form10q.htm

10-Q 1 form10q.htm CLASSIC COSTUME, INC FORM 10-Q form10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

S QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2008

£ TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE EXCHANGE ACT

For the transition period from ___________ to _____________

Commission File Number 333-45678

CLASSIC COSTUME COMPANY, INC.

(Exact name of small business issuer as specified in its charter)

Delaware

(State or other jurisdiction of incorporation or organization)

20-8317658

(I.R.S. Employer Identification No.)

1202 Lexington Avenue, APT. 104, New York, New York 10028

(Address of principal executive offices)

646-259-1009

(Issuer’s telephone number)

(Former name, former address and former fiscal year if changed since last report)

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 the 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 o

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

Yes x No o

The number of shares of the Registrant’s Common Stock outstanding as of April 30, 2008 was 12,957,117.

Transitional Small Business Disclosure Format (Check one): Yes o No x

CLASSIC COSTUME COMPANY, INC.

(a development stage company)


	Page Number
PART 1 – Financial Information

Item 1 – Unaudited Financial Information:

Consolidated Balance Sheet as of March 31, 2008 (Unaudited) and December 31, 2007	3

Consolidated Statements of Operations for the Three Months Ended March 31, 2008 and 2007 (Unaudited) and from Inception (December 29, 2006), to March 31, 2008 (Unaudited)	4

Consolidated Statement of Changes in Stockholders’ Equity (Unaudited)	5

Statements of Cash Flows for the Three Months Ended March 31, 2008 and 2007 (Unaudited) and from Inception (December 27, 2006, to March 31, 2008 (Unaudited)	6

Notes to Unaudited Financial Statements	7-12

Item 2 - Management’s Discussion and Analysis or Plan of Operation	13-17

Item 3 - Quantitative and Qualitative Disclosures About Market Risk	17

Item 4T - Controls and Procedures	17

PART II - Other Information (Items 1-6)	17-18

CLASSIC COSTUME COMPANY, INC. & SUBSIDIARY

(a development stage company)

CONSOLIDATED BALANCE SHEET

	March 31, 2008			December 31, 2007
	(UNAUDITED)			(AUDITED)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	10		$	278
Inventories		6,400			6,132
Total current assets		6,410			6,410

OTHER ASSETS
Capitalized software costs, net		200			225
Intangibles		2,660			2,815
Total assets	$	9,270		$	9,450

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	3,000		$	3,000
Advance from shareholder		20,000			-
Total current liabilities		23,000			3,000


STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value, 5,000,000 shares authorized,
No shares issued and outstanding		-			-
Common stock, $.001 par value, 50,000,000 shares authorized,
12,957,117 issued and outstanding		12,957			12,957
Additional Paid-In Capital		634,899			634,899
Deficit accumulated during the development stage		(661,586	)		(641,406	)
Total stockholders' equity		(13,730	)		6,450

Total liabilities and stockholders' equity	$	9,270		$	9,450

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

CLASSIC COSTUME COMPANY, INC. & SUBSIDIARY

(a development stage company)

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

							Cumulative
							Totals
							From Inception
	For the three			For the three			(December 29, 2006)
	months ended			months ended			Through
	March 31, 2008			March 31, 2007			March 31, 2008

Revenue	$	-		$	7,476		$	14,078
Costs of revenue		-			2,194			5,683

Gross profit		-			5,282			8,395

General and administrative expenses
Officer compensation		-			-			504,440
Legal fees		-			107,656			107,656
Audit fees		20,000			3,000			31,000
Amortization of intangibles		180			2,650			11,065
Printing		-			-			3,512
Postage		-			-			1,431
Impairment of intangible		-			-			(996	)
Other		-			90			10,040
Total operating expenses		20,180			113,396			668,148

Loss from operations		(20,180	)		(108,114	)		(659,753	)

Other income (expense):
Interest expense		-			-			(1,833	)

Net loss	$	(20,180	)	$	(108,114	)	$	(661,586	)

(Loss) per share:
Basic and diluted earnings (loss) per share	$	(0.00	)	$	(0.01	)

