ITEM 1. BUSINESS
GENERAL INFORMATION ABOUT OUR COMPANY
We were incorporated in the state of Nevada on September 25, 2007. Andrea Fehsenfeld was appointed sole officer and director. At that time the board of directors voted to seek capital and begin development of our business plan. We received our initial funding of $9,000 through the sale of common stock to Ms. Fehsenfeld who purchased 3,000,000 shares of common stock at $0.003 per share and $45,000 from the sale of 3,000,000 shares of common stock issued to 30 un-affiliated investors at $0.015 per share. On June 11, 2008, we effected a five for one forward stock split of our authorized and issued and outstanding common stock. As a result, our authorized capital has increased from 75,000,000 to 375,000,000 shares of common stock and our outstanding share capital has increased from 6,000,000 shares of common stock to 30,000,000 shares of common stock.
PRINCIPAL PRODUCTS OR SERVICES AND THEIR MARKETS:
Our principal products are feature films and television series designed for the North American market.
We intend to option scripts and treatments to package the projects and sell to them to various studios and production companies. Our choice of projects will vary dependent upon market trends and interests. The entertainment sector is booming as an exploding television and internet landscape are increasing the demand for quality filmed material.
The projects we package will have the opportunity to generate revenue not just in North America but also in the foreign and ancillary markets. TV series can syndicate both locally and globally and films can be shown in a variety of markets for years, which provide an ongoing source of revenue, often in perpetuity. This will make them very attractive to possible buyers.
DISTRIBUTION METHODS OF THE PRODUCTS OR SERVICES:
We initially plan to attend the various film and TV markets in North America and Europe to source the projects we choose to option. Once we have sourced a number
of projects, we will begin the packaging process, which involves many pre-production activities such as securing appropriate cast and above the line talent (directors etc).
Either before or once the projects are completely packaged we will to speak to various broadcasters, studios and specialized distributors about purchasing the packaged projects.
The typical revenues secured during selling off the packaged projects vary based on the scope and subject matter of the project, who is attached and what audience the piece is targeted towards. As a rule, we are seeking a 10-20% mark up on our costs.
STATUS OF ANY PUBLICLY ANNOUNCED NEW PRODUCT OR SERVICE:
We currently have no new publicly announced products or services.
COMPETITIVE BUSINESS CONDITIONS AND OUR COMPETITIVE POSITION IN THE INDUSTRY AND METHODS OF COMPETITION:
The production industry allows for smart newcomers to earn revenue via packaging of projects and then selling them to studios and companies eager to green light projects that are ready to go. The lack of funding for the initial optioning phase is an area of frustration for many companies starting out. By owing several concepts from the start Boreal Productions will have the leverage to parlay these into profitable projects.
We believe that our competitive strengths will be having an experienced team of producers and writers on board to shepherd the optioned projects into award winning entertainment for the clients who buy them.
SOURCES AND AVAILABILITY OF RAW MATERIALS AND THE NAMES OF PRINCIPAL SUPPLIERS:
We will not be using raw materials in our industry.
DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS:
Luckily, the distribution markets for entertainment are diverse so we will never be dependent on one source for our revenue. We may sell one series to Warner and then sell a project to Disney. This variety also allows us to build up relationships with many players, thereby giving us more creative latitude with the projects we choose to option.
PATENTS, TRADEMARKS, LICENSES, FRANCHISES, CONCESSIONS, ROYALTY AGREEMENTS OR LABOR CONTRACTS, INCLUDING DURATION:
In optioning entertainment properties, we do not have to concern ourselves with any of the above, other than ensuring we are adhering to any contractual obligations we create with writers and producers during development and adhering to the union pay scales when filming in the various states.
NEED FOR ANY GOVERNMENT APPROVAL OF PRINCIPAL PRODUCTS OR SERVICES:
We do not require any government approval for optioning; producing or distributing the type of entrainment we plan to create.
EFFECT OF EXISTING OR PROBABLE GOVERNMENTAL REGULATIONS ON THE BUSINESS:
We are not subject to any government regulations.
THE AMOUNT SPENT DURING EACH OF THE LAST TWO FISCAL YEARS ON RESEARCH AND DEVELOPMENT ACTIVITIES:
We have not spent any money on research and development activities.
COSTS AND EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS (FEDERAL, STATE AND LOCAL):
We are not aware of any environmental regulations that could directly affect our operations, but no assurance can be given that environmental regulations will not, in the future, have a material adverse impact on our business.
