bowmo, Inc. - Quarter Report: 2008 September (Form 10-Q)

10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934

For Quarterly Period Ended September 30, 2008
Commission File Number 333-139685

Harcom Productions Inc.

(Exact name of registrant as specified in its charter)


OKLAHOMA (State or other jurisdiction of incorporation or organization)		73-1556790 (IRS Employer Identification No.)

5459 South Mingo Rd., Ste A, Tulsa, OK 74146

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (918) 664-9933

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 S 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 definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer £	Accelerated filer £	Non-accelerated filer £	Smaller reporting company S
		(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 £ No S

The number of shares outstanding of the registrant’s common stock, par value $0.01 per share, as of October 28, 2008: 1,637,500 shares.

Harcom Productions, Inc.

Balance Sheets

September 30, 2008 and December 31, 2007

(UNAUDITED)


ASSETS
		September 30, 2008		Dec. 31, 2007
Current Assets
Cash & Cash Equivalents	$	890	$	4,798
Accounts Receivable, net		58,394		56,028
Prepaid Expenses		390		4,846
Total Current Assets		59,674		65,672
Other Assets

Intangible Assets-Less Amortization		92,920		105,331
Deposits		1,500		1,650

Total Other Assets		94,420		106,981

TOTAL ASSETS	$	154,093	$	172,653

LIABILITIES & STOCKHOLDERS' EQUITY

Current Liabilities

Accounts Payable & Accrued Liabilities	$	25,694	$	41,935
Due to related parties		166,602		71,850
Note payable (Current)		8,490		8,086

Total Current Liabilities		200,786		121,871

Long Term Liabilities, net of current portion		143,077		149,496

Total Liabilities		343,863		271,367

Stockholders' Equity
Common Stock, Authorized 100,000,000
Shares, Par Value $.01, Issued and Outstanding
On December 31, 2007 and September 30, 2008
is 1,637,500 shares		16,375		16,375
Additional Paid-In Capital		99,067		99,067
Accumulated Deficit		(305,212)		(214,156)

Total Stockholders’ Equity/(Deficit)		(189,770)		(98,714)

TOTAL LIABILITIES AND EQUITY	$	154,093	$	172,653

The accompanying notes are an integral part of the interim financial statements

Harcom Productions Inc.

Statements of Operations

For the Three Months and Nine Months Ended September 30, 2008 and 2007

(UNAUDITED)


REVENUE		Three Months Ended Sept 30, 2008		Three Months Ended Sept 30, 2007		Nine Months Ended Sept 30, 2008		Nine Months Ended Sept 30, 2007

Shipped Products	$	107,142	$	118,569	$	290,524	$	367,074
Consulting Fees		18,850		0		25,500		0
Refund/Discounts of Services		(0)		(91)		(1182)		(3157)
Total Revenue		125,992		118,478		314,842		363,917

COST OF GOODS SOLD
Commission		12,472		10,770		37,879		35,177
Materials		23,885		18,767		59,658		72,647
Amortization Expense		4137		4137		12,411		12,411
Total Cost of Good Sold		40,494		33,674		109,948		120,235

Gross Profit		85,498		84,804		204,894		243,682

OPERATING EXPENSES
General & Administrative		28,251		14,489		82,454		54,071
Medical Insurance		411		2711		1244		8508
Employee Compensation		84,720		59,813		202,506		180,276
Total Operating Expenses		113,382		77,013		286,204		242,855

OTHER EXPENSE
Interest Expense		3333		8113		9706		22,956

NET INCOME/LOSS	$	(31,217)	$	(322)	$	(91,016)	$	(22,129)

Pro Forma Presentation of Net Income/(Loss)
Net Income (Loss) before Income Tax	$	(31,217)	$	(322)	$	(91,016)	$	(22,129)
Provision for Income Tax		0		0		0		0

Net Income (Loss)	$	(31,217)	$	(322)	$	(91,016)	$	(22,129)

Earnings(Loss) per common
share-basic and fully Diluted	$	(0.01)	$	(0.01)	$	(0.01)	$	(0.01)

Weighted average number of
Common shares outstanding		1,637,500		1,637,500		1,637,500		1,637,500

The accompanying notes are an integral part of the interim financial statements

Harcom Productions Inc.

