U

10KSB/A 1 frame1203ksba.htm AMENDED DECEMBER 31, 2003 10-KSB U

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-KSB/A

[X]

Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2003

[ ]

Transition report pursuant to section 13 or 15(d) of the Securities Exchange act of 1934 for the transition period from to

Commission File No. 33-2783-S

FRAMEWAVES, INC.

(Name of Small Business Issuer as specified in its charter)

Nevada 82-0404220

(State or Other Jurisdiction of (IRS Employer

Incorporation or Organization) Identification No.)

1981 East 4800 South, Suite 100, Salt Lake City, Utah, 84117

(Address of Principal Executive Offices and Zip Code)

(801) 272-9294

Issuer's Telephone Number:

Securities registered under Section 12(b) of the Act: None

Securities registered under Section 12(g) of the Act: None

Check whether the issuer (1) filed all reports required to be filed by sections 13 or 15(d) of the Exchange Act during the past 12 months (or such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X ] No [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [ ]

The Registrant's revenue for its most recent fiscal year was $0.

The issuer’s common stock is listed on the Over the Counter Bulletin Board under the symbol FWAV. There was a minimal market and limited trading volume for the issuer’s common stock during fiscal year 2003. The aggregate market value of the issuer’s common stock held by non-affiliates at December 31, 2003 is deemed to be $12,725.

At December 31, 2003, the Registrant had outstanding 1,208,994 shares of common stock, par value $0.001.

Transitional Small Business Format: Yes [ ] No [ X ]

Documents incorporated by reference: None.

FRAMEWAVES, INC.

FORM 10-KSB

DECEMBER 31, 2002

INDEX

Page

PART I

Item 1. Description of Business

Item 2. Description of Property

Item 3. Legal Proceedings

Item 4. Submission of Matters to a Vote of Security Holders

PART II

Item 5. Market for Common Equity and Related Stockholder Matters

Item 6. Management’s Discussion and Analysis or Plan of Operation

Item 7. Financial Statements

Item 8. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

Item 8A. Controls and Procedures

PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act

Item 10. Executive Compensation

Item 11. Security Ownership of Certain Beneficial Owners and Management

Item 12. Certain Relationships and Related Transactions

Item 13. Exhibits and Reports on Form 8-K

Item 14. Principal Accountant Fees and Services

Signatures

(Inapplicable items have been omitted)

FORWARD-LOOKING STATEMENT NOTICE

When used in this report, the words “may,” “will,” “expect,” “anticipate,” “continue,” “estimate,” “project,” “intend,” and similar expressions are intended to identify forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 regarding events, conditions, and financial trends that may affect the Company’s future plans of operations, business strategy, operating results, and financial position. Persons reviewing this report are cautioned that any forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties and that actual results may differ materially from those included within the forward-looking statements as a result of various factors. Such factors are discussed under the headings ”Item 1. Description of Business,” and “Item 6. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and also include general economic factors and conditions that may directly or indirectly impact the Company’s financial condition or results of operations.

PART I

AMENDMENT – This report is being amended solely to include a conformed signature on our Independent Auditors’ Report that was inadvertently left out of the original filing.

Item 1. Description of Business

History

FrameWaves, Inc. (the “Company” or “FrameWaves”) was originally incorporated under the name of Messidor Limited on December 23, 1985 as a development stage company for the purpose of engaging in all lawful transactions permitted under the State of Nevada, including the acquisition of various business opportunities to provide profit and maximize shareholder value.

On December 27, 2000, the shareholders, at a special meeting, changed the Company’s name from Messidor Limited to FrameWaves, Inc. The shareholders also approved the acquisition of Corners, Inc. (“Corners”), a Nevada corporation, whereby the Company exchanged 1,000,000 shares of the Company’s common stock for all of Corner’s issued and outstanding shares of common stock. Corners had incorporated on November 17, 1998 in the State of Nevada to provide custom framing for interior designers in conjunction with business contacts provided by Corners’ officers and directors. Since its inception, Corners has had limited operations due to its officers and directors other obligations, however, the officers and directors have maintained their business contacts with certain interior designers. Further, FrameWaves intends to use Corners as an operating subsidiary and actively pursue the custom framing business by utilizing Corners’ business contacts to procure contracts for future operations, and to engage in a comprehensive and aggressive marketing campaign, including but not limited to, soliciting unknown but potential business contacts through direct mailings, media, and other mediums that will generate leads to contracts for future operations

