,
2008 (23,287) (23,287)
------------ ------------ ------------ ------------ ------------
alances at April 30, 2008 2,860,000 $ 2,860 $ 120,138 $ (23,287) $ 99,711
------------ ------------ ------------ ------------ ------------
Net income for the 3 months ended
July 31, 2008 3,936 3,936
------------ ------------ ------------ ------------ ------------
Balances at July 31, 2008 2,860,000 $ 2,860 $ 120,138 $ (19,351) $ 103,647
============ ============ ============ ============ ============
4
QUANTUM INFORMATION INC.
NOTES TO FINANCIAL STATEMENTS
For the Three Months Ended July 31, 2008
NOTE 1 - BUSINESS AND CONTINUED OPERATIONS
The Company was incorporated under the name Inkie Entertainment Group on May 19,
2005 in the State of Nevada. The Company was formed for the purpose of engaging
in all lawful businesses. The Company changed its name in January, 2008 to
Quantum Information Inc. The Company's authorized capital consists of 75,000,000
shares of $0.001 par value common voting stock.
The financial statements presented include all adjustments which are, in the
opinion of management, necessary to present fairly the financial position,
results of operations and cash flows for the period presented in accordance with
the accounting principles generally accepted in the United States of America.
All adjustments are of a normal recurring nature.
Current Business of the Company
-------------------------------
The Company had no material business operations from inception May 19, 2005
through 2007. In 2008 the Company made plans to produce feature films at low
cost, using its own digital camera equipment. To this end the Company raised
capital, purchased camera equipment and entered the development stage of film
production. Limited revenue was received from renting the camera equipment.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and equivalents
--------------------
Cash and equivalents include investments with initial maturities of three months
or less.
Fair Value of Financial Instruments
-----------------------------------
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards ("SFAS") No. 107, "Disclosures About Fair Value of
Financial Instruments." SFAS No. 107 requires disclosure of fair value
information about financial instruments when it is practicable to estimate that
value. The carrying amounts of the Company's financial instruments as of July
31, 2008 approximate their respective fair values because of the short-term
nature of these instruments. Such instruments consist of cash, accounts payable
and accrued expenses. The fair value of related party payables is not
determinable.
Income Taxes
------------
The Company utilizes SFAS No. 109, "Accounting for Income Taxes," which requires
the recognition of deferred tax assets and liabilities for the expected future
tax consequences of events that have been included in the financial statements
or tax returns. Under this method, deferred tax assets and liabilities are
determined based on the difference between the tax basis of assets and
liabilities and their financial reporting amounts based on enacted tax laws and
statutory tax rates applicable to the periods in which the differences are
expected to affect taxable income.
5
QUANTUM INFORMATION INC.
NOTES TO FINANCIAL STATEMENTS
For the Three Months Ended July 31, 2008
Valuation allowances are established, when necessary, to reduce deferred tax
assets to the amount expected to be realized. The Company generated deferred tax
credits through net operating loss carryforwards. However, a valuation allowance
of 100% has been established, as the realization of the deferred tax credits is
not reasonably certain, based on going concern considerations outlined below.
Equipment
---------
Equipment, including camera equipment, is recorded at cost and depreciated using
straight line methods over the estimated useful lives of the related assets
ranging from 3 to 10 years. The Company reviews the carrying value of long-term
assets to be held and used when events and circumstances warrant such a review.
If the carrying value of a long-lived asset is considered impaired, a loss is
recognized based on the amount by which the carrying value exceeds the fair
market value. Fair market value is determined primarily using the anticipated
cash flows discounted at a rate commensurate with the risk involved. The cost of
normal maintenance and repairs is charged to operations as incurred. Major
overhaul that extends the useful life of existing assets is capitalized. When
equipment is retired or disposed, the costs and related accumulated depreciation
are eliminated and the resulting profit or loss is recognized in income.