Statements of Cash Flows

For the Nine Months Ended September 30, 2008 and 2007

(UNAUDITED)


		For the Nine Months Ended		For the Nine Months Ended
Operating Activities:		Sept 30, 2008		Sept 30, 2007

Net Income (Loss)	$	(91,016)	$	(22,129)
Adjustments to reconcile Net Income (Loss) to net
cash used in operating activities:
Amortization		12,411		12,411
Accounts receivable		(2366)		13,306
Accounts Payable and Accrued Expenses		(16,241)		853
Prepaid expenses		(4456)		(504)
Net Cash (Used) Provided By Operating Activities		(101,668)		3937

Investment Activities		0		0

Financing Activities
Note Payable (Current)		404		378
Due to Related Party		97,356		6885
Net Cash Provided by Financing Activities		97,760		7263

Net Change in Cash		(3908)		11,200
Cash, Beginning of Period		4,798		(568)
Cash, End of Period	$	890	$	10,632

Non Cash Activities		0		0
Supplemental Information
Interest Paid	$	9,706	$	22,956
Income Taxes Paid		0		0
The accompanying notes are an integral part of the interim financial statements

Harcom Productions Inc.

Notes to Financial Statements

For The Nine Months Ended September 30, 2008

Note 1 – Summary of Significant Accounting Policies

Organization and Nature of Operations

Harcom Productions, Inc. was incorporated in 1999 in the state of Oklahoma. The Company’s headquarters are located in Tulsa, Oklahoma. In early 1999, the Company executed a Purchase Agreement to acquire the operating and intangible assets of an existing production company from a related party. As such, the Company has since operated as a production company specializing in on hold messaging for all types of companies.

Cash and Cash Equivalents

The Company considers highly liquid investments (those readily convertible to cash) purchased with original maturity dates of three months or less to be cash equivalents.

Income Taxes

In 2006 The Company was treated as a partnership for federal income tax purposes. Consequently, federal income taxes were not payable by the Company. Members were taxed individually on their shares of the Company’s earnings. The Company’s net income or loss was allocated among the members in accordance with the regulations of the Company.

In 2007 The Company had completed its conversion to a C-Corporation under the laws of the state of Oklahoma. Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due. Income taxes are accounted for in accordance with SFAS No. 109, "Accounting for Income Taxes" ("SFAS 109"). Under SFAS No. 109 income taxes are recognized for the following: i) amount of taxes payable for the current year, and ii) deferred tax assets and liabilities for the future tax consequences of events that have been recognized differently in the financial statements than for tax purposes. Deferred tax assets and liabilities are established using statutory tax rates and are adjusted for tax rate changes. SFAS 109 also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Allowance for Doubtful Accounts

It is the Company's policy to provide an allowance for doubtful accounts when it believes there is a potential for non-collectability. As of September 30, 2008, the Company’s allowance for doubtful accounts totaled $5,606 based upon management’s analysis of possible bad debts. This analysis was based on a two year study of bad debt as it relates to Receivables.

Revenue Recognition

Costs of Goods Sold costs include all direct equipment, amortization, material, shipping costs and those indirect costs related to contract performance, such as indirect labor. Selling, general and administrative costs are charged to expenses as incurred. Changes in contract performance, contract conditions, and estimated profitability that may result in revisions to costs and income are recognized in the period in which the revisions are determined.

For revenue from product sales, the Company recognizes revenue in accordance with Staff Accounting Bulletin ("SAB") No. 104, "Revenue Recognition," which superseded SAB No. 101, "Revenue Recognition in Financial Statements." SAB No. 101 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company defers any revenue for which the product has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required. SAB No. 104 incorporates Emerging Issues Task Force ("EITF") No. 00-21, "Multiple-Deliverable Revenue Arrangements." EITF No. 00-21 addresses accounting for arrangements that may involve the delivery or performance of multiple products, services and/or rights to use assets. The effect of implementing EITF No. 00-21 on the Company's financial position and results of operations was not significant. This issue addresses determination of whether an arrangement involving more than one deliverable contains more than one unit of accounting and how the arrangement consideration should be measured and allocated to the separate units of accounting. EITF No. 00-21 became effective for revenue arrangements entered into in periods beginning after September 15, 2003.

For those contracts which contain multiple deliverables, management must first determine whether each service, or deliverable, meets the separation criteria of EITF No. 00-21. In general, a deliverable (or a group of deliverables) meets the separation criteria if the deliverable has standalone value to the customer and if there is objective and reliable evidence of the fair value of the remaining deliverables in the arrangement. Each deliverable that meets the separation criteria is considered a "separate unit of accounting." Management allocates the total arrangement consideration to each separate unit of accounting based on the relative fair value of each separate unit of accounting. The amount of arrangement consideration that is allocated to a unit of accounting that has already been delivered is limited to the amount that is not contingent upon the delivery of another separate unit of accounting. After the arrangement consideration has been allocated to each separate unit of accounting, management applies the appropriate revenue recognition method for each separate unit of accounting as described previously based on the nature of the arrangement. All deliverables that do not meet the separation criteria of EITF No. 00-21 are combined into one unit of accounting, and the appropriate revenue recognition method is applied.