Weighted average shares
outstanding - basic and diluted		12,957,117			12,354,117

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

CLASSIC COSTUME COMPANY, INC. & SUBSIDIARY

(a development stage company)

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

									Additional					Total
	Preferred Stock				Common Stock				Paid-in		Accumulated			Stockholders'
	Shares		Amount		Shares		Amount		Capital		Deficit			Equity

Balance, December 29, 2006		-	$	-		-	$	-	$	-	$	-		$	-

Issuance of restricted shares to
officer @ $0.05 per share		-		-		10,000,000		10,000		490,000		-			500,000

Net loss		-		-		-		-		-		(500,000	)		(500,000	)

Balance, December 31, 2006		-		-		10,000,000		10,000		490,000		(500,000	)		-

Issuance of Common Stock for
services @ $.05 per share		-		-		2,153,117		2,153		105,503		-			107,656

Issuance of Common Stock to former
stockholders of WWR @ $.05 per share		-		-		201,000		201		9,849		-			10,050

Issuance of Common Stock pursuant to
private placement @ $.05 per share		-		-		603,000		603		29,547		-			30,150

Net loss		-		-		-		-		-		(141,406	)		(141,406	)

Balance, December 31, 2007		-		-		12,957,117		12,957		634,899		(641,406	)		6,450

Net loss		-		-		-		-		-		(20,180	)		(20,180	)
Balance, March 31, 2008 (Unaudited)		-	$	-		12,957,117	$	12,957	$	634,899	$	(661,586	)	$	(13,730	)

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

CLASSIC COSTUME COMPANY, INC. & SUBSIDIARY

(a development stage company)

STATEMENTS OF CASH FLOWS

(UNAUDITED)

							Cumulative
							Totals
							From Inception
	For the three			For the three			(December 29, 2006)
	months ended			months ended			Through
	March 31, 2008			March 31, 2007			March 31, 2008

Cash flows from operating activities:
Net loss	$	(20,180	)	$	(108,494	)	$	(661,586	)

Adjustments to reconcile net loss to net
cash used in operating activities:

Impairment of intangible					-			(996	)
Amortization		180			2,650			11,065
Common stock issued for services		-			107,656			607,656

Increase in assets and liabilities:
Inventories		(268	)		2,109			(1,408	)
Accounts payable and accrued expenses		-			(10,620	)		(9,167	)

Net cash used in operating activities		(20,268	)		(6,699	)		(54,436	)

Cash flows from investing activities:
Trademark procurement costs		-			-			(3,100	)
Net cash used in investing activities		-			-			(3,100	)

Cash flows from financing activities:
Cash overdraft		-			(10	)		(10	)
Advance from shareholder		20,000			7,405			27,406
Proceeds from sale of capital stock		-			-			30,150
Net cash provided by financing activities		20,000			7,395			57,546


Net increase in cash and cash equivalents		(268	)		696			10
Cash and cash equivalents - beginning of period		278			-			-

Cash and cash equivalents - end of period	$	10		$	696		$	10

Non-Cash Investing and Financing Activities:
Note issued for investment in subsidiary	$	-		$	30,000		$	30,000
Common stock issued for investment in subsidiary	$	-		$	10,050		$	10,050
Total assets acquired	$	-		$	5,292		$	5,292
Total liabilities acquired	$	-		$	(17,735	)	$	(17,735	)

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

Classic Costume Company, Inc. and Subsidiar y

(a development stage company)

Notes to Consolidated Financial Statements

(Unaudited)

Note 1 -Description of Business

Classic Costume Company, Inc. (“Classic” or “We” or “the Company”) was formed as a Delaware corporation on December 29, 2006. We are a development stage corporation formed to produce and market our unique line of historical costumes and reenactment clothing lines through our website with the registered domain name of WorldWideRelics.Com. To date, we have completed our range of historical uniforms known as “Britain in the 1930’s” and have had commenced selling these items to the growing market of world wide enthusiasts and collectors through our internet platform and on eBay Inc. We intend to add new ranges of product covering the American Civil War reenactment market by producing a range of high quality uniforms for both the Union and Confederate Civil War Re-enactor. This range includes both uniforms as well as accoutrements such as boots, belts and back packs produced to a museum quality standard. The final business group is the marketing and sale of high quality copies of both British and German uniforms from both the world wars to satisfy the demand from the growing re-enactment groups world wide which are principally in Europe.