Going Concern
-------------
The Company's financial statements are prepared using accounting principles
generally accepted in the United States of America applicable to a going
concern, which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. The Company had a net profit
before taxes of $3,936 in the three months ended July 31, 2008 and a positive
stockholders' equity of $103,647. The Company is renting its film equipment with
a cinematographer, but has not yet established an ongoing source of revenues
sufficient to cover its operating costs and to allow it to continue as a going
concern. The ability of the Company to continue as a going concern is dependent
on the Company obtaining adequate capital to fund operating losses until it
becomes profitable. If the Company is unable to obtain adequate capital, it
could be forced to cease development of operations.
In order to continue as a going concern, develop a reliable source of revenues,
and achieve a profitable level of operations the Company will need, among other
things, additional capital resources. Management's plans to continue as a going
concern include raising additional capital through sales of common stock. In the
interim, shareholders of the Company are committed to meeting its minimal
operating expenses. However, management cannot provide any assurances that the
Company will be successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plans described in the preceding
paragraph and eventually secure other sources of financing and attain profitable
operations. The accompanying financial statements do not include any adjustments
that might be necessary if the Company is unable to continue as a going concern.
6
QUANTUM INFORMATION INC.
NOTES TO FINANCIAL STATEMENTS
For the Three Months Ended July 31, 2008
Development-Stage Company
-------------------------
The Company is considered a development-stage company, having limited operating
revenues during the period presented, as defined by Statement of Financial
Accounting Standards ("SFAS") No. 7. SFAS No. 7 requires companies to report
their operations, shareholders deficit and cash flows since inception through
the date that revenues are generated from management's intended operations,
among other things. Management has defined inception as May 19, 2005. Since
inception, and more particularly since commencing business in January, 2008, the
Company has incurred an operating loss of $19,351. Much of this related to
consultants, as a means to generate working capital. The Company's working
capital has been generated through the sales of common stock. Management has
provided financial data since May 19, 2005, "Inception", in the financial
statements, as a means to provide readers of the Company's financial information
to make informed investment decisions.
Use of Estimates
----------------
The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, and disclosure of contingent liabilities at the date of the
financial statements and the reported amounts of expenses during the reporting
period. Actual results could differ from those estimates.
Earnings (Loss) Per Share
-------------------------
Statement of Financial Accounting Standards No. 128 "Earnings Per Share"
requires presentation of basic earnings per share and diluted earnings per
share. Basic income (loss) per share ("Basic EPS") is computed by dividing net
loss available to common stockholders by the weighted average number of common
shares outstanding during the period.
Diluted earnings per share ("Diluted EPS") is similarly calculated using the
treasury stock method except that the denominator is increased to reflect the
potential dilution that would occur if dilutive securities at the end of the
applicable period were exercised. There were no potential dilutive securities as
at July 31, 2008.
The following is a reconciliation of the numerators and denominators of the
basic and diluted earnings per share computations for the three months ended
July 31, 2008 sand 2007.
Numerator: 2008 2007
-------- ---- ----
Basic and diluted net loss per share:
Net Income (Loss) $3,936 0
7
QUANTUM INFORMATION INC.
NOTES TO FINANCIAL STATEMENTS
For the Three Months Ended July 31, 2008
Denominator
-----------
Basic and diluted weighted average
number of shares outstanding 2,860,000 0
Basic and Diluted Net Loss Per Share $ 0.00 0
------------------------------------
NOTE 3 - RELATED PARTY TRANSACTIONS
On January 10, 2008 the Board authorized the issue of common stock to two
Directors:
Joel Klandrud, 900,000 shares at a price of $0.01
President and Chief Operating Officer per share
Director
Sandra Dosdall, 900,000 shares at a price of $0.01
Director per share
NOTE 4 - COMMITMENTS AND CONTINGENCIES
There were no commitments or contingencies as at July 31, 2008.
NOTE 5 - CAPITAL STOCK TRANSACTIONS
On January 10, 2008, 1,800,000 common shares were issued for cash at $0.01 per
share, realizing $18,000.
On February 20, 2008, 1,060,000 common shares were issued for cash at $0.10 per
share, realizing $104,998.
At July 31,2008 the Company had authorized 75,000,000 common shares, of which
the total issued and outstanding was 2,860,000.