Use of Estimates

The preparation of financial statements in conformity with generally accepted principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting period. Actual results could differ significantly from those estimates.

Long-Lived Assets

Equipment is stated at cost and depreciated over a useful life of 7 years. Expenditures for maintenance and repairs are charged to operating expenses as incurred. When equipment is retired or otherwise disposed of, the cost of the asset and the related accumulated depreciation are removed from the accounts with the resulting gain or loss being reflected in results of operations.

Intangible assets include intellectual property rights which were valued at the date of acquisition by management and amortized over 15 years.

Management assesses the recoverability of equipment and intangible assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable from its future undiscounted cash flows. If it is determined that an impairment has occurred, an impairment loss is recognized for the amount by which the carrying amount of the asset exceeds its estimated fair value.

New Accounting Standards

Recent Accounting Pronouncements

In November 2007, the FASB issued FSP Nos. FAS 115-1 and 124-1, "The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments". This FSP addresses the determination as to when an investment is considered impaired, whether the impairment is 'other-than-temporary', and the measurement of an impairment loss. The investment is impaired if the fair value is less than cost. The impairment is 'other-than-temporary' for equity securities and debt securities that can contractually be prepaid or otherwise settled in such a way that the investor would not recover substantially all of its cost. If 'other-than-temporary', an impairment loss shall be recognized in earnings equal to the difference between the investment's cost and its fair value. The guidance in this FSP is effective in reporting years beginning after December 15, 2005. This guidance has not had a material effect on the financial statements of the Company.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. Under the provisions of SFAS No. 159, the Company may choose to carry many financial assets and liabilities at fair values with changes in fair value recognized in earnings. The company has adopted the pronouncement for periods beginning after January 1, 2008. This implementation has not had a material effect on the financial statements of the Company. .

In September 2006, the Financial Accounting Standard s Board (“FASB”) issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109” (FIN No. 48). This Interpretation prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The company adopted the pronouncement for periods after July 1, 2007 and the pronouncement had no material impact on our financial statements.

In September 2006, the FASB issued SFAS No. 157, a standard that provides enhanced guidance for using fair value to measure assets and liabilities. The standard applies whenever other standards require (or permit) assets or liabilities to be measured at fair value. The standard does not expand the use of fair value in any new circumstances. This Statement was originally to become effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. However on February 12, 2008 FASB issued a Staff Position Bulletin, amending SFAS No. 157, to establish the effective date of the statement as fiscal years beginning after November 15, 2008 and interim periods within those fiscal years. Earlier application is encouraged, provided that the reporting entity has not yet issued financial statements for that fiscal year, including financials statements for an interim period within that fiscal year. The Company has adopted this pronouncement effective for periods beginning after January 1, 2008, and the adoption has had no material effect on the financial statements of the Company.

In December 2004, the FASB issued SFAS No. 123R, “Share-Based Payment”. This statement replaces SFAS No. 123, “Accounting for Stock Based Compensation” and supersedes ABP Opinion No. 25, “Accounting for Stock Issued to Employees”. It establishes accounting standards for transactions in which an entity exchanges its equity instruments for goods or services. The statement requires companies to expense the fair value of employee stock options and other equity-based compensation, eliminating the alternative to use APB No. 25’s intrinsic value method. The statement became effective for the Company on January 1, 2006. In March 2005, the SEC released Staff Accounting Bulletin No. 107 “Share-Based Payment”, which provides interpretive guidance related to the interaction between SFAS 123 (R) and certain SEC rules and regulations. It also provides the SEC staff’s views regarding valuation of share-based payment arrangements. Management believes that SFAS No. 123 (R) and SAB No. 107 will have an impact on future share-based transactions of the Company but cannot determine the impact at this time.

In November 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 151, “Inventory Costs, an amendment of ARB No. 43, Chapter 4.” SFAS No. 151 clarifies that abnormal amounts of idle facility expense, freight handling costs and wasted materials (spoilage) should be recognized as current-period charges and requires the allocation of fixed production overheads to inventory based on the normal capacity of the production facilities. We adopted SFAS No. 151 on January 1, 2006. There was no material impact on our accounting for inventory costs.

