10-Q 1 g3113.txt QTRLY REPORT FOR THE QTR ENDED 3-31-09 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q [X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the period ended March 31, 2009 [ ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period ___________ to ___________ Commission File Number 000-52278 SHADOW MARKETING INC. (Exact name of registrant as specified in its charter) Nevada 26-1281852 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 17365 S.W. 13th Street Pembroke Pines, Florida 33029 (Address of principal executive offices) (Zip Code) Issuer's telephone number, including area code: 954-562-3017 N/A (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days Yes [X] No [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] (do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ] Shadow Marketing Inc. (A Development Stage Company) Balance Sheets (Expressed in US Dollars) --------------------------------------------------------------------------------

See notes to financial statements. 2 Shadow Marketing Inc. (A Development Stage Company) Statements of Operations (Expressed in US Dollars) (Unaudited) --------------------------------------------------------------------------------

See notes to financial statements. 3 Shadow Marketing Inc. (A Development Stage Company) Statements of Stockholders' Equity (Deficiency) For the period September 19, 2003 (inception) to March 31, 2009 (Expressed in US Dollars) --------------------------------------------------------------------------------

See notes to financial statements. 4 SHADOW MARKETING INC. (A Development Stage Company) Statements of Cash Flows (Expressed in US Dollars) (Unaudited) --------------------------------------------------------------------------------

See notes to financial statements. 5 SHADOW MARKETING INC. (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS March 31, 2009 (Unaudited) -------------------------------------------------------------------------------- 1. INTERIM FINANCIAL STATEMENTS The unaudited financial statements as of March 31, 2009 and for the three months and nine months ended March 31, 2009 and 2008, and for the period September 19, 2003 (inception) to March 31, 2009 have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with instructions to Form 10-Q. In the opinion of management, the unaudited financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position as of March 31, 2009 and the results of operations and cash flows for the periods ended March 31, 2009 and 2008. The financial data and other information disclosed in these notes to the interim financial statements related to these periods are unaudited. The results for the nine months ended March 31, 2009 is not necessarily indicative of the results to be expected for any subsequent quarter of the entire year ending June 30, 2009. The balance sheet at June 30, 2008 has been derived from the audited financial statements at that date. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the Securities and Exchange Commission's rules and regulations. These unaudited financial statements should be read in conjunction with our audited financial statements and notes thereto for the year ended June 30, 2008 as included in our report on Form 10-K. 2. ORGANIZATION AND BUSINESS OPERATIONS Shadow Marketing Inc. (the "Company") was incorporated in the State of Nevada on September 19, 2003. The Company is a Development Stage Company as defined by Statement of Financial Accounting Standards ("SFAS") No. 7. During the year ended June 30, 2005, the Company started to publish "Up & Over", a magazine planned to contain articles focusing on the purchase, training, and care of sports horses. In the year ended June 30, 2006, the first issue was published and distributed to outlets without charge. Although the Company plans to publish three to four issues per year, it has not published and distributed a second issue due to a lack of working capital. 3. DUE TO RELATED PARTY The due to related party is due a Company officer and director, does not bear interest, and is due on demand. 4. STOCKHOLDERS' EQUITY The Company has not adopted a stock option plan and has not issued any stock options or other common stock equivalents. 5. INCOME TAXES The provision for (benefit from) income taxes differs from the amount computed by applying the statutory United States federal income tax rate of 35% to income (loss) before income taxes. The sources of the difference follow: 6 SHADOW MARKETING INC. (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS March 31, 2009 (Unaudited) --------------------------------------------------------------------------------

