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TMT Capital Corp – ‘10KSB/A’ for 6/30/03

On:  Monday, 12/22/03, at 5:23pm ET   ·   For:  6/30/03   ·   Accession #:  1092306-3-660   ·   File #:  0-50104

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

12/22/03  TMT Capital Corp                  10KSB/A     6/30/03    5:61K                                    KMB Solutions, LLC/FA

Amendment to Annual Report — Small Business   —   Form 10-KSB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10KSB/A     Amendment to Annual Report -- Small Business --       22    109K 
                          form10ksba2                                            
 2: EX-31.1     Certification of CEO                                   2±    10K 
 3: EX-31.2     Certification of CFO                                   2±    10K 
 4: EX-32.1     Certification of CEO                                   1      7K 
 5: EX-32.2     Certification of CFO                                   1      7K 


10KSB/A   —   Amendment to Annual Report — Small Business — form10ksba2
Document Table of Contents

Page (sequential) | (alphabetic) Top
 
11st Page   -   Filing Submission
4Item 7. Financial Statements
15Earnings Per Share
"Accounting for Asset Retirement Obligations
"Accounting for the Impairment or Disposal of Long-Lived Assets
"Rescission of FASB Statements No. 4,44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections
16Accounting for Costs Associated with Exit or Disposal Activities
21Item 13. Exhibits and Reports on Form 8-K
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-KSB/A Amendment #2 (Mark One) X ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2003 TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to________________ Commission file number 000-50104 JANE BUTEL CORPORATION ______________________________________________ (Name of small business issuer in its charter) Florida 65-0327060 _______________________________ ___________________ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 125 Second Street NW, Albuquerque, NM 87102 ___________________________________________________ (Address of principal executive offices) (Zip Code) (505) 243-2622 _________________________ Issuer's telephone number Securities registered under Section 12(b) of the Exchange Act: Name of each exchange Title of each class on which registered ___________________ _____________________ None None Securities registered under Section 12(g) of the Exchange Act: Common Stock ________________ (Title of class) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X] State issuer's revenues for its most recent fiscal year. $220,748 State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of a specified date within the past 60 days. There is no market for registrant's common stock and no shares were sold within the last 60 days.
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State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. 22,620,750 shares of common stock are outstanding as of December 3, 2003. DOCUMENTS INCORPORATED BY REFERENCE None Transitional Small Business Disclosure Format (Check one): Yes [ ]; No [X]
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EXPLANATORY NOTE REGARDING THIS AMENDMENT ON FORM 10-KSB/A Registrant is filing this Annual Report on Form 10-KSB/A for the fiscal year ended June 30, 2003 solely for the purpose of making the following revision from the information reported in registrant's Annual Report on Form 10-KSB/A filed on December 8, 2003: Note 4 to the Financial Statements is revised to reconcile the disclosure of the notes payable in Note 4 with the amount of notes payable reported on the balance sheet. Please refer to the Annual Report on Form 10-KSB/A on December 8, 2003 for the balance of registrant's Form 10-KSB/A for the fiscal year ended June 30, 2003. Pursant to Exchange Act Rule 12b-15 only Part I, Item 7- Financial Statements and Exhibits 31.1, 31.2, 32.1 and 32.2 are included in this amendment.
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ITEM 7. FINANCIAL STATEMENTS. JANE BUTEL CORPORATION June 30, 2003
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Board of Directors Jane Butel Corporation INDEPENDENT AUDITOR'S REPORT I have audited the accompanying balance sheet of Jane Butel Corporation (Company) (formerly Earth Labs Inc.) as of June 30, 2003 and the related statement of operations, statement of stockholders' equity, and the statement of cash flows for the twelve month period ended June 30, 2003 and 2002. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these statements based on my audit. I conducted my audit in accordance with generally accepted auditing standards in the 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. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered recurring losses from operations and negative working capital that raise substantial doubt about its ability to continue as a going concern. This is further explained in the notes to financial statements. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 30, 2003 and the results of its operations and its cash flows for the twelve month period ended June 30, 2003 and 2002 in conformity with accounting principles generally accepted in the United States. Clyde Bailey P.C. San Antonio, Texas September 13, 2003 F-1
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[Enlarge/Download Table] JANE BUTEL CORPORATION BALANCE SHEETS __________________________ As of June 30 2003 2002 __________________________ A S S E T S Current Assets ______________ Cash $ 1,011 $ - Inventory 27,044 23,382 Accounts Receivable net of allowance for bad debt 5,156 8,817 Accounts Receivable - related party 12,894 12,894 _________ _________ Total Current Assets 46,105 45,093 Fixed Assets ____________ Equipment 114,095 114,095 Leasehold Improvements 97,159 97,159 Accumulated Depreciation (191,778) (165,197) _________ _________ Total Fixed Assets 19,476 46,057 Other Assets ____________ Television Film Costs 240,862 280,789 Websites, net of amortization 48,252 74,319 Videos, net of amortization 59,593 76,689 _________ _________ Total Other Assets 348,707 431,797 _________ _________ Total Assets $ 414,288 $ 522,947 ========= ========= L I A B I L I T I E S Current Liabilities ___________________ Cash Overdraft - 2,690 Accounts Payable 