Principal Products and Services

FrameWaves’ principal product and service consists of providing customized frames to interior designers and retail consumers. This will be accomplished by interfacing directly with designers and consumers where they will be presented with a selection of FrameWaves’ materials and styles in order to determine the type and quality of frame desired. FrameWaves will then customize frames to the clients’ specifications. Such customization might entail the ordering, designing, manufacturing, or the subcontracting of work in order to meet the clients’ needs. This product and service will allow FrameWaves to be a complete and professional supplier of customized frames to the interior designers and retail customers. However, the Company is a development stage company with no operations and has yet to engage in any contract negotiations with frame suppliers, interior designers or retail consumers.

Marketing

FrameWaves intends to market its product and service to interior designers and retail consumers through established business contacts of the officers and directors, direct mailing program targeting interior designers, and word of mouth. FrameWaves might also market its products and services by advertising in widely distributed magazines that Management considers influential among designers and consumers. These advertisements will focus on FrameWaves’ ability to be a complete and professional supplier of customized frames. However, the Company is in its development stage and has not yet launched any of the above marketing strategies, and there is no assurance that such marketing strategies will be launched in the future. Additionally, the Company cannot predict whether it will, in the future, be dependent upon one or a few major customers.

Raw Materials and Principal Suppliers

The Company has yet to engage in any contract negotiations with any suppliers of custom frames or raw materials for such frames. Accordingly, the Company is unable to predict the sources and availability of raw materials and the names of any principal suppliers. Notwithstanding, Management believes that there are numerous reliable sources for custom frames and raw materials for such frames.

Governmental Regulation

There is no meaningful government regulation that directly affects FrameWaves’ business. However, FrameWaves’ potential suppliers are subject to federal, state, local or foreign environmental laws and regulations relating to the handling and management of certain chemicals used and generated in manufacturing frame products. Management believes that it is reasonably likely that the trend in environmental litigation and regulation will continue toward stricter standards and that changes in the laws and regulations could indirectly affect FrameWaves in the form of higher purchasing costs.

Competition

The custom framing industry is highly competitive, and includes a large number of wholesale, retail and other specialized competitors, none of which dominate the market. A number of the companies competing directly with FrameWaves have superior knowledge and experience, including established contacts and networks, as well as financial and other resources greater than those of the Company. These factors create a highly competitive environment in which the Company's future customers will continuously evaluate which product suppliers to use, resulting in pricing pressures and the need for ongoing improvements in customer service.

Management believes that competition in the custom framing industry is generally a function of timeliness of delivery, price, quality, reliability, product design, product availability and customer service. Management further believes that FrameWaves can compete favorably with other custom framing companies by: (i) interfacing directly with designers and consumers and customizing frames to clients’ specifications; (ii) utilizing its officers’ business contacts, (iii) providing a broad range of products and services; and (iv) developing strong name recognition within the custom framing community. However, the Company is in its development stage and has not yet entered into the market, and there is no assurance that the Company can successfully enter and compete in the custom framing market.

Employees

The Company currently has no employees. Executive officers will devote only such time to the affairs of the Company as they deem appropriate, which is estimated to be approximately 20 hours per month per

person. The need for employees will be addressed at such time operations prove successful.

Item 2. Description of Property

The Company utilizes office space at 1981 East 4800 South, Suite 100, Salt Lake City, Utah, 84117, provided by Thomas A. Thomsen, an officer and director of the Company. The Company does not pay rent for this office space.

Item 3. Legal Proceedings

The Company is not a party to any legal proceedings, and to the best of its knowledge, no such proceedings by or against the Company have been threatened.

Item 4. Submission of Matters to a Vote of Security Holders

None

PART II

Item 5. Market for Common Equity and Related Stockholder Matters

Our common stock is listed on the Over the Counter Bulletin Board under the symbol FWAV. There is currently no trading volume for our securities. At December 31, 2003, the Company had 472 shareholders owning 1,208,994 shares of FrameWaves’ issued and outstanding common stock, of which 68,994 are free trading. The balance are restricted stock as that term is used in Rule 144.