NUMBER OF TOTAL EMPLOYEES AND NUMBER OF FULL TIME EMPLOYEES:
At the present time, the company has no employees other than its officer and director who devote their time either as needed or on a full-time basis to the Company's business.
BANKRUPTCY OR SIMILAR PROCEEDINGS
There has been no bankruptcy, receivership or similar proceeding.
REORGANIZATIONS, PURCHASES OR SALES OF ASSETS
There have been no material reclassifications, mergers, consolidations, or purchase or sale of a significant amount of assets not in the ordinary course of business.
REPORTS TO SECURITIES HOLDERS
We provide an annual report that includes our audited financial information to our shareholders upon written request. We will make our financial information equally available to any interested parties or investors through compliance with the disclosure rules of the Securities Exchange Act of 1934. We will be subject to disclosure filing requirements including filing a Form 10-K annually and Form 10-Q quarterly. In addition, we will file Form 8-K and other proxy and information statements from time to time as required. We do not intend to voluntarily file the above reports in the event our obligation to file such reports is suspended under the Exchange Act.
The public may read and copy any materials that we file with the Securities and Exchange Commission, ("SEC"), at the SEC's Public Reference Room at 100 F Street NE, Washington, DC 20549. The public may obtain information on the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
ITEM 1A.
ITEM 1A. RISK FACTORS
SINCE WE ARE A DEVELOPMENT STAGE COMPANY, HAVE GENERATED NO REVENUES AND LACK AN OPERATING HISTORY, AN INVESTMENT IN THE SHARES OFFERED HEREIN IS HIGHLY RISKY AND COULD RESULT IN A COMPLETE LOSS OF YOUR INVESTMENT IF WE ARE UNSUCCESSFUL IN OUR BUSINESS PLANS.
Our company was incorporated in September 2007; we have recently commenced our business operations but we have not yet realized any revenues. We have a limited operating history upon which an evaluation of our future prospects can be made. Such prospects must be considered in light of the substantial risks, expenses and difficulties encountered by new entrants into the production industry. Our ability to achieve and maintain profitability and positive cash flow is highly dependent upon a number of factors, including our ability to purchase/option quality material and develop it into projects that will earn revenue. Based upon current plans, we expect to incur operating losses in future periods as we incur significant expenses associated with the initial startup of our business. Further, we cannot guarantee that we will be successful in realizing revenues or in achieving or sustaining positive cash flow at any time in the future. Any such failure could result in the possible closure of our business or force us to seek additional capital through loans or additional sales of our equity securities to continue business operations.
WE DO NOT YET HAVE ANY SUBSTANTIAL ASSETS AND ARE TOTALLY DEPENDENT UPON OUR CURRENT CASH TO FULLY FUND OUR BUSINESS.
The only cash currently available is the cash paid by our founder for the acquisition of her shares, proceeds from our offering and funds loaned to us by our director. We must generate revenue from operations or further funding to continue. There can be no assurance that we would be able to raise additional funding needed in the event that unanticipated costs increases our projected expenses. Our auditors have expressed substantial doubt as to our ability to continue as a going concern.
WE CANNOT PREDICT WHEN OR IF WE WILL PRODUCE REVENUES, WHICH COULD RESULT IN A TOTAL LOSS OF YOUR INVESTMENT IF WE ARE UNSUCCESSFUL IN OUR BUSINESS PLANS.
We have not yet generated any revenues from operations. There can be no assurance that we will generate revenues or that revenues will be sufficient to maintain our business. As a result, investors could lose all of their investment if we are not successful in our proposed business plans.
OUR CONTINUED OPERATIONS DEPEND ON CURRENT PRODUCTION APPETITES. IF THE PROJECTS WE CHOOSE TO PRODUCE DO NOT MEET THE CRITERIA OF DISTRIBUTION PARTNERS, THE ABILITY TO GENERATE REVENUE WILL BE MINIMIZED.
The production industry worldwide is in a favorable position. The demand for quality entertainment worldwide is reaching record levels. If this appetite diminishes, there will be less demand and we could find ourselves with properties that no one is willing to purchase.
THE LOSS OF ANDREA FEHSENFELD OR OTHER KEY MANAGEMENT PERSONNEL WOULD HAVE AN ADVERSE IMPACT ON OUR FUTURE DEVELOPMENT AND COULD IMPAIR OUR ABILITY TO SUCCEED.