72,745 25,874 Deferred Income 16,656 55,760 Other Current Liabilities 52,162 40,594 Notes Payable 155,000 130,000 Accrued Settlements Payable 30,199 13,600 _________ _________ Total Current Liabilities 326,762 268,518 Long-Term Liabilities Notes Payable - Related Party 244,098 244,098 _________ _________ Total Long-Term Liabilities 244,098 244,098 - _________ _________ Total Liabilities 570,860 512,616 Commitments and Contingencies - - S T O C K H O L D E R S ' E Q U I T Y Preferred Stock - - 2,500,000 authorized shares, $1.00 par value none issued Common Stock 22,621 21,921 50,000,000 authorized shares, $.001 par value 22,620,750 and 21,920,750 shares issued and outstanding Additional Paid-in-Capital 47,568 47,568 Accumulated Deficit (226,761) (59,158) _________ _________ Total Stockholders' Equity (Deficit) (156,572) 10,331 _________ _________ Total Liabilities and Stockholders' Equity 414,288 522,947 ========= ========= The accompanying notes are integral part of the consolidated financial statements. F-2
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[Enlarge/Download Table] JANE BUTEL CORPORATION STATEMENT OF OPERATIONS ______________ ______________ For the For the Year Year Ending June 30 Ending June 30 ______________ ______________ 2003 2002 ______________ ______________ Revenues: _________ Revenues $ 220,748 $ 330,063 ______________ ______________ Total Revenues $ 220,748 $ 330,063 Expenses: Cost of Sales 83,670 85,161 Payroll Expenses 53,583 49,043 Occupancy Costs 19,713 21,697 Professional Fees 36,852 4,204 Interest Expense 32,193 31,836 Impairment Loss 24,199 35,400 Depreciation and Amortization Expense 102,722 41,945 Operating Expenses 57,924 71,365 ______________ ______________ Total Expenses 410,856 340,651 Net Income (Loss) from Operations $ (190,108) $ (10,588) Other Income and Expenses: __________________________ Barter Revenue $ 39,104 $ 22,560 Other Expenses (16,599) - ______________ ______________ Total Other Income and Expenses $ 22,505 $ 22,560 Net Income before taxes $ (167,603) $ 11,972 Provision for Income Taxes: ___________________________ Income Tax Benefit/(Expense) - - ______________ ______________ Net Income (Loss) $ (167,603) $ 11,972 ============== ============== Basic and Diluted Loss Per Common Share (0.01) 0.00 ______________ ______________ Weighted Average number of Common Shares 22,562,417 21,845,750 used in per share calculations ============== ============== The accompanying notes are integral part of the consolidated financial statements. F-3
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[Enlarge/Download Table] JANE BUTEL CORPORATION STATEMENT OF STOCKHOLDERS' EQUITY $.001 par value Common Paid-In Deficit Stockholders' Shares Stock Capital Accumulated Equity __________ _______________ ________ ___________ _____________ Balance, June 30, 2001 21,820,750 21,821 (13,821) (71,130) (63,130) __________ _______________ ________ ___________ _____________ Issuance of Shares for Services 100,000 100 61,389 - 61,489 Net Income (Loss) 11,972 11,972 __________ _______________ ________ ___________ _____________ Balance, June 30 2002 21,920,750 21,921 47,568 $ (59,158) $ 10,331 Stock Issued to D'Hawaii Shareholders 700,000 700 700 Net Income (Loss) (167,603) (167,603) __________ _______________ ________ ____________ _____________ Balance, June 30 2003 22,620,750 $ 22,621 $47,568 $ (226,761) $(156,572) ========== =============== ========= ============ ============= The accompanying notes are integral part of the consolidated financial statements. F-4
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[Enlarge/Download Table] JANE BUTEL CORPORATION STATEMENT OF CASH FLOWS __________ __________ For the For the Year Ended Year Ended June 30 June 30 __________ __________ 2003 2002 __________ __________ Cash Flows from Operating Activities: _____________________________________ Net Income (Loss) $ (167,603) $ 11,972 Changes in operating assets and liabilities: Depreciation Expense 26,582 32,134 Amortization Expense 76,140 9,811 Impairment Loss 24,199 35,400 Stock Issued for Services 700 - (Increase)/Decrease Account Receivable 3,661 13,130 (Increase)/Decrease Account Receivable Related Party - (12,894) Increase in Inventory (3,662) (7,308) (Increase)/Decrease Prepaid Expenses - 8,900 Production of Videos & Website - (117,900) Television Film Costs (13,095) - Commitments and Contingencies 16,599 - Barter Revenue (non-cash) (39,104) (22,560) Increase/(Decrease) Accounts Payable 46,871 (61,941) Increase/(Decrease) in Other Current Liablities 7,413 (7,381) __________ __________ Total Adjustments 146,304 (130,609) __________ __________ Net Cash (Used in) Provided From Operating Activities $(21,299) $ (118,637) Cash Flows from Investing Activities: _____________________________________ Capital Expenditures - - __________ __________ Net Cash Used in Investing Activities $ - $ - Cash Flows from Financing Activities: _____________________________________ Note Payable 25,000 99,829 Notes Payable Related Parties - (1,638) __________ __________ Net Cash Provided for Financing Activities $ 25,000 $ 98,191 __________ __________ Net Increase (Decrease) in Cash $ 3,701 $ (20,446) Cash Balance, Begin Period (2,690) $ 17,755 __________ __________ Cash Balance, End Period $ 1,011 $ (2,690) ========== ========== Supplemental Disclosures: Cash Paid for interest $ 7,559 $ 17,190 Cash Paid for income taxes $ - $ - The accompanying notes are integral part of the consolidated financial statements. F-5