Significant components of the Company's deferred income tax assets are as follows: March 31, June 30, 2009 2008 -------- -------- Net operating loss carryforward $ 25,820 $ 23,286 Valuation allowance (25,820) (23,286) -------- -------- Net deferred tax assets $ -- $ -- ======== ======== Based on management's present assessment, the Company has not yet determined it to be more likely than not that a deferred tax asset of $25,820 at March 31, 2009 attributable to the future utilization of the net operating loss carryforward of $73,772 will be realized. Accordingly, the Company has provided a 100% allowance against the deferred tax asset in the financial statements. The Company will continue to review this valuation allowance and make adjustments as appropriate. The $73,772 net operating loss carryforward expires $ 12 in year 2024, $16,967 in year 2025, $20,385 in year 2026, $8,372 in year 2027, $20,795 in year 2028, and $7,241 in year 2029. Current United States income tax laws limit the amount of loss available to offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited. 6. COMMITMENTS AND CONTINGENCIES Rental agreement - The Company has been using office space provided by an officer and director at no cost to the Company. Conflicts of interest - Officers and directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, they may face a conflict in selecting between the Company and their other business interests. The Company has not formulated a policy for the resolution of such conflicts. 7 FORWARD-LOOKING STATEMENTS This Form 10-Q includes "forward-looking statements" within the meaning of the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. All statements other than historical facts included in this report, including without limitation, statements under "Plan of Operation", regarding our financial position, business strategy, and plans and objectives of management for the future operations, are forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to, market conditions, competition and the ability to successfully complete financing. ITEM 2. PLAN OF OPERATION OVERVIEW We were incorporated pursuant to the laws of Nevada on September 19, 2003. During the year ended June 30, 2005, we published the first issue of our magazine, "Up & Over". The first edition was distributed to retailers without charge and it has not yet been determined whether a market exists for the magazine. CASH REQUIREMENTS We will continue to attempt to raise funds necessary for the publication of additional issues of Up & Over Magazine, at an anticipated cost of $15,000 per issue. Subject to financing, we would anticipate publishing up to four issues for a potential aggregate cost of $60,000. However, during the current and most recently completed fiscal years, we have been unsuccessful in raising funds for operations. In addition, we are reviewing other potential acquisitions in various business sectors with a view to enhancing stockholder value. Currently, we are in the process of completing a due diligence investigation of various opportunities. However, there is no guarantee that we will be able to reach any agreement to acquire any assets. As well, we anticipate spending an additional $15,000 on administrative costs such as accounting and auditing fees, legal fees and fees incurred in our compliance with reporting obligations. Total expenditures over the next 12 months are therefore expected to be $75,000. SOURCES AND USES OF CASH At March 31, 2009, our current assets consisted of $1,838 in cash. With these funds, we will only be able to satisfy our cash requirements for approximately one month, provided we do not publish any additional issues of Up & Over Magazine. Accordingly, we will have to raise additional funds in the next twelve months in order to sustain and expand our operations. We currently do not have a specific plan of how we will obtain such funding; however, we anticipate that additional funding will be in the form of equity financing from the sale of our common 8 stock. We have and will continue to seek to obtain short-term loans from our directors, although no future arrangement for additional loans has been made. We do not have any agreements with our directors concerning these loans. We do not have any arrangements in place for any future equity financing. EVENTS, TRENDS AND UNCERTAINTIES The continuing development of our business will depend upon our ability to attract subjects for our magazine articles, as well as advertisers. Future advertising may be affected by events and trends such as general economic conditions, alternative means of advertising and the circulation of our magazine. In order to increase our revenue in the future, we will have to increase our advertising rates and eventually charge a cover price for our magazine once we establish a market for it. In order to justify higher rates, we will need to increase our magazine circulation by reaching agreements with magazine distributors. We have not entered into any distribution agreements to date and cannot be assured that we will be able to do so. RESULTS OF OPERATIONS We did not earn any revenues during the nine-month period ended March 31, 2009. We incurred operating expenses in the amount of $7,241 for the period consisting entirely of general and administrative costs. We have not attained profitable operations and are dependent upon obtaining financing to pursue activities. For these reasons, there is substantial doubt that we will be able to continue as a going concern. ITEM 3 CONTROLS AND PROCEDURES EVALUATION OF DISCLOSURE CONTROLS We evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2009. This evaluation was conducted by Greg Fedun, our chief executive officer and Christopher Paterson, our principal accounting officer. Disclosure controls are controls and other procedures that are designed to ensure that information that we are required to disclose in the reports we file pursuant to the Securities Exchange Act of 1934 is recorded, processed, summarized and reported. LIMITATIONS ON THE EFFECTIVE OF CONTROLS Our management does not expect that our disclosure controls or our internal controls over financial reporting will prevent all error and fraud. A control system, no matter how well conceived and operated, can provide only reasonable, but no absolute, assurance that the objectives of a control system are met. Further, any control system reflects limitations on resources, and the benefits of a control system must be considered relative to its costs. These limitations also include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of a control. A design of a control system is also based upon certain assumptions about potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected. 9 CONCLUSIONS Based upon their evaluation of our controls, Greg Fedun, our chief executive officer and Christopher Paterson, our principal accounting officer, have concluded that, subject to the limitations noted above, the disclosure controls are effective providing reasonable assurance that material information relating to us is made known to management on a timely basis during the period when our reports are being prepared. There were no changes in our internal controls that occurred during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect our internal controls. PART II- OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company is not a party to any pending legal proceeding. Management is not aware of any threatened litigation, claims or assessments. ITEM 2. CHANGES IN SECURITIES None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS AND REPORT ON FORM 8-K 31.1 Certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 31.2 Certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 We did not file any current reports on Form 8-K during the nine-month period ended March 31, 2009. 10 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. May 5, 2009 Shadow Marketing Inc. /s/ Greg Fedun -------------------------------- Greg Fedun, President and Chief Executive Officer /s/ Christopher Paterson -------------------------------- Christopher Paterson Principal Accounting Officer and Principal Financial Officer 11

Shadow Marketing Inc. 10-Q