On January 7, 2007, we issued an aggregate of 10,000,000 shares of common stock, valued at $0.05 per share, to E. Todd Owens for professional services rendered amounting to $500,000. The issuance of these shares and the related expenses are reflected in the accompanying financial statements as of December 31, 2006.

On January 17, 2007, in consideration for 100% of the outstanding shares of World Wide Relics, Inc. (“WWR”) (a Nevada corporation formed on January 8, 2005), we issued 201,000 shares of common stock and a promissory note for $30,000 bearing interest at the rate of 7% and due on March 31, 2008 to the former shareholder of WWR. The accompanying financial statements include the operations of WWR. During June 2007 the Company raised a total of $30,150, representing 603,000 shares, in a public offering.

Note 2 - Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements include the accounts of the Classic Costume, Inc. and its wholly owned subsidiary, World Wide Relics, Inc. All significant intercompany accounts and transactions have been eliminated in the consolidated financial statements.

Use of Estimates

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

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments and other short-term investments with a maturity of three months or less, when purchased, to be cash equivalents.

Property and Equipment

Property and equipment is stated at cost, less accumulated depreciation. Depreciation is provided using the straight-line method over the estimated useful lives of the related assets (primarily three to five years). Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life. Costs of maintenance and repairs are charged to expense as incurred.

Inventories

Inventory is valued at the lower of cost or market and consists of finished goods. The cost is determined by using the actual amount paid to acquire the items.

Classic Costume Company, Inc. and Subsidiary

(a development stage company)

Notes to Consolidated Financial Statements

(Unaudited)

Note 2 - Summary of Significant Accounting Policies (continued)

Stock Based Compensation

In December 2004, the FASB issued SFAS No. 123(R), "Share-Based Payment," which replaces SFAS No. 123 and supersedes Accounting Principles Board (“APB”) Opinion No. 25. Under SFAS No. 123(R), companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation arrangements include stock options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. In March 2005 the SEC issued Staff Accounting Bulletin No. 107, or “SAB 107”. SAB 107 expresses views of the staff regarding the interaction between SFAS No. 123(R) and certain SEC rules and regulations and provides the staff's views regarding the valuation of share-based payment arrangements for public companies. SFAS No. 123(R) permits public companies to adopt its requirements using one of two methods. On April 14, 2005, the U.S. Securities and Exchange Commission (the “SEC”) adopted a new rule amending the compliance dates for SFAS 123R. Companies may elect to apply this statement either prospectively, or on a modified version of retrospective application under which financial statements for prior periods are adjusted on a basis consistent with the pro forma disclosures required for those periods under SFAS No. 123. Effective January 1, 2006, the Company has adopted SFAS No. 123(R) under the prospective method.

Recoverability of Long-Lived Assets

The Company reviews the recoverability of its long-lived assets on a periodic basis whenever events and changes in circumstances have occurred which may indicate a possible impairment. The assessment for potential impairment is based primarily on the Company’s ability to recover the carrying value of its long-lived assets from expected future cash flows from its operations on an undiscounted basis. If such assets are determined to be impaired, the impairment recognized is the amount by which the carrying value of the assets exceeds the fair value of the assets. Property and equipment to be disposed of by sale is carried at the lower of the then current carrying value or fair value less estimated costs to sell. Intangible assets with indefinite useful lives are tested for impairment annually or more frequently if an event indicates that the asset might be impaired. In accordance with SFAS No. 142, the fair value of these intangible assets is determined based on a discounted cash flow methodology.

At December 31, 2007, the Company determined that the intangible asset associated with the acquisition of World Wide Relics, Inc. was impaired; accordingly, the unamortized balance of $41,968 was written off. Further, the seller of World Wide Relics, Inc. agreed to cancel the purchase note of $30,000 and an advance from shareholder of $11,130. Such amounts were netted against the impairment.