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JANE BUTEL CORPORATION (FORMERLY TEX MEX INC.) NOTES TO FINANCIAL STATEMENTS AS OF JUNE 30, 2003 NOTE 1- BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION Jane Butel Corporation ("the Company") (formerly Earth Labs Inc.) was incorporated under the laws of the State of Florida in April 1992 as the Institute for Strategic Business Development, Inc. for the purpose of promoting and carrying on any lawful business for which a corporation may be incorporated under the laws of the State of Florida. The company has a total of 50,000,000 authorized shares with a par value of $.001 per share and with 22,620,750 common shares issued and outstanding as of June 30, 2003. The Company has designated 2,500,000 as preferred stock with a par value of $1.00. There is no preferred stock outstanding as of June 30, 2003. The fiscal year-end will be June 30. BASIS OF PRESENTATION On August 26, 2002, the Company entered into a Share Exchange Agreement with Tex-Mex Inc. (Tex-Mex), a New Mexico Corporation whereby Jane Butel exchanged all of her shares in Tex-Mex Inc. for 13,512,450 shares of the Company. Jane Butel now owns 60% of the Company. The exchange agreement will be accounted for in a recapitalization of a subsidiary for accounting purposes and the assets and liabilities being recorded at their net equity value. Although the Share Exchange Agreement did not occur until August 26, 2002, these financial statements have been retroactively restated to reflect the merger in the June 30, 2003 financial statements. 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 revenues and expenses during the reporting period. Actual results could differ from those estimates. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company and its sister company Jane Butel Corporation a New Mexico corporation (incorporation date: March 17, 2000). All significant inter-company transactions have been eliminated in consolidation. TELEVISION SERIES PRODUCTION The company incurred costs in the production and the development of a television series. These costs, including costs of production, have been capitalized in accordance with Statement of Position 00-2 "Accounting by Producers or Distributors of Films." These capitalized costs are amortized using the individual film forecast method whereby capitalized costs are amortized in the proportion that the current year's revenues from the series bears to management's estimated revenues to be received from all sources for the series. The Company is using these television series masters for a public television series as well as airing on America One. The Contract for PBS was signed in April 2002 for a three year period and started running on public television stations September 7, 2002. The Company will track sales from the television series of books and other items. The America One Contract began on December 1, 2001 and extends for two years. Revenue and costs forecasts for television series are regularly reviewed by management and revised when warranted by changing market conditions. Unamortized production costs are compared to fair value for each reporting period. If estimated gross revenue is not sufficient to F-6
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JANE BUTEL CORPORATION (FORMERLY TEX MEX INC.) NOTES TO FINANCIAL STATEMENTS AS OF JUNE 30, 2003 recover the unamortized production costs, the unamortized production costs are written down to their fair values. Amortization expenses have been recorded since the series began airing in September 2002. Accordingly, these costs will be amortized in related future periods with revenues that are generated in accordance with SOP 00-2. Since the current contract for exhibition with PBS is for three years, management's estimate of ultimate revenues (which represents the net present value of the ultimate revenues ) is based upon a three year forecast of the book sales, and other sales (i.e. classes, spices and pantry items,) attributable to the series. The ratio of increased sales to management's estimate of ultimate revenues will be applied to the remaining unamortized TV series production costs. Management has estimated the ultimate revenues to be three hundred and sixty seven dollars ($367,944). The ultimate revenues are calculated based on expected increase of revenues in the amount of $503,432 over a three year period and has been discounted at the rate of 15%. Based upon this estimate of ultimate revenues the company will recognize amortization of television production costs in future periods as follows: _____________________________________________________________________ Year Ended June 30: 2004 2005 _____________________________________________________________________ Projected Amortization 74,119 65,393 _____________________________________________________________________ Unamortized Balance 139,570 74,117 _____________________________________________________________________ Per SOP 00-2.53, if the accumulative amortization at the end of the three year period fails to meet the 80 percent requirement, the company will increase its amortization expense in the fourth year to meet an amortization level of eighty percent. The company has adopted an impairment policy which identifies two events which would trigger the recognition of an impairment loss: (1) the cancellation of the PBS Contract, or (2) the projected sales falls significantly below (more than 25%) management projections. Given the occurrence of either event management will considered this asset impaired and will recognize an impairment loss of the unamortized production cost. PBS CONTRACT On April 1 2002 the Company entered into an agreement with the Association for Community Television (ACT) on behalf of KUHT/Houston PBS in which KUHT will act as the exclusive presenting station for the distribution of thirty (30) thirty-minute (30:00) videotaped television programs on southwestern cooking. As producer, the company is responsible for the timely production and delivery to KUHT of each program in the series in the form of final master tapes and the securing of releases including but not limited to talent music, location, photographic or footage releases in a form satisfactory to KUHT. The Company has met all these requirements and the shows started airing on September 7, 2002. The company is required to pay to KUHT (presenter) a thirty thousand dollar fee ($30,000) fee based upon the sale of the special version of "Jane Butel's Southwestern Kitchen" cookbook. The company is obligated to pay three dollars ($3.00) per cookbook until KUHT receives ten thousand dollars ($10,000) and one dollar and fifty cents ($1.50) per cookbook until KUHT has received the balance of the thirty thousand ($30,000) presenter fee. The company is also obligated to pay an additional five percent (5%) of the net cost of each cookbook or 5% of $22.00 or $1.10 to KUHT which will then be remitted to American Public Television (APT). The series started running in September 2002. F-7