CLOSING BID

CLOSING ASK

2003

High

Low

High

Low

January 2 through March 31

.10

April 1 through June 30

.15

.10

July 1 through September 30

.11

.10

3.05

October 1 through December 31

.11

3.05

CLOSING BID

CLOSING ASK

2002

High

Low

High

Low

May 10 (first available) through

June 28

.25

.20

1.50

1.25

July 1 through September 30

.25

1.50

October 1 through December 31

.35

.10

3.00

1.50

The above quotations, as provided by the National Quotation Bureau, LLC, represent prices between dealers and do not include retail markup, markdown or commission. In addition, these quotations do not represent actual transactions.

FrameWaves has not paid any dividends since its inception, and it is not likely that any dividends on its common stock will be declared at any time in the foreseeable future. Any dividends will be subject to the discretion of FrameWaves' Board of Directors, and will depend upon, among other things, the operating and financial condition of FrameWaves, its capital requirements and general business conditions. Our ability to pay dividends is also subject to limitations imposed by Nevada law. Under Nevada law,

dividends may be paid to the extent that a corporation’s assets exceed its liabilities and it is able to pay its debts as they become due in the usual course of business. There can be no assurance that any dividends on FrameWaves common stock will be paid in the future.

Recent Sales of Unregistered Securities.

The following is a detailed list of securities sold within the past three years without registration under the Securities Act. All issuances are numerically reported in post-split form.

In December of 2000, the Company issued 42,969 shares pursuant to shareholder approval of a hundred (100) to one (1) reverse split of the Company’s issued and outstanding common stock whereby shareholder ownership that was fractionalized or reduced below a round lot of 100 shares were rounded up to the nearest whole share or round lot of 100 shares, respectively.

In December of 2000, the Company issued 1,000,000 shares of restricted common stock to officers and directors of the Company in exchange for 1,500 shares of Corners’ common stock. The following table details the recipient’s name, amount of stock received, and consideration paid. All shares were issued in a private transaction, not involving any public solicitation or commissions, and without registration in reliance on the exemption provided by Section 4(2) of the Securities Act.

Name	Amount Received	Consideration Paid
Thomas A. Thomsen	333,334 shares	500 shares of Corners, Inc. common stock
Dianne Hatton-Ward	333,333 shares	500 shares of Corners, Inc. common stock
Susan Santage	333,333 shares	500 shares of Corners, Inc. common stock

In November of 2000, the Company issued 100,000 shares of restricted common stock to Thomas A. Thomsen, an officer and director of the Company, in exchange for $5,000 cash and $5,000 in services performed on behalf of the Company by resurrecting and reviving it from dormancy and making necessary and timely cash advances. The shares were issued in a private transaction, not involving any public solicitation or commissions, and without registration in reliance on the exemption provided by Section 4(2) of the Securities Act.

Item 6. Management’s Discussion and Analysis or Plan of Operation

Years Ended December 31, 2003 and 2002

The Company did not generate any revenue during the years ended December 31, 2003 and 2002.

General and administrative expenses at December 31, 2003 were $5,955 compared to general and administrative expenses of $5,366 for the year ended December 31, 2002. Expenses in both years were largely due to accounting, legal and other professional costs.

As a result of the foregoing, the Company realized net losses of $5,955 for the year ended December 31, 2003 and $5,366 for the year ended December 31, 2002. The Company’s net loss is attributable to a lack of business and ongoing professional costs associated with preparing the Company’s public reports.

Years Ended December 31, 2002 and 2001

The Company did not generate any revenue during the year ended December 31, 2002 compared to revenue of $1,267 for the year ended December 31, 2001.

General and administrative expenses at December 31, 2002 were $5,366 compared to general and administrative expenses of $7,250 for the year ended December 31, 2001. Expenses in both years were largely due to accounting, legal and other professional costs.

Liquidity and Capital Resources

At December 31, 2003, assets consisted of $2,040 in cash. Liabilities consisted of $2,617 in accounts payable leaving the Company without any working capital. At December 31, 2002, the Company’s assets consisted of $2,090 in cash. Liabilities in 2002 consisted of $1,626 in accounts payable.

