U

10QSB 1 framewaves605qsb.htm JUNE 30, 2005 10-QSB U

U.S. Securities and Exchange Commission

Washington, D.C. 20549

Form 10-QSB

(Mark One)

[ X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2005

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from _____________ to ______________

Commission file number: 33-2783-S

FRAMEWAVES, INC.

(Exact name of small business issuer as specified in its charter)

NEVADA 87-699977

(State or other jurisdiction of (IRS Employer Identification No.)

incorporation or organization)

1981 EAST 4800 SOUTH, SUITE 100, SALT LAKE CITY, UTAH, 84117

(Address of principal executive offices)

(801) 272-9294

(Issuer's telephone number)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under plan confirmed by a court. Yes ____ No___

APPLICABLE ONLY TO CORPORATE ISSUERS

The aggregate number of shares issued and outstanding of the issuer's common stock as of June 30, 2005 was 1,258,994 shares of $0.001par value.

Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]

FORM 10-QSB

FRAMEWAVES, INC.

INDEX

		Page
PART I.	Financial Information
	Item 1. Unaudited Financial Statements Consolidated Balance Sheets – June 30, 2005 and December 31, 2004 Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2005 and 2004, and for the period December 31, 1993 (Quasi-Reorganization) Through June 30, 2005 Consolidated Statements of Stockholders’ Equity for the Period December 31, 1993 (Quasi-Reorganization) Through June 30, 2005 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2005 and 2004, and for the period December 31, 1993 (Quasi-Reorganization) Through June 30, 2005 Notes to Consolidated Financial Statements Item 2. Management’s Discussion and Analysis of Financial Condition or Plan of Operation Item 3. Controls and Procedures	3 3 4 5-6 7 8-10 11 14
PART II.	Other Information Item 6. Exhibits and Reports on Form 8-K	14
	Signatures	15

(Inapplicable items have been omitted)

PART I.

FINANCIAL INFORMATION

ITEM 1. Financial Statements (unaudited)

FRAMEWAVES, INC. AND SUBSIDIARY

(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS

JUNE 30, 2005 AND DECEMBER 31, 2004

	June 30,	December 31,
Assets	2005	2004


Current Assets:
Cash	$ 927	$ 4,010

Total current assets	927	4,010

Total Assets	$ 927	$ 4,010


Liabilities and Stockholders' Equity

Current Liabilities:
Accounts payable	$ 4,567	$ 4,091

Total current liabilities	4,567	4,091


Stockholders' Equity:
Common stock, $.001 par value
100,000,000 shares authorized, 1,258,994 issued and outstanding	1,259	1,259

Additional paid-in capital	38,847	38,847

Deficit accumulated during the development stage	(43,746)	(40,187)

Total Stockholders' Equity	(3,640)	(81)

Total Liabilities and Stockholders' Equity	$ 927	$ 4,010

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

FRAMEWAVES, INC. AND SUBSIDIARY

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2005 AND 2004

AND THE PERIOD DECEMBER 31, 1993 (quasi-Reorganization)

THROUGH JUNE 30, 2005

					For the period
					December 31, 1993
	For the	For the	For the	For the	(Quasi –
	Three Months	Three Months	Six Months	Six Months	Reorganization)
	Ended	Ended	Ended	Ended	Through
	June 30,	June 30,	June 30,	June 30,	June 30,
	2005	2004	2005	2004	2005



Revenues	$ --	$ --	$ --	$ --	$ 1,267

Expenses, general and administrative	943	2,582	3,559	4,212	45,013

Operating loss	(943)	(2,582)	(3,559)	(4,212)	(43,746)

Other income (expense)	--	--	--	--	--

Net Loss	$(943)	$(2,582)	$(3,559)	$(4,212)	$(43,746)

Net loss per share	$ --	$ --	$ --	$ --	$ (.09)

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

FRAMEWAVES, INC. AND SUBSIDIARY

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE PERIOD DECEMBER 31, 1993 (Quasi - Reorganization) THROUGH JUNE 30, 2005

				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, 2002	--	--	--	(27,728)

Common stock issued for cash
and services at $.10 per share
on November 3, 2000	100,000	100	9,900	--

Contribution by shareholder
for Company expenses paid
directly by shareholder	--	--	17,282	--

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	43,394	43	(43)	--

Balance, December 31, 2002	1,208,994	$ 1,209	$26,983	$(27,728)

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

FRAMEWAVES, INC. AND SUBSIDIARY

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - CONTINUED

FOR THE PERIOD DECEMBER 31, 1993 (Quasi - Reorganization) THROUGH JUNE 30, 2005

				Deficit
				Accumulated
			Additional	During the
	Common Stock		Paid-in	Development
	Shares	Amount	Capital	Stage

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)

Common stock issued for cash
at $.14 per share on
December 31, 2004	50,000	50	6,950	--

Net loss for the year
ended December 31, 2004	--	--	--	(6,504)