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JANE BUTEL CORPORATION (FORMERLY TEX MEX INC.) NOTES TO FINANCIAL STATEMENTS AS OF JUNE 30, 2003 AMERICA ONE CONTRACT On December 1, 2002, a distribution contract went into effect enabling the network to run the 30 shows of Jane Butel's Southwestern Kitchen for a period of two years on a joint venture basis. They were to supply 50% of all advertising revenue. To date they have sold none and have been put on notice that the contract will not be renewed if no revenue is realized before the contract renewal 90 days prior to December 1, 2003, or by August 1, 2003. VIDEOS The company has capitalized costs associated with the production of 12 cooking video's averaging 40 minutes in length and has amortized these costs using the individual film forecast method whereby expense is recognized in proportion to the current years in accordance with Statement of Position 00-2 "Accounting by Producers or Distributors of Films". The Company has evaluated the carrying value of these assets and has determined that the fair value of the film is less than the unamortized film cost and a 30% reduction should be recorded based on the statement of operations. The Company has also evaluated the net realizable value and obsolescence exposure of the videos. There are no participation costs associated with these videos. The company has adopted its impairment and amortization policy based upon SOP 00-2 and has estimated the ultimate revenue based upon cooking club video sales for future periods (five years). Management has estimated the ultimate revenue resulting from video sales for a five year period to be approximately six hundred and eighty nine thousand dollars ($689,238 i.e. the net present value discounted at 15% for future cash flows).The ratio of actual sales to the ultimate estimated revenue will then be applied to the unamortized balance of video costs. If actual sales fall below expected amounts, the company will adjust the amount of amortized video expense to meet the 80% requirement as specified in SOP 00-2. The following table presents the expected amortization to recognize in future periods: ________________________________________________________________________________ Year Ended June 30: 2004 2005 2006 2007 ________________________________________________________________________________ Amortization 12,970 12,638 11,061 9,010 ________________________________________________________________________________ Unamortized Bal. 57,441 44,803 33,742 24,732 ________________________________________________________________________________ Management recognized an impairment loss of $24,199 and $35,400 for the year ending June 30, 2003 and 2002, respectively which was based upon sales not meeting projected sales figures for 2002. Management's impairment policy has identified three events that would trigger an additional impairment loss: (1) the cancellation of the current PBS contract, (2) failure to meet projected sales figures from the sale of videos, (3) higher attrition of cooking club membership than the projected 25% rate. Given the occurrence of any of these three events, management will recognize an impairment loss of the unamortized balance of the production costs. IMPAIRMENT OF LONG-LIVED ASSETS The Company follows SFAS No. 144, "Accounting for Impairment or Disposal of Long-Lived Assets for the fiscal year ended June 30, 2003. The Statement requires that an impairment loss be recognized when the carrying value of long lived assets (asset group) exceeds its fair value for long-lived assets, liabilities and certain identifiable intangibles to be held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. F-8
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JANE BUTEL CORPORATION (FORMERLY TEX MEX INC.) NOTES TO FINANCIAL STATEMENTS AS OF JUNE 30, 2003 Under SFAS No 144, the Company considered long-lived assets consisting primarily of property and equipment and note receivable, website, videos, and other assets. The assets not covered by SFAS 144 that are included in an asset group are adjusted in accordance with other applicable accounting standards prior to testing the asset group for recoverability. The recoverability of long-lived assets is evaluated at the operating unit level by an analysis of operating results and consideration of other significant events or changes in the business environment. If an operating unit has indications of impairment, such as current operating losses, the Company will evaluate whether impairment exists on the basis of undiscounted expected future cash flows from operations before interest for the remaining amortization period. If impairment exists, the carrying amount of the long-lived assets is reduced to its estimated fair value. In August 2001, the FASB issued Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets which addresses financial accounting and reporting for the impairment or disposal of long-lived assets and supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of, and the accounting and reporting provisions of APB Opinion No. 30, Reporting the Results of Operations for a Disposal of a Segment of a Business. The Company was required to adopt SFAS 144 in the first quarter of 2002 and the Company does not expect the adoption SFAS 144 to have a material effect on the Company's financial statements. The asset groups not covered by SFAS 144 that are included in an asset group are adjusted in accordance with other applicable accounting standards prior to testing the asset group for recoverability. The Company has categorized all of its long-lived assets as being held and used and not to be sold. ACCOUNTING METHOD The Company's financial statements are prepared using the accrual method of accounting. Revenues are recognized when services and products have been completed and delivered and expenses when incurred on the related services and products. The major sources of revenue are the three and five day schools. The Company requires an advance registration and payment prior to the start of the school. If the student wants to cancel the school then a $150 cancellation fee is charged. The Company records the payment received in advance as deferred revenue until the classes are held. As of June 30, 2003, there were no advance payments recorded. The other smaller components of revenue are the spice sales and book and video sales. These sales are received from the web site