Currently, the Company has no material commitments for capital expenditures. Management anticipates that operating expenses for the next twelve months will be approximately $5,000 to $6,000. Management believes that it does not have sufficient cash to meet its immediate operational needs and will require additional capital to cover ongoing operating expenses. Management may attempt to raise additional capital for its current operational needs through loans from its officers, debt financing, equity financing or a combination of financing options. However, there are no existing understandings, commitments or agreements for such an infusion; nor can there be assurances to that effect.

Item 7. Financial Statements

The financial statements of the Company appear at the end of this report beginning with the Index to Financial Statements on page 13.

Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 8A. Controls and Procedures

(a)

Evaluation of Disclosure Controls and Procedures. The Company's management, with the participation of the chief executive officer and the chief financial officer, carried out an evaluation of the effectiveness of the Company's "disclosure, controls and procedures" (as defined in the Securities Exchange Act of 1934 (the "Exchange Act") Rules 13a-15(3) and 15-d-15(3) as of the end of the period covered by this annual report (the "Evaluation Date"). Based upon that evaluation, the chief executive officer and the chief financial officer concluded that, as of the Evaluation Date, the Company's disclosure, controls and procedures are effective, providing them with material information relating to the Company as required to be disclosed in the reports the Company files or submits under the Exchange Act on a timely basis.

(b)

Changes in Internal Control over Financial Reporting. There were no changes in the Company's internal controls over financial reporting, known to the chief executive officer or the chief financial officer, that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons

The following table sets forth the name, age, and position of each officer and director of the Company. All directors hold office until the next annual meeting of stockholders or until their successors are duly

elected and qualified. Officers serve at the discretion of the Board of Directors.

The Company has no audit committee financial expert, as defined under Section 228.401, serving on its audit committee because it has no audit committee and is not required to have an audit committee because it is not a listed security as defined in Section 240.10A-3.

Name	Age	Positions	Since
Thomas A. Thomsen	28	President and Director	November, 2000
Dianne Hatton-Ward	47	Vice President and Director	November, 2000
Susan Santage	42	Secretary/ Treasurer and Director	November, 2000

The following is information on the business experience of each officer and director.

Thomas A. Thomsen, President and Director. Mr. Thomsen graduated from the University of Utah in May of 2000 with a BS in Finance. Since March of 1999, Mr. Thomsen has worked for Interwest Transfer Company, and provides stock analysis, issuances and transfers. From 1990 to 1999, Mr. Thomsen was employed by the Granite School District whereby he provided security and maintenance for Granger High School.

Dianne Hatton-Ward, Vice President and Director. Ms. Hatton-Ward is currently a part-time student at Westminster College. Since 1994, Ms. Hatton-Ward has worked as control scheduler for Qwest Communications International, Inc., a telecommunications company, where she is responsible for the design and support of several applications like client interfacing, job applications and job-flows.

Susan Santage, Secretary, Treasurer and Director. Ms. Santage graduated from Salt Lake Community College in 1989 with an AAS in Graphic Design. In 1984, Ms. Santage graduated from the Salt Lake School of Interior Design. From 1989 to the present date, Ms. Santage has engaged in freelance graphic design where she has contracted with several companies including Break-thru Industries, KLCY Radio Station, Phoenix Aviation, Inc., and the Salt Lake Community College.

Item 10. Executive Compensation

The Company has no agreement or understanding, express or implied, with any director, officer or principal stockholder, or their affiliates or associates, regarding compensation in the form of salary, bonuses, stocks, options, warrants or any other form of remuneration, for services performed on behalf of the Company. Nor are there compensatory plans or arrangements, including payments to any officer in relation to resignation, retirement, or other termination of employment, or any change in control of the Company, or a change in the officer’s responsibilities following a change in control of the Company.

Item 11. Security Ownership of Certain Beneficial Owners and Management

The following table sets forth as of December 31, 2003, the name and shareholdings of each person known to us that either directly or beneficially holds more than 5% of our 1,208,994 issued and outstanding shares of common stock, par value $.001. The table also lists the name and shareholdings of each director and of all officers and directors as a group. Except as otherwise indicated, the persons named in the table have sole voting and dispositive power with respect to all shares beneficially owned, subject to community property laws where applicable.