Balance, December 31, 2004	1,258,994	1,259	38,847	(40,187)

Net loss for the six months
ended June 30, 2005	--	--	--	(3,559)

Balance, June 30, 2005	1,258,994	$ 1,259	$ 38,847	$(43,746)

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

FRAMEWAVES, INC. AND SUBSIDIARY

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004

AND THE PERIOD DECEMBER 31, 1993 (Quasi- Reorganization)

TO JUNE 30, 2005

			For the period
			December 31,
			1993
	For the	For the	(Quasi-
	Six Months	Six Months	Reorganization)
	Ended	Ended	Through
	June 30,	June 30,	June 30,
	2005	2004	2005
Cash flows from operating activities:
Net loss	$ (3,559)	$ (4,212)	$(43,746)

Adjustments to reconcile net income
To cash provided by operating activities:

Contribution from shareholder	--	--	22,196
Common stock issued for services	--	--	5,000
Increase (decrease) in accounts payable	476	4,174	4,567

Net cash used by operating activities:	(3,083)	(38)	(11,983)

Cash flows from investing activities:

Cash received in acquisition of subsidiary	--	--	910

Cash flows from financing activities:

Issuance of common stock	--	--	12,000

Net increase (decrease) in cash	(3,083)	(38)	927

Cash, beginning of period	4,010	2,040	--

Cash, end of period	$ 927	$ 2,002	$ 927

Interest paid	$ --	$ --	$ --

Income taxes paid	$ --	$ --	$ --

The accompanying notes are an integral part of the 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 “fresh start” for accounting purposes.

b. 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.

Revenue Recognition

Revenue is recognized on the accrual basis of accounting when earned. The Company's primary business generated revenue from picture framing. The Company has not had any revenue since 2001.

Notes to Financial Statements - Continued

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

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.

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 June 30, 2005, 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.

On December 1, 2004, the Company issued 50,000 shares of its common stock for $.14 per share for an aggregate cash price of $7,000.

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 June 30, 2005, there are no options or warrants outstanding to acquire the Company’s common stock.

Notes to Financial Statements - Continued

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 $40,187 that may be offset against future federal income taxes. If not used, the carryforwards will expire between 2020 and 2024. 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.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATIONS

SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS

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 "Item 2. Management's Discussion and Analysis of Financial Condition or Plan 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.

Our 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.

Our Business

FrameWaves originally intended to use Corners as an operating subsidiary and to 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 might generate leads to contracts for future operations.

As of the date of this report, Framewaves has been unsuccessful in implementing its business plan and has no ongoing operations. Due to other obligations the Company’s officers and directors have been unable to devote adequate time to developing the business and have yet to engage in any contract negotiations with frame suppliers, interior designers or retail consumers. Framewaves has had only limited operations since inception and has not generated any revenues since the fourth quarter of 2001.

Management intends to continue pursuing their original plan of operation. However, there is no assurance that the Company will ever successfully pursue or implement such a business plan. For these reasons, management believes that while it will continue to attempt to implement their framing industry business plan it is in the best interest of the Company and its shareholders to simultaneously seek, investigate, and if warranted, acquire an interest in a different business opportunity. We are not restricting our search to any particular industry or geographical area. We may therefore engage in essentially any business in any industry. Our management has unrestricted discretion in seeking and participating in a business opportunity, subject to the availability of such opportunities, economic conditions and other factors.

The selection of a business opportunity in which to participate is complex and extremely risky and will be made by management in the exercise of its business judgment. There is no assurance that we will be able to identify and acquire any business opportunity which will ultimately prove to be beneficial to our company and shareholders.

Because we have no specific business plan or expertise, our activities are subject to several significant risks. In particular, any business acquisition or participation we pursue will likely be based on the decision of management without the consent, vote, or approval of our shareholders.

Sources of Opportunities

We anticipate that business opportunities may arise from various sources, including officers and directors, professional advisers, securities broker-dealers, venture capitalists, members of the financial community, and others who may present unsolicited proposals.

We will seek potential business opportunities from all known sources, but will rely principally on the personal contacts of our officers and directors as well as indirect associations between them and other business and professional people. Although we do not anticipate engaging professional firms specializing in business acquisitions or reorganizations, we may retain such firms if management deems it in our best interests. In some instances, we may publish notices or advertisements seeking a potential business opportunity in financial or trade publications.

Criteria

We will not restrict our search to any particular business, industry or geographical location. We may acquire a business opportunity in any stage of development. This includes opportunities involving “start up” or new companies. In seeking a business venture, management will base their decisions on the business objective of seeking long-term capital appreciation in the real value of our company. We will not be controlled by an attempt to take advantage of an anticipated or perceived appeal of a specific industry, management group, or product.

