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EX-32 - Blue Line Protection Group, Inc.ergv_ex32.htm
EX-31.2 - Blue Line Protection Group, Inc.ergv_ex31-2.htm
EX-31.1 - Blue Line Protection Group, Inc.ergv_ex31-1.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
For the quarterly period ended: March 31, 2011
 
Or
 
[  ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
For the transition period from ____________ to _____________
 
Commission File Number: 000-52942
 
THE ENGRAVING MASTERS, INC.
(Exact name of registrant as specified in its charter)
 
Nevada
20-5543728
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
   
3717 W. Woodside, Spokane, WA
99208
(Address of principal executive offices)
(Zip Code)
   
(509) 599-2728
(Registrant's telephone number, including area code)
 
 
  ______________
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 [   ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that ht registrant was required to submit and post such files).  Yes [   ]   No [X]

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    [   ]  
(Do not check if a smaller reporting company)
Smaller reporting company  [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes [X]   No [   ]

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

Common Stock, $0.001 par value
7,630,000 shares
(Class)
(Outstanding as at May 16, 2011)
 

 
 
 

 

THE ENGRAVING MASTERS, INC.

Table of Contents








 
 
 

 
 
 

 






 
2

 

PART I – FINANCIAL INFORMATION

Unaudited Financial Statements

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial reporting and pursuant to the rules and regulations of the Securities and Exchange Commission ("Commission").  While these statements reflect all normal recurring adjustments which are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the financial statements and footnotes thereto, which are included in the Company's December 31, 2010, Annual Report on Form 10-K previously filed with the Commission on March 30, 2011.








 
 
 
 
 
 
 

 










 
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The Engraving Masters, Inc.
(A Development Stage Company)
Balance Sheets


 
 
March 31,
   
December 31,
 
   
2011
   
2010
 
   
(unaudited)
   
(audited)
 
Assets
           
             
Current assets:
           
   Cash
  $ 952     $ 191  
      Total current assets
    952       191  
                 
Fixed assets, net
    115       242  
                 
Total assets
  $ 1,067     $ 433  
                 
Liabilities and Stockholders’ Equity
               
                 
Current liabilities:
               
   Accounts payable
  $ 500     $ -  
      Total current liabilities
    -       -  
                 
Total liabilities
    -       -  
                 
Stockholders’ equity
               
    Preferred stock, $0.001 par value, 100,000,000 shares
               
      authorized, no shares issued and outstanding
    -       -  
    Common stock, $0.001 par value, 200,000,000 shares
               
      authorized, 7,630,000 shares issued and outstanding
               
      as of 3/31/11 and 12/31/10
    7,630       7,630  
   Additional paid-in capital
    55,645       49,645  
   Deficit accumulated during development stage
    (62,708 )     (56,842 )
   Total stockholders’ equity
    1,067       433  
                 
Total liabilities and stockholders’ equity
  $ 1,067     $ 433  





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



 
4

 

The Engraving Masters, Inc.
(A Development Stage Company)
Statements of Operations
(Unaudited)




   
For the three months ended
   
Inception
 
   
March 31,
   
(September 11, 2006) to
 
   
2011
   
2010
   
March 31, 2011
 
                   
Revenue
  $ -     $ -     $ -  
                         
Expenses:
                       
   Depreciation expense
    127       127       1,406  
   General and administrative expenses
    5,739       5,476       61,302  
      Total expenses
    5,866       5,603       62,708  
                         
Net loss
  $ (5,866 )   $ (5,603 )   $ (62,708 )
                         
Weighted average number of
                       
   common shares outstanding – basic
    7,630,000       7,630,000          
                         
Net loss per share – basic
  $ (0.00 )   $ (0.00 )        





 
 
 
 
 

 


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



 
5

 

The Engraving Masters, Inc.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)


   
For the three months ended
   
Inception
 
   
March 31,
   
(September 11, 2006) to
 
   
2011
   
2010
   
March 31, 2011
 
Operating activities
                 
Net loss
  $ (5,866 )   $ (5,603 )   $ (62,708 )
Adjustments to reconcile net loss to
                       
  net cash used by operating activities:
                       
      Depreciation
    127       127       1,406  
Changes in operating assets and liabilities:
                       
      Increase in accounts payable
    500       500       500  
Net cash used by operating activities
    (5,239 )     (4,976 )     (60,802 )
                         
Investing activities
                       
   Purchase of fixed assets
    -       -       (1,521 )
Net cash used by investing activities
    -       -       (1,521 )
                         
Financing activities
                       
   Donated capital
    6,000       5,500       21,175  
   Issuances of common stock
    -       -       42,100  
Net cash provided by financing activities
    6,000       5,500       63,275  
                         
Net increase in cash
    761       524       952  
Cash – beginning of the period
    191       553       -  
Cash – end of the period
  $ 952     $ 1,077     $ 952  
                         
Supplemental disclosures:
                       
   Interest paid
  $ -     $ -     $ -  
   Income taxes paid
  $ -     $ -     $ -  



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


 
6

 

The Engraving Masters, Inc.
(A Development Stage Company)
Notes to Financial Statements
Unaudited


Note 1 – Basis of presentation

The interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC).  Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein.  It is suggested that these interim financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2010 and notes thereto included in the Company's annual report on Form 10-K.  The Company follows the same accounting policies in the preparation of interim reports.

