U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-KSB/A
(x) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period ended December 31, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-27454
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Part I
Item 1. Description of Business.
BUSINESS DEVELOPMENT
INCEPTION THROUGH DECEMBER 1998
World Wide Motion Pictures (a sole proprietorship)(the
"Predecessor") was founded in July of 1977, with the guidance and
consultation of well-known producer and director Otto Preminger,
under the name of World Wide Motion Pictures and later incorporated
under the laws of the state of Michigan on December 9, 1980 under
the name of World Wide Motion Pictures Corporation (the
"Predecessor") and has filed "annual reports" with the state of
Michigan securities bureau as required by Michigan law. The
Predecessor was formed for the purpose of financing, developing,
producing, purchasing and distributing filmed and taped motion
picture and television product for consumption by the general
public. In March of 1981 the Predecessor acquired G.L. Productions,
Inc. and all of its facilities, a Washington, D.C. company. In
November of 1983, the Predecessor, through a reorganization
agreement, merged with the National Power Corporation (the
"Company")(formerly Juggernaut Energy Corporation), a Utah public
corporation. National Power Corporation's common stock was traded
on the over-the-counter market with registered broker-dealer firms
making a market nationally. Contemporaneously with the merger, the
name of the Company was changed to WWMP Inc. and subsequently
changed to World Wide Motion Pictures Corporation. At the time of
this filing, the Company has shareholders in 32 states and 7 foreign
countries including England, Japan, Singapore, Australia, Germany,
Israel, and Canada including the names of 15 broker-dealer firms
holding the Company's common securities.
The Predecessor formerly was, and currently the Company is,
organized to finance, develop, produce, purchase and
market/distribute a wide variety of motion picture and television
projects including feature films, short subjects, docudramas,
documentaries, industrial films, and television productions using a
formula of high technology, moderate budget, cost control, and
continual flow of product. The Company is engaged in and pursuing
diversified business enterprises with profit potential as authorized
by its charter and bylaws such as new and emerging media
technologies, educational seminars and health care services.
The Company has an active 18-member Board of Directors; Board
designated committees including Executive, Audit, Finance, and
Personnel; staff operating committees including Production and
Product Development, Standards, and Experimental projects; elected
officers, and an Advisory Board of Directors. Certain other
individuals who provide technical, theatrical, marketing, business,
and production services to the Company on a specific ongoing basis
have entered into contracts with the Company.
The following transactions represent certain events that have
transpired throughout the history of the Company's business that
resulted in major developments within the Company's current
corporate strategic plan and the specific developments regarding the
company's business in the last three years.
(bullet) CORPORATE ACQUISITION BY THE PREDECESSOR
In March of 1981, the Predecessor acquired G.L. Productions Inc., a
Washington, D.C. company ("GLP") and all of its assets. GLP was a
production and distribution company producing and distributing short
subject, docudrama, documentary and industrial motion pictures.
Certain of GLP's productions were produced and distributed in
conjunction with the United States Government. The Predecessor
acquired GLP by the exchange of 12,469 then authorized and
previously unissued shares of the Predecessor which, upon merger
with the Company, became 2,012,814 shares of common stock of the
Company. These shares were issued to GLP's president and sole
owner, George T. Lindsey, for 1000 shares of GLP unregistered common
stock representing 100% of GLP's outstanding common stock. Mr.
Lindsey is currently a Vice President for the Company and is
entitled to a contractual sales commission of five (5%) percent of
any revenue of the product library of the Company that was owned by
GLP prior to its acquisition by the Predecessor from lease or sale
by him personally to third parties. (There have been no commissions
earned by Mr. Lindsey during the past three years.)
(bullet) THE NATIONAL POWER CORPORATION AGREEMENT AND PLAN OF
REORGANIZATION
On February 7, 1980, Juggernaut Energy Corporation was incorporated
under the laws of the state of Utah. In April of 1980, Juggernaut
Energy Corporation had prepared an offering circular for the
issuance of an initial public offering of up to 500,000 shares of
its common stock for the purpose of acquiring a maximum of $100,000
or minimum of $50,000 in working capital. The offering was
underwritten by First Equities Corp. of Salt Lake City, Utah, the
effective date of which was April 18, 1980. The stock offering
price was $.20 per share and the offering was closed upon the
acquisition of the minimum amount of expected proceeds. Combined
with the original incorporator's stock, immediately following the
close of the public offering, the Company's outstanding shares of
common stock totalled 1,350,000 (150,000 initially issued to
Officers, Directors and Founder of the corporation; 500,000 from
offering; 150,000 at par value $0.01 as partial consideration for
the assignment of interest in oil exploration; 550,000 for $5,500.00
cash). On October 17, 1981, Juggernaut Energy Corporation amended
its Articles of Incorporation to effect a name change to National
Power Corporation, increase the authorized common stock to
50,000,000 shares, and decrease the par value from $.01 to $.0025
per share.
On October 14, 1983, National Power Corporation executed a letter of
intent with the Predecessor, the material provisions of which
provided that the Predecessor would exchange 145,578 of its
unregistered common shares for 23,500,000 of the issued and
outstanding capital stock of National Power Corporation. On
February 10, 1984, pursuant to a special meeting of shareholders of
the National Power Corporation, a majority of the National Power
Corporation's issued and outstanding shares adopted resolutions
relating to the consummation of an Agreement and Plan of
Reorganization as between the Predecessor, namely World Wide Motion
Pictures Corporation and the National Power Corporation. In
connection with the foregoing, the Predecessor issued to the
National Power Corporation 145,578 shares of its unregistered common
stock and in consideration therefore, the Predecessor acquired, in
a tax-free stock for stock transaction (calculated to comply with
Internal Revenue Codes), approximately 94% of the issued and
outstanding shares of the National Power Corporation. Further, the
merger process resulted in a change in the Company's number of
shares issued, outstanding and authorized and a change in par
value.
Also, as a result of the foregoing transaction, a change in control
of the Company took place and a new board of directors was elected.
The National Power Corporation also amended its Articles of
Incorporation to effect a name change to World Wide Motion Pictures
Corporation, the Company.
(bullet) SECURITIES OFFERINGS OF THE PREDECESSOR AND COMPANY
In June of 1982, the Predecessor's securities counsel, Dykema,
Gossett, Spencer, Goodnow & Trigg, under the direction of the
Predecessor's management, prepared an unregistered private placement
limited partnership offering circular for the production of one full
length feature motion picture. Net proceeds to the company would
have been $1,000,000 (50 units at $20,000 per unit). The offering
was prepared as a self-underwriting financing proposed by the
Predecessor to be formed in compliance with the Uniform Limited
Partnership Act of the State of Michigan. The offering was
abandoned prior to any sales of units as a result of a change in
strategic planning by the Predecessor's management. Essentially,
management concluded that expending all of its production resources
in the preparation of one motion picture was unduly speculative and
that participation in a broad range of film and television
partnership packages would thereby assure a greater degree of
opportunity for success.
In March of 1986, the Company's securities counsel, Berry, Moorman,
King, Cook and Hudson, under the direction of the Company's
management, prepared a registered private placement limited
partnership offering circular for the production of four full length
feature motion pictures. Net proceeds to the Company would have been
$200,000 minimum or $4,960,000 maximum (40 units at $5,000 per unit
minimum/992 units at $5,000 per unit maximum). The offering was to
be underwritten by R.B. Marich Inc., a registered broker/dealer firm
in Denver, Colorado, and W.R. Lazard & Co., a registered
broker/dealer firm in New York, New York. The offering was
withdrawn as a result of impending changes that occurred in the
United States tax laws at that time. All proceeds that were
committed to the offering were returned.
The Company has not proposed a public offering of its common stock
since the initial public offering of the National Power Corporation
in 1980.
(bullet) FILM LIBRARY ACQUISITIONS
The Company acquires various completed motion pictures and
television productions, some of which are totally or partially
purchased in exchange for common stock, preferred stock, and a
revenue participation of the Company. A significant acquisition
occurred in November of 1991, at which time the Company entered into
an agreement with an un-related non-affiliated entity, Presidio
Productions, a California corporation ("Presidio"), whereby the
Company acquired all right, title and interest in 136 motion picture
and television productions ("Product") in exchange for a total
consideration aggregating 2,000,000 fully paid, non-assessable,
unregistered Rule 144 shares of common stock of the Company and
25,000 fully paid, non-assessable, unregistered shares of preferred
stock of the Company. Further terms and conditions of the
Company/Presidio transaction were as follows: a.) The Company agreed
to cause all of the common shares being issued to Presidio
thereunder to be issued immediately following the "closing" of the
Company/Presidio transaction; and, b.) The Company issued the
remaining preferred shares upon the delivery of all physical
elements of the product including 35mm gauge negative film footage,
35mm gauge answer print film footage, 1-inch videotape masters, 3/4"
videotape submasters, and 1/2" videotape archival cassettes.
The value of the film library was determined by arms-length
negotiations between the buyer and the seller which included review
of production and replacement costs, previous marketing experience
and marketing potential. Accordingly, the Company has pursuant to
GAAP, reported the transaction in the financial statements at
$12,750,000 under unclassified assets. On December 14, 1992, the
Company/Presidio transaction was considered closed, with all parties
thereto having executed the agreement and Product delivered to the
Company. Under the terms of that same agreement all Product had
been delivered by Presidio to the Company in good condition and
represented to be free of any and all liens or encumbrances along
with a bill of sale regarding the same. A limited amount of revenue
has been received from the leasing of films and television
productions in the library.