and phone orders. The Company replaces any problems with the orders, but does not have a cancellation policy for these sale items. The Company is the primary obligor in the transactions and it is responsible for fulfillment of the order and for the customer's acceptance of the goods or services sold, the general industry risk, and has reasonable latitude to establish the selling price and follows the guidance of EITF 99-19 relating to the "gross" method of reporting revenue on the cooking classes, sales of videos, books and spices. Also, relating to SOP 00-2 the company has not entered and does not plan to enter into any agreement with the license arrangements with the sale of television show masters. The contract with the Production Company for the videos has been revised. The Production Company is not related in any way to Jane Butel or any of the principals of the company. The production was completed in January, 1995, and it is recognized that the remaining amount to be paid the production company is $12,000 reduced from $60,000 which will be paid at a royalty rate of 10% of the gross sales of videos until this amount is paid, at which time the Agreement is considered complete and no further financial responsibility is due to the Production Company. The fees will be accrued and paid quarterly. The Company does not receive revenue from the airing of the television shows and the production costs have been capitalized in the balance sheet. The television shows produce sales of books, videos, classes, and pantry items. The Company is F-9
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JANE BUTEL CORPORATION (FORMERLY TEX MEX INC.) NOTES TO FINANCIAL STATEMENTS AS OF JUNE 30, 2003 using these masters for the public television series masters. The Contract was signed in April 2002 for a three year period and started running on public television stations. The Company is tracking sales resulting from the television series. These assets are classified as being held and used and will be reviewed by management for impairment purposes on a quarterly basis per the requirement of SOP 00-2. The Company adopted the U.S. Securities and Exchange Commission's ("SEC") Staff Accounting Bulletin 101, "Revenue Recognition" ("SAB 101"), which provides guidance on the recognition, presentation, and disclosure of revenue in financial statements filed with the SEC. The adoption of SAB 101 did not have a material effect on the Company's business, financial condition, results of operations or cash flows. The Company believes that SAB 101 has been followed in the recognition of revenues. Fixed assets are stated at cost. Depreciation and amortization using the straight-line method for financial reporting purposes and accelerated methods for income tax purposes. The periods of depreciation for each major class of depreciable assets are as follows: Equipment 5 Years Leasehold Improvements 5 Years Websites 3 Years Inventory is valued at cost and charged to expense as sales are made at a unit cost per item and carried at the lower of cost or market. BARTER TRANSACTIONS In August 2000 the Company entered into an agreement with an unrelated contractor under which the Company received web site development services in exchange for the Company running promotional mentions on its America One television series. The Company began broadcasting the promotional mentions in December 2001 and they will continue to run on the remaining shows of the series through November 2003. The contractor completed its website development in the spring of 2002. The Company consulted APB 29 which provides that such transactions be recorded at the fair value of the assets or services given or received, whichever is more clearly evident. Since the Company had no method of determining the value of the promotional mentions it provided, it did not recognize any income or expense from this transaction until the promotional mentions began running and the website was substantially completed. The Company is amortizing the $78,320 from December 1, 2001 to November 30, 2003 at the rate of $188 per promotional mention as broadcasted. A total of $22,560 and $39,104 is being recognized as other income in the section of the Statement of Operations for the period ended June 30, 2002 and 2003, respectively and the balance as deferred income.The Company amortized $26,967 and $4,001 of the website cost in fiscal 2003 and 2002 leaving a net asset value of $48,252 as of June 30, 2003. STOCK-BASED COMPENSATION PLANS The Company accounts for all transactions under which employees, officers and directors receive shares of stock or options in the Company in accordance with F-10
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JANE BUTEL CORPORATION (FORMERLY TEX MEX INC.) NOTES TO FINANCIAL STATEMENTS AS OF JUNE 30, 2003 the provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," ("APB 25"), under which no compensation cost is recognized. The Company adopted Statements of Financial Accounting Standards No. 123 ("SFAS No. 123"), "Accounting for Stock-Based Compensation," for disclosure purposes, and has adopted the proforma disclosure requirements of SFAS 123. Accordingly, no compensation has been recognized in the results of operations for the employee, officers and directors stock plan other than for options issued at an exercise price below market price, to non- employees for consulting services or to debt providers that had stock or options attached with the exception for transactions with employees that are within the scope of APB 25, all transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value or the consideration received or the fair value of the equity instruments issued, whichever is a more reliable measure. EARNINGS PER SHARE The Company adopted Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share," which simplifies the computation of earnings per share requiring the restatement of all prior periods. Basic earnings per share are computed on the basis of the weighted average number of common shares outstanding during each year. Diluted earnings per share are computed on the basis of the weighted average number of common shares and dilutive securities outstanding. Dilutive securities having an anti-dilutive effect on diluted earnings per share are excluded from the calculation. The Company does not have any dilutive securities as of June 30, 2003. RECENT ACCOUNTING PRONOUNCEMENTS ACCOUNTING FOR ASSET RETIREMENT OBLIGATIONS In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations". SFAS No. 