Our performance is substantially dependent upon the creative expertise of our President, Andrea Fehsenfeld, and our ability to hire and retain qualified personnel. It may be difficult to find sufficiently qualified individuals to replace Andrea Fehsenfeld if we were to lose her services. The loss of Andrea Fehsenfeld or any of our future key management personnel could have a material adverse effect on our business, development, financial condition, and operating results.
COMPETITION IN THE PRODUCTION INDUSTRY IS STRONG. IF WE CANNOT SUCCESSFULLY COMPETE, OUR BUSINESS MAY BE ADVERSELY AFFECTED.
The production industry has always had a strong lure for people interested in Hollywood. We will compete against a large number of well-established studios with greater product and name recognition and with substantially greater financial and marketing capabilities than ours, as well as against a large number of small specialty producers. Our competitors include, by way of example, Columbia, Paramount, NBC, ABC and other well-known and respected companies. There can be no assurance that we can compete successfully in this complex and changing market. If we cannot, our business will be adversely affected.
ITEM 2.
ITEM 2. PROPERTIES
We do not currently own any property. We are currently operating out of a detached office space on a private piece of property while we are in the organizational stage. We have not leased an office yet but anticipate signing a lease in 2013 if operations warrant it.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
We are not currently a party to any legal proceedings, and we are not aware of any pending or potential legal actions.
ITEM 4.
ITEM 4. MINE SAFETY DISCLOSURES
N/A
PART II
ITEM 5.
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our common stock is listed for quotation on the Over-the-Counter Bulletin Board under the symbol BPRO. There has been no active trading of our stock on the OTC Bulletin Board.
PENNY STOCK RULES
The Securities and Exchange Commission has also adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the Nasdaq system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system).
A purchaser is purchasing penny stock which limits the ability to sell the stock. Our shares constitute penny stock under the Securities and Exchange Act. The shares will remain penny stocks for the foreseeable future. The classification of penny stock makes it more difficult for a broker-dealer to sell the stock into a secondary market, which makes it more difficult for a purchaser to liquidate his/her investment. Any broker-dealer engaged by the purchaser for the purpose of selling his or her shares in us will be subject to Rules 15g-1 through 15g-10 of the Securities and Exchange Act. Rather than creating a need to comply with those rules, some broker-dealers will refuse to attempt to sell penny stock.
The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document, which:
- contains a description of the nature and level of risk in the market for penny stock in both public offerings and secondary trading;
- contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the Securities Act of 1934, as amended;
- contains a brief, clear, narrative description of a dealer market, including "bid" and "ask" price for the penny stock and the significance of the spread between the bid and ask price;
- contains a toll-free telephone number for inquiries on disciplinary actions;
- defines significant terms in the disclosure document or in the conduct of trading penny stocks; and
- contains such other information and is in such form (including language,type, size and format) as the Securities and Exchange Commission shall require by rule or regulation;
The broker-dealer also must provide, prior to effecting any transaction in a penny stock, to the customer:
- the bid and offer quotations for the penny stock;
- the compensation of the broker-dealer and its salesperson in the transaction;
- the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and
- monthly account statements showing the market value of each penny stock held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements will have the effect of reducing the trading activity in the secondary market for our stock because it will be subject to these penny stock rules. Therefore, stockholders may have difficulty selling their securities.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
We do not have any equity compensation plans.
SECTION 16(a)
Based solely upon a review of Form 3 and 4 furnished by us under Rule 16a-3(d) of the Securities Exchange Act of 1934, we are not aware of any individual who failed to file a required report on a timely basis required by Section 16(a) of the Securities Exchange Act of 1934.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
There were no purchases of shares of our common stock by us or any affiliated purchasers during the year ended September 30, 2012.
FORWARD STOCK SPLIT
Effective June 11, 2008, we effected a five for one forward stock split of our authorized and issued and outstanding common stock. As a result, our authorized capital has increased from 75,000,000 to 375,000,000 shares of common stock and our outstanding share capital has increased from 6,000,000 shares of common stock to 30,000,000 shares of common stock.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
We are still in our development stage and have generated no revenue to date.
We incurred operating expenses of $12,752 and $11,252 for the years ended September 30, 2012 and 2011, respectively. These expenses consisted of general operating expenses and professional fees incurred in connection with the day to day operation of our business. Our net loss from inception through September 30, 2012 was $70,628.
Cash provided by financing activities for the period from inception (September 24, 2007) through September 30, 2012 was $54,000, resulting from the sale of 3,000,000 shares of common stock issued to our director at $0.003 per share for $9,000 and 3,000,000 shares of common stock issued to 30 un-affiliated investors at $0.015 for proceeds of $45,000.