(bullet) FORMATION OF OPERATING SUBSIDIARIES OF THE COMPANY
In July, 1993, the Company formed two fully operational, wholly
owned subsidiaries, World Wide Film & Television Institute and WWMPC
Environmental Services Corporation. The Institute's primary
business is the development, production, marketing, and
implementation of educational symposiums, workshops, lectures, and
forums, on a national basis in areas covering the entertainment
industry specifically film and television, financing, packaging,
production, marketing/distribution, and the political/networking
process that accompanies these areas of expertise. Main events
(primarily symposiums and seminars with more than one hundred
participants) are scheduled on an annual basis and workshops,
lectures and forums intermittently throughout the year. The
Company's first entry into a completely diversified field was the
formation of WWMPC Environmental Services Corporation. This
company's primary business was the marketing and distribution of
environmental services (including detection and remediation of
indoor air quality for residential and commercial dwellings and
products)(including indoor air quality testing kits for residential
and commercial dwellings); the orchestration, production, marketing,
and implementation of information seminars and infomercials designed
specifically for contractors and other professionals in the energy
business desirous of augmenting their existing activity by entering
the environmental services field. Special staff with expertise in
this area was retained by the Company's management to ensure optimum
productivity and growth potential. The Company discontinued the
operation of this business in December 1994. Subsidiary
corporations are formed periodically for the purpose of developing,
producing, or distributing one or more motion picture or television
productions owned and/or controlled by the company. The subsidiary
corporations, when active, individually operate as a separate
business with separately defined boards of directors, executive and
operating officers, investors, liabilities, production or
co-production teams and revenue sharing arrangements. Currently,
the
company has two active "production" corporation subsidiaries; World
Wide Films Inc., which was recently used for the production of the
feature length motion picture tentatively entitled "Shattered
Illusions" featuring Morgan Fairchild, Bruce Weitz, Richard Lynch,
and Dan Monahan, and World Wide Productions Inc. for the production
of an upcoming specialty television production entitled "The
Classics", and the feature length motion picture tentatively
entitled "Along for the Ride". A diversified subsidiary
corporation, World Wide Medical Services Ltd. was formed in December
1996 to provide a variety of home health care and temporary nursing
services to the healthcare delivery system. This new subsidiary
expects to begin producing profits during the third quarter of 1999.
BUSINESS OF COMPANY
PRINCIPAL PRODUCTS AND SERVICES OF THE COMPANY
The principal business of the Company is the development, financing,
production, purchasing and marketing/distribution of feature
films/video productions and various other forms of filmed and/or
televised entertainment. In addition, the Company and its
Associates produce/co-produce documentaries, docudramas, industrial
films, and specialty television productions for consumption by the
general public. Feature films and short subject projects completed
and/or marketed by the Company are generally rented or sold to
national and international theater chains, independent television
stations and television networks. Revenue can be generated from a
variety of sources. The three basic sources are: (1) theatrical
exhibition pursuant to agreements which generally provide for
payment by the exhibitors of a percentage of box office receipts
with or without a guarantee of a fixed minimum, (2) licensing to
television networks, regional broadcasters and syndicated
arrangements pursuant to agreements which provide for a fixed
license fee payable in periodic installments; and (3) wholesale of
film/video product to national and regional home video outlets
encompassing both foreign and domestic markets pursuant to a fixed
retail rental formula. Substantial additional profits may also
accrue from ancillary exploitation of media product including
satellite broadcast, merchandising, literary rights and related
paraphernalia.
The Company produces/co-produces and markets its film and television
product as individual motion pictures and television productions
which are customarily organized and accounted for as separate
businesses with their own management, employees, equipment and
budgets. Currently, the Company is using wholly owned subsidiary
corporations it has formed for motion picture and television
production. The controlling production entity or co-production
entity (in certain cases, the Company) has primary overall
responsibility for all aspects of a project, from pre-production,
principal photography and post production through marketing and
distribution. The individual producer(s) for each film or
television project is responsible for general management and
administrative coordination of the film or video as well as
participation in the planning, principal casting, technical and
creative responsibilities to be performed in conjunction with the
director of the production. The production of a full length motion
picture or feature television project involves a number of related
activities which, in general, can take six months to more than a
year to fully complete.
Producers, directors, performers, writers, and various technicians
who participate in the production of the Company's film and
television projects are generally retained on a project-by-project
basis, and are normally compensated by negotiated fixed fees and/or
all standard guidelines set down by unions and guilds in the motion
picture and television industry.
The Company's various production, development, marketing, and
finance committees continuously review and, in specific cases
consult on or package feature film and television projects for
financing, production, and distribution. Management of the Company
has, since the Company's inception, encouraged "open" screenplay and
teleplay submission in addition to the submission of completed
project acquisition possibilities in all genre of filmed and video
taped entertainment in order to insure the best possible opportunity
for selection of quality and marketable product for the Company to
be involved.
The Company currently owns and maintains a completed screenplay and
teleplay literary library encompassing 57 WGA (Writer's Guild of
America) registered properties from which it periodically reviews
and occasionally selects the most imaginative and promising ones for
either development, production, or marketing. Certain screenplays
and teleplays currently owned or optioned by the Company have been
developed and packaged for production throughout the history of the
Company.
Additionally, the Company currently owns and maintains a completed
film and television library encompassing 277 titles of feature
length motion pictures, documentaries, docudramas, and television
projects. For internal control purposes, the Company's Board of
Directors directed management to retain an independent appraiser in
order to further establish verification of the value of its
completed product library as currently determined by staff and
management. The Company also owns certain film equipment, a sound
effects library, a still slide library, novels and options on
treatments and holds a beneficial interest in certain ongoing
contracts. Options on literary treatments otherwise defined as
developing storylines and creative ideas are occasionally secured by
the Company and company's like the Company for the purpose of
developing the storyline or creative idea into a fully developed
screenplay or teleplay at some unknown time in the future. The
Company may or may not contribute expertise to a film or television
project such as script polishing, script rewriting, packaging,
financing, scheduling, budgeting, and line production. The
Company's "beneficial interest" (percentage of future revenue, if
any) in certain ongoing contracts includes certain of the
above-referred to options or options on already fully prepared
screenplays
or teleplays which may or may not be produced into a film or
television production at some unknown time in the future. None of
the ongoing contracts "beneficial interest" entered into by the
Company is significantly material to the Company's current financial
condition and/or operations at the present time. The full
development of the contracts is dependent on the acquisition of
additional capital by the Company.
Distribution of product by the Company initially can be and
currently is generally channeled through the Company's
distribution/marketing network of associated companies, the
Company's Producer's Representatives, television syndicators and all
other established customary channels used by independent producers
and production companies. The Company's distribution/marketing
network of associated companies is comprised of a wide variety of
domestic and foreign film distributors and television syndicators,
all of which have extensive backgrounds of experience and knowledge
in specific areas of marketing and distribution of film and
television product including domestic film distribution, foreign
film distribution, domestic television syndication, foreign
television syndication, domestic home video distribution, foreign
home video distribution, and domestic and international cable,
pay-per-view and satellite broadcast. The Company's Producer's
Representative, in some cases, acts as a liaison between the Company
and the above referred distribution network relative to specific
contractual points of discussion for a particular transaction the
Company may be contemplating for the exploitation of one of its
product.
The principals of the Company have a proven record of professional
experience demonstrating their training and knowledge in high
quality, cost controlled, moderately budgeted film/video productions
and innovative marketing and distribution skills. Certain of these
backgrounds include production and marketing experience at both
large studios and small independent companies. The combined number
of motion pictures and television productions the production and
marketing personnel of the Company have been instrumentally involved
with encompass over 100 productions. The production and marketing
team is skilled and/or expert in the use of the latest technological
filming and video taping techniques, state of the art equipment, and
administrative control, i.e., experienced budget scheduling and
production/distribution cost supervision and distribution
capabilities. Certain of the technological expertise and/or
equipment that is used by the Company's professional personnel
include theatrical "Platform Releasing" (e.g., THE RIVER RUNS
THROUGH IT (in current video release), Tri Star Pictures, in excess
of $30 million in gross revenue worldwide; PULP FICTION (in current
video release), Miramax, in excess of $100 million in gross revenue
worldwide; THE POSTMAN (in current video release), Miramax, in
excess of $15 million in gross revenue worldwide), "Regional Break
Releasing", "Test Market Releasing"; Panavision, Kodak, Arroflex,
and Nikkagami camera equipment in 16, Super 16 and 35mm gauge
format; Avid, Protools, and Media 100 post production and editorial
equipment for film and video; Keylight lighting equipment; and DHX,
DAK and Nagomi sound equipment.
The principals of the Company have developed, produced, distributed
and consulted on a wide variety of feature films, documentaries,
docudramas, short subjects, television productions and industrial
motion pictures. They and/or their productions have earned a wide
variety of many national and international film/television
production awards including, as an example: Emmy awards (David
Toma/CBS Movie-of-the-Week, BABIES HAVING BABIES), Emmy nominations,
Drummer awards (former executive vice president and current advisor
Henry Barth/wide variety of industrial and training films),
gold/silver and bronze medals from various international film
festivals (George Lindsey/New York and Chicago Film Festivals for
docudramas and documentaries), Academy awards and academy award
nominations (Charles Newirth/feature film FORREST GUMP) and Academy
award nominations (Fred Baron/feature film ROBOCOP)(John R.
Woodward/feature film THE SHAWSHANK REDEMPTION).
The Company and its principals have entered into various ongoing
agreements and arrangements relative to the consultancy, production,
financing and distribution of motion picture or television
projects.
Many of the agreements and arrangements contain provisions which
could result in revenue to the Company. Although a significant part
of the Company's historical operations has been devoted to
developing and consummating these agreements and arrangements with
a wide variety of companies and individuals within the entertainment
industry, the potential revenue resulting from such agreements and
arrangements has not been shown as receivables or assets on the
Company's financial statements. Potential revenue from the above
referred-to ongoing agreements and arrangements can be acquired by
the Company utilizing general and more specific markets and
technologies, which in the opinion of the Company's management, will
also increase in scope and size. As indicated by a wide variety of
industry publications including Variety and The Hollywood Reporter,
current trends indicate that these future markets and expanding
technologies, such as the increase in the deregulation of the
European television industry and 100+ channel global satellite
television programming, will extend for a lengthy period of time.
In the opinion of the Company's management, these future markets and
expanding technologies will continue to promote further new ways to
exploit film and television entertainment product; i.e., with mass
appeal increasing as specific technological industries such as high
definition television, CD-Rom, DVD, and expanded Internet
communications. Full and complete exploitation of these agreements
and arrangements by the Company will require the acquisition of
additional working capital, which the Company is anticipating to
achieve through financial offerings and/or other traditionally used
methods of private sector, commercial banking, and other methods of
capital acquisition used by small and midsized companies.