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS No. 143 is effective for fiscal years beginning after June 15, 2002. The Company does not expect that there will be a material impact from the adoption of SFAS No. 143 on its financial position, results of operations, or cash flows. ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets". SFAS No. 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets. It supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets To Be Disposed Of", and the accounting and reporting provisions of Accounting Principles Board Statement ("APB") 30, "Reporting the Results of Operations - Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions", for the disposal of a segment of a business. The Company is required to adopt SFAS No. 144 on October 1, 2002. The Company does not expect that the adoption of SFAS No. 144 will have a material effect on its financial position, results of operations or cash flows. RESCISSION OF FASB STATEMENTS NO. 4,44 AND 64, AMENDMENT OF FASB STATEMENT NO. 13, AND TECHNICAL CORRECTIONS F-11
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JANE BUTEL CORPORATION (FORMERLY TEX MEX INC.) NOTES TO FINANCIAL STATEMENTS AS OF JUNE 30, 2003 In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4,44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections". SFAS No. 145 requires the classification of gains and losses from extinguishments of debt as extraordinary items only if they meet certain criteria for such classification in APB No. 30, "Reporting the Results of Operations, Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual, and Infrequently Occurring Events and Transactions". Any gain or loss on extinguishments of debt classified as an extraordinary item in prior periods that does not meet the criteria must be reclassified to other income or expense. These provisions are effective for fiscal years beginning after May 15, 2002. Additionally, SFAS No. 145 requires sale-leaseback accounting for certain lease modifications that have economic effects similar to sale-leaseback transactions. These lease provisions are effective for transactions occurring after May 15, 2002. The Company does not expect the adoption of SFAS No. 145 to have a material effect on its financial position, results of operations or cash flows. ACCOUNTING FOR COSTS ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES In July 2002, the FASB issued SFAS No. 146 , "Accounting for Costs Associated with Exit or Disposal Activities". SFAS No. 146 replaces "Emerging Issues Task Force Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)". SFAS No. 146 requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. Examples of costs covered by the standard include lease termination costs and certain employee severance costs that are associated with a restructuring, discontinued operation, plant closing, or other exit or disposal activity. SFAS No. 146 is to be applied prospectively to exit or disposal activities initiated after December 31, 2002. The Company does not expect the adoption of SFAS No. 146 to have a material effect on its financial position, results of operations or cash flows. NOTE 2 - COMMON STOCK The Company has a total of 50,000,000 authorized shares of common stock with a par value of $.001 per share and with 22,620,750 shares issued and outstanding as of June 30, 2003. The Company has designated 2,500,000 as preferred stock with a par value of $1.00. In March of 2002, the Company issued another 100,000 shares to Jane Butel that was recorded at $61,489. The amount recorded was for services rendered in the development of the television programs that had been accrued in previous years. The $61,489 was deducted from the accrued amount due Jane Butel. The services rendered by Jane Butel in the production and development of the television programs were reviewed and were considered to be general and administrative and were not capitalized as television production costs. Per SOP 00-2, production overhead should not include general and administrative expenses. In August of 2002, the Company issued 700,000 shares to various individuals prior to the share exchange agreement. The common shares were valued at $.001 because the Company was inactive and not trading. On August 26, 2002, the Company entered into a Share Exchange Agreement with Tex-Mex Inc. (Tex-Mex), a New Mexico Corporation whereby the Jane Butel exchanged all of her shares in Tex-Mex Inc. for 13,512,450 shares of the F-12
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JANE BUTEL CORPORATION (FORMERLY TEX MEX INC.) NOTES TO FINANCIAL STATEMENTS AS OF JUNE 30, 2003 Company. After the agreement is completed she will own 60% of the Company. The shares were recorded as the equity valued of the assets received in the Company being $119,450. NOTE 3 - NOTE PAYABLE - RELATED PARTIES The Company entered into a promissory note payable with Jane Butel, individually, on June 28, 2002 in the amount of $244,098. The note is for funds loaned to the Company by the principal shareholder, Jane Butel. The note matures on July 1, 2007 with accrued interest at the rate of 6.97% in the amount of $25,215 as of June 30, 2003. Pecos Valley Spice Co. produces all of the products which the Company purchases at the Distributor Cost, which is 25% below wholesale. (Wholesale price is 50% or half of the cost of retail.) The revenues for the sale of the product are included in the June 30, 2003 Profit and Loss under Spice Division Internet sales, Mail Order or Pantry sales. Pecos Valley Spice Co. records its costs separately in its own accounting. Pecos Valley Spice Co. operates as its own entity, creating its products and pricing. The Company operates as the exclusive or Master Distributor. The Company is not the agent because the Company pays for the product and then resells product to the public. Per EITF 99-19 the Company reports these transactions under the "gross reporting" of revenues. The Company supplies the marketing and distribution system for the products. NOTE 4 - NOTES PAYABLE The company executed a note payable on February 9, 2001 for one