Results of operations for the interim periods are not indicative of annual results.

Note 2 – History and organization of the company

The Company was organized September 11, 2006 (Date of Inception) under the laws of the State of Nevada, as The Engraving Masters, Inc.  The Company is authorized to issue up to 100,000,000 shares of its common stock and 100,000,000 shares of preferred stock, each with a par value of $0.001 per share.

The business of the Company is to sell engraved awards and collectibles via the Internet.  The Company has limited operations and in accordance with FASB ASC 915-10, “Development Stage Entities,” the Company is considered a development stage company.

Note 3 - Going concern

The Company’s financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The Company had an accumulated deficit of $62,208. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

In order to continue as a going concern, the Company will need, among other things, additional capital resources.  The Company is contemplating conducting an offering of its debt or equity securities to obtain additional operating capital.  The Company is dependent upon its ability, and will continue to attempt, to secure equity and/or debt financing.  There are no assurances that the Company will be successful and without sufficient financing it would be unlikely for the Company to continue as a going concern.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.


 
7

 

The Engraving Masters, Inc.
(A Development Stage Company)
Notes to Financial Statements
Unaudited

Note 4 – Accounting Policies and Procedures

Use of estimates
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 revenue and expenses during the reporting period.  Actual results could differ from those estimates.

Revenue recognition
The Company recognizes revenue when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the amount of fees to be paid by the customer is fixed or determinable; (3) the product has been provided to the customer; and (4) the collection of our fees is probable.  The Company will record revenue when it is realizable and earned and the product has been shipped to the customer.

Loss per share
Net loss per share is provided in accordance with FASB ASC 260-10, “Earnings per Share”.  Basic loss per share is computed by dividing losses available to common stockholders by the weighted average number of common shares outstanding during the period.  Diluted income (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. The Company had no dilutive common stock equivalents, such as stock options or warrants as of March 31, 2011.

Recent Accounting Pronouncements
The Company has evaluated the recent accounting pronouncements through ASU 2011-01 and believes that none of them will have a material effect on the company’s financial statements.

Note 5 – Fixed assets

Fixed assets as of March 31, 2011 and December 31, 2010, consisted of the following:

   
March 31,
   
December 31,
 
   
2011
   
2010
 
Computer equipment
  $ 1,521     $ 1,521  
                 
Accumulated depreciation
    (1,406 )     (1,279 )
    $ 115     $ 242  

During the three months ended March 31, 2011 and 2010, the Company recorded depreciation expense of $127 and $127, respectively.





 
8

 

The Engraving Masters, Inc.
(A Development Stage Company)
Notes to Financial Statements
Unaudited


Note 6 - Stockholders’ equity

The Company is authorized to issue 100,000,000 shares of $0.001 par value common stock and 100,000,000 shares of $0.001 par value preferred stock.

On September 14, 2006, the sole officer and director of the Company paid for expenses on behalf of the Company in the amount of $175.  The entire amount was donated, is not expected to be repaid and is considered to be additional paid-in capital.

On September 25, 2006, the sole officer and director of the Company donated cash in the amount of $100.  The entire amount is considered to be additional paid-in capital.

On October 5, 2006, the Company issued 6,000,000 shares of its no par value common stock as founders’ shares to an officer and director in exchange for cash in the amount of $10,000.

On October 10, 2007, the Company issued 1,630,000 shares of its par value common stock in a public offering for total gross cash proceeds in the amount of $32,600.  Total offering costs related to this issuance was $500.

Through the year ended December 31, 2009, an officer and director of the Company donated cash in the amount of $3,600.  The entire amount is considered to be additional paid-in capital.

Through the year ended December 31, 2010, an officer and director of the Company donated cash in the amount of $11,300.  The entire amount is considered to be additional paid-in capital.

Through the three months ended March 31, 2011, an officer and director of the Company donated cash in the amount of $6,000.  The entire amount is considered to be additional paid-in capital.

As of March 31, 2011, there have been no other issuances of common stock.

Note 7 – Warrants and options

As of March 31, 2011, there were no warrants or options outstanding to acquire any additional shares of common stock.