Since its creation in July of 1977, the Company's management
continuously researches current data, updates pertinent technical
information, and has subsequently implemented procedures regarding
the production of and consultancy for moderately budgeted feature
film (production budgets of approximately $250,000 to $5,000,000)
and television projects produced on a continual flow of product
basis. (Management of the Company define "continual flow of product"
as the production of motion picture and television product produced
on an overlapping production basis; ie., 3 weeks into 4 weeks of
post production for production "A", principal photography on
Production "B" begins; and 3 weeks into 4 weeks of principal
photography on Production "B", pre-production on Production "C"
begins.) It is the Company's opinion that following this production
process will help to ensure a "continual flow of product" for the
marketing and distribution of product by the Company and
subsequently help to ensure and increase a continuous revenue
stream. The above formula is a central basis for the Company's
profit making strategy. It is the opinion of management that such
strategy has a high percentage of opportunity for success. The full
realization of profits from the Company's strategic preparations is
dependent on the acquisition of additional capital.
The following transactions represent the most significant
potentially revenue-producing arrangements relative to motion
picture and television production, co-production, marketing,
consulting and acquisitions the Company has entered into to date.
(bullet) DOCUMENTARY/DOCUDRAMA/SCREENPLAY ACQUISITION AND MARKETING
On March 18, 1981, the Company acquired G.L. Productions, Inc.
("GLP") of Washington, D.C. and all of its facilities and
productions including twenty-eight 30 and 60-minute documentaries
and docudramas and 42 completed/registered screen and teleplays
("product"). Certain titles include RHOUTES TO GYANA featuring
Leonard Nimoy, YOU'VE COME A LONG WAY MAYBE featuring Barbara
Walters; and THE LOST ANCIENT CITIES OF TOPAN AND TIKAL featuring
Brock Peters. The Company and GLP have entered into various
television syndication and public broadcast agreements since the
acquisition of the product relative to the marketing and
exploitation of the product. According to the terms of the
acquisition, the Company retains 100% of any potential producer's
gross revenue percentage accruing to the Company from any and all
marketing and exploitation of the product worldwide in perpetuity.
(bullet) SCREENPLAY/TELEPLAY ACQUISITION
On November 28, 1983, the Company entered into an acquisition
agreement (Agreement) with Paul Alex Productions of Huntington
Beach, CA for the purpose of acquiring all right, title and interest
in 12 completed screenplays and teleplays ("product"). The product
was registered with the Writer's Guild of America West and consisted
of various genre of story content. According to the terms of the
acquisition, the Company retains 80% of any potential producer's
gross revenue percentage accruing to the Company from any and all
marketing and exploitation of the produced product worldwide in
perpetuity.
(bullet) FEATURE FILM CO-PRODUCTION
On March 26, 1987, the Company entered into a co-production
agreement (Agreement) with G.O.D. Entertainment/The Pitch Limited of
Los Angeles, CA for the purpose of co-producing the feature length
motion picture entitled HOLLYWOOD HEARTBREAK aka PITCH ("product").
The product, which stars Mark Moses, Carol Mayo Jenkins and James
LeGro, completed production in June of 1987, and was distributed by
subdistributor, Raystar Distribution Company, to video outlets
throughout the United States and Europe. According to the terms of
the Agreement the Company retains 5% of any of the potential
producer's net revenue percentage accruing to the Company from any
and all marketing and exploitation of the product worldwide in
perpetuity.
(bullet) TELEVISION ACQUISITION
On May 19, 1987, the Company entered into an acquisition agreement
(Agreement) with United Development Industries/Topper Ltd. of Los
Angeles, CA for the purpose of acquiring all right, title and
interest in the television production entitled VEGAS DAZE
("product"). The product, which stars Larry Storch, Forrest Tucker,
Ruth Buzzi and Gary Owens was distributed by sub-distributor Palm
Springs Distribution Company to video outlets in regional southwest
territories. According to the terms of the Agreement the Company
retains 50% of any of the potential producer's net revenue
percentage accruing to the Company from any and all marketing and
exploitation of the product worldwide in perpetuity.
(bullet) TELEVISION CO-PRODUCTION
On April 11, 1990, the Company entered into a co-production
agreement ("Agreement") with Pacific Film Group of Los Angeles, CA
for the purpose of co-producing and distributing three 30-minute
television productions entitled HOLLYWOOD HOTTEST STUNTS, THE REAL
GODFATHERS, and THRILLS, CHILLS AND SPILLS ("product"). The three
independently hosted productions were distributed by distributor,
Myntex Corporation through the Handleman Company, in a "video
sell-through" arrangement throughout the United States and Canada.
According to the terms of the Agreement the Company retains 3% of
any potential producer's gross revenue percentage accruing to the
Company from any and all marketing and exploitation of the product
worldwide in perpetuity.
(bullet) FEATURE FILM ACQUISITION
On September 6, 1990, the Company through a purchase agreement
("Agreement") with Tagerick Films of Los Angeles, CA acquired all
right, title and interest in the feature length motion picture
entitled TERROR ON SHADOW MOUNTAIN ("product") starring Richard
Groat and Bill Smith. At the time of this filing the product was in
post production and has not been distributed in any markets or
territories. According to the terms of the Agreement the Company
retains 50% of any potential producer's gross revenue percentage
accruing to the Company from any and all marketing and exploitation
of the product worldwide in perpetuity.
(bullet) FEATURE FILM CO-PRODUCTION
On October 21, 1991, the Company entered into a co-production
agreement ("Agreement") with J.O.E. Productions and Webb Films
International of Los Angeles, CA for the purpose of co-producing the
feature length motion picture entitled BREAKING UP WITH PAUL aka
MOVIES, MONEY AND MURDER ("product"). The product which stars
Martin Mull, Karen Black, and Laine Kazan completed production in
December of 1990, and was distributed by Hills Entertainment Inc. to
video retail outlets throughout the world. According to the terms
of the Agreement the Company retains 2% of any potential producer's
gross revenue percentage accruing to the Company from any and all
marketing and exploitation of the product worldwide in perpetuity.
(bullet) FEATURE FILM LIBRARY ACQUISITION AND DISTRIBUTION
On November 29, 1991, the Company acquired 136 feature film and
television productions ("product") from Presidio Productions Inc. of
Palm Springs, California ("Presidio") encompassing ownership/control
and collateral marketing and exploitation rights in all markets and
all territories worldwide. At the time of this filing the product
was in various stages of marketing and distribution. According to
the terms of the agreement the Company retains 50% of any potential
producer's gross revenue percentage accruing to the Company from any
and all marketing and exploitation of the product worldwide in
perpetuity.
(bullet) TELEVISION CO-PRODUCTION
On June 22, 1992, the Company entered into a co-production agreement
("Agreement") with Webb Films International of Los Angeles, CA for
the co-production of a 60-minute television production special
entitled VIDEO MONDO aka THE RAVE ("product"). At the time of this
filing the product was in post production and has not been
distributed in any market or territory. According to the terms of
the Agreement the Company retains 2% of any potential producer's
gross revenue percentage accruing to the Company from any and all
marketing and exploitation of the product worldwide in perpetuity.
(bullet) FEATURE FILM CO-PRODUCTION/CONSULTANCY
On July 9, 1992, the Company entered into a co-production/
consultancy agreement ("Agreement") with Pacific Film Group of Los
Angeles, CA for the purpose of co-producing and rendering financial
and industry related advice to Pacific Film Group for the packaging
and production of the feature length motion picture entitled SWEET
JUSTICE ("product"). The product, which stars Mark Singer, Fynn
Carter and Mickey Rooney, completed production in August of 1992 and
was distributed by Trimark Pictures to Blockbuster Video for video
retail outlets throughout the United States and Europe. According
to the terms of the Agreement the Company retains 2% of the
potential producer's gross revenue percentage accruing to the
Company from any and all marketing and exploitation of the product
worldwide in perpetuity.
(bullet) DOCUDRAMA CO-PRODUCTION
On May 8, 1993, the Company entered into a co-production and
distribution agreement ("Agreement") with independent film producer,
Lance Matthews of New York, NY, for the co-production and
distribution of a 60-minute docudrama motion picture entitled BLUNTS
& STUNTS aka TRULY COMMITTED ("product"). At the time of this
filing, the Product was in post production and has not been
distributed in any markets or territories. According to the terms
of the Agreement the Company retains 40% of any potential producer's
gross revenue percentage accruing to the Company from any and all
marketing and exploitation of the product worldwide in perpetuity.
(bullet) TELEVISION SYNDICATION AGREEMENT
On August 23, 1994, the Company entered into a license agreement
("Agreement") with Media One Broadcasting Company of San Francisco,
CA for the television syndication of certain film and television
product owned or controlled by the Company which a portion of such
product is part of the Company's acquired film and television
library, including 14 feature length motion pictures and 3
television productions. The syndication territories included
Northern California, Arizona and Washington State. According to the
terms of the Agreement the Company retains 50% of any potential net
revenue percentage accruing to the Company from any and all
marketing and exploitation of the product worldwide in perpetuity.
(bullet) FEATURE FILM CO-PRODUCTION
On October 14, 1994, the Company entered into a Co-Production
Agreement ("Agreement") with Pacific Pictures of Los Angeles, CA for
the purpose of co-producing the feature length motion picture
entitled NATURALLY BAD ("product"). The product which stars Robert
Z'dar and Shannon Teare completed production in November of 1994,
and was distributed by Northwest Video Distribution Company to video
retail outlets throughout the United States and Europe. According
to the terms of the Agreement the Company retains 2% of any
potential producer's gross revenue percentage accruing to the
Company from any and all marketing and exploitation of the product
worldwide in perpetuity.
