bowmo, Inc. - Quarter Report: 2009 March (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 March 31, 2009
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 X No .

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See 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 X .
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes No X .

The number of shares outstanding of the registrant’s common stock, par value $0.01 per share, as of May 14, 2009: 1,637,500 shares.


Harcom Productions, Inc.
Balance Sheets


			March 31,2009 (UNAUDITED)		December 31, 2008
	ASSETS
Current Assets
	Cash & Cash Equivalents	$	8,275	$	8,337
	Accounts Receivable, net		54,028		59,243
	Other Current Assets		1,931		2,733
Total Current Assets			64,234		70,313

Other Assets
	Intangible Assets-Less Amortization		84,646		88,783
	Deposits		1,500		1,500
Total Other Assets			86,146		90,283

TOTAL ASSETS		$	150,380	$	160,596

LIABILITIES & STOCKHOLDERS' EQUITY

Current Liabilities
	Accounts Payable & Accrued Liabilities	$	23,270	$	25,689
	Due to related parties		216,276		192,808
	Note payable (Current)		8,770		8,629
Total Current Liabilities			248,316		227,126

Long Term Liabilities, net of current portion			138,621		140,867
Total Liabilities			386,937		367,993

Stockholders' Equity
	Common Stock, Shares Authorized 100,000,000
	Par Value $.01,
	Issued and Outstanding
	1,637,500 shares		16,375		16,375
	Additional Paid-In Capital		99,067		99,067
	Accumulated Deficit		(351,998)		(322,839)
Total Equity			(236,556)		(207,397)

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	150,381	$	160,596
The accompanying notes are an integral part of the interim financial statements

Harcom Productions Inc.

Statements of Operations

(UNAUDITED)


			For the three months ended March 31, 2009		For the three months ended March 31, 2008
REVENUE
	Shipped Products	$	82,756	$	76,318
	Refund/Discounts of Services		0		(1,045)
Total Revenue			82,756		75,273

COST OF GOODS SOLD
	Commission		8,878		17,840
	Materials		21,673		13,854
	Amortization Expense		4,137		4,137
Total Cost of Good Sold			34,688		35,831

Gross Profit			48,068		39,442

OPERATING EXPENSES
	General & Administrative		16,515		25,112
	Medical Insurance		410		423
	Employee Compensation		56,283		58,090
Total Operating Expenses			73,208		83,625

OTHER EXPENSE
	Interest Expense		3,217		2,988

NET INCOME/LOSS		$	(28,357)	$	(47,171)

Presentation of Net Income/(Loss)
	Net Income (Loss) before Income tax	$	(28,357)	$	(47,171)

	Provision for Income tax		0		0

	Net Income (Loss)	$	(28,357)	$	(47,171)

	Earnings (Loss) per Common share basic and fully Diluted	$	(0.02)	$	(0.01)

	Weighted average number of Common shares outstanding		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

(UNAUDITED)


			For the three months ended March 31, 2009		For the three months ended March 31, 2008
Operating Activities:

	Net Income (Loss)	$	(28,357)	$	(47,171)
	Adjustments to reconcile Net Income (Loss) to net
	cash used in operating activities:
	Amortization		4,137		4,137
	Accounts receivable		5,215		1,314
	Accounts Payable and Accrued Liabilities		(2,419)		8,075
	Prepaid expenses		(802)		(1,500)
Net Cash (Used) Provided By Operating Activities			(22,226)		(35,145)

Investment Activities			0		0
Financing Activities
	Note Payable (Current)		141		133
	Due to Related Party		22,023		41,833
Net cash provided by financing activities			22,164		41,966

Net Change in Cash			(62)		6,821
Cash, Beginning of Period			8337		4,798
Cash, End of Period		$	8275	$	11,619

Non Cash Activities			0		0

Supplemental Information
	Interest Paid	$	3,217	$	2,988
	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 Three Months Ended March 31, 2009

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 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 March 31, 2009, the Company’s allowance for doubtful accounts totaled $5,181 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 June 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 April 2009, the FASB issued FSP No. FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides guidance on estimating fair value when market activity has decreased and on identifying transactions that are not orderly. Additionally, entities are required to disclose in interim and annual periods the inputs and valuation techniques used to measure fair value. This FSP is effective for interim and annual periods ending after June 15, 2009. The Company does not expect the adoption of FSP FAS 157-4 will have a material impact on its financial condition or results of operation.

