U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549


FORM 10-QSB


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


     For the quarterly period ended September 30, 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. 033-02783-S


FRAMEWAVES, INC.

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


 

Nevada

(State or other jurisdiction of incorporation or organization)

82-0404220

 (IRS Employer Identification No.)

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

 (Address of principal executive offices)


(801) 272-9294

(Issuer’s telephone number)



Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for 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 [  ]



APPLICABLE ONLY TO CORPORATE ISSUERS:


State the number of shares outstanding of each of the issuer’s classes of common equity, as of the most recent practicable date:


At September 30, 2003 there were 1,208,994 shares of common stock, par value $.001 issued and outstanding.


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




#





FORM 10-QSB

FRAMEWAVES, INC.

INDEX


  

Page

PART I.

Financial Information


 

Item 1.  Unaudited Financial Statements


Consolidated Balance Sheets – September 30, 2003 and December 31, 2002


Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2003 and 2002, and for the period December 31, 1993 (Quasi-Reorganization) Through March 31, 2003


Consolidated Statements of Stockholders’ Equity for the Period December 31, 1993 (Quasi-Reorganization) Through September 30, 2003


Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2003 and 2002, and for the period December 31, 1993 (Quasi-Reorganization) Through September 30, 2003


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



4




5




6




8


9



12


13

PART II.

Other Information


Item 6.  Exhibits and Reports on Form 8-K



14



Signatures


14


(Inapplicable items have been omitted)





#




PART I.


Financial Information


Item 1.  Financial Statements (unaudited)

 

In the opinion of management, the accompanying unaudited financial statements included in this Form 10-QSB reflect all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results of operations for the periods presented.  The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.





#




FRAMEWAVES, INC. AND SUBSIDIARY

(A Development Stage Company)


CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2003 AND DECEMBER 31, 2002



September 30,

December 31,

        2003       

        2002    


Assets


Current Assets:


Cash

                               

$ 2,053        

$ 2,090


Total current assets                

  2,053        

  2,090


Total Assets                        

$ 2,053        

$ 2,090



Liabilities and Stockholders' Equity


Current Liabilities:                    


Accounts payable                       

$ 5,302        

$ 1,626


Total current liabilities           

  5,302        

  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              

26,983        

26,983


Deficit accumulated during the

   development stage                    

(31,441)  

(27,728)


Total Stockholders' Equity          

 (3,249)      

    464


Total Liabilities and Stockholders'

   Equity                            

$ 2,053       

$ 2,090

  

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 NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002

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

THROUGH SEPTEMBER 30, 2003


      For The Period

   December 31, 1993

   For The         

   For The          

   For The         

  For The         

        (Quasi-

Three Months    

Three Months     

Nine Months     

Nine Months       Reorganization)

   Ended           

    Ended             

   Ended          

   Ended            

Through

September 30,   

September 30,    

September 30,    

September 30,          September 30,

    2003        

    2002         

    2003         

    2002       

     2003     



Revenues

$    --

 

$    --  

  

$    --

  

   

$    --

$  1,267


Expenses, general

And administrative

    401  

  1,058    

  

  3,713  

   

  3,452

  32,708  

  

Operating Loss

   (401)

 (1,058)  

   

(3,713)

    

(3,452)

 

(31,441)


Other Income

         --  

         --   

  

         --  

   

         --

          --  

(Expense)


Net Loss

$  (401)  

$(1,508)

  $(3,713)

$(3,452)

$(31,441)


Net Loss per Share

  $    --  

   $    --    

  

     $    --

   

    $    --

   $   (.03)





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 SEPTEMBER 30, 2003


      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, 2000

        --                --

      

          --

 

(16,379)


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        

      (43)         

 

        --


Balance, December 31, 2000     

1,208,569        1,209       

  19,518          

(16,379)


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 SEPTEMBER 30, 2003


      Deficit

Accumulated

Additional

    During the

    Common Stock   

  Paid-in

   Development

  Shares     Amount     

  Capital

        Stage          



Common stock issued due to

  stock split adjustment     

     425             --         

 

      --         

      --


Contribution by shareholder

  for Company expenses paid

  directly by shareholder       

      --    

           --        

   2,121         

      --


Net loss for the year ended

   December 31, 2001          

      --  

           --       

        --         

  (5,983)


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)


Net loss for the nine months

  ended September 30, 2003

                   --   

           --        

         --         

   (3,713)


Balance, September 30, 2003

      1,208,994       $ 1,209        

$ 26,983         

$(31,441)

 

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 NINE MONTHS ENDED SEPTEMBER, 2003 AND 2002