In analyzing prospective business opportunities, management will consider the following factors:

available technical, financial and managerial resources;

working capital and other financial requirements;

the history of operations, if any;

prospects for the future;

the nature of present and expected competition;

the quality and experience of management services which may be available and the depth of the management;

the potential for further research, development or exploration;

the potential for growth and expansion;

the potential for profit;

the perceived public recognition or acceptance of products, services, trade or service marks, name identification; and other relevant factors.

Generally, our management will analyze all available factors and make a determination based upon a composite of available facts, without relying on any single factor.

Methods of Participation of Acquisition

Management will review specific business opportunities and then select the most suitable opportunities based on legal structure or method of participation. Such structures and methods may include, but are not limited to, leases, purchase and sale agreements, licenses, joint ventures, other contractual arrangements, and may involve a reorganization, merger or consolidation transaction. Management may act directly or indirectly through an interest in a partnership, corporation, or other form of organization.

Procedures

As part of the our investigation of business opportunities, officers and directors may meet personally with management and key personnel of the firm sponsoring the business opportunity. We may visit and inspect material facilities, obtain independent analysis or verification of certain information provided, check references of management and key personnel, and conduct other reasonable measures.

We will generally ask to be provided with written materials regarding the business opportunity. These materials may include the following:

descriptions of product, service and company history; management resumes;

financial information;

available projections with related assumptions upon which they are based;

an explanation of proprietary products and services;

evidence of existing patents, trademarks or service marks or rights thereto;

present and proposed forms of compensation to management;

a description of transactions between the prospective entity and its affiliates;

relevant analysis of risks and competitive conditions;

a financial plan of operation and estimated capital requirements;

and other information deemed relevant.

Competition

We expect to encounter substantial competition in our efforts to acquire a business opportunity. The primary competition is from other companies organized and funded for similar purposes, small venture capital partnerships and corporations, small business investment companies and wealthy individuals.

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.

Results of Operations for the Three-Month Periods Ended June 30, 2005 and 2004

The Company generated no revenue during the three-month periods ended June 30, 2005 and 2004.

General and administrative expenses for the three months ended June 30, 2005 were $943 compared to general and administrative expenses of $2,582 during the three-month period ended June 30,, 2004. Expenses consisted of general corporate administration, legal and professional fees, and accounting and auditing costs. As a result of these factors, the Company realized a net loss of $943 for the three-month period ended June 30, 2005 and a net loss of $2,582 for the comparable period in 2004.

Results of Operations for the Six-Month Periods Ended June 30, 2005 and 2004

General and administrative expenses for the six months ended June 30, 2005 were $3,559 compared to general and administrative expenses of $4,212 during the six-month period ended June 30,, 2004. Expenses consisted of general corporate administration, legal and professional fees, and accounting and auditing costs. As a result of these factors, the Company realized a net loss of $3,559 for the six-month period ended June 30, 2005 and a net loss of $4,212 for the comparable period in 2004.

Cumulative net loss from quasi-reorganization on December 31, 1993 through June 30, 2005 was $43,746.

Liquidity and Capital Resources

The Company generated no revenue during the six-month periods ended June 30, 2005 and 2004. At June 30, 2005, the Company’s total assets consisted of $927 in cash. Total current liabilities at June 30, 2005 consisted of $4,567 in accounts payable. At December 31, 2004, the Company had total assets consisting of $4,010 in cash and total liabilities consisting of $4,091 in accounts payable.

The Company has no material commitments for the next twelve months. Currently the Company has a capital deficit and its current liquidity needs cannot be met with the cash on hand. In the past, the Company has relied on capital contributions from shareholders to supplement operating capital when necessary. The Company may sell common stock, take loans from officers, directors or shareholders or enter into debt financing agreements to meet its liquidity needs for the next twelve months. However, there are no agreements or understandings to this effect.

ITEM 3. Controls and Procedures

(a) Evaluation of disclosure controls and procedures. Based on the evaluation of our disclosure controls and procedures (as defined in Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) required by Securities Exchange Act Rules 13a-15(b) or 15d-15(b), our Chief Executive Officer and our Chief Financial Officer have concluded that as of the end of the period covered by this report, our disclosure controls and procedures were effective.

(b) Changes in internal controls. There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

ITEM 6. Exhibits and Reports on Form 8-K

Reports on Form 8-K

None

Exhibits

Copies of the following documents are included as exhibits to this report pursuant to Item 601 of Regulation S-B.

Exhibit No.

SEC Ref. No.

Title of Document

Location

(31.1)

Certification of the Principal Executive Officer

pursuant to Section 302of the Sarbanes-Oxley Act of 2002

Attached

(31.2)

Certification of the Principal Financial Officer

pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Attached

(32.1)

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*

Attached

(32.2)

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

* The Exhibit attached to this Form 10-QSB shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to liability under that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

SIGNATURES

In accordance with the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

FRAMEWAVES, INC.

Date: August 10, 2005

/s/ Thomas A. Thomsen

Thomas A. Thomsen

President

Chief Executive Officer

Date: August 10, 2005

/s/ Susan Santage

Susan Santage

Chief Financial Officer