Effective June 11, 2008, we effected a five for one forward stock split of our authorized and issued and outstanding common stock. As a result, our authorized capital has increased from 75,000,000 to 375,000,000 shares of common stock and our outstanding share capital has increased from 6,000,000 shares of common stock to 30,000,000 shares of common stock.
Our auditors have expressed their doubt about our ability to continue as a going concern unless we are able to generate profitable operations.
LIQUIDITY AND CAPITAL RESOURCES
Our cash balance at September 30, 2012 was $1,157. Management does not believe our cash balance will be enough to fund operations for the next twelve months. She has agreed to advance the company funds for operations until we begin to generate revenue from operations.
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements.
PLAN OF OPERATION
MILESTONES
MAY 2008 - JUNE 2008
Our corporate logo design and stationary was completed. Boreal web site began construction. We attended the Banff TV and New Media festival from the 6th-11th of June. At these two events, we made contact with three other producers and writers who we have received scripts from for packaging. We sent the scripts out for review from actors and directors.
JULY 2008 - DECEMBER 2008:
During this phase, Boreal optioned a new film property, Crimson Falls, and we are currently in negotiations on another TV series. Our web site has its home page up with more information to follow. We secured a director for a project that we will be optioning in 2009 called "The Clinic".
JANUARY 2009 - JUNE 2009
We approached a director and lead actors for "The Clinic" packaging. We also started preliminary negotiations on both director and composer for "Crimson Falls". There are four other TV projects, which we began negotiations on to option. We attended the Banff TV Festival in June 2009 and made several good connections with distributors. We are packaging two other series: Vikram Vij: India Infused and Raider of the Spice Rack.
JULY 2009 - DECEMBER 2009
We did a joint deal with Vancouver based Free Form Productions on three TV projects: ICON, Breakaway and My Kind of Town. We approached three different Los Angeles based agents: CAA, UTA and Rebel Entertainment to assist us with other packaging elements and meetings have been set up for the New Year - February 2010. "The Clinic" packaging is completed. Tickets and flights were booked for the NATPE conference, which is happening at the end of January 2010 in Las Vegas, Nevada.
JANUARY 2010 - SEPTEMBER 2010
We attended the NATPE conference in Las Vegas at the end of January to market the company. We had successful meetings with NBC, Marvista, ABC Family and Lionsgate. We traveled to Los Angeles in February and met agents at Rebel Entertainment, CAA, UTA and William Morris to develop new referrals for packaging. The meetings were successful and we have started discussions with other producers. In March we secured the director for Crimson Falls - PR Brown - and started approaching key distributors on that film. In June we attended the Banff TV conference again to further develop our programs and attach other key players.
OCTOBER 2010 - MARCH 2011
We have made a deal with Arclight Films to distribute Crimson Falls. We are currently in discussions with a financier in Los Angeles to complete the equity-financing component of the project. Since Arclight committed to distribution, we did not attend the American Film Market. In September we attended West Doc in Los Angeles, where we met with Discovery, History, Bravo, WETV and the Game Show Network to discuss unscripted ideas. In November we met with various talent agents in Los Angeles to start securing LOI's for the lead roles in Crimson Falls.
APRIL - SEPTEMBER 2011
We were delayed in closing financing on Crimson Falls due to an integral change in the Northern Ontario film credit program, which was to supply 20% of our financing. There continued to be great interest from the talent agents we have
approached re: cast options for this project. We attended the Toronto Film Festival in early September to create pre-buzz for the movie. In June, we attended the Banff New Media festival to speak with distributors about other upcoming projects.
OCTOBER - DECEMBER 2011
The Northern Ontario film tax credit program was reinstated and we submitted our application to them in November. We had preliminary confirmation of being shortlisted for the program. We will find out in January 2012 if we are successful. The outcome of this decision will dictate what remaining financing needs to be completed. Our CEO will be in Los Angeles for several months in the New Year, trying to secure the last leg of financing. Our meetings at TIFF went well and we secured an Ontario based producer, Michael Baker, for the production of Crimson Falls in Ontario in 2012 if the financing is completed. We also forged a relationship with Breakthrough Entertainment, a large distributor, for a possible output deal for TV movies.