hundred thousand dollars ($100,000) payable to James and Lila Dickey at six percent (6%) per annum. Interest on the note is due in monthly installments and the principal matures on February 7, 2003. An additional $300,000 is due based on $2.00 per cookbook sold. On November 28, 2001 the company entered into a note for $13,750 payable to James Dickey. This note is a demand note. The company agreed to pay an additional $13,750 based on $5.00 per cookbook of the JANE BUTEL'S SOUTHWESTERN KITCHEN until the full amount has been paid. The Company entered in a note with Janet E Freeman Trust in August 2002 in the amount of $25,000. The note carries interest at the rate of 10% and matured in February 2003. As of June 30, 2003, the company is also indebted to two unrelated individuals for $1,000 and $2,000 respectively. NOTE 5 - RELATED PARTIES There exist related party relationships with Jane Butel, principal stockholder and officer, in the form of a Note Payable in the amount of $244,098. Also, there exists a related party relationship with Pecos Valley Spice Company in the form of a Note Receivable in the amount of $12,894 where the Company is owed that amount from Pecos Valley for funds advanced to the Company. Jane Butel, individually, owns 18.75% of Pecos Valley Spice Company. NOTE 6 - NOTE RECEIVABLE - RELATED PARTY The Company entered into a promissory note receivable with Pecos Valley Spice Company in the amount of $12,894. The note is a demand note and matures on June 30, 2003. F-13
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JANE BUTEL CORPORATION (FORMERLY TEX MEX INC.) NOTES TO FINANCIAL STATEMENTS AS OF JUNE 30, 2003 NOTE 7 - LEASE The Company entered into a lease agreement with the La Posada Hotel in Albuquerque, New Mexico for 2,900 square feet office and cooking school space. The lease was originally signed in June 1997 and covered the term from July 1, 1997 to June 30, 2002 at the rate of $1,500 per month. Since the lease has expired, the Company is currently extending the lease on a month to month basis. NOTE 8 - INCOME TAXES The components of the provision for income tax benefits(expense) are as follows: Year Ended June 30, ___________________ 2003 2002 ____ ____ Current: Federal $ 54,128 $ ( 3,882) State 7,510 ( 538) Valuation Allowance (61,638) 4,420 ___________ ____________ $ -0- $ ( -0-) ___________ ____________ The above provision has been calculated based on Federal and State statutory rates in the adjusted rates of 34% for Federal and 4.5% for State tax rates adjusted by a valuation allowance of deferred tax assets bringing the effective rate to zero. Significant components of the Company's deferred tax assets and liabilities as of June 30, 2003 and 2002 are a result of temporary differences related to the items as described as follows: [Enlarge/Download Table] 2003 2002 Deferred Tax Deferred Tax Deferred Tax Deferred Tax Assets Liabilities Assets Liabilities ____________________________________________________________________ Impairment Loss $ 8,936 -0- $ 13,073 -0- Net Operating Loss 52,701 -0- -0- -0- Other 3,971 -0- -0- 9,103 Valuation allowance on Deferred tax assets (65,608) -0- (13,073) (9,103) ____________________________________________________________________ $ -0- -0- $ -0- $ -0- ==================================================================== SFAS 109 specifies that deferred tax assets are to be reduced by a valuation allowance if it is more likely than not that some portion of the deferred tax assets will not be realized. The Company considered its historic lack of substantial taxable profits, its internal projections concerning future taxable profits, its assumptions underlying such projections and the likelihood of achieving such future taxable profits. Based on such considerations the Company determined that because of its historic lack of substantial operating profits, there is sufficient uncertainty with respect to its ability to achieve profitable operations in future periods that the Company cannot justify the recording of an income tax asset and, accordingly, the Company established a valuation reserve in the full amount of the deferred tax assets in the fiscal years ended June 30, 2003 and 2002. As of June 30, 2003, the Company had approximately $167,000 in net operating loss carryforwards for federal income tax purposes. The loss carryforwards expire beginning in 2013. The net operating loss carryforwards will be available to affect taxable income within the carryforward period, subject to limitations of the tax code. NOTE 9 - COMMITMENT AND CONTINGENCIES The Company reached a settlement agreement with Peppercreek Farms Inc. in a court case in Oklahoma City, Oklahoma. The settlement agreement calls for a payment of $13,600 to be paid by January 5, 2003. The Company has settled with the production company on the videos production in the remaining amount of $12,000 is directly contingent upon the sale of videos and, therefore the financial statements have not been revised to reflect this obligation. A judgment in the amount of $16,599 has been rendered against the Company by World Wide Country Tours for classes that were cancelled. The Company intends to try and settle this debt for smaller amount in the near future. This amount has been recorded in the balance sheet under commitment and contingencies. On January 24, 2003 a suit was filed against us in Second Judicial District Court, Bernalillo County, New Mexico by James Allen Dickey and Lila Dickey seeking a judgment in the amount of $127,000 plus interest. The Company borrowed such sums in 2001. The Company agreed to repay a $100,000 loan on February 10, 2003 and to pay an additional $300,000 based on $2.00 per cookbook sold on our TV programs. The Company agreed to pay a $13,750 loan on demand and pay an additional $13,250 based on $5.00 per cookbook sold. Jane Butel and her spouse guaranteed payment up to $113,250 each and were also named as defendants. The additional liability is solely contingent upon the Company selling cookbooks and has not been recorded in the financial statements as of June 30, 2003. A settlement was reached on August 19, 2003 and detailed under Note 11. NOTE 10 - WEBSITES Costs are capitalized when it is probable that a website will be completed and will be used to perform the function intended. When it is probable that upgrades and enhancements will result in additional functionality such costs are F-14