NOTE 6 - LITIGATION
There were no legal proceedings against the Company with respect to matters
arising in the ordinary course of business. Neither the Company nor any of its
officers or directors is involved in any other litigation either as plaintiffs
or defendants, and have no knowledge of any threatened or pending litigation
against them or any of the officers or directors.
8
QUANTUM INFORMATION, INC.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion of financial condition and results of operations
should be read in conjunction with the financial statements and the notes to the
financial statement, which are included elsewhere in this report.
Quantum was incorporated on May 19, 2005 and plans to be engaged in the
production, distribution and marketing of filmed entertainment products,
including theatrical motion pictures, television programs, home video products,
and digitally delivered entertainment and media.
Quantum expects to derive revenue from the exploitation of entertainment
properties across multiple media and distribution channels. Quantum expects to
receive revenue from all of the following sources on a project-by-project basis:
o Producer and production fees for services in the creation and
production of motion pictures, television programs and other
visual media;
o Royalties from future earnings of the projects that Quantum may
develop or produce;
o Royalty payments from merchandising consumer products bearing the
logos, brands, and other forms of intellectual property from
Quantum's films, television programs and other visual media; and
o Royalties and license payments from exploitation of soundtrack
and music publishing rights for music from Quantum's films,
television programs and archives.
As its first project, Quantum will attempt to produce a short (45
minutes) motion picture. The estimated costs to produce this motion picture are:
Script acquisition and development $ 15,000
Purchase of filmmaking equipment 85,000
Purchase of post production computers and software 15,000
Production expenses 100,000
Marketing 5,000
-----------
$ 220,000
===========
Quantum will attempt to fund the costs of producing the motion picture
through internal sources, the sale of its securities or through licensing or
pre-selling the film to various distribution channels.
1
As of August 29, 2008 Quantum:
o had not specified a subject or selected a screenplay for its first
project;
o was conducting limited operations; and
o did not have any material capital commitments, other than funding its
operating losses.
Quantum owns commercial grade digital camera equipment and is working with
several production companies on a work-for-hire basis.
Quantum does not know of any trends, events or uncertainties that have had
or are reasonably expected to have a material impact on Quantum' operations or
financial condition.
Between January and March 2008 Quantum sold 1,060,000 shares of its common
stock, at a price of $.10 CDN per share, to a group of private investors.
Quantum's future plans will be dependent upon the amount of capital
Quantum is able to raise. Quantum may attempt to raise additional capital
through the private sale of its equity securities or borrowings from third party
lenders. Quantum does not have any commitments or arrangements from any person
to provide Quantum with any additional capital. If additional financing is not
available when needed, Quantum may cease operations. Quantum does not have any
plans, arrangements or agreements to sell its assets or to merge with another
entity.
Quantum's significant accounting policies are discussed in Note 2 to its
financial statements included as part of this report.
Item 4.T. CONTROLS AND PROCEDURES
Quantum's management is responsible for establishing and maintaining
adequate internal control over financial reporting as required by Sarbanes-Oxley
(SOX) Section 404.A. Quantum's internal control over financial reporting is a
process designed under the supervision of its Chief Executive and Financial
Officer to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of its financial statements for external purposes
in accordance with Generally Accepted Accounting Principles.
There were no changes in Quantum's internal controls over financial
reporting that occurred during the quarter ended July 31, 2008 that have
affected, or are reasonably likely to materially affect, Quantum's internal
control over financial reporting.
Joel Klandrud, Quantum's President and Principal Financial Officer,
evaluated the effectiveness of Quantum's disclosure controls and procedures as
of the end of the period covered by this report; and in his opinion Quantum's
disclosure controls and procedures were effective.
2
PART II
Item 6. (a) Exhibits
--------
Number Exhibit
------ -------
31 Rule 13a-14(a) Certifications
32 Section 1350 Certifications
3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
QUANTUM INFORMATION, INC.
Date: September 3, 2008 /s/ Joel Klandrud
------------------------------------
Joel Klandrud, President and Principal
Financial and Accounting Officer