JANUARY - JUNE 2012
As of May 7, 2012, we are still waiting for a final funding answer from the Northern Ontario film tax credit program. Their decision-making has been deferred by several months as they were assessing the funds they had to distribute. Currently, we have several Canadian distributors on standby, waiting for the funding decision. If we do not receive the funds, the project will need to be re-assessed as Arclight Films, the international sales agent, is unable to offer any upfront pre sales. Our CEO will be attending the Real Screen West Conference on May 30th and 31st in Santa Monica, to try and move several other projects into development. In addition, the CEO will likely attend the Producers Guild of America's annual conference June 8-10th in Culver City to continue momentum on additional projects.
JULY 2012 - DECEMBER 2012
Crimson Falls was not chosen for funding from the Northern Ontario film tax credit program. As a result, we will be changing directors to try and access Telefilm financing and complete the project in 2013. Our CEO did attend Real Screen West and pitched new projects; we are waiting to hear back from Discovery and Spike (US Broadcasters) on possibly moving forward into development.
JANUARY 2013 - JUNE 2013
We are currently waiting assessment from a major distributor on contributing the necessary piece of financing for Crimson Falls, which will allow us to apply to Telefilm and move into production in mid 2013. Our CEO is attending a digital marketing conference in Las Vegas in January 2013 to investigate and develop additional streams for marketing content ideas. Our CEO may attend the Real Screen Conference East in Washington, DC, at the end of January 2013, to pitch new project ideas. Our CEO will be back in Los Angeles in February attending meetings to secure interest on several television concepts.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS
GEORGE STEWART, CPA 316 17TH AVENUE SOUTH SEATTLE, WASHINGTON 98144 (206) 328-8554 FAX(206) 328-0383
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors Boreal Productions Inc.
I have audited the accompanying balance sheets of Boreal Productions Inc. (A Development Stage Company) as of September 30, 2012 and 2011, and the related statements of operations, stockholders' equity and cash flows for the years ended September 30, 2012 and 2011 and for the period from may 9, 2007 (inception), to September 30, 2012. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the 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. I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Boreal Productions Inc., (A Development Stage Company) as of September 30, 2012 and 2011, and the results of its operations and cash flows for the years ended September 30, 2012and 2011 and the period from May 9, 2007 (inception), to September 30, 2012 in conformity with generally accepted accounting principles in the United States of America.
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note # 3to the financial statements, the Company has had no operations and has no established source of revenue. This raises substantial doubt about its ability to continue as a going concern. Management's plan in regard to these matters is also described in Note # 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ George Stewart ------------------------------- Seattle, Washington December 27, 2012
BOREAL PRODUCTIONS INC. (A Development Stage Company) Balance Sheet --------------------------------------------------------------------------------
See Notes to Financial Statements
BOREAL PRODUCTIONS INC. (A Development Stage Company) Statement of Operations --------------------------------------------------------------------------------
See Notes to Financial Statements
BOREAL PRODUCTIONS INC. (A Development Stage Company) Statement of Changes in Stockholders' Equity From September 24, 2007 (Inception) through September 30, 2012 --------------------------------------------------------------------------------
Note: On June 24, 2008 the Company effected a 5 for 1 forward split of its share capital such that every one share of common stock issued and outstanding prior to the split was exchanged for five post-split shares of common stock.
See Notes to Financial Statements
BOREAL PRODUCTIONS INC. (A Development Stage Company) Statement of Cash Flows --------------------------------------------------------------------------------
See Notes to Financial Statements
BOREAL PRODUCTIONS INC. (An Development Stage Company) Notes to Financial Statements September 30, 2012 --------------------------------------------------------------------------------
NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
Boreal Productions Inc. (the Company) was incorporated under the laws of the State of Nevada on September 24, 2007. The Company was formed to option feature films and TV projects and then package them to sell at a profit to various studios and production companies.
The Company is in the development stage. Its activities to date have been limited to capital formation, organization and development of its business plan. The Company has commenced limited operations.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. BASIS OF ACCOUNTING
The Company's financial statements are prepared using the accrual method of accounting. The Company has elected a September 30, year-end.
B. BASIC EARNINGS PER SHARE
ASC No. 260, "Earnings Per Share", specifies the computation, presentation and disclosure requirements for earnings (loss) per share for entities with publicly held common stock. The Company has adopted the provisions of ASC No. 260.
Basic net loss per share amounts is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted earnings per share are the same as basic earnings per share due to the lack of dilutive items in the Company.
C. CASH EQUIVALENTS
The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.
D. USE OF ESTIMATES AND ASSUMPTIONS
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In accordance with ASC No. 250 all adjustments are normal and recurring.