In October 2008, the FASB issued FSP No. FAS 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active,” (“FSP FAS 157-3”), which clarifies application of SFAS 157 in a market that is not active. FSP FAS 157-3 was effective upon issuance, including prior periods for which financial statements have not been issued. The adoption of FSP FAS 157-3 had no impact on the Company’s results of operations, financial condition or cash flows.

In December 2008, the FASB issued FSP No. FAS 140-4 and FIN 46(R)-8, “Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities.” This disclosure-only FSP improves the transparency of transfers of financial assets and an enterprise’s involvement with variable interest entities, including qualifying special-purpose entities. This FSP is effective for the first reporting period (interim or annual) ending after December 15, 2008, with earlier application encouraged. The Company adopted this FSP effective January 1, 2009. The adoption of the FSP had no impact on the Company’s results of operations, financial condition or cash flows.

In December 2008, the FASB issued FSP No. FAS 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets” (“FSP FAS 132(R)-1”). FSP FAS 132(R)-1 requires additional fair value disclosures about employers’ pension and postretirement benefit plan assets consistent with guidance contained in SFAS 157. Specifically, employers will be required to disclose information about how investment allocation decisions are made, the fair value of each major category of plan assets and information about the inputs and valuation techniques used to develop the fair value measurements of plan assets. This FSP is effective for fiscal years ending after December 15, 2009. The Company does not expect the adoption of FSP FAS 132(R)-1 will have a material impact on its financial condition or results of operation.

In September 2008, the FASB issued exposure drafts that eliminate qualifying special purpose entities from the guidance of SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,” and FASB Interpretation 46 (revised December 2003), “Consolidation of Variable Interest Entities − an interpretation of ARB No. 51,” as well as other modifications. While the proposed revised pronouncements have not been finalized and the proposals are subject to further public comment, the Company anticipates the changes will not have a significant impact on the Company’s financial statements. The changes would be effective March 1, 2010, on a prospective basis.

In June 2008, the FASB issued FASB Staff Position EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities, (“FSP EITF 03-6-1”). FSP EITF 03-6-1 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting, and therefore need to be included in the computation of earnings per share under the two-class method as described in FASB Statement of Financial Accounting Standards No. 128, “Earnings per Share.” FSP EITF 03-6-1 is effective for financial statements issued for fiscal years beginning on or after December 15, 2008 and earlier adoption is prohibited. We are not required to adopt FSP EITF 03-6-1; neither do we believe that FSP EITF 03-6-1 would have material effect on our consolidated financial position and results of operations if adopted.

In May 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts-and interpretation of FASB Statement No. 60”. SFAS No. 163 clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement of premium revenue and claims liabilities. This statement also requires expanded disclosures about financial guarantee insurance contracts. SFAS No. 163 is effective for fiscal years beginning on or after December 15, 2008, and interim periods within those years. SFAS No. 163 has no effect on the Company’s financial position, statements of operations, or cash flows at this time.

In May 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles”. SFAS No. 162 sets forth the level of authority to a given accounting pronouncement or document by category. Where there might be conflicting guidance between two categories, the more authoritative category will prevail. SFAS No. 162 will become effective 60 days after the SEC approves the PCAOB’s amendments to AU Section 411 of the AICPA Professional Standards. SFAS No. 162 has no effect on the Company’s financial position, statements of operations, or cash flows at this time.

In March 2008, the Financial Accounting Standards Board, or FASB, issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133. This standard requires companies to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. This Statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company has not yet adopted the provisions of SFAS No. 161, but does not expect it to have a material impact on its consolidated financial position, results of operations or cash flows.