Name and Address of Directors, Executive Officers and 5% Beneficial Owners	Amount and Nature of Beneficial Ownership	Percent of Class of Common Stock
Thomas A. Thomsen (1) (2) 1981 East 4800 South, Suite 100 Salt Lake City, Utah 84117	86,285	7.1%
Dianne Hatton-Ward (1) 1981 East 4800 South, Suite 100 Salt Lake City, Utah 84117	333,333	27.6%
Susan Santage (1) 1981 East 4800 South, Suite 100 Salt Lake City, Utah 84117	333,333	27.6%
Directors and Executive Officers as a Group: Three Persons	1,102,951	62.3%

(1)

Officer and director of the Company.

(2)

Mr. Thomsen owns 83,334 shares directly, and 2,951 shares indirectly through European Holdings, Inc. Mr. Thomsen owns and controls European Holdings, Inc.

Item 12. Certain Relationships and Related Transactions

Item 13. Exhibits and Reports on Form 8-K

Exhibit

Title

Location

31.1

31.2

32.1

32.2

Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Certification of the Principal Executive Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Certification of the Principal Financial Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Attached

Reports on Form 8-K

FrameWaves did not file any reports on Form 8-K during the last three months of the period reflected by this report.

Item 14. Principal Accountant Fees and Services

Audit Fee

The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal account for the audit of FrameWaves, Inc. and Subsidiary’s annual financial statement and review of financial statements included in FrameWaves, Inc. and Subsidiary’s 10-QSB reports and services normally provided by the accountant in connection with statutory and regulatory filings or engagements were $2,130 for fiscal year ended 2002 and $2,335 for fiscal year ended 2003.

Audit-Related Fees

There were no fees for other audit related services for fiscal year ended 2003.

Tax Fees

There were no fees for tax compliance, tax advice and tax planning for the fiscal years 2003 and 2002.

All Other Fees

There were no other aggregate fees billed in either of the last two fiscal years for products and services provided by the principal accountant, other than the services reported above.

We do not have an audit committee currently serving and as a result our board of directors performs the duties of an audit committee. Our board of directors will evaluate and approve in advance, the scope and cost of the engagement of an auditor before the auditor renders audit and non-audit services. We do not rely on pre-approval policies and procedures.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

FRAMEWAVES, INC.

Date: December 20, 2004

/s/Thomas A. Thomsen

Chief Executive Officer

Date: December 20, 2004

/s/Susan Santage

Chief Financial Officer

In accordance with the Exchange Act, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Date: December 20, 2004

/s/Thomas A. Thomsen

Director

Date: December 20, 2004

/s/Susan Santage

Director

Date: March 18, 2004

/s/Dianne Hatton-Ward

Director

FRAMEWAVES, INC. AND SUBSIDIARY

(A Development Stage Company)

TABLE OF CONTENTS

Page

Independent Auditor’s Report

Financial Statements:

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Stockholders' Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Burnham & Schumm, P.C.

CERTIFIED PUBLIC ACCOUNTANTS

1981 East Murray Holladay Road

A Professional Corporation

Suite 245

Officers:

Salt Lake City, Utah 84117

Lonnie K. Burnham, C.P.A.

Phone (801) 272-0111

Ted Schumm, C.P.A.

Fax (801) 272-0125

INDEPENDENT AUDITOR’S REPORT

To the Board of Directors and Stockholders

of FrameWaves, Inc. and Subsidiary

We have audited the accompanying consolidated balance sheets of FrameWaves, Inc. (a Nevada corporation) and subsidiary as of December 31, 2003 and 2002, and the related consolidated statements of income, stockholders’ equity and cash flows for the years ended December 31, 2003, 2002 and 2001. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with U.S. generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of FrameWaves, Inc. and subsidiary as of December 31, 2003 and 2002, and the results of their operations and their cash flows for the years ended December 31, 2003, 2002 and 2001 in conformity with U.S. generally accepted accounting principles.