Note 8– Related party transactions

In September 2006, an officer, director and shareholder of the Company paid for incorporation expenses on behalf of the Company in the amount $175.  The full amount has been donated and is not expected to be repaid and is thus categorized as additional paid-in capital.

Also, in September 2006, an officer, director and shareholder of the Company donated cash in the amount of $100 to the Company.  The full amount has been donated and is not expected to be repaid and is thus categorized as additional paid-in capital.

In September 2007, the Company loaned an officer and director cash in the amount of $50.  The loan bore no interest and was payable on demand.  In October 2007, the loan was repaid in full.

Through the year ended December 31, 2009, an officer and director of the Company donated cash in the amount of $3,600.  The entire amount is considered to be additional paid-in capital.



 
9

 

The Engraving Masters, Inc.
(A Development Stage Company)
Notes to Financial Statements
Unaudited


Note 8– Related party transactions (continued)

Through the year ended December 31, 2010, an officer and director of the Company donated cash in the amount of $11,300.  The entire amount is considered to be additional paid-in capital.

Through the three months ended March 31, 2011, an officer and director of the Company donated cash in the amount of $6,000.  The entire amount is considered to be additional paid-in capital.

The Company does not lease or rent any property.  Office services are provided without charge by an officer and director of the Company.  Such costs are immaterial to the financial statements and, accordingly, have not been reflected therein.  The 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, such persons 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.







 
 
 
 

 









 
10

 

Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This Quarterly Report contains forward-looking statements about The Engraving Masters, Inc.’s business, financial condition and prospects that reflect management’s assumptions and beliefs based on information currently available.  We can give no assurance that the expectations indicated by such forward-looking statements will be realized.  If any of our management’s assumptions should prove incorrect, or if any of the risks and uncertainties underlying such expectations should materialize, The Engraving Master’s actual results may differ materially from those indicated by the forward-looking statements.

The key factors that are not within our control and that may have a direct bearing on operating results include, but are not limited to, acceptance of our services, our ability to expand our customer base, managements’ ability to raise capital in the future, the retention of key employees and changes in the regulation of our industry.

There may be other risks and circumstances that management may be unable to predict.  When used in this Quarterly Report, words such as,  "believes,""expects," "intends,""plans,""anticipates,""estimates" and similar expressions are intended to identify forward-looking statements, although there may be certain forward-looking statements not accompanied by such expressions.

Management’s Discussion and Results of Operation

We are an online retailer of engraved products and awards, consisting of trophies, plaques, medals, statuettes and other recognition awards capable of being engraved with various congratulatory or personal phrases, for the purpose of recognizing achievements in sports, academics or other celebrations.  Since our inception, we have worked with the singular goal of executing our business plan and establishing a base of operations.  Unfortunately, we generated no revenues in any period since our inception.  We have no sources of revenues and cannot forecast the amount, if any, of revenues we will generate for the foreseeable future.

In the execution of our business, we incur depreciation expense related to our computer equipment, as well as various general and administrative costs.  General and administrative expenses mainly consist of office expenditures and accounting and legal fees.  During the three months ended March 31, 2011, our expenses of $5,866 consisted of $127 in depreciation expense and $5,739 in general and administrative expenses.  In the comparable period for the three month period ended March 31, 2010, we incurred $5,603 in total expenses, consisting of $127 in depreciation expense and $5,476 in general and administrative expenses.  Aggregate operating expenses from our inception on September 11, 2006 through March 31, 2011 were $62,708, of which $1,406 is related to depreciation expense and $61,302 in general and administrative expenses.  No development related expenses have been or will be paid to our affiliates.  We expect to continue to incur general and administrative expenses for the foreseeable future, although we cannot estimate the extent of these costs.

As a result of our minimal level of revenues and incurring ongoing expenses related to the implementation of our business, we have experienced net losses in all periods since our inception on September 11, 2006.  In the three months ended March 31, 2011, our net loss totaled $5,866, compared to a net loss of $5,603 in the comparable three month period ended March 31, 2010.  Since our inception, we have accumulated net losses in the amount of $62,708.  We anticipate incurring ongoing operating losses and cannot predict when, if at all, we may expect these losses to plateau or narrow.  We have not been profitable from our inception through the period ended March 31, 2011.  There is significant uncertainty projecting future profitability due to our history of losses, lack of revenues, and due to our reliance on the performance of third parties on which we have no direct control.

Generating sales in the next 12 months is important to support our business.  In order for us to achieve profitability and support our planned ongoing operations, we estimate that we must begin generating a minimum of $25,000 in sales in the next 12 months.  However, we cannot guarantee that we will generate any sales, let alone achieve that target.  As of the date of this quarterly report, we are a development stage company with no revenues and a limited operational history.  We have a website located at www.engravingmasters.com to serve as our sole method of attracting customers and generating sales.  We intend to operate solely as an online company.  All sales are expected to be realized through our website.  To date, we have not received any orders via the website.