Revenue Recognition

The Company follows the guidance of the Securities and Exchange Commission's Staff Accounting Bulletin 104 for revenue recognition. In general, the Company records revenue when persuasive evidence of an arrangement exists, services have been rendered, the sales price to the customer is fixed or determinable, and collectability is reasonably assured.

Revenues from services are recognized when the services are performed, evidence of an arrangement exists, the fee is fixed and determinable and collectability is probable. In circumstances when these criteria are not met, revenue recognition is deferred until resolution occurs.

Income Taxes

The Company accounts for income taxes utilizing the liability method of accounting. Under the liability method, deferred taxes are determined based on differences between financial statement and tax bases of assets and liabilities at enacted tax rates in effect in years in which differences are expected to reverse. Valuation allowances are established, when necessary, to reduce deferred tax assets to amounts that are expected to be realized.

Earnings (Loss) Per Share of Common Stock

The Company presents basic earnings (loss) per share and, if appropriate, diluted earnings per share in accordance with SFAS 128, “Earnings Per Share (“SFAS 128”). Under SFAS 128 basic net income (loss) per share is computed by dividing net income (loss) for the period by the weighted-average number of shares outstanding during the period. Diluted net income per share is computed by dividing net income for the period by the weighted-average number of common share equivalents during the period. There were no unexpired options or warrants to purchase shares of common stock at March 31, 2008.

Classic Costume Company, Inc. and Subsidiary

(a development stage company)

Notes to Consolidated Financial Statements

(Unaudited)

Note 2 - Summary of Significant Accounting Policies (continued)

Fair Value of Financial Instruments

The carrying amounts reported in the consolidated balance sheet for cash, accounts receivable and payable approximate fair value based on the short-term maturity of these instruments.

Intangible Assets

The Company accounts for intangible assets in accordance with the provisions of SFAS No. 142, “Goodwill and Other Intangible Assets”, which requires intangible assets with indefinite useful lives not be amortized, but be tested for impairment annually or whenever indicators or impairments arise. Intangible assets that have finite lives continue to be amortized over their estimated useful lives. Our intangible asset consists of a trademark on the Company’s name and its website.

As of March 31, 2008 the Company’s identifiable intangible assets subject to amortization consisted of the following:

	March 31, 2008
	Intangible Assets		Accumulated Amortization
Trademark	$	3,100	$	440
Total	$	3,100	$	440

Amortization of the trademark, recorded on a straight line basis over its estimated useful life of five years was $180 and $25 for the three months ended March 31, 2008 and March 31, 2007, respectively.

Shipping and handling costs

The Company accounts for shipping and handling costs as a component of “Cost of Sales”.

Recent Issued Accounting Standards

In March 2008, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133, which requires additional disclosures about the objectives of the derivative instruments and hedging activities, the method of accounting for such instruments under SFAS No. 133 and its related interpretations, and a tabular disclosure of the effects of such instruments and related hedged items on our financial position, financial performance, and cash flows. SFAS No. 161 is effective for the Company beginning January 1, 2009. Management believes that, for the foreseeable future, this Statement will have no impact on the financial statements of the Company once adopted.

FASB 141(revised 2007) – Business Combinations

In December 2007, the FASB issued FASB Statement No. 141 (revised 2007), Business Combinations. This Statement replaces FASB Statement No. 141, Business Combinations. This Statement retains the fundamental requirements in Statement 141 that the acquisition method of accounting (which Statement 141 called the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination. This Statement defines the acquirer as the entity that obtains control of one or more businesses in the business combination and establishes the acquisition date as the date that the acquirer achieves control. This Statement’s scope is broader than that of Statement 141, which applied only to business combinations in which control was obtained by transferring consideration. By applying the same method of accounting—the acquisition method—to all transactions and other events in which one entity obtains control over one or more other businesses, this Statement improves the comparability of the information about business combinations provided in financial reports.

This Statement requires an acquirer to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date, with limited exceptions specified in the Statement. That replaces Statement 141’s cost-allocation process, which required the cost of an acquisition to be allocated to the individual assets acquired and liabilities assumed based on their estimated fair values.