Reclassification

Certain reclassifications may have been made in prior years' financial statements to conform to classifications used in the current year.

Note 2 – Intangible Assets

The cost to acquire intangible assets in 1999 has been allocated to the assets acquired according to the estimated fair values and amortized over a 15 year life using the straight line method. The Company has adopted SFAS No. 142, Goodwill and Other Intangible Assets, whereby the Company periodically tests its intangible assets for impairment. On an annual basis, and when there is reason to suspect that their values have been diminished or impaired, these assets are tested for impairment, and write-downs will be included in results from operations. No impairment was identified for the years ended December 31, 2007 and 2006.

The identifiable intangible assets acquired and their carrying values at September 30, 2008 and 2007 are:



		2008		2007
Jingles used in on hold messaging	$	248,247	$	248,247
Less: Accumulated Amortization		(155,327)		(138,779)
Net Intangible Asset	$	92,920	$	109,468

Total amortization expense charged to operations for the quarter ended September 30, 2008 and 2007 was $4137 and $4137 respectively.

Note 3 –Long-term Debt

The long-term debt is a note payable to the former owners, dated July 1, 1999 bearing interest at 6.5% per annum, payable on March 1, 2019. The balance on the note payable net of current portion on December 31, 2006 was $157,583 and on December 31, 2007 it was $149,496. The balance on September 30, 2008 is $143,077.

Note 4 – Due to Related Party

Since the year 2000, the Company’s General Manager, Charles Harwell has advanced funds to the Company to purchase materials expensed as costs of goods sold. These loans were made through the use of Mr. Harwell’s personal credit cards. As such, the amount of interest accrued is dictated by the interest rate agreed to through the General Manager’s credit card agreement. The amount due to Mr. Harwell, including interest, as of September 30, 2008 is $166,602.

Note 5 – Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. However the Company has reported net losses of ($51,854) and ($78,367) for the years ended December 31, 2006 and December 31, 2007 respectively, as well as net losses of ($91,016) for the nine month period ending September 30, 2008. Without realization of additional capital, it would be unlikely for the Company to continue as a going concern. It is management's plan to complete and execute a business plan in order to supply the needed cash flow.

ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General Overview

The following Management’s Discussion and Analysis is intended to help the reader understand our company. It is provided as a supplement to, and should be read in conjunction with, our financial statements and the accompanying notes (“Notes”).

Forward-Looking Statements

Historical results and trends should not be taken as an indication of future operations. Management's statements contained in this report that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Actual results may differ materially from those included in the forward-looking statements. The Company intends such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and is including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “may,” “should,” “could,” "believe," "expect," "anticipate," "estimate," "project," "prospects," or similar expressions. The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on the operations and future prospects of the Company include, but are not limited to: changes in economic conditions, legislative/regulatory changes, the availability of capital, interest rates, and the competitive environment. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Further information concerning the Company and its business; including additional factors that could materially affect the Company's financial results, are included herein and in the Company's other filings with the Securities and Exchange Commission.

The following discussion and analysis should be read in conjunction with the financial statements and notes to financial statements included elsewhere in this quarterly report on Form 10-Q. This report and the financial statements and notes to financial statements contain forward-looking statements, which generally include the plans and objectives of management for future operations, including plans and objectives relating to future economic performance and our current beliefs regarding revenues we might earn if we are successful in implementing our business strategies. The Company does not undertake to update, revise or correct any forward-looking statements.

LIQUIDITY AND CAPITAL RESOURCES

OVERVIEW

Our principal sources of liquidity are existing cash, cash generated by our operations, and our ability to borrow cash when needed from a related party as discussed in our notes to financial statements.

Our principal uses of liquidity are paying the costs and expenses associated with our operations, and servicing outstanding indebtedness.

The company faced significant setbacks in profitability in the fourth quarter of 2007 and the first three quarters of 2008. Net losses for the first quarter of 2008 were ($47,171). Net losses for the second quarter of 2008 were ($12,628). Net losses for the quarter ending September 30, 2008 were ($31,217).

While the capital resources of the company are limited from a cash perspective, the credit of the officers and directors for guaranteeing any loan necessary is extremely strong. The company has not established any lines of credit with any banks. In the event a supplier or lender requires additional credit to obtain small equipment or other business supplies, our officers and directors are willing to extend their credit to accomplish the purchase. The Company has made no commitments for capital expenditures in coming periods. The Company is not aware of any material trends that could affect our capital resources.