(bullet) FEATURE FILM ACQUISITION
On September 28, 1995, the Company entered into a Purchase Agreement
("Agreement") with M&D Productions of San Jose, CA, for the
acquisition of all right, title and interest in the feature length
motion picture entitled CITIZEN SOLDIER ("product") starring Dean
Stockwell and Billy Gray. Delivery of all final picture elements
was completed on November 27, 1995. The Company has added the
product to its completed film and television product library catalog
for any and all leasing or rental possibilities. According to the
terms of the Agreement the Company retains 60% of any potential net
revenue percentage accruing to the Company from any and all
marketing and exploitation of the product worldwide in perpetuity.
(bullet) TELEVISION CO-PRODUCTION II
On November 17, 1995, the Company entered into an agreement
("Agreement") with Pacific Pictures of Los Angeles, CA for the
development, co-production and distribution of a television series
of 5 special interest 30-minute productions entitled TIPS FOR BETTER
HEALTH (three shows) and MARKET PLACES OF THE WORLD (two shows)
("product"). At the time of this filing, the series has been
distributed to independent, low power (LP) and cable television
outlets throughout the United States and has not yet realized any
material revenues. According to the terms of the Agreement the
Company retains 5% of any potential producer's gross revenue
percentage accruing to the Company from any and all marketing and
exploitation of the product worldwide in perpetuity.
(bullet) SPECIALTY VIDEO DISTRIBUTION ARRANGEMENT
On July 23, 1996, the Company entered into a Distribution Agreement
("Agreement") to market and distribute worldwide the 60-minute
specialty instructional video entitled THE INTERNET TOUR GUIDE
("product"). At the time of this filing, the product was in the
marketing and distribution phase and has not yet realized any
material revenue from such efforts. According to the terms of the
arrangement the Company retains 40% of any potential producer's
gross revenue percentage accruing to the Company from any and all
marketing and exploitation of the product worldwide in perpetuity.
CURRENT AND ANTICIPATED DEVELOPMENTS IN THE COMPANY'S BUSINESS
(bullet) FEATURE FILM CO-PRODUCTION
On February 19, 1997, the Company's wholly-owned subsidiary, World
Wide Films Inc., entered into a Co-Production and Distribution
Agreement ("Agreement") with Best Pictures Inc. of Redondo Beach,
California, for the purpose of producing the feature length motion
picture entitled SHATTERED ILLUSIONS ("Product"). The Product,
which features Morgan Fairchild, Bruce Weitz, Sy Richardson, Richard
Lynch and Dan Monahan, was completed in February of 1998 and is
currently being distributed by the Company (represented by
RGH/Lion's Share Pictures [Foreign]/All Channel Films [Domestic]).
According to the terms of the Agreement, World Wide Films Inc.
retains 50% of any potential producer's gross revenue percentage
accruing to the company from any and all marketing and exploitation
of the Product worldwide, in perpetuity and the Company retains 26%
portion of any potential gross distribution revenue percentage
occurring to the Company for any and all marketing and exhibitionof
the product world wide in perpetuity.
(bullet) WEBSITE DEVELOPMENT, CREATION AND IMPLEMENTATION
On January 29, 1998, the Company entered into an agreement
("Agreement") with Mr. Ralph Johnson of Los Angeles, California and
on May 8, 1998, with Steelelink Communications of San Francisco, CA,
respectively, for the development, creation and implementation of
the Company's Internet web site. The Company's web site went online
in June 1998 and was implemented by management for the purpose of
providing a wide variety of information to the general public and
further increasing the marketing reach of its products and services
including its completed film and television product library.
Corporate financing scenarios will also be explored, via the
Internet, such as limited partnerships and stock offerings. The
Company's web page currently links to the U.S. Securities and
Exchange Commission Edgar system, E-Trade and Ameritrade. The
Company updates its website on a perpetual basis taking into account
the latest technologies offered to the Internet. The site's address
is www.wwmpc.com.
(bullet) SPECIALTY TELEVISION PRODUCTION
On August 28, 1998, the Company's wholly-owned subsidiary, World
Wide Productions Inc., entered into a Co-Production Agreement
("Agreement") with Snow Lion Interactive Media of Los Angeles,
California, for the purpose of co-producing the television pilot and
series entitled CLASSIC CAR ("Product"). The Product, which was
designed as a 13-part series, showcases domestic and foreign
production automobiles and is designed for the car enthusiast and
casual viewer. At the time of this filing, the Product was in
production. According to the terms of the Agreement, the Company
retains 50% of any potential producer's gross revenue percentage
accruing the company from any and all marketing and exploitation of
the Product worldwide, in perpetuity.
(bullet) FILM AND TELEVISION PRODUCTION ACQUISITION
On November 22, 1998, the Company entered into a Purchase Agreement
("Agreement") with Snow Lion Interactive Media of Los Angeles to
acquire a variety of film and television product ("Product") from
Snow Lion Interactive Media. Acquired Product consists of four film
and television productions of various lengths and subject matter and
additional archival film footage including a children's television
show and three specialty television shows ranging in length from
30-60 minutes. At the time of this filing, certain of the Product
had
been distributed by IQ Entertainment in the foreign markets.
According to the terms of the Agreement, the Company retains 50% of
any potential producer's gross revenue percentage accruing the
company from any and all marketing and exploitation of the Product
worldwide, in perpetuity.
BUSINESS ENTERPRISES UNDER CONTEMPLATION BY THE COMPANY
* (bullet) CORPORATE ACQUISITION NEGOTIATIONS
* For the past five years, the Company has been in the process of
reviewing and analyzing various potential corporate acquisitions and
merger possibilities, certain of which are highly diversified such
as Internet technology, instructional, and medical services.
Management of the Company has conducted indepth internal discussions
concerning the risks, requirements, potential and overall viability
of associating with a highly diversified business. In the opinion
of the Company's management, so long as the diversified business
maintains a significant level of potential revenue producing
capability, management expertise for sustaining such ongoing revenue
potential, clarity of mission statement and objectives, and cash
flow potential which could be used in the development of the
Company's core business, management of the Company will encourage
such mergers and acquisitions, investigations and possibilities for
the express purpose of increasing, overall, shareholder value of the
Company. In addition to the quantitative and qualitative aspects of
the Company's diversification decisions, the articles, bylaws and
corporate charter of the Company provide for flexibility in the
Company's ability to explore and enter into diversified fields of
enterprise.
MARKETING OF THE COMPANY'S PRODUCTS AND SERVICES
The combined experiences of the Company's management and companies
in its distribution network creates a strong and diverse marketing
position for the Company. Marketing outlets and techniques which
have been successfully utilized for the Company's products or
services in the past and/or which will be utilized in the future
either domestically or in foreign territories include: THEATRICAL
EXHIBITION, HOME VIDEO SALES, HOME VIDEO RENTAL, BROADCAST (NETWORK)
TELEVISION, SYNDICATED TELEVISION, CABLE TELEVISION, PAY-PER-VIEW,
SATELLITE TRANSMISSION, LOW POWER (LP) REGIONAL TELEVISION, PUBLIC
BROADCAST (PBS) TELEVISION, AND ANCILLARY PRODUCT MERCHANDISING
(ancillary product merchandising includes revenues created from
non-theatrical or non-broadcast exploitation such as merchandising
of
clothing, toys, books and music). All or some of these outlets are
customarily incorporated into a marketing strategy on either a
regional, national, or international exposure basis with quality,
genre public appeal, and rating, all being factors. The Company's
network of marketing and distribution companies includes independent
and major industry leaders such as UNITED ARTISTS INC. (relationship
between the Company and the company includes foreign and domestic
theatrical exhibition of feature film product), MIRAMAX FILMS INC.
(relationship between the Company and the company includes domestic
theatrical exhibition of feature film product), MGM/UA INC.
(relationship between the Company and the company includes foreign
and domestic theatrical exhibition of feature film product),
RGH/LIONS SHARE PICTURES (relationship between the Company and the
company includes foreign theatrical and all ancillary exhibition of
feature film and television product), ALL CHANNEL FILMS
(relationship between the Company and the company includes all
ancillary domestic exhibition of feature film product), CINETRUST
Entertainment Co. (relationship between the Company and the company
includes foreign and domestic broadcast, television and home video
exhibition of feature film and television product), TWENTIETH
CENTURY FOX FILM CORPORATION (relationship between the Company and
the company includes foreign and domestic theatrical exhibition of
feature film product), SHAPIRO GLICKENHAUS ENTERTAINMENT
(relationship between the Company and the company includes all
ancillary foreign and domestic exhibition of feature film and
television product), PARAGON CABLE TELEVISION (relationship between
the Company and the company includes regional cable broadcast of
television product), CENTURY CABLE TELEVISION (relationship between
the Company and the company includes regional cable broadcast of
television product), MNTEX CORPORATION (relationship between the
Company and the company includes sell-thru specialty video product)
and the HANDLEMAN COMPANY (relationship between the Company and the
company includes sell-thru specialty video product). Primary
expected revenue sources include but are not limited to:
THEATRICAL EXPLOITATION - An average of approximately 60% of
theatrical revenue within the industry as a whole is derived from
the North American market with respect to English language films.
The balance comes from overseas outlets with the most significant
being Japan, France, Germany, Italy, the United Kingdom and
Australia. The overseas market is very important to the overall
gross revenues of a film and is once again on the incline due to the
decrease in the value of the dollar. Foreign markets fluctuate, but
in general can be responsible for 60% of the total box office
revenue of the film.
The Company has earned an immaterial amount of revenue at this time
from theatrical exhibition for the feature film products known as
PITCH aka HOLLYWOOD HEARTBREAK; MOVIES, MONEY AND MURDER aka
BREAKING UP WITH PAUL; SWEET JUSTICE; NATURALLY BAD and CITIZEN
SOLDIER. (Further exploitation of this product by the Company will
require additional working capital.)