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, 2008 and 2007.

The identifiable intangible assets acquired and their carrying values at March 31, 2009 and 2008 are:


	2009	2008
Jingles used in on hold messaging	$ 248,247	$ 248,247
Less: Accumulated Amortization	(163,601)	(147,053)
Net Intangible Asset	$ 84,646	$ 101,194

Total amortization expense charged to operations for the quarter ended March 31, 2009 and 2008 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 March 31, 2008 was $149,496 and on December 31, 2008 it was $140,867. The balance on March 31, 2009 is $138,621.

Note 4 – Due to Related Parties

Since 2004, the Company’s General Manager has advanced funds to the Company to purchase materials expensed as costs of goods sold as well as to occasionally meet payroll obligations. These loans were made through the use of the General Manager’s personal credit cards and personal loans. As such, the amount of interest accrued is dictated by the interest rate agreed to through the General Manager’s credit agreement. For the years ended December 31, 2008 and 2007, the net effect of unpaid advances were $192,808 and 71,850 respectively. The net effect of unpaid balances on March 31, 2009 is $216,276.

Note 5 – Other Commitments and Contingencies

Lease Agreement

On March 12, 2008, the Company executed a lease agreement. This lease agreement covers the office space for the Company’s headquarters in Tulsa, Oklahoma includes 3,000 square feet of finished office space leased for one year beginning on April 1, 2008 and included a deposit of $1,500. The lease renews annually and the related rental expense for 2007 was $19,800 and $24,000, for 2008 respectively. The related rental expense for the quarter ended March 31, 2009 is $5,100.

Note 6- 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 ($78,367) and ($108,683) for the years ended March 31, 2008 and December 31, 2008 respectively, and a net loss of ($28,357) for quarter ended March 31, 2009. Without the 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 2008. Net losses for the year were ($108,683). Net losses for the quarter ending March 31, 2009 were ($28,357).

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 2008, the company used $109,333 of cash in operating activities. During the quarter ended March 31, 2008 the company used $35,145 of cash in operating activities. During the quarter ended March 31, 2009 the company used $22,226 of cash in operating activities. This $12,919 decrease in cash used in operating activities in the first three months of 2009 when compared to the same period in 2008 was a result of Net losses being reduced by $18,814 when comparing those losses to the first quarter of 2008. This, along with a decrease in accounts receivable over the prior quarters comparison to the fourth quarter of the preceding year of $3901, along with a decrease of account payable, accrued liabilities of $5656. These items account for the majority of the difference.

Results of Operations for the three months ended March 31, 2009 and 2008

Revenues:

For the three months ended March 31, 2009, total revenues were $82,756 as compared to total revenues of $75,273 for the same period in 2008. This increase of $7483 or 10%, is still not enough revenue to take the organization to a profitable position. This improvement should be viewed more as an improvement in a very poor first quarter of 2008 rather than a large enough difference to enable the Company to cash flow itself without taking on small, unsecured loans from a related party, as discussed in our Notes to Financials. The General Manager of the Company, Charles Harwell is back in good health in the first quarter of 2009 as compared to his very poor health in the first quarter of 2008. His presence on a daily basis has a material impact on the morale of the employees and therefore the productivity of the sales force.

The continued daily involvement of Susan Harwell in the areas of Production and Playback, also provides a higher quality product to the average customer while reducing the turnaround time from an average of seven days from point of sale to playback back in 2008, to three days now in 2009. This enables the customer to hear the final product while the terms of the original sale are still fresh in their mind, and their excitement level is a bit higher, which leads to a higher ship-out rate than when the turnaround time was twice as long.

Though nothing is certain, the Board of Directors and Management are hopeful that the revenue improvements experienced in the first quarter of 2009, will continue in future periods, thus improving our liquidity and capital position.