 
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Our management believes that most organizations are postponing or suspending purchasing engraved award products, such as we sell.  As a result, we have decided to delay all marketing and promotional efforts.  We intended to implement search engine placement and keyword submission optimization services to increase the visibility of our website.  To date, we have not developed or implemented any marketing strategy.

As of March 31, 2011, we had $952 of cash on hand, which our management believes these funds are not sufficient to implement our planned strategies and establish a base of operations over the next 12 months.  Our management expects that we will experience net cash out-flows for the fiscal year 2011, given the developmental nature of our business.  We cannot predict the stability of current or projected overhead or that we will generate sufficient revenues to maintain our operations without the need for additional capital.  Our management believes we may need to raise additional capital by issuing capital stock in exchange for cash in order to continue as a going concern.  There are no formal or informal agreements to attain such financing.  We cannot assure you that any financing can be obtained or, if obtained, that it will be on reasonable terms.  As such, our principal accountants have expressed substantial doubt about our ability to continue as a going concern because we have limited operations and have not fully commenced planned principal operations.  If our business fails, our investors may face a complete loss of their investment.

Our management does not anticipate the need to hire additional full- or part- time employees over the next 12 months, as the services provided by our current officers appear sufficient at this time.  Our officers work for us on a part-time basis, and are prepared to devote additional time, as necessary.  We do not expect to hire any additional employees over the next 12 months.

No development related expenses have been or will be paid to our affiliates.

Our management does not expect to incur research and development costs.

We do not have any off-balance sheet arrangements.

We currently do not own any significant plant or equipment that we would seek to sell in the near future.

We have not paid for expenses on behalf of our directors. Additionally, we believe that this fact shall not materially change.

We currently do not have any material contracts and or affiliations with third parties.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of March 31, 2011, our management, with the participation of our President and Chief Executive Officer and our Senior Vice President and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(b) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  Based upon that evaluation, our President and Chief Executive Officer and our Chief Financial Officer concluded that, as of March 31, 2011, our disclosure controls and procedures were effective in ensuring that material information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, including ensuring that such material information is accumulated by and communicated to our management, including our President and Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in internal controls over financial reporting

There was no change in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.



 
12

 

PART II – OTHER INFORMATION

Unregistered Sales of Equity Securities

On September 14, 2006, we issued 6,000,000 shares of our common stock to David A. Uddman, a founding shareholder, officer and director.  This sale of stock did not involve any public offering, general advertising or solicitation.  The shares were issued in exchange for services performed by this founding shareholder on our behalf in the amount of $6,000.  Mr. Uddman received compensation in the form of common stock for performing services related to the formation and organization of our Company, including, but not limited to, designing and implementing a business plan and providing administrative office space for use by the Company; thus, these shares are considered to have been provided as founder’s shares.  Additionally, the services are considered to have been donated, and have resultantly been expensed and recorded as a contribution to capital.  At the time of the issuance, Mr. Uddman had fair access to and was in possession of all available material information about our company, as Mr. Uddman is the President and a director of The Engraving Masters, Inc.  The shares bear a restrictive transfer legend.  On the basis of these facts, we claim that the issuance of stock to our founding shareholders qualifies for the exemption from registration contained in Section 4(2) of the Securities Act of 1933.

Exhibits and Reports on Form 8-K

Exhibit Number
Name and/or Identification of Exhibit
   
3
Articles of Incorporation & By-Laws
   
 
(a) Articles of Incorporation *
   
 
(b) By-Laws *
   
31
Rule 13a-14(a)/15d-14(a) Certifications
   
 
(a) David Uddman
   
 
(b) Jolene Uddman
   
32
Certification under Section 906 of the Sarbanes-Oxley Act (18 U.S.C. Section 1350)
   
*  Incorporated by reference herein filed as exhibits to the Company’s Registration Statement on Form 10 previously filed with the SEC on November 28, 2007, and subsequent amendments made thereto.



 
 
 

 





 
13

 


Pursuant to the requirements of the Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

THE ENGRAVING MASTERS, INC.
(Registrant)
 
Signature
Title
Date
     
/s/ David Uddman
President and
May 16, 2011
David Uddman
Chief Executive Officer
 
     
/s/ Jolene Uddman
Chief Financial Officer
May 16, 2011
Jolene Uddman
   
     
/s/ Jolene Uddman
Chief Accounting Officer
May 16, 2011
Jolene Uddman
   






 
 
 
 
 
 
 
 
 
 
 
 
 

 









 
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