According to Richard Fay of AMC Theater circuit, the second largest
exhibitor of feature length motion picture product in the world,
there is currently a building boom occurring among exhibitors with
the number of screens in the United States beginning to increase in
the 1980's by 7.4% to more than 20,300. It is the Company's opinion
that, due to a widely known increase in public consumption in, and
desire for more feature filmed entertainment domestically along with
the increased desire by foreign markets for United States produced
feature film entertainment, this trend of expansion for the number
of screens in both the United States and foreign territories will
continue throughout this decade and well into the next century. The
exhibitors or movie theater owners generally retain an average of
50% of the box office receipts as their fee and remit the other 50%
frequently referred to as "domestic theatrical film rentals" to the
film's distributor. Home video advances for feature films can range
from $10,000 to more than $5,000,000 plus escalators based upon such
variables as box office performance, print and advertising
expenditures and the number of screens secured during theatrical
release.
CABLE TV, PAY TV, DBS, AND MATV EXPLOITATION - Pay television has
shown tremendous growth over the past decade. The market leaders,
past and present, have been Home Box Office (HBO), Cinemax, and
Showtime/The Movie Channel. These pay television services have
recently exhibited over 300 films per year. Of the approximately
$20 (basic) price per month that a pay television subscriber pays to
a cable company, about $10 is returned to the pay television service
and in turn, $3 to $6 is returned to the distributor. Distributors,
on exclusive multi-picture studio arrangements, have been able to
command prices of $3 to $8 million per film. On a non-exclusive
basis, prices range from $500,000 to $2 million per film where the
film has achieved average success. Certain of the Company's film
and/or television product are or have been shown periodically on
cable television throughout the world (see Page 17 in Management
Discussion and Analysis).
A relatively new area of exhibition is PAY-PER-VIEW. At present,
there are approximately 12 million homes equipped to receive the
service and that number is expected to increase to 30 million by the
end of the decade. Prices generally charged for pay-per-view range
from $10 to $50 per show to the consumer depending on the nature of
the entertainment, of which approximately 60% is being returned to
the distributor. The expanding growth in this area will continue to
be a major new revenue source for film distribution.
MATV (Master Antenna Television) systems available in North America
produce an additional though relatively small revenue source for
films and DBS (Direct Broadcast Satellite) is beginning to make
substantial inroads, primarily throughout Europe in those countries
where residential cable service is not readily available.
The Company has earned an immaterial amount of revenue at this time
from cable television, pay television, DBS and MATV for the feature
film projects entitled PITCH aka HOLLYWOOD HEARTBREAK; MOVIES, MONEY
AND MURDER aka BREAKING UP WITH PAUL; SWEET JUSTICE, NATURALLY BAD,
CITIZEN SOLDIER, and television production specials entitled KJ
COUNTRY, specialty videos entitled THRILLS, CHILLS & SPILLS; THE
REAL GODFATHERS; HOLLYWOOD'S HOTTEST STUNTS, and fifteen public
domain classic feature film production prints owned by the Company.
(Further exploitation of this product by the Company will require
additional working capital.)
NETWORK TELEVISION EXPLOITATION - The broadcast television industry
in North America is dominated by three networks, ABC, CBS and NBC.
With the recent development of Fox Broadcasting in addition, the
network's generally license 75 to 150 theatrical films annually and
commission approximately 125 made-for-television movies (MOWs) from
independent producers such as the Company. In addition, they
broadcast over 100 hours of miniseries. American and foreign
television networks are still very significant buyers of feature
films. In the United States they have become less aggressive than
the pay television companies in their pricing policies. The price
range for multiple broadcast of a film by a major network is between
$500,000 and $5 million. Exceptional films may command
substantially higher prices.
The Company has earned an immaterial amount of revenue at this time
from network television exploitation for the feature film product
known as PITCH aka HOLLYWOOD HEARTBREAK; MOVIES, MONEY AND MURDER
aka BREAKING UP WITH PAUL; SWEET JUSTICE, NATURALLY BAD, and CITIZEN
SOLDIER. (Further exploitation of this product by the Company
and/or its associates will require additional working capital.)
SYNDICATED TELEVISION EXPLOITATION - Revenue from rights granted to
individual independent television stations (of which there are over
250 in North America), has increased in recent years as the number
(over 300 in U.S./Canada) and financial strength of local stations
has increased. These stations usually described as the "syndication
market" and often loosely associated for product buying purposes now
rival the traditional standard (broadcast) television networks in
competing for viewers. As the core of their programming, these
stations use syndicated (after network) television series and
feature length films.
The Company has acquired immaterial revenue at this time from
syndicated television exploitation for the television production
special known as KJ COUNTRY. (Further exploitation of this product
by the Company will require additional working capital.)
OTHER REVENUE - i.) Non-theatrical revenue results from a film or
television project being made available to airlines, schools, public
libraries, community groups, ships at sea, prisons, and bases for
the military forces; and
ii.) Ancillary markets such as the rights to use the images of
characters in a film or television project for merchandising
purposes in connection with video games, toys, t-shirts, posters,
and like paraphernalia; and
iii.) Revenue may also be realized from the novelization of the
screenplay/teleplay and other related publications, music used in
the film and television projects sold as soundtracks, records, CDs,
cassettes, and mechanical performance and sheet music publication.
The Company has acquired no revenues at this time from these
particular sources of non-theatrical, television, or ancillary
markets.
The Company has participated in a variety of the preceding type of
marketing and distribution arrangements over the past sixteen
years.
The Company's major effort has been focused on syndication of film
and television product and regional broadcast of film and television
product in the state of California. As previously referenced, in
order to further expedite and create revenue from marketing and
distribution efforts of the Company and its distributor network, the
Company requires significant additional working capital to more
fully and properly exploit any appropriate markets and media while
creating additional viable desire by the general public to acquire
or consume this product. The Company's future plans include the
acquisition of additional working capital through financial
offerings and/or other customarily used methods of capital
acquisition by small and midsize companies, including debt or equity
financing or a combination of both, to acquire certain of this
additionally needed working capital.
THE COMPANY'S COMPETITION IN THE MOTION PICTURE AND TELEVISION
INDUSTRY
The motion picture and television industry is highly competitive.
Management of the Company believes that a picture's theatrical
success is dependent upon general public acceptance, marketing
technology, advertising and the quality of the production. The
Company's motion picture and television productions compete with
numerous independent and foreign productions as well as productions
produced and distributed by a number of major domestic companies,
many of which are units of conglomerate corporations with assets and
resources substantially greater than the Company's. Management of
the Company believes that in recent years there has been an increase
in competition in virtually all facets of the Company's business.
The motion picture industry itself competes with television and
other forms of leisure-time entertainment. The growth of pay
television and the use of home video products may have an effect
upon theater attendance and non-theatrical motion picture
distribution. Since the Company may distribute product to all of
these markets, it is not possible to determine how its business as
a whole will be affected by these developments and accordingly, the
resultant impact on the financial statements.
Obtaining motion pictures for distribution and the distribution of
motion pictures are highly competitive endeavors. In the
distribution of motion pictures, there is very active competition to
obtain bookings of pictures in theaters and on television networks
and stations throughout the world. A number of major motion picture
companies have acquired motion picture theaters. Such acquisitions
may have an adverse effect on the Company's distribution operation,
endeavors, and its ability to book certain theaters, which, due to
their prestige, size and quality of facilities, are deemed to be
especially desirable for motion picture bookings.
In producing and distributing television programs, competition is
intense because the number of available broadcast hours is limited,
other forms of programming compete to fill such time and there are
numerous suppliers of such programming, including the networks,
other motion picture companies and independent producers.
Management believes that the decision by the networks, individual
television stations and cable systems to license a motion picture is
based primarily on the quality of the picture, its appropriateness
for a general television audience, its box office and critical
success and, if the picture has previously been shown on television,
audience response as measured by ratings.
The Company's ability to compete in certain foreign territories with
either film or television product is affected by local restrictions
and quotas. In certain countries, local governments require that a
minimum percentage of locally produced productions be broadcast,
thereby further reducing available time for exhibition of the
product.
Recent regulations effecting the Company's competitive position in
the motion picture and television industry, include the United
States inability in 1994 to reach agreement with its major
international trading partners to include audiovisual works, such as
television programs and motion pictures, under the terms of the
General Agreement on Trade and Tariffs Treaty ("GATT"). The failure
to include audiovisual works under GATT allows many countries
(including members of the European Union, which consists of Belgium,
Denmark, Germany, Greece, Spain, France, Ireland, Italy, Luxembourg,
the Netherlands, Portugal and the United Kingdom) to continue
enforcing quotas that restrict the amount of American programming
which may be aired on television in such countries. The Council of
Europe has adopted a directive requiring all member states of the
European Union to enact laws specifying that broadcasters must
reserve a majority of their transmission time (exclusive of news,
sports, games shows and advertising) for European works. The
directive does not itself constitute law, but must be implemented by
appropriate legislation in each member country. In addition, France
requires that original French programming constitute a required
portion of all programming aired on French television. These quotas
generally apply only to television programming and not to theatrical
exhibition of motion pictures, but quotas on the theatrical
exhibition of motion pictures could also be enacted in the future.
There can be no assurance that additional or more restrictive
theatrical or television quotas will not be enacted or that
countries with existing quotas will not more strictly enforce such
quotas. Additional or more restrictive quotas or more stringent
enforcement of existing quotas could materially and adversely affect
the business of the Company by limiting its ability to fully exploit
its productions internationally.
Distribution rights to motion picture and television productions
specifically are granted legal protection under the copyright laws
of the United States and most foreign countries. These laws provide
substantial civil and criminal sanctions for unauthorized
duplication and exhibition of motion pictures. Motion pictures,
musical works, sound recordings, art work, still photography and
motion picture properties are separate works, subject to copyright
under most copyright laws, including the United States Copyright Act
of 1976, as amended. The Company plans to take appropriate and
reasonable measures to secure, protect and maintain or obtain
agreements to secure, protect and maintain copyright protection for
its film and television projects under the laws of applicable
jurisdictions. Management is aware of reports of extensive
unauthorized misappropriation of videocassette rights to motion
pictures. Motion picture piracy is an industry-wide problem. The
Motion Picture Association of America, an industry trade association
(the "MPAA"), operates a piracy hotline and investigates all reports
of such piracy. Depending upon the results of such investigations,
appropriate legal action may be brought by the owner of the rights.