BOREAL PRODUCTIONS INC. (An Development Stage Company) Notes to Financial Statements September 30, 2012 --------------------------------------------------------------------------------
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
E. INCOME TAXES
Income taxes are provided in accordance with ASC No. 740, Accounting for Income Taxes. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carryforwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of all of the deferred tax assets will be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
F. REVENUE
The Company records revenue on the accrual basis when all goods and services have been performed and delivered, the amounts are readily determinable, and collection is reasonably assured. The Company has not generated any revenue since its inception.
G. ADVERTISING
The Company will expense its advertising when incurred. There has been no advertising since inception.
NOTE 3. GOING CONCERN
The accompanying financial statements are presented on a going concern basis. The Company had no operations during the period from September 24, 2007 (date of inception) to September 30, 2012 and generated a net loss of $70,628. This condition raises substantial doubt about the Company's ability to continue as a going concern. Even though the Company is currently in the development stage and has minimal expenses, management does not believe that the company's current cash of $1,157 is sufficient to cover the expenses they will incur during the next twelve months.
NOTE 4. WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any additional shares of common.
BOREAL PRODUCTIONS INC. (An Development Stage Company) Notes to Financial Statements September 30, 2012 --------------------------------------------------------------------------------
NOTE 5. RELATED PARTY TRANSACTIONS
The sole officer and director of the Company may, in the future, become involved in other business opportunities as they become available, she may face a conflict in selecting between the Company and her other business opportunities. The Company has not formulated a policy for the resolution of such conflicts.
As of September 30, 2012, there is a loan payable due to Andrea Fehsenfeld for $26,000, which is non interest bearing with no specific repayment terms.
NOTE 6. INCOME TAXES
As of September 30, 2012 ------------------------ Deferred tax assets: Net operating tax carryforwards $ 70,628 Other 0 -------- Gross deferred tax assets 70,628 Valuation allowance (70,628) -------- Net deferred tax assets $ 0 ========
Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carryforwards are expected to be available to reduce taxable income. As the achievement of required future taxable income is uncertain, the Company recorded a valuation allowance.
NOTE 7. NET OPERATING LOSSES
As of September 30, 2012, the Company has a net operating loss carryforwards of approximately $70,628. Net operating loss carryforward expires twenty years from the date the loss was incurred.
NOTE 8. STOCK TRANSACTIONS
Transactions, other than employees' stock issuance, are in accordance with ASC No. 505. Thus issuances shall be accounted for based on the fair value of the consideration received. Transactions with employees' stock issuance are in accordance with ASC No. 718. These issuances shall be accounted for based on the fair value of the consideration received or the fair value of the equity instruments issued, or whichever is more readily determinable.
On September 24, 2007 the Company issued a total of 15,000,000 shares of common stock to one director for cash in the amount of $0.0006 per share for a total of $9,000.
BOREAL PRODUCTIONS INC. (An Development Stage Company) Notes to Financial Statements September 30, 2012 --------------------------------------------------------------------------------
NOTE 8. STOCK TRANSACTIONS (CONTINUED)
On February 18, 2008 the Company issued a total of 15,000,000 shares of common stock to thirty investors for cash in the amount of $0.003 per share for a total of $45,000.
On June 11, 2008 the Company effected a 5 for 1 forward split of its share capital such that every one share of common stock issued and outstanding prior to the split was exchanged for five post-split shares of common stock. The number of shares referred to in the previous paragraphs is post-split number of shares. The Company also changed its post-split authorized capital to 375,000,000 shares of common stock with a par value of $0.001 per share. All share amounts have been retroactively adjusted for all periods presented.
As of September 30, 2012 the Company had 30,000,000 shares of common stock issued and outstanding.
NOTE 9. STOCKHOLDERS' EQUITY
The stockholders' equity section of the Company contains the following classes of capital stock as of September 30, 2012:
Common stock, $ 0.001 par value: 375,000,000 shares authorized; 30,000,000 shares issued and outstanding.
NOTE 10. NEW ACCOUNTING PRONOUCEMENTS
The Company has evaluated all the recent accounting pronouncements through the date the financial statements were issued and filed with the Securities and Exchange Commission and believe that none of them will have a material effect on the company's financial statements.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON FINANCIAL DISCLOSURE
None.
ITEM 9A.
ITEM 9A. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Under the supervision and with the participation of our management, including our principal executive officer and the principal financial officer (our president), we have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded as of the evaluation date that our disclosure controls and procedures were effective such that the material information required to be included in our Securities and Exchange Commission reports is accumulated and communicated to our management, including our principal executive and financial officer, recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms relating to our company, particularly during the period when this report was being prepared.
MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, for the company.
Internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of its management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
Management recognizes that there are inherent limitations in the effectiveness of any system of internal control, and accordingly, even effective internal control can provide only reasonable assurance with respect to financial statement preparation and may not prevent or detect material misstatements. In addition, effective internal control at a point in time may become ineffective in future periods because of changes in conditions or due to deterioration in the degree of compliance with our established policies and procedures.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in there being a more than remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.
Under the supervision and with the participation of our president, management conducted an evaluation of the effectiveness of our internal control over financial reporting, as of September 30, 2011, based on the framework set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our evaluation under this framework, management concluded that our internal control over financial reporting was not effective as of the evaluation date due to the factors stated below.
Management assessed the effectiveness of the Company's internal control over financial reporting as of evaluation date and identified the following material weaknesses:
INSUFFICIENT RESOURCES: We have an inadequate number of personnel with requisite expertise in the key functional areas of finance and accounting.
INADEQUATE SEGREGATION OF DUTIES: We have an inadequate number of personnel to properly implement control procedures.
LACK OF AUDIT COMMITTEE & OUTSIDE DIRECTORS ON THE COMPANY'S BOARD OF DIRECTORS: We do not have a functioning audit committee or outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures.
Management is committed to improving its internal controls and will (1) continue to use third party specialists to address shortfalls in staffing and to assist the Company with accounting and finance responsibilities, (2) increase the frequency of independent reconciliations of significant accounts which will mitigate the lack of segregation of duties until there are sufficient personnel and (3) may consider appointing outside directors and audit committee members in the future.
Management, including our president, has discussed the material weakness noted above with our independent registered public accounting firm. Due to the nature of this material weakness, there is a more than remote likelihood that misstatements which could be material to the annual or interim financial statements could occur that would not be prevented or detected.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management's report in this annual report.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
There have been no changes in our internal control over financial reporting that occurred during the last fiscal quarter for our fiscal year ended September 30, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The director and officer of Boreal Productions Inc., who will hold her offices until death, resignation, retirement, removal, disqualification, or until a time as her successor(s) shall be elected and qualified is as follows:
Name and Address Age Position(s) ---------------- --- -----------
Andrea Fehsenfeld 43 President, Secretary, Treasurer 8017 Kenyon Avenue Director, CEO & CFO Los Angeles, CA 90045
The person named above has held her offices/positions since inception of our Company and is expected to hold said offices/positions until the next annual meeting of our stockholders. The named officer and director is our only officer, director, promoter and control person.
No current or former executive officer or director of the corporation has been the subject of any order, judgment, or decree of any court of competent jurisdiction, or any regulatory agency permanently or temporarily enjoining, barring, suspending or otherwise limiting her from acting as an investment advisor, underwriter, broker or dealer in the securities industry, or as an affiliated person, director or employee of an investment company, bank, savings and loan association, or insurance company or from engaging in or continuing any conduct or practice in connection with any such activity or in connection with the purchase or sale of any securities.
No executive officer or director of the corporation has been convicted in any criminal proceeding (excluding traffic violations) or is the subject of a criminal proceeding which is currently pending.
No executive officer or director of the corporation is the subject of any pending legal proceedings.
BACKGROUND INFORMATION ABOUT OUR SOLE OFFICER AND DIRECTOR
Andrea Fehsenfeld has been President of Free Form Productions since 1999 and has been active in the production industry during this time. She has overseen over 100 productions with clients from Asia, the US, Canada, Europe and South America. She has been a member of Women in Film, the Motion Picture Industry Association and the AICP (American Commercial Producers).
Andrea Fehsenfeld attended Langara College and received a Sales and Marketing diploma in 1992. Prior to running Free Form Productions, Ms. Fehsenfeld spent seven years in the finance industry, running her own financial planning business.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers, and persons who own more than ten percent of our common stock, to file with the Securities and Exchange Commission initial reports of ownership and reports of changes of ownership of our common stock. Officers, directors and greater than ten percent stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file.
We intend to ensure to the best of our ability that all Section 16(a) filing requirements applicable to our officers, directors and greater than ten percent beneficial owners are complied with in a timely fashion.
CODE OF ETHICS
We do not currently have a code of ethics, because we have only limited business operations and only one officer and director, we believe a code of ethics would have limited utility. We intend to adopt such a code of ethics as our business operations expand and we have more directors, officers and employees.