OPERATING ACTIVITIES

During the first nine months of 2008, the company used $101,668 of cash in operating activities compared to cash being provided by operating activities in the amount of $3937 in the first nine months of 2007. The increase in cash used in operating activities in the first nine months of 2008 was a result of increased operating losses in the first three quarters of 2008.

Results of Operations for the nine months ended September 30, 2008 and 2007

Revenues:

For the three months ended September 30, 2008, total revenues were $125,992 as compared to total revenues of $118,478 for the same period in 2007. This does not represent a material change. However, for the nine months ended September 30, 2008 the total revenues were only $314,842 as compared to $363,917 for the same nine month period in 2007. This is a decrease of $49,075, or 13.5%. The bulk of this decrease occurred in the first quarter of 2008, as the decrease in revenues for the first quarter of 2008 as compared to the same period for the prior year was $63,026, or 46%. Management attributes this decrease to one key factor. Our General Manager, Charles Harwell was in poor health during this first quarter, causing him to be absent from the daily operations of the Company. Since he is the key individual to whom employees look for leadership and final decisions on an operational level, when he is not present, it has a substantial effect on the morale of the employees, especially those on the sales team. At the close of the first quarter, however, two key decisions were made by the Board of the Company in an attempt to improve the overall financial health of the Company.

Effective March 15, 2008, Board Member, and Officer, Susan Harwell, made a commitment to be on site no fewer than thirty hours each week. Susan brings twenty years of business experience to the company, with most of that being related specifically to the sale of On-Hold Messages and Radio Jingles. Management believes the revenue performance of the company for the second and third quarters of 2008 has improved, as reflected in the financials, due to her involvement. Susan was able to locate a much larger, more attractive office space for the Company at the same monthly lease price per square foot as the space the Company has occupied since 2002. In addition to this, with Mrs. Harwell’s oversight, the company has now launched a more efficient and user friendly website, created a more attractive logo, and has been able to document most of the sales training system in a written manual for the first time. Along with Susan, Shane Harwell, our President, who is not typically involved at a daily operational level, but rather provides oversight at an organizational and financial reporting level, began to invest ten hours weekly into the operational aspect of the company, focusing mainly on sales training, the procurement of sales “leads”, and assisting in the recruitment of five new sales staff members, who were added to the staff throughout the month of September. Mr. Harwell brings twenty years of experience as it relates to sales training and organizational leadership to the day to day operations of the Company. Though nothing is certain, the Board of Directors and Management are hopeful that the revenue improvements experienced in the second and third quarters of 2008, will continue in future periods, thus improving our liquidity and capital position.

Cost of Goods Sold:

Although for the nine months ended September 30, 2008 compared to the same period for 2007, the Cost of Goods Sold figure comprised 35% and 33% of Total Revenue respectively, the Cost of Goods Sold for the three month period ended September 30, 2008 as compared to the same period for 2007; the figures were $40,494 and $33,674 respectively. This is due primarily to a price increase from the supplier of the digital units that play the messages that the Company produces and distributes. Research is currently being conducted to ascertain whether or not another supplier can provide the units at a lower cost. The Company cannot guarantee that an alternative supplier will be able to provide the units at a lower cost, and therefore the ongoing effect of the price increase on liquidity is uncertain.

Rent and Office Expense:

The rent payment on our office space is currently approximately 21% of our General and Administrative Expense. When comparing Rent Expense from the third fiscal quarter of 2008 to that of 2007, the expense was $6050 as compared to $4950. The Company changed locations on April 1, 2008. Management believes the upgrade to our location will enable us to attract and retain a higher caliber of employee in the future. This effect on our staffing efforts should more than compensate for the additional rent expense, and thus provide stronger profits and working capital in the future. Office Expense was $7604 for the nine months ended September 30, 2008, as compared to $4332 for the same period in 2007. This was due to paint and new carpet for several rooms in the new, leased, office space during the second quarter of 2008. This placed a stronger demand on our working capital during that period.

Telephone Expense:

The Telephone Expense for the nine months ended September 30, 2008 was $12,540 as opposed to $13,549 for the same period in 2007. The company was able to absorb the cost of moving the entire phone system (18 lines) from our previous location to our current location early in the second quarter of 2008, while still saving $1009 over the nine months ended September 30, 2008 as compared to the same period in 2007. The company is paying lower long distance fees this year as compared to last year. This should contribute to slightly higher profits and slightly stronger liquidity in the fourth quarter of 2008.