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

TO SEPTEMBER 30, 2003


 For the period

          December 31, 1993

    For the

    For the

     (Quasi –

Nine Months

Nine Months  

Reorganization)

     Ended

     Ended

     Through


September 30,

September 30,

September 30,

      2003      

      2002       

          2003  


Cash flows from

 operating activities:

  Net loss           

   $ (3,713)

    $(3,452)

       $(31,441)


Adjustments to

 reconcile net income

 to cash provided by

 operating activities:    

  Contribution from    

   Shareholder

               --

           --

          17,282   

Common stock issued

   for services

               --

           --

            5,000

  Increase in

   accounts payable

          3,676

      3,425

            5,302


Net cash used

  by operating

  activities:

            (37)

         (27)

          (3,857)


Cash flows from

  investing activities:


    Cash received in

      acquisition of subsidiary

              --

            --

             910


Cash flows from

  financing activities:

    Issuance of common stock

              --

            --

          5,000


Net increase

  (decrease) in cash

         (37)

         (27)

          2,053


Cash, beginning

  of period       

       2,090

        2,127

                --


Cash, end of period

   $  2,053

     $ 2,100

       $  2,053


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



1.

Summary of Business and Significant Accounting Policies


a.

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.


c.

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.


d.

Net Loss Per Share


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


a.

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.







FRAMEWAVES, INC. AND SUBSIDIARY

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Notes to Financial Statements - Continued


2.

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.


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 September 30, 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.


5.

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.


6.

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 September 30, 2003, there are no options or warrants outstanding to acquire the Company’s common stock.






FRAMEWAVES, INC. AND SUBSIDIARY

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Notes to Financial Statements - Continued


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.  Corners, Inc. did not have any significant revenues or expenses during the year ended December 31, 2000; therefore, pro forma condensed statement of operations is not presented.


8.

Income Taxes


The Company has had no taxable income under Federal or State tax laws.








Item 2.  Management’s Discussion and Analysis of Financial Condition or Plan of Operation


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 “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.


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.  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 sporadic operations and has yet to establish any significant contracts 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.


Result of Operations, Three Month and Nine Month Periods Ended September 30, 2003 and 2002


The Company generated no revenue during the three month and nine month periods ended September 30, 2003 and 2002.


General and administrative expenses for the three months ended September 30, 2003 were $401 compared to general and administrative expenses of $1,058 during the three months ended September 30, 2002.  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 $101 for the three months ended September 30, 2003 and a net loss $1,058 for the comparable period in 2002.  


Expenses for the nine months ended September 30, 2003 were $3,713 compared to general and administrative expenses of $3,452 during the nine months ended September 30, 2002.  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 $3,713 for the nine months ended September 30, 2003 and a net loss $3,452 for the comparable period in 2002.


Cumulative net loss from quasi-reorganization on December 31, 1993 through September 30, 2003 was $31,441.


Liquidity and Capital Resources


At September 30, 2003, the Company’s total assets consisted of $2,053 in cash.  Total current liabilities at September 30, 2003 consisted of $5,302 in accounts payable.  At December 31, 2002, the Company had total assets consisting of $2,090 in cash and total liabilities consisting of $1,626 in accounts payable.


The Company has no material commitments for the next twelve months and believes that its current liquidity needs can 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 anticipates that should it become necessary, it will receive sufficient contributions from shareholders to continue operations for at least the next twelve months.  However, there are no agreements or understandings to this effect.    Should the Company require additional capital, it may sell common stock, take loans from officers, directors or shareholders or enter into debt financing agreements.


Item 3.  Controls and Procedures


Within the 90-day period prior to the date of this report, we evaluated the effectiveness and operation of our disclosure controls and procedures under the supervision of our Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934.  Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that we maintain proper and effective procedures for gathering, analyzing and disclosing all information in a timely fashion that is required to be disclosed in its Exchange Act reports.  There have been no significant changes in internal controls or other factors that could significantly affect internal controls subsequent to the date we carried out our evaluation.


PART II.  Other Information


Item 6.  Exhibits and Reports on Form 8-K.


Reports on Form 8-K:  No reports on Form 8-K were filed by FrameWaves during the quarter ended September 30, 2003.


Exhibits:


Exhibit

Number

Title

Location

31.1

Certification of Chief Executive Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002

Attached

31.2

Certification of Chief Financial Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002

Attached

32.1

Certification of Chief Executive Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002

Attached

32.2

Certification of Chief Financial Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002

Attached


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: November 5, 2003

 

/s/Thomas A. Thomsen

Thomas A. Thomsen

President

Chief Executive Officer



Date: November 5, 2003

/s/ Susan Santage

Susan Santage

Chief Financial Officer