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JANE BUTEL CORPORATION (FORMERLY TEX MEX INC.) NOTES TO FINANCIAL STATEMENTS AS OF JUNE 30, 2003 capitalized. Websites will be considered to be impaired when it no longer provides substantial service potential, or significant changes occur in the extent or manner in which the website is used. Impairment write off will be recognized in the period when impairment is deemed by management to have occurred. The company capitalized its website development. It was engaged in the following types of activities: creation of initial graphics, entering the initial content of the website, creation of hypertext links to other websites and installation of developed websites on web servers. These costs are to be capitalized as per the guidance provided by SOP 98-1. The company has adopted the policy of recording as expense in future period's activities such as; registering with web site engines, creation of new links, backup costs, user administration. The Company is actively pursuing web-site development. The Company has adopted "Financial Accounting Standards Board Emerging Task Force Consensus 00-2 (FASB EITF 00-2): Accounting for Website Development Costs." The adoption of this procedure relates to the accounting for costs of internal software, requires that costs of developing web applications and infrastructure, as well as cost of graphic development, be capitalized, rather than the historical common practice of same period expense. Costs of website planning and operation continue to be expensed as normal. The website is being set up to be amortized over a three year period on a straight line basis unless the website becomes impaired under SFAS 144. Management has reviewed this long lived asset as being held and used and noted no events that would indicate any impairment such as significant value of the market value or a significant change in the extent or manner it was used. NOTE 10 - GOING CONCERN The Company's financial statements are prepared using generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company does not have significant cash or other material assets to cover its operating costs and liabilities that raise substantial doubt about its ability to continue as a going concern. The stockholders/officers and or directors have committed to advancing operating costs of the Company interest free to insure that the Company has enough operating capital over the next twelve months. NOTE 11 - SUBSEQUENT EVENTS On August 19, 2003, a "Settlement and Mutual Release" was signed between the parties in the suit that was filed January 24, 2003 in Second Judicial District Court, Bernalillo County, New Mexico by James Allen Dickey and Lila Dickey seeking a judgment in the amount of $127,000 plus interest. The Company borrowed such sums in 2001. A summary of the settlement is as follows: 1. Total of $137,500 is due with attorney fees and past due interest. 2. Interest to accrue at 6% on the original debt of $100,000, 10% on $19,500, and no interest on the attorney fees and past due interest. 3. Monthly payment of $610 per month plus $2.00 per cookbook sold beginning September 15, 2003 and continuing until August 15, 2005 when the balance of the $137,500 is due. 4. After the entire $137,500 plus interest is paid, the cookbook payment increases to $5.00 per book until an additional $300,000 is paid. F-15
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JANE BUTEL CORPORATION (FORMERLY TEX MEX INC.) NOTES TO FINANCIAL STATEMENTS AS OF JUNE 30, 2003 5. Mutual release of any and all other claims. There are no other subsequent events that warrant disclosure in these financial statements. F-16
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ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K. (a) The following exhibits are furnished in this report. Exhibit No. Description 3.1 Amended and Restated Articles of Incorporation of registrant. (1) 3.2 By-laws of registrant. (2) 10.1 Share exchange agreement between Jane Butel and Earth Labs, Inc. (3) 10.2 Indemnification Agreement between Earth Labs, Inc. and certain shareholders. (4) 10.3 Distribution Agreement with Pecos Valley Spice Co. (5) 10.4 Revised Video Agreement (6) 31.1 Certification by CEO pursuant to Section 302 of Sarbanes Oxley Act of 2002. 31.2 Certification by CFO pursuant to Section 302 of Sarbanes- Oxley Act of 2002. 32.1 Certification of CEO pursuant to Section 906 of Sarbanes- Oxley Act of 2002. 32.2 Certification by CFO pursuant to Section 906 of Sarbanes- Oxley Act of 2002. (1) Incorporated by reference to Exhibit 3.1 to the Company's registration statement on Form 10-SB (file no. 000-50104). (2) Incorporated by reference to Exhibit 3.2 to the Company's registration statement on Form 10-SB (file no. 000-50104). (3) Incorporated by reference to Exhibit 10.1 to the Company's registration statement on Form 10-SB (file no. 000-50104). (4) Incorporated by reference to Exhibit 10.2 to the Company's registration statement on Form 10-SB (file no. 000-50104). (5) Incorporated by reference to Exhibit 10.3 to the Company's registration statement on Form 10-SB (file no. 000-50104). (6) Incorporated by reference to Exhibit 10.4 to the Company's registration statement on Form 10-SB (file no. 000-50104). We will furnish a copy of any of these exhibits to a shareholder upon written request to Jane Butel, President, Jane Butel Corporation 125 Second Street NW, Albuquerque, NM 87102 (B) Reports on Form 8-K There were no reports filed on Form 8-K during the quarter ended June 30, 2003.
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SIGNATURES In accordance with the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Albuquerque, New Mexico on December 18, 2003. JANE BUTEL CORPORATION (Registrant) /s/ JANE BUTEL ______________________ Jane Butel President In accordance with the requirements of the Exchange Act, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated: Signature Title Date ______________ _____________________________ _________________ /s/ JANE BUTEL President and Director December 18, 2003 ______________ (Principal Executive Officer) Jane Butel (Principal Financial Officer)

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