Classic Costume Company, Inc. and Subsidiary

(a development stage company)

Notes to Consolidated Financial Statements

(Unaudited)

Note 2 - Summary of Significant Accounting Policies (Cont’d)

Recent Issued Accounting Standards (Cont’d)

FASB 160 – Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51

In December 2007, the FASB issued FASB Statement No. 160 - Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51. This Statement applies to all entities that prepare consolidated financial statements, except not-for-profit organizations, but will affect only those entities that have an outstanding noncontrolling interest in one or more subsidiaries or that deconsolidate a subsidiary. Not-for-profit organizations should continue to apply the guidance in Accounting Research Bulletin No. 51, Consolidated Financial Statements, before the amendments made by this Statement, and any other applicable standards, until the Board issues interpretative guidance.

This Statement amends ARB 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. Before this Statement was issued, limited guidance existed for reporting noncontrolling interests. As a result, considerable diversity in practice existed. So-called minority interests were reported in the consolidated statement of financial position as liabilities or in the mezzanine section between liabilities and equity. This Statement improves comparability by eliminating that diversity.

A noncontrolling interest, sometimes called a minority interest, is the portion of equity in a subsidiary not attributable, directly or indirectly, to a parent. The objective of this Statement is to improve the relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing accounting and reporting standards that require: (a) The ownership interests in subsidiaries held by parties other than the parent be clearly identified, labeled, and presented in the consolidated statement of financial position within equity, but separate from the parent’s equity, (b) The amount of consolidated net income attributable to the parent and to the noncontrolling interest be clearly identified and presented on the face of the consolidated statement of income, (c) Changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary be accounted for consistently. A parent’s ownership interest in a subsidiary changes if the parent purchases additional ownership interests in its subsidiary or if the parent sells some of its ownership interests in its subsidiary. It also changes if the subsidiary reacquires some of its ownership interests or the subsidiary issues additional ownership interests. All of those transactions are economically similar, and this Statement requires that they be accounted for similarly, as equity transactions, (d) When a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary be initially measured at fair value. The gain or loss on the deconsolidation of the subsidiary is measured using the fair value of any noncontrolling equity investment rather than the carrying amount of that retained investment, (e) Entities provide sufficient disclosures that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners.

This Statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008 (that is, January 1, 2009, for entities with calendar year-ends). Earlier adoption is prohibited. This Statement shall be applied prospectively as of the beginning of the fiscal year in which this Statement is initially applied, except for the presentation and disclosure requirements. The presentation and disclosure requirements shall be applied retrospectively for all periods presented. Management believes this Statement will have no impact on the financial statements of the Company once adopted.

Classic Costume Company, Inc. and Subsidiary

(a development stage company)

Notes to Consolidated Financial Statements

(Unaudited)

Recent Issued Accounting Standards (Cont’d)

This Statement applies to all transactions or other events in which an entity (the acquirer) obtains control of one or more businesses (the acquirer), including those sometimes referred to as “true mergers” or “mergers of equals” and combinations achieved without the transfer of consideration, for example, by contract alone or through the lapse of minority veto rights. This Statement applies to all business entities, including mutual entities that previously used the pooling-of-interests method of accounting for some business combinations. It does not apply to: (a) The formation of a joint venture, (b) The acquisition of an asset or a group of assets that does not constitute a business, (c) A combination between entities or businesses under common control, (d) A combination between not-for-profit organizations or the acquisition of a for-profit business by a not-for-profit organization.

This Statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. An entity may not apply it before that date. Management believes this Statement will have no impact on the financial statements of the Company once adopted.

Management does not believe that any recently issued, but not yet effective accounting pronouncements if currently adopted would have a material effect on the accompanying consolidated financial statements.

Note 3-Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has no operating history nor any revenues or earnings from operations. Additionally, the Company’s ongoing expenses, primarily registration, legal accounting costs, have been paid through funds advanced to it by certain shareholders. The Company intends to resolve its liquidity problems through pursuing a merger or combination with a profitable third party buyer. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Note 4-Equity Transactions

The Company was incorporated on December 29, 2006. Upon incorporation, the Company had authority to issue the following:

Preferred Stock- 5,000,000 $.001 par value shares.

Common Stock- 50,000,000 $.001 par value shares.