Net Income:

For the three months ended September 30, 2008, Net Losses were ($31,217) as compared to Net Losses of ($322) for the same period of 2007. Net Losses for the nine months ended September 30, 2008 were ($91,016) as compared to ($22,129) for the same period of 2007. Management believes that the overall national economic downturn is having a negative effect on it’s earnings. Many business owners who would have considered our products to be a necessity in better economic times, are now viewing it as an optional luxury. The Company cannot guarantee that profitability will be improved in either upcoming quarters or in 2009. If earnings do not improve, the Company will have to continue to rely on borrowings from Directors to meet the company’s cash flow requirements or seek outside debt or equity vehicles that can be secured on terms that are favorable to the company.

Comparison of Balance Sheet for September 30, 2008 and December 31, 2007 as it pertains to Capital and Liquidity.

Cash and Equivalents:

The balance in this account is $3908 lower on September 30, 2008 than it was on December 31, 2007. However, this shift is not a material indicator of the capital or liquidity position of the Company. Of greater concern to management is the increase in debts due to related parties which have resulted from stagnant sales and higher expenses in the third quarter of 2008. If earnings do not improve, the Company will have to continue to rely on borrowings from related parties to meet the company’s cash flow requirements or seek outside debt or equity vehicles that can be secured on terms that are favorable to the company.

Accounts Receivable:

The balance in this account is $2366 higher on September 30, 2008 than it was on December 31, 2007. However, this small increase is not material when considered in light of the overall Balance Sheet, nor is it an indicator of the capital or liquidity position of the Company. As a result, Management believes no conclusion can be drawn regarding its effect on capital or liquidity at this time.

Total Current Liabilities:

The Total Current Liabilities balance has increased by $78,915 from the period between December 31, 2007 and September 30, 2008. This is primarily due to the increase in the balance of the notes Due to related parties of $94,752. This increase reflects borrowings from Charles Harwell, a Director in the Company, who loans cash to the company to offset losses. This loan bears no interest as discussed in the notes to financials. However, this level of debt creates a future demand on profits, as the Company seeks to repay the Director from future profits. This factor presents a significant challenge as it pertains to the future liquidity and capital position of the Company.

FINANCING ACTIVITIES

In the first nine months of 2008, net cash provided by financing activities was $97,760 while the net cash provided by financing activities during the first nine months of 2007 was $7263. The difference was due to borrowings from a related party to assist with cash flow as discussed in the notes to financials.

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, as defined by 229.10(f) (1), we are not required to provide the information required by this item.

ITEM 4: CONTROLS AND PROCEDURES

a) Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Report on Form 10-Q, an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures was carried out by the Company under the supervision and with the participation of our Chief Executive and Chief Financial Officer. Based on that evaluation, the Chief Executive and Chief Financial Officer concluded that the Company’s disclosure controls and procedures have been designed and are being operated in a manner that provides reasonable assurance that the information required to be disclosed by the Company in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. A system of controls, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the system of controls are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

(b) Changes in Internal Control over Financial Reporting.

During the quarter ended September 30, 2008, there was no change in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II

ITEM 1.

Legal Proceedings:

We are currently not involved in any litigation that we believe could have a materially adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our company’s or our company’s subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

None

ITEM 3.

Defaults Upon Senior Securities:

None.

ITEM 4.

Submission of Matters to a Vote of Security Holders:

No matters were submitted to shareholders for the period ended September 30, 2008.

ITEM 5.

Other Information:

None.

Item 6. Exhibits:

The following exhibits are included as required by Item 601 of Regulation S-K. Those marked with an asterisk and required to be filed hereunder, are incorporated by reference and can be found in their entirety in our original form SB-2 Registration Statement, filed under SEC File Number 333-139685, at the SEC website at www.sec.gov.



Exhibit No.	Description
3(i)*	Harcom Productions, Inc. Certificate of Incorporation
3(ii)*	Articles of Amendment to Harcom Productions, Inc. Certificate of Incorporation
3(iii)*	Harcom Productions, LLC Certificate of Conversion
3(iv)*	Harcom Productions, LLC Plan of Conversion
3(v)*	Amendments to the Articles of Organization of the Powerhouse, L.L.C., an Oklahoma Limited Liability Company
3(vi)*	Harcom Productions, Inc. By-Laws
31	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act.
32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



Signature	Title	Date

/s/ Shane Harwell	Chief Executive Officer; Chief Financial Officer	October 28, 2008
	President, Secretary, and Chairman of the Board