Depending upon the extent of the piracy, the Federal Bureau of
Investigation may assist in these investigations and related
criminal prosecutions.
Motion picture piracy is an international as well as a domestic
problem. Motion picture piracy is extensive in many parts of the
world, including South America, Asia (including Korea, China and
Taiwan), the countries of the former Soviet Union and the former
Eastern bloc countries. In addition to the MPAA, the Motion Picture
Export Association, the American Film Marketing Association and the
American Film Export Association monitor the progress and efforts
made by various countries to limit or prevent piracy. In the past,
these various trade associations have enacted voluntary embargoes of
motion picture exports to certain countries in order to pressure the
governments of those countries to become more aggressive in
preventing motion picture piracy. In addition, the United States
government has publicly considered trade sanctions against specific
countries which do not prevent copyright infringement of United
States produced motion pictures. There can be no assurance that
voluntary industry embargoes or United States government trade
sanctions will be enacted. If enacted, such actions could impact
the Company's competitive position in the industry and the amount of
revenue that the Company realizes from the international
distribution of its programs depending upon the countries subject to
such action and the duration of such action. If not enacted or if
other measures are not taken, the motion picture industry (including
the Company) may continue to lose an indeterminate amount of
revenues as a result of motion picture piracy.
Further, the Code and Ratings Administration of the MPAA assigns
ratings indicating age-group suitability for theatrical distribution
of motion pictures. The Company expects to follow, when
appropriate, the practice of submitting applicable film projects for
such ratings.
United States television stations and networks, as well as foreign
governments, impose additional restrictions on the content of film
and television productions which may restrict in whole or in part
theatrical or television exhibition in particular territories.
Management's current policy is to distribute film and television
productions for which there will be no material restrictions on
exhibition in any major territories or media. This policy often
requires production of "cover" shots or alternate photography and
recording of certain scenes for insertion in versions of a
production exhibited on television or theatrically in certain
territories. There can be no assurance that current and future
restrictions on the content of the Company's productions may not
limit or affect the Company's ability to exhibit it in certain
territories and media.
DEPENDENCE ON A FEW MAJOR CUSTOMERS
The Company and its affiliated companies, due to the diversification
of interests as discussed supra, are not dependent on a few major
production successes or customers. Although the Company has and
will continue to utilize the services of a number of experienced and
well-known performers and technicians, the Company's diversification
is such that the loss of any one such professional would not be a
material matter that would seriously adversely affect the Company's
business operations.
THE COMPANY'S FUTURE CAPITAL REQUIREMENTS
The Company has currently been negotiating with various
broker-dealer investment banking firms to underwrite public
offerings of
the Company's securities in the total amount of $7,000,000. Terms
of the proposed public offerings have not been finalized but it is
anticipated by management that the Company will utilize the net
proceeds from such offering in the following general manner.
$ 700,000 administrative expenses
300,000 development expenses
3,000,000 production expenses
1,250,000 acquisition expenses
1,750,000 marketing expenses
$7,000,000 Total
The Company intends to further resolve and provide for its liquidity
needs as well as provide for the needed capital resources to expand
its operations through private placements on a project-by-project
basis in limited partnership form. To meet the Company's interim
liquidity and capital resources needs while the Company's proposed
future public offering and private placement offerings are being
prepared and examined, the Company, in addition to short term
borrowings, is presently contemplating further sales of its
unregistered common equity to accredited investors under one or more
exemptions that provide for the same.
EMPLOYEES
The Company presently has under contract eight officially elected
officers of the Company, one fulltime and two part-time assistants.
Certain of the contracts have provisions that are contingent upon
the acquisition of substantial working capital by the Company.
Accordingly, certain of the officers do not devote their full time
to the business of the Company. Full and parttime employees
involved in motion picture and/or television development production
or distribution operations number between approximately 5-60
depending on the number of projects in process, the complexity of a
particular project, and production and/or marketing timetables.
Employees involved in the healthcare subsidiary currently number
approximately 25 year round. The educational seminar subsidiary
only uses personnel when presenting a seminar or similar event at
which time approximately 3 to 5 employees are required.
Item 2. Description of Property.
The Company owns no real properties. The Company's present offices
and facilities, located in both suburban and metropolitan geographic
areas, encompass approximately 5,500 square feet in buildings of
good condition. Locations which are occupied on a month-to-month
or yearly lease basis include the Company's executive offices since
1984 at Seacliff Office Park, 2120 Main Street, Suite 180,
Huntington Beach, California, 92648; A film production office at
13437 Ventura Blvd, Suite 228, Sherman Oaks, California; and a video
production office at 1119 Colorado Avenue, Santa Monica,
California.
The Company's corporate records office at 561 E. Jefferson, Detroit,
Michigan, 48226; and a branch office of the Company at 42 King
Street, New York, New York, 10014.
Item 3. Legal Proceedings.
There are no material pending legal proceedings to which the Company
is a party or to which any of its assets are subject. However, the
Company is currently in ongoing negotiations for the reimbursement
of lost material which consists of eight 1" and/or 3/4" and/or
digital betacam videotape and 35mm film submaster copies of feature
length motion picture and television productions, owned or
controlled by the Company which were maintained at a post production
film and video facility. The Company's attorneys are preparing
litigation and related processes relative to the lost material in
the event the results of the negotiations are unsatisfactory. The
Company is seeking damages in the amount of three hundred ninety
seven thousand five hundred ($397,500) dollars for the loss of its
"stored material". Further, the co-producers with the Company
'
s
subsidiary, World Wide Films Inc., pertaining to a feature length
film have commenced litigation to attempt to desolve the
Co-Production Agreement which exists between the Co-Producer and the
Subsidiary relative to the production processes of that feature
length film. The Company's management and attorneys believe the
lawsuit to be groundless, therefore ultimately resulting in a
favorable Judgment for the Company.
Various legal actions, governmental investigations and proceedings
and claims may be instituted or asserted in the future by the
Company or against the Company and/or its subsidiaries including
those arising out of alleged deficiencies in the company
'
s products;
governmental or industry regulations relating to safety, financial
services; employment-related matters; distributor, exhibitor,
co-producer, vendor, supplier, or other contractual relationships;
intellectual property rights; product warranties and environmental
matters. Some of the foregoing matters involve or may involve
compensatory, punitive or anti-trust or other treble damage claims
in varying amounts, environmental remediation programs, sanctions or
other relief which, if granted, would require varying expenditures.
Litigation is subject to many uncertainties, and the outcome of
individual litigated matters is not predictable with assurance. The
Company does not reasonably expect, based on its analysis, that any
adverse outcome from such matters would have a material effect on
future consolidated financial statements for a particular year,
although such an outcome is possible.
Item 4. Submission of Matters to a Vote to Security Holders.
N/A
Part II
Item 5. Market for Common Equity and Related Stockholder Matters.
N/A
Item 6. Management's Discussion and Analysis or Plan of
Operations.
Management's discussion and analysis of financial condition and
results of operation should be read in conjunction with the
consolidated financial statements and related notes.
RESULTS OF OPERATIONS
The Company's revenue for the year ended December 31, 1998 was
$28,772, as compared to $137,837 for the comparable period of 1997.
This decrease in revenue is primarily attributable to less fee
income received for the production of motion picture and television
product. The 1998 net loss prior to depreciation expense and a
special charge for film inventory write-down was $(30,971),and the
net income before depreciation and a special charge for film
inventory write-down for the comparable period in 1997 was
$119,694.
After the allowance for depreciation and a special charge for film
inventory write-down, the net loss for 1998 was $4,131,355 versus
$4,406,260 for 1997 which also included a special charge for film
inventory write-down. For the year ended December 31, 1998,
expenses for the Company's development, production and distribution
operations were $40,621 and its miscellaneous operations were
$19,122, totalling $59,743, compared to a total of $18,143 for 1997.
The increase in administrative expense from $18,143 in 1997 to
$59,743 in 1998 is primarily due to the cost of marketing and
distribution of completed film and television productions. There
were no resultant per share earnings to common stockholders in 1998
or 1997.
The Company derives its revenues from the licensing of its newly
created film and television productions, the licensing of its
inventory of previously produced films or television productions and
fees received for professional services provided to the industry.
The Company also receives revenue for the marketing and distribution
of product produced or owned by 3rd party producers and production
companies. The generation of revenue in the motion picture and
television industry is highly competitive which may have a material
impact on the Company's financial statements.
<TABLE>
The following table presents operations data for the periods
indicated.
<CAPTION>
Years Ended December 31,
1998 1997 1996
<S> <C> <C> <C>
Revenues $28,772 $137,837 $75,000
Costs and Expenses
Operating &
Administration expenses 59,743 18,143 13,921
Depreciation and
amortization 232,004* 434,004* 306,463
Special charge -
film inventory write-down $(3,868,380)* $(4,091,950) $ - 0 -
Net loss $4,131,355 $4,406,260 $(243,086)
* Reflects revaluing of net realizable value of inventory referred
to below.
</TABLE>
The Company has presented a consolidated balance sheet which
includes five wholly-owned active subsidiaries: World Wide Films
Inc., World Wide Productions Inc., World Wide Film & Television
Institute, World Wide Entertainment Inc., and Environmental Services
Corporation. The Company's charter allows it to branch into
diversified fields of enterprise provided management concludes there
is a significant potential for profit. It is the decision of
management to continue the major portion of the Company's operations
in the motion picture and television industry, but since the primary
business objective of the Company is to increase the value of its
stockholders' equity, if and when opportunities arise to derive
profits for the corporation in a diversified industry, the Company
shall investigate and if appropriate, pursue such opportunities.
The motion picture and television segment of the Company's current
or planned operations is the only segment material to the Company's
financial statements or condition.
The Company's motion picture and television participation strategy
has been to expend its resources and to set in place relationships
and contracts in preparation for the continued development,
acquisitions, production and/or marketing/distribution of quality
moderate budget feature length motion pictures, documentaries,
docudramas and television productions. The strategy additionally
includes the acquisition of screenplays and teleplays suitable for
development/packaging and completed motion pictures and television
projects for licensing and marketing/distribution opportunities for
all applicable sales territories throughout the world. At such time
that the above-referred to additional working capital is secured, it
is the Company's opinion that substantial revenue will be generated
by the existing film and television library and future distribution
of potential new product, ultimately realizing its projected return
on investment.