On January 7, 2007, the Company issued an aggregate of 10,000,000 shares of common stock, valued at $0.05 per share, to E. Todd Owens for professional services. The issuance of these shares is reflected in the Company’s financial statements as of December 31, 2006. In January 2007 the Company issued 2,354,117 common shares valued at $0.05 to its lawyers, Sichenzia Ross Friedman Ference LLP, for legal services rendered. In June 2007 the Company issued 603,000 shares in a public offering of shares at $.05 per share.

Note 5 – Change of Control of Registrant

On September 25, 2007 (the “Effective Date”), pursuant to the terms of a Stock Purchase Agreement, J & J Global Assets Inc. purchased 10,000,000 shares of the issued and outstanding common stock of Classic Costume Company, Inc. (the “Company”) from E. Todd Owens, CEO of the Company, for $541,250 in cash. Pursuant to the terms of a Securities Purchase Agreement, J & J Global Assets Inc. also purchased 2,153,117 shares of the issued and outstanding common stock of the Company, and a Warrant to purchase 15% of the outstanding shares of common stock of the Company for $108,750 in cash. The total of 12,153,117 shares represents 94% of the outstanding common stock of the Company. J & J Global Assets Inc. used personal funds to purchase the shares of the Company. As part of the acquisition, and pursuant to the Stock Purchase Agreement, and Securities Purchase Agreement the following changes to the Company’s directors and officers have occurred:

o As of September 25, 2007, Carl Oberg was appointed to the Board of Directors of the Company and as the Chief Executive Officer, Principal Financial Officer and Secretary.

o E. Todd Owens then resigned as the Chairman of the Board, Company’s President, Chief Executive Officer, Secretary, Chief Financial Officer, and Treasurer.

o Also as of September 25, 2007, E. Todd Owens was appointed as a Company Vice President.

Classic Costume Company, Inc. and Subsidiaries

(a development stage company)

Notes to Consolidated Financial Statements

(Unaudited)

Note 6-Acquisition

On January 17, 2007, the Company executed and consummated a Stock Purchase Agreement with the sole shareholders of World Wide Relics, Inc. where the Company acquired all of the issued and outstanding capital stock of World Wide Relics, Inc. In consideration for the stock of the Company issued to the former shareholder of the acquired subsidiary 201,000 shares of the Company’s common stock and a promissory note for $30,000 bearing interest at the rate of seven percent, due March 31, 2008. The note payable was forgiven by its holder on December 10, 2007.

The following table summarizes the estimated fair values of the assets and liabilities assumed at the date of acquisition:

Purchase price	$	40,050
Total assets		(5,292	)
Total liabilities		17,735
Identifiable intangible assets	$	52,493

Amortization expense for the Company’s intangibles amounted to $0 and $2,625 for the three months ended March 31, 2008, and March 31, 2007, respectively.

The following unaudited pro forma consolidated results of operations have been prepared as if the acquisition of World Wide Relics, Inc. had occurred as of the following period:

	March 31, 2007
Net revenues	$	7,476
Net loss applicable to common shareholders		5,192
Basic and diluted net income per share		0.01

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

FORWARD LOOKING STATEMENTS

Management’s Discussion and Analysis contains “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as well as historical information. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that the expectations reflected in these forward-looking statements will prove to be correct. Forward-looking statements include those that use forward-looking terminology, such as the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “project,” “plan,” “will,” “shall,” “should,” and similar expressions, including when used in the negative. Although we believe that the expectations reflected in these forward-looking statements are reasonable and achievable, these statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Current shareholders and prospective investors are cautioned that any forward-looking statements are not guarantees of future performance. Such forward-looking statements by their nature involve substantial risks and uncertainties, certain of which are beyond our control, and actual results for future periods could differ materially from those discussed in this report, depending on a variety of important factors, among which are our ability to implement our business strategy, our ability to compete with major established companies, the acceptance of our products in our target markets, the outcome of litigation, our ability to attract and retain qualified personnel, our ability to obtain financing, our ability to continue as a going concern, and other risks described from time to time in our filings with the Securities and Exchange Commission. Forward-looking statements contained in this report speak only as of the date of this report. Future events and actual results could differ materially from the forward-looking statements. You should read this report completely and with the understanding that actual future results may be materially different from what management expects. We will not update forward-looking statements even though its situation may change in the future.