/s/ Burnham & Schumm

Salt Lake City, Utah

March 6, 2004

FRAMEWAVES, INC. AND SUBSIDIARY

(A Development Stage Company)

CONSOLIDATED BALANCE SHEET

DECEMBER 31, 2003 and 2002

December 31,

2003

2002

___________

Assets

Current Assets:

Cash

$ 2,040

$ 2,090

Total current assets

$ 2,040

$ 2,090

Total Assets

$ 2,040

$ 2,090

Liabilities and Stockholders' Equity

Current Liabilities:

Accounts payable

$ 2,617

$ 1,626

Total current liabilities

2,617

1,626

Stockholders' Equity:

Common stock, $.001 par value

100,000,000 shares authorized,

1,208,994 issued and outstanding

1,209 1,209

Additional paid-in capital

31,897

26,983

Deficit accumulated during the

development stage

(33,683) (27,728)

Total stockholders' equity

(577) 464

Total Liabilities and Stockholders'

Equity

$ 2,040 $ 2,090

The accompanying notes are an integral part of the consolidated financial statements.

FRAMEWAVES, INC. AND SUBSIDIARY

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

For the period

December 31,

1993

(Quasi -

Reorganization)

Through

December 31,

2003

2002

2001

2003

Revenues

$ --

$ 1,267

Expenses, general

and administrative

5,955

5,366

7,250

34,950

Operating loss

(5,955)

(5,366)

(5,983)

(33,683)

Other income

(expense)

__ --

Net Loss

$ (5,955)

$(5,366)

$ (5,983)

$(33,683)

Net loss per share

$ -- $ --

$ -- $ (.03)

The accompanying notes are an integral part of the consolidated financial statements.

FRAMEWAVES, INC. AND SUBSIDIARY

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

Deficit

Accumulated

Additional

During the

Common Stock

Paid-in

Development

Shares Amount Capital Stage

__________________

__________

Balance, December 31, 1993

65,600

$ 66

$ (66)

$ --

Net loss accumulated for

the period December 31, 1993

(quasi-reorganization)

through December 31, 1999

Common stock issued for cash

and services at $.10/ share

on November 3, 2000

100,000

100

9,900

Contribution by shareholder

for Company expenses paid

directly by shareholder

9,817

Common stock issued in

acquisition of subsidiary,

Corners, Inc. on

December 27, 2000

1,000,000

1,000

(90)

Common stock issued due to

rounding up shareholders with

less than 100 shares after

100 for 1 reverse stock split

effective December 27, 2000

42,969

(43)

Net loss for the year

ended December 31, 2000

(16,379)

________

_____

________

Balance, December 31, 2000 1,208,569 $ 1,209 $ 19,518 $ (16,379)

The accompanying notes are an integral part of the consolidated financial statements.

FRAMEWAVES, INC. AND SUBSIDIARY

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - CONTINUED

YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

Deficit

Accumulated

Additional

During the

Common Stock

Paid-in

Development

Shares Amount Capital Stage

___________________

_________

___________

Balance, December 31, 2000 1,208,569 $ 1,209 $ 19,518

$ (16,379)

Contribution by shareholder

for Company expenses paid

directly by shareholder

2,121

Common stock issued due

to stock split adjustment

425

Net loss for the year

ended December 31, 2001

(5983)

Balance, December 31, 2001

1,208,994

1,209

21,639

(22,362)

Contribution by shareholder

for Company expenses paid

directly by shareholder

5,344

Net loss for the year

ended December 31, 2002

_ -- _

_ --

___ --

(5,366)_

Balance, December 31, 2002

1,208,994

1,209

26,983

(27,728)

Contribution by shareholder

for Company expenses paid

directly by shareholder

4,914

Net loss for the year

ended December 31, 2003

_ -- _

__ --

_ (5,955)_

Balance, December 31, 2003

1,208,994

$ 1,209

$ 31,897

$ (33,683)

The accompanying notes are an integral part of the consolidated financial statements.

FRAMEWAVES, INC. AND SUBSIDIARY

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

For the period

December 31, 1993

(Quasi -

Reorganization)

Through

December 31,

2003 2002

2001 2003

Cash flows from

operating activities:

Net loss $ (5,955) $(5,366) $ (5,983) $(33,683)

Adjustments to

reconcile net income

to cash provided by

operating activities:

Contribution from

shareholder 4,914 5,344 2,121 22,196

Common stock issued

for services -- -- -- 5,000

Increase (decrease) in

accounts payable 991 (15) 79 2,617

Net cash used

by operating

activities: (50) (37) (3,783) (3,870)

Cash flows from

investing activities:

Cash received in

acquisition of

subsidiary -- -- -- 910

Cash flows from

financing activities:

Issuance of

common stock -- -- -- 5,000

The accompanying notes are an integral part of the consolidated financial statements.