CORPORATE GOVERNANCE
We currently act with Andrea Fehsenfeld as our sole director. We have determined that Ms. Fehsenfeld is not an independent director as defined by Nasdaq Marketplace Rule 4200(a)(1.5).
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officer paid by us during the fiscal year that ended September 30, 2011 in all capacities for the accounts of our executives, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO):
SUMMARY COMPENSATION TABLE
OPTION GRANTS TABLE. There have been no individual grants of stock options to purchase our common stock made to the executive officer named in the Summary Compensation Table.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE. There have been no stock options exercised by the executive officer named in the Summary Compensation Table.
LONG-TERM INCENTIVE PLAN ("LTIP") AWARDS TABLE. There have been no awards made to a named executive officer in the last completed fiscal year under any LTIP.
The officer and director of the company does not intend to receive cash remuneration or salary for her efforts unless and until our business operations are successful, at which time salaries and other remuneration will be established by the Board of Directors, as appropriate.
Our officer, director, advisor or key employee is not currently party to employment agreements with the company. We have no pension, health, annuity, bonus, insurance, stock options, profit sharing or similar benefit plans; however, we may adopt such plans in the future. There are presently no personal benefits available for directors, officers or employees of the company.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of the date of this report, the total number of shares owned beneficially by our director, officer and key employee, individually and as a group, and the present owners of 5% or more of our total outstanding shares. The stockholder listed below has direct ownership of her shares and possesses sole voting and dispositive power with respect to the shares.
Name and Address of No. of Percentage Beneficial Owner (1) Shares of Ownership -------------------- ------ ------------
Andrea Fehsenfeld 15,000,000 50% 8017 Kenyon Avenue Los Angeles, CA 90045
All Officers and Directors as a Group 15,000,000 50%
---------- (1) The person named may be deemed to be a "parent" and "promoter" of the Company, within the meaning of such terms under the Securities Act of 1933, as amended, by virtue of his/her direct and indirect holdings in the Company.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On September 25, 2007, a total of 15,000,000 shares of Common Stock (post-split basis) were issued in exchange for cash in the amount of $9,000 U.S., or $.003 per share to Andrea Fehsenfeld, the sole officer and director of the company. All of such shares are "restricted" securities, as that term is defined by the Securities Act of 1933, as amended. (See "Principal Stockholders".)
Ms. Fehsenfeld was not paid for any underwriting services that she performed on our behalf with respect to our recent offering.
As of September 30, 2012, there is a loan payable due to Andrea Fehsenfeld for $26,000, which is non-interest bearing with no specific terms of repayment.
We do not currently have any conflicts of interest by or among our current officer, director, key employee or advisors. We have not yet formulated a policy for handling conflicts of interest; however, we intend to do so prior to hiring any additional employees.
ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The total fees charged to the company for audit services, including quarterly reviews, were $xxx, audit-related services were $Nil, tax services were $Nil and other services were $Nil during the year ended September 30, 2012.
The total fees charged to the company for audit services, including quarterly reviews, were $7,500, audit-related services were $Nil, tax services were $Nil and other services were $Nil during the year ended September 30, 2011.
PART IV
ITEM 15.
ITEM 15. EXHIBITS
The following exhibits are included with this filing:
Exhibit Number Description ------ -----------
3(i) Articles of Incorporation* 3(ii) Bylaws* 31.1 Sec. 302 Certification of CEO 31.2 Sec. 302 Certification of CFO 32.1 Sec. 906 Certification of CEO 32.2 Sec. 906 Certification of CFO 101 Interactive data files pursuant to Rule 405 of Regulation S-T
---------- * Included in our SB-2 filing under Commission File Number 333-146627.
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
January 4, 2013 Boreal Productions Inc.
/s/ Andrea Fehsenfeld --------------------------------------------------- By: Andrea Fehsenfeld (Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, President, Secretary, Treasurer & Sole Director)
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
/s/ Andrea Fehsenfeld Chief Executive Officer January 4, 2013 -------------------------- ----------------------- ---------------- Andrea Fehsenfeld Title Date
/s/ Andrea Fehsenfeld Chief Financial Officer January 4, 2013 -------------------------- ----------------------- ---------------- Andrea Fehsenfeld Title Date
/s/ Andrea Fehsenfeld Principal Accounting Officer January 4, 2013 -------------------------- ---------------------------- ---------------- Andrea Fehsenfeld Title Date