Cost of Goods Sold:

For the three months ended March 31, 2009, and the three months ended March 31, 2008, the figure was almost the same; $34,688 and $35,831 respectively. However, the two main figures that comprise these totals had some fluctuation. Cost of Materials was $21,673 in 2009 and only $13,854 in 2008. This was due to two reasons. The first was that we purchased approximately $5,000 in digital players due to a liquidation sale from one of our vendors in 2009. This decision by management will save us 30% on those particular units in coming months. They are our standard units for re-sale, so there is no danger of that inventory remaining un-sold in coming months. The other reason simply had to do with the timing of when agreements were made to purchase the inventory last year versus this year, and therefore the recording under the accrual method of accounting reflects that difference. The same is true of the Commission figure. The difference between the $17,840 in 2008 vs. $8,878 in 2009 is due to two variables. One is the timing of accrual entry. The other, however, is due to the fact that our sales this year were generated by a greater number of more inexperienced staff contributing sales at lower levels per salesperson than last year. Last years sales, although $7483 lower than this years, were driven primarily by two, very seasoned representatives who generated over 80% of the sales, and therefore earned higher commissions. Management believes if we can continue to train our less experience representatives, we should see an overall positive effect on our liquidity in coming quarters.

Operating Expenses:

Our Total Operating Expense dropped from $83,625 for the first fiscal quarter in 2008 to $76,425 for the same period in 2009. More significantly, this represents a reduction in operating expenses as a percentage of revenue from 111% of revenues in 2008 to 92% in 2009. While the improved percentage is still not low enough for the company to experience positive cash flow, it is certainly a step in the right direction. Part of the reason for the improvement is that total employee compensation as a percentage of sales actually dropped from 77% in the first quarter of 2008 to 68.5% for the first quarter of 2009. Although management believes that these percentages are still too high for the Company to be profitable, it is a positive step in the right direction. Management believes that continuing to increase sales is the most solid long-term solution to our liquidity situation, as the Company does not employ any individual whose efforts are not required on a full time basis to keep the Company operating at an acceptable level of efficiency.

Our General and Administrative expenses dropped from $25,112 to $19,318 when comparing those expenses from the period ended March 31, 2008 to the period ended March 31, 2009. This is a difference of $5,794 or 23%. The main reasons for this decrease were twofold. First, our telephone expense was less than half the amount it was in 2008, because in 2008 we changed our location, so there were significant costs associated with disconnecting our phone system and reinstalling the system in our new offices. Secondly, our professional fees were about $3000 higher in 2008 due the timing of auditing and quarterly review work, and when those engagements with our independent accounting firm took place.

Though management believes some of the small trends in expense reductions discussed above are positive, it is impossible to determine if our sales will increase in future quarters. Without an increase in sales, our liquidity picture will remain poor, and we will have to continue to rely upon borrowings from a related party, until we can increase our overall sales performance.

Net Income:

For the three months ended March 31, 2009, Net Losses were ($28,357) as compared to Net Losses of ($47,171) for the same period in 2008. Management believes this improvement has more to do with the reduction of certain operational expenses, and the timing of those expenses as discussed above, than a material change in the profitability of the company due to it’s slightly higher sales. Management will continue to focus on providing strong sales training for the newer member of our staff in hopes that the per person sales average will continue to climb in coming quarters. Management believes the net losses that the Company has experienced over the past five quarters is a result of the overall national economic downturn. 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 upcoming quarters. 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 March 31, 2009 and March 31, 2008 as it pertains to Capital and Liquidity.

Cash and Equivalents:

The balance in this account is $3344 lower on March 31, 2009 than it was on March 31, 2009. 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 over the past six quarters. 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 $686 lower on March 31, 2009 than it was on March 31, 2008. However, this small decrease 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 $76,173 from the period between March 31, 2008 and March 31, 2009. This is primarily due to the increase in the balance of the notes Due to related parties of $102,543. 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 three months of 2008, net cash provided by financing activities was $41,966 while the net cash provided by financing activities during the first three months of 2009 was $22,164. 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 March 31, 2009, 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 March 31, 2009.


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.

-----------------------

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	May 14, 2009
	President, Secretary, and Chairman of the Board