INTRODUCTION

The following discussion and analysis summarizes the significant factors affecting: (i) our consolidated results of operations for the three months ended March 31, 2008; and (ii) financial liquidity and capital resources. This discussion and analysis should be read in conjunction with our consolidated financial statements and notes included in our most recent Form 10-KSB.

We are a start-up, development stage company with a limited operating history. We were initially formed in December 2006 and on January 17, 2007 we acquired World Wide Relics, Inc. World Wide Relics, Inc. was initially formed in January 2005. The market for our products sold through the Internet has only recently begun to develop and is rapidly evolving. Our prospects must be considered in light of the risks, costs and difficulties frequently encountered by companies in their early stage of development, particularly companies in the rapidly evolving Internet market. In order to be successful, we must, among other things, attract, retain and motivate qualified customers to view our website, successfully implement our Internet marketing programs, respond to competitive developments and successfully expand our internal infrastructure, particularly sales, marketing and administrative personnel and its accounting system. Our mission is to combine the advantages of online commerce with a superior customer focus in order to be an authoritative source for authentic and excellent reproductions of historical memorabilia and clothing. In sum, our goals are:

1. To generate maximum sales revenues by offering an extensive range of superior products to online consumers at competitive prices;

2. To generate referral and repeat business by offering exceptional service and sales follow-up to our customers

3. To maximize the competitive advantage we hold through the sale of quality products which consumers value.

We have been working with our Indian supplier to expand our offerings into the American Civil War re-enactment arena. Our aim is to provide so-called “Reenactors” with authentic-looking uniforms and regalia (buckles, badges, etc.) at affordable prices. The following is a description of Civil War Reenactments and our target market:

There are clubs in the United States, Canada, and even the United Kingdom where enthusiasts don uniforms and portray life in the Civil War period. American Civil War reenactments have drawn a fairly sizable following of enthusiastic participants, of all ages, willing to brave the elements and expend money and resources in their efforts to duplicate the events down to the smallest recorded detail. Participants may even attend classes put on by event sponsors where they learn how to dress, cook, eat, and even "die" just as real Civil War soldiers would have. Most reenactment have anywhere from 100-1,000 actors, portraying either Union or Confederate infantry, artillery, or cavalry forces. To date the biggest Civil War reenactment was the 135th Gettysburg (1998), which had over 41,000 reenactors and a crowd of over 45,000 watching.

Reasons given for taking part in such activities differ. Some partakers are interested in getting a historical standpoint on the turbulent times that gripped the nation, particularly if they can trace their ancestry back to those who fought in the war. Others participate merely for the escapism that such events offer. Some commentators have suggested that Southerners are drawn to these activities for political reasons, because they represent a rejection of the North. Often, however, this is a false stereotype. In fact, some are Northerners that may have been "sympathetic" to the Southerners, who are often outnumbered in events in the North. In some cases if there are not enough Union soldiers present, Confederate soldiers are asked to switch sides for the day/event. There are thought to be three types of Reenactors:

Farbs - are reenactors who spend relatively little of their time or money maintaining authenticity with regard to uniforms, accessories, or even period behavior. ‘Farb’ is derived from the German "farben" which means to make or to manufacture; others contend that the term stems from the phrase, "far be it from me to criticize, but look at that...” These people are self-made Union or Confederate soldiers, wearing modern-day sunglasses, wristwatches, eyeglasses and the like as they exercise their impression of soldiers of the period. They are content to wear their grey polyester work trousers and grey work shirt with their name tag stitches removed, and any old-looking hat when they are Confederate soldiers; and they wear pretty much anything blue when they are Union soldiers. They all too often disregard the direction of their officers and fail to maintain the orderly behavior in drill and on the field which would have been common during the War, displaying not an independent spirit but an undisciplined, unruly, and rude spirit. Farbs might march out into a Reenactment wearing blue jeans and boots, for example. Some think the origin of the word is a truncated version of "Far be it from authentic." An alternative definition is "Far be it for me to question his impression".