Arrangements for participation by the Company in various feature
film and television productions for the last 24-month period include
gross and net revenue participations in the following feature film
and television production ranging between 2-60% of worldwide revenue
potential including all markets and all media that the particular
production is distributed in. (1) In 1997, post production and
distribution of the documentary entitled THE OUTLAW TRAIL, 100 YEARS
REVISITED, in association with Western Sunset Films, an 8-year old
Los Angeles based documentary production company. (2) In 1998,
development and production of the television production entitled
CLASSIC CAR, in association with SLIM, Inc., a 4-year old Los
Angeles based television production company. Other arrangements
include marketing and distribution of a feature length film acquired
by the Company entitled CITIZEN SOLDIER originally produced by M&D
Productions, a 7-year old Los Angeles based film production company,
purchased by the Company in 1995 and providing a 60% gross revenue
participation to the Company in perpetuity. Also, in 1995, the
Company purchased thirty-seven feature film submaster (videotape)
prints from Stanley Pappas providing 20% of any gross revenue of the
product in perpetuity, and the television production series entitled
TIPS FOR BETTER HEALTH and MARKET PLACES OF THE WORLD, both owned
and produced by Pacific Pictures Inc., a 9-year old Los Angeles
based film and television production company, and providing 5% gross
revenue co-production participation to the Company in perpetuity.
Additionally in 1995, the Company licensed to Media One
Broadcasting, a 12-year old television syndication company, for
$71,000 and 40%of net revenue the right to telecast four feature
motion pictures and seventeen television productions which the
Company owns as part of its completed product library. In 1996 the
Company licensed to Wittman Productions Inc., a 4-year old Los
Angeles based film production company, twenty feature films and
television productions for $75,000 and 40% of net revenue for the
right to telecast and exploit those productions which the Company
owns as part of its library.
In 1995 and 1996, certain other film and television participations
of the Company included development and packaging arrangements, the
Company's review and in certain cases, advice and counsel on
screenplays and screenplay development scenarios for the subsequent
possible packaging and production and distribution of a particular
project. The most significant of these productions, their production
companies, and percentage of future gross revenue allocated to the
Company, were the feature length film entitled CHOICE offered by
production company Best Pictures Inc., a 4-year old Los Angeles
based production company, (50%); and the feature length film
entitled ALONG FOR THE RIDE offered by production company Wittman
Productions Inc., a 4-year old Los Angeles based production company,
(50%).
In 1999 and 2000, the Company expects to produce and/or distribute
two full length feature films or specialty television projects for
theatrical and ancillary worldwide exploitation. The productions
will be entirely or in large part under the responsibility, control
and ownership of the Company. All financing for the completion of
the recently completed feature length production entitled SHATTERED
ILLUSIONS featuring Morgan Fairchild, Bruce Weitz, Richard Lynch and
Dan Monahan was secured and the production was completed and is now
in distribution. The feature length production, ALONG FOR THE RIDE
and/or MR. CORKLESBY, has approximately 50% of the financing secured
and negotiations for the remainder in process.
<TABLE>
The following is a table showing the comparison of balance sheet
data between 1997 and 1998.
<CAPTION>
CATEGORY 1997 1998 % CHANGE
<S> <C> <C> <C>
Net Profit (Loss) (4,406,260) $(4,131,355) -(6%)
Assets 13,454,607 9,805,185* -27%
Stockholder Equity 13,282,100 9,635,498* -32%
Liabilities and
deferred credit 172,507 169,687 -1%
Net Revenues 137,837 28,772 -90%
Inventory 14,193,063 10,796,884 -25%
* Reflects revaluing of net realizable value of inventory as
referred to below.
</TABLE>
GENERAL
In fiscal 1997 and 1998 the Company continued its involvement in a
variety of film and television projects relative to development,
acquisitions, packaging, production and marketing/distribution
activities. The Company also continued to pursue potential
diversified business opportunities that have cash flow
possibilities. Management believes that a film or television
production's economic success is dependent upon several overlapping
factors including general public appetite of a potential genre or
performer at the time of release, domestic and international
marketing philosophy, applicable usage of existing and new and
emerging technology, advertising strategy with resultant penetration
and the overall quality of the finished production. The Company's
film and television productions may compete for sales with numerous
independent and foreign productions as well as projects produced and
distributed by a number of major domestic and foreign companies,
many of which are units of conglomerate corporations with assets and
resources substantially greater than the Company's.
Management of the Company believes that in recent years there has
been an increase in competition in virtually all facets of the
Company's business. Specifically, the motion picture industry
competes with television and other forms of leisure-time
entertainment. Since the Company may for certain undetermined
markets and products distribute its product to all markets and media
worldwide, it is not possible to determine how its business as a
whole will be affected by these developments and accordingly, the
resultant impact on the financial statements.
The Company has currently obtained the investment capital to produce
and/or distribute a minimum of two full length feature films or
specialty television productions within the next two years.In
addition to the development, financing, production, and distribution
of motion picture and television product, the Company expects to
continue to exploit a portion or portions of the Company's completed
film and television library to a wide variety of distribution
outlets including network television, cable television, satellite
broadcast, pay-per-view, and home video sales. Specifically, live
action motion pictures are generally licensed for broadcast on
commercial television following limited or wide release distribution
to theatrical outlets (theaters), homevideo and pay television.
Licensing to commercial television is generally accomplished
pursuant to agreements which allow a fixed number of telecasts over
a prescribed period of time for a specified license fee. Television
license fees vary widely, from several thousand to millions of
dollars depending on the film or television production, the number
of times it may be broadcast, whether it is licensed to a network or
a local station and, with respect to local stations, whether the
agreement provides for prime-time or off-time telecasting. Licensing
to domestic and foreign television stations (syndication) is an
important potential source of revenue for the Company, although in
recent years the prices obtainable for individual film and
television product in domestic syndication have declined as pay
television licensing has grown. The growth of pay television and
home video technologies,i.e. DVD (Digital Video Disk) and HDTV (High
Definition television), has had an adverse effect on the fees
obtainable from the licensing of film and television product to
networks and local television stations. Thereby potentially
effecting the Company's ability to generate substantive revenue from
this particular venue; however increasing revenue potential in other
areas.
Conversely, the Company may derive revenue from the marketing and
sale, either directly or through licensees, of motion pictures and
other filmed or videotaped product on videocassette or Digital Video
Disk for playback on a television set or monitor through the use of
videocassette recorders ("VCRs"), digital video diskrecorders and
continued advancements of pay television (cable), satellite
broadcast technologies, and Internet applications domestically and
internationally.
The Company currently holds the distribution rights to 277 motion
picture and television titles.The revenue competition relative to
existing or pending exploitation agreements of the Company's film
and television product library and current and future production and
distribution of projects is volatile due to the many technological
and innovative changes in the industry and also changes regularly
occurring in the international economy.
LIQUIDITY AND CAPITAL RESOURCES
The Company experienced small negative cash flow from operations for
the year ended December 31, 1998, whereas the Company enjoyed a
positive cash flow in 1997. At December 31, 1997, the Company had
$56,541 in cash and no cash equivalents. At December 31, 1998, the
Company had $28,726 in cash and no cash equivalents. The decrease in
cash was due primarily to the decrease in fee income for the
development, production, marketing and distribution of motion
picture and television product. The Company anticipates that its
existing capital resources will be adequate to satisfy its capital
requirements for the forseeable future. However, to accomplish the
Company's planned activities, it will need to raise additional funds
through public or private financings in the form of debt or equity.
The Company has available substantial loss carry forwards for
federal income tax purposes. The exact amount of the loss
carryforwards is uncertain until the Company reaches an
understanding with the Internal Revenue Service in that regard. In
order to finance its operations, working capital needs and capital
expenditures, the Company utilized revenue from licensing fees,
loans, proceeds from the private sale of equity securities, deferred
compensation, profit participation, and equity in exchange for
services and product.
In accordance with the Securities and Exchange Commission
"Regulation D", and subject to Rule 144 restrictions, the Company in
1998 issued 380,000 shares of its common stock and no shares of its
preferred stock for cash and 215,500 shares of its common stock and
no shares of its preferred stock for product and services. In 1997,
the Company issued 385,500 shares of its common stock and no shares
of its preferred stock for cash and 549,000 shares of its common
stock and no shares of its preferred stock for product and services
acquired by or provided to the Company. No proceeds from the sale of
the corporation's common stock or preferred stock has ever been used
to pay compensation to employees or executives of the Company.
The Company was issued a standby irrevocable Letter of Credit from
the Huntington Bank, Cleveland, Ohio (now Society Bank), in the
amount of fifty thousand ($50,000). The terms of the Huntington Bank
Letter of Credit required that, if utilized, the Company would
pledge as collateral a portion of its film and television product
library. If the Letter of Credit were exercised, the resultant loan
would be secured by a commensurate portion of the Company's film and
television product library. The Huntington Bank terms also provided
that the Company would continue to be able to sell or lease any
portion of the product library as long as it retained sufficient
material to secure any loans made as a result of the Letter of
Credit.
The Company currently utilizes a fifty thousand ($50,000) dollar
primary line of credit with the Wells Fargo Bank of California, to
accommodate its daily cash flow needs and occasionally uses its
credit lines at other financial institutions and with its vendors
and suppliers.
The Company holds a Promissory Note for one hundred fifty thousand
($150,000) dollars from Mr.Gary T. Wittman payable to the Company in
annual installments of twenty five thousand ($25,000) dollars each
beginning April 30, 2000. The Note is secured by a pledge of high
grade stocks comprising a portion of the Dow Jones Industrial
average or higher quality securities and are valued at two hundred
and fifty thousand ($250,000) dollars or greater.