FRAMEWAVES, INC. AND SUBSIDIARY

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

For the period

December 31, 1993

(Quasi -

Reorganization)

Through

December 31,

2003 2002

2001 2003

Net increase (decrease)

in cash

(50)

(37)

(3,783)

2,040

Cash, beginning

of period

2,090

2,127

5,910

Cash, end of period

$ 2,040

$ 2,090

$ 2,127

$ 2,040

Interest paid

$ --

Income taxes paid

$ --

The accompanying notes are an integral part of the consolidated financial statements.

FRAMEWAVES, INC. AND SUBSIDIARY

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Summary of Business and Significant Accounting Policies

Summary of Business

The Company was incorporated under the laws of the State of Nevada on December 23, 1985. The Company was formed to pursue business opportunities. The Company was unsuccessful in its operations. During 1993, Management determined it was in the best interest of the Company to discontinue its previous operations. The Company is considered to have re-entered into a new development stage on December 31, 1993. Because the Company discontinued its previous operations and is selling new potential business opportunities, the Company adopted quasi-reorganization accounting procedures to provide the Company a Afresh start@ for accounting purposes.

Principles of Consolidation

The consolidated financial statements contain the accounts of the Company and its wholly-owned subsidiary, Corners, Inc. All significant intercompany balances and transactions have been eliminated.

Cash Flows

For purposes of the statement of cash flows, the Company considers all highly liquid investments purchased with a maturity of three months or less to be cash or cash equivalents.

Net Loss Per Share

The net loss per share calculation is based on the weighted average number of shares outstanding during the period.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Quasi-Reorganization

December 7, 2000, the shareholders of the Company approved to adopt quasi-reorganization accounting procedures. Quasi-reorganization accounting allowed the Company to eliminate its previous accumulated deficit of approximately $235,000 against additional paid-in capital. Therefore, the adoption of quasi-reorganization accounting procedures gave the Company a “fresh start” for accounting purposes. The Company is also considered as re-entering a new

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

development stage on December 31, 1993, as it discontinued all of its previous operations. These financial statements have been restated to reflect the change.

3. Stock Split

On December 27, 2000, the Company approved a 100 for 1 reverse split of the issued and outstanding common stock but no shareholder’s ownership shall be less than 100 shares. An additional 43,394 shares were issued as a result of rounding up to the 100 share minimum.

The 100 for 1 reverse split has been retroactively applied in the accompanying financial statements.

4. Amended Articles of Incorporation

On December 27, 2000, the Company amended its articles of incorporation to change its name from Messidor Limited to FrameWaves, Inc. In addition, the Company decreased its authorized shares from 500,000,000 to 110,000,000 shares of stock of which 100,000,000 shall be designated common stock and 10,000,000 shall be designated preferred stock. At December 31, 2003, no preferred stock has been issued by the Company. The Company has the authorization to issue the preferred stock in one or more series and to determine the voting rights, preferences as to dividends and liquidation, conversion rights, and other rights of each series.

Issuance of Common Stock

On November 3, 2000, the Company issued 100,000 shares of its $.001 par value common stock for an aggregate price of $10,000. $5,000 was received in cash and $5,000 for services rendered.

Stock Options and Warrants

The Company has designated 2,000,000 shares of its authorized and unissued common stock to a future stock option plan. At December 31, 2003, there are no options or warrants outstanding to acquire the Company’s common stock.

7. Acquisition of Subsidiary

On December 27, 2000, the Company acquired 100% of the outstanding common shares of Corners, Inc. in exchange for the issuance of 1,000,000 shares of its previously authorized but unissued common stock. Corners, Inc. was purchased at book value of $910 or $.001 per share. The acquisition has been accounted for on the purchase method and 100% of the purchase price was allocated to cash.

Income Taxes

The Company has had no taxable income under Federal or State tax laws. The Company has loss carryforwards totaling $33,683 that may be offset against future federal income taxes. If not used, the carryforwards will expire between 2020 and 2023. Due to the Company being in the development stage and incurring net operating losses, a valuation allowance has been provided to reduce the deferred tax assets from the net operating losses to zero. Therefore, there are no tax benefits recognized in the accompanying statement of operations.