Authentics—are re-enactors on the opposite end of the spectrum from Farbs. They try to recreate life in the Civil war to the fullest, researching details of material goods and operations in a quest for accuracy. Often they will nitpick every detail of authenticity, to the point where they are known as a "thread counter", a person who criticizes other people because they are even slightly off from authentic.

Mainstreamer—the last type of reenactor really doesn't have an official label, but is often called the "Mainstreamer." These reenactors are somewhere between farb and authentic. They are more common than either farbs or authentics.

Our financial statements are prepared in accordance with U.S. generally accepted accounting principles and we have expensed all development expenses related to the establishment of the company.

CRITICAL ACCOUNTING POLICIES

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States, which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The critical accounting policies that affect our more significant estimates and assumptions used in the preparation of our financial statements are reviewed and any required adjustments are recorded on a monthly basis.

Revenue Recognition

Revenue is recognized when products are shipped or services are rendered.

CRITICAL ACCOUNTING POLICIES (Cont’d.)

Website Development Costs

Website development costs consist principally of outside consultants and related expenses. We follow the provisions of Emerging Issues Task Force (“EITF”) Issue No. 00-2, “Accounting for Website Development Costs,” which provides guidance in accounting for costs incurred to develop a website. Our website is being continually changed on a regular basis as the business model continues to evolve. Accordingly, due to the uncertainty of our future products, these costs are expensed as incurred and are included in website development costs.

Research and Development

Research and development costs are charged to expense as incurred.

Stock Based Compensation

As permitted under Statement of Financial Accounting Standard ("SFAS") No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure" ("SFAS 148"), which amended SFAS No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), we have elected to continue to follow the intrinsic value method in accounting for its stock-based employee compensation arrangements as defined by Accounting Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued to Employees," and related interpretations including "Financial Accounting Standards Board Interpretation No. 44, Accounting for Certain Transactions Involving Stock Compensation," an interpretation of APB No. 25. No stock-based employee compensation cost is reflected in net income, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant.

New Accounting Pronouncements

FASB 141(revised 2007) – Business Combinations

New Accounting Pronouncements (Cont’d.)

FASB 160 – Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.

Seasonality of Business

We expect there to be subject to some seasonal fluctuations in its operating results, with revenues in November and December and other popular shopping holidays expected to be higher because of relationship of purchasing gifts and needed items for friends and family members being specifically associated with these occasions.

RESULTS OF OPERATIONS

Quarter Ended March 31, 2008. The Company did not have any sales for the first quarter, as compared to sales for $7,476 for the comparable period last year. The Company continued its development of its uniform product line, and it managed to procure original metal dies used to make authentic historic uniform belt buckles from a firm in Birmingham, England.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.

ITEM 4T. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, Mr. Oberg, who serves as both the Chief Executive Officer and Chief Financial Officer (the “Officer”), conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")). Based upon this evaluation, the Officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms.

In addition, no change in our internal control over financial reporting occurred during the fiscal quarter ended March 31, 2008 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II: OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS.

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.

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

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit No.		Exhibit
3.1		Articles of Incorporation (1)
3.2		Bylaws (1)
5.01		Changes in control of registrant (2)
5.02		Departure of directors or principal officers; election of directors; appointment of principal officers. (2)
31.1		Rule 13a-14(a)/15d-14(a) certification of Certificate of Chief Executive Officer *
31.2		Rule 13a-14(a)/15d-14(a) certification of Certificate of Chief Financial Officer *
32.1		Section 1350 Certification of Principal Executive Officer. *
32.2		Section 1350 Certification of Principal Financial Officer. *

———————

*filed herewith

(1)	Incorporated by reference to the registration statement on Form SB-2 as filed on May 8, 2007.

(2)	Incorporated by reference to the Current Report on Form 8-K as filed on October 1, 2007.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CLASSIC COSTUME, INC

May 16, 2008	By:	/s/ Carl Oberg
		Carl Oberg
		Chief Executive Officer, President, Secretary, Chief Financial Officer, Treasurer, Principal Accounting Officer and Director