The Company's principal liquidity at the end of 1998 included cash
of$28,726 and net accounts receivable of $28,382 and at the end of
1997 included cash of $56,541 and net accounts receivable of
$25,226. The Company's liquidity position has remained sufficient to
support on-going general administrative expense, pilot programs,
strategic position, and the garnering of contracts, relationships
and film and television product for addition to the Company's
library, and the financing, packaging, development and production of
two feature films and specialty television projects.
Although the Company during 1997 and 1998 earned revenues, unless
the Company has an influx of additional capital, the Company will
not be able to accomplish its planned objectives and revenue
projections. Accordingly, the Company intends to resolve and provide
for its liquidity needs as well as provide for the needed capital
resources to expand its operations through a future proposed public
offering of its common shares to the public. It is anticipated that
such an offering will commence within the next 24 months for an
amount to be determined by the Company and its underwriter(s).
To meet the Company's interim liquidity and capital resources needs
while the Company's contemplated public offering is being prepared
and examined, the Company is presently investigating the
possibilities of future loans and is considering future sales of
unregistered common equity to accredited investors under one or more
exemptions that provide for same. In the event loans are obtained,
one of the terms may provide that such loans be repaid from the
proceeds derived from the Company's contemplated public offering. A
primary use of public offering proceeds would be the further
exploitation of the Company's current completed product film and
television library, participations in completed films, and the
continued development, production and marketing/distribution of new
film and television production opportunities.
<TABLE>
The following table presents equity, earnings, and cash balance
data for the periods indicated.
<CAPTION>
As of December 31,
1998 1997 1996
<S> <C> <C> <C>
Stockholders' Equity $9,635,498* $13,282,100* $17,407,742
Shares of
Common Stock Outstanding 47,629,592 $47,033,790 $46,099,592
Net loss $4,131,355* $4,406,260* $243,086
Retained earnings Deficit $9,340,445* $5,209,090* $802,828
Cash $28,726 $56,541 $196,318
*Reflects reduction in net realizable value of film library as
referred to below.
</TABLE>
In 1998, management, for a second time, revalued its film inventory
based on management's recent receipt of commentary from the
Securities and Exchange Commission, with an additional appraisal of
potential resale value, encompassing worthiness of the inventory
items as works of art, and potential licensing capabilities,
resulting in a reduction in management's estimate of a net
realizable value of $3,868,380. The results of the revaluations
effectuated in 1997 and 1998 resulted in a substantial reduction in
book value of approximately 51% for the library.
The Company expects its marketing operations to expand considerably
over the next three years. The current inventory and contracts
acquired by the Company are now beginning to be more vigorously
exploited. As the Company's focus moves from extensive accumulation
of product and contracts in an ownership capacity to capital
acquisition specifically for marketing purposes using recently
developed technologies. A substantial increase in income and/or
receivables are anticipated to take place beginning in the last
quarter of 1999. Although the Company is conservative regarding its
policy concerning the use of borrowed operating capital, it is now
in a position to use its reputation and contacts in the industry to
leverage operating funds profitably.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
The statements which are not historical facts contained in this Form
10-KSB are 'forward looking statements' within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, that involve
risks and uncertainties. The words "anticipate", "believes",
"expect", "intend", "may" or similar expressions used in this Form
10-KSB as they relate to the Company or its Management are generally
intended to identify such forward looking statements.
These risks and uncertainties contained in this Form 10-KSB include
but are not limited to, product demand and market acceptance risks,
the effect of economic conditions generally and retail/wholesale in
the motion picture and television industry and marketing conditions
specifically, the impact of competition, technological difficulties,
capacity and supply constraints or difficulties, the results of
financing efforts, changes in consumer preferences and trends, the
effect of the Company's accounting policies, weather conditions,
acts of God, and other risks detailed in the Company's Security and
Exchange Commission filings.
Item 7. Financial Statements.
REED & TAYLOR
CERTIFIED PUBLIC ACCOUNTANTS
PROFESSIONAL CORPORATION
561 E. JEFFERSON AVE.
DETROIT, MI 48226-4324
_________
ROBERT E. REED, CPA
LINDA W. TAYLOR, CPA
Telephone (313) 961-7258
Fax (313) 961-3110
INDEPENDENT AUDITOR'S REPORT
To the Shareholders and Board of Directors
World Wide Motion Pictures Corporation
We have audited the accompanying consolidated balance sheets of
World Wide Motion Pictures Corporation and subsidiaries as of
December 31, 1998 and 1997, and the related statements of income,
stockholders' equity, and cash flows for the years then ended.
These financial statements and accompanying notes are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted
standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above and accompanying notes present fairly, in all material
respects, the financial position of World Wide Motion Pictures
Corporation and subsidiaries as of December 31, 1998 and 1997, and
the results of its operations and its cash flows for the years then
ended in conformity with generally accepted accounting principles.
/s/ REED & TAYLOR, CPAs, P.C.
Reed & Taylor, CPAs, P.C.
Detroit, Michigan
April 19, 1999 <TABLE>
Consolidated Balance Sheets
<CAPTION>
WORLD WIDE MOTION PICTURES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
AUDITED
1998 1997
Assets ------- -------
<S> <C> <C>
Cash $ 28,726 $ 56,541
Accounts receivable 28,382 25,226
Note receivable 150,000 150,000
Work in process 438,606 436,985
Completed motion pictures/
Television productions 8,622,731 12,026,111
Film properties
(screenplays/teleplays) 1,680,967 1,680,967
Equipment 49,937 46,437
Other assets 54,500 49,000
Less accumulated depreciation (1,248,664) (1,016,660)
Total Assets $9,805,185 $13,454,607
Liabilities
Accounts payable 3,246 5,053
Common stock payable 61 1,124
Preferred stock payable 80 30
Notes payable 16,300 16,300
Deferred credit to production costs 150,000 150,000
Total Liabilities and Deferred
Credit 169,687 172,507
Stockholders' equity
Common Stock $.001 Par Value, 100,000,000
shares authorized, 47,629,592 issued 47,629 47,034
Preferred Stock $.01 Par Value, 1,000,000
shares authorized, $10.00 Par Value 100,000
Shares authorized, 121,217 issued 1,212 1,212
Additional paid-in capital 18,927,102 18,442,944
Retained earnings deficit (9,340,445) (5,209,090)
Total Stockholders' Equity $9,635,498 $13,282,100
Total Liabilities, Deferred Credit
and Stockholders' Equity $9,805,185 $13,454,607
<FN>
<F1>
See Notes to Consolidated Financial Statements
</FN>
</TABLE>
<TABLE>
Consolidated Statements of Income
<CAPTION>
WORLD WIDE MOTION PICTURES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1998 and 1997
AUDITED
1998 1997
-------- --------
<S> <C> <C>
Revenues $ 28,772 137,837
Operating expenses and special charge:
Administrative 59,743 18,143
Provision for depreciation 232,004 434,004
Special charge -
film inventory write-down 3,868,380 4,091,950
Total operating expenses
and special charge 4,160,127 4,544,097
Net income (loss) $(4,131,355) $(4,406,260)
Earnings available to
common stockholders None None
Earnings per common share, assuming
full dilution None None
<FN>
<F1>
See Notes to Consolidated Financial Statements
</FN>
</TABLE>
<TABLE>
Consolidated Statement of Cash Flows
<CAPTION>
WORLD WIDE MOTION PICTURES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998 and 1997
AUDITED
1998 1997
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $(4,131,355)$(4,406,260)
Adjustments to reconcile net income (loss) to net
cash provided by or used in operating activities:
Depreciation $ 232,004 $ 434,004
Allocation of overhead to asset 29,650
Deferred credit to production costs 150,000
Special charge - film inventory write-down 3,868,380 4,091,950
Changes in assets and liabilities:
Increase in notes and accounts receivable (3,156) (173,722)
Increase (decrease) in accounts payable (2,820) 5,972
Decrease in customer deposit -0- (115,000)
Net cash provided by (used in)
operating activities (36,947) 16,594
Investing activities:
Purchase of equipment (3,500) -0-
Increase in work in process (1,621) (436,991)
Cash used in investing activities (5,121) (436,991)
Financing activities:
Proceeds from issuance
of restricted stock $ 14,253 280,620
Net decrease in cash $(27,815) (139,777)
Cash balances - beginning of year $ 56,541 196,318
Cash balances - end of year $ 28,726 $ 56,541
Supplemental cash flow information
Schedule of noncash transactions
Stock issued for services and product 215,500 549,000
Reduction in inventory valuation<F1> $3,868,380 $4,091,950
Reclassification of Note Receivable<F2> $150,000 $150,000
<FN>
<F1>
The substantial decrease in fixed asset value was the result of
the Company's survey of its motion picture and television film
inventory. After consulting with its accountants and the review
of current Financial Accounting Standards Board (FASB)
pronouncements and comments from the Securities and Exchange
Commission Staff to management, the reduced value from film by
film analysis and accelerated amortization of $4,091,950 (1997)
and $3,868,380 (1998) is appropriate. See Note 2 of Notes to
Consolidated Financial Statements.
<F2>
Upon conferring with the Company's Accountants, the Company
reclassified the Promissory Note from income to a deferred credit
to production costs as explained in Note 11 to the Notes to
Consolidated Financial Statements.
<F3>
See Notes to Consolidated Financial Statements
</FN>
</TABLE>
<TABLE>
Stockholders' Equity
<CAPTION>
WORLD WIDE MOTION PICTURES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
AUDITED
Number of
Outstanding
Shares Par Additional Retained
Common Preferred Amount Paid-in Capital Earnings Total
------- --------- ------- -
- ---------- --------- ------
<S> <C> <C> <C> <C> <C> <C>
Balances,
Dec. 31,
1997
47,033,790 121,217 48,246 18,442,944 (5,209,090) 13,282,100
Stock
issued
595,500 0 595 484,158 484,753
- - Cash 380,000
- - Services 215,500
- - Film 0
Net loss,
year ended
Dec. 31,
1998 4,131,355(4,131,355)
Balances,
Dec. 31,
1998
47,629,290121,217 48,841 18,927,102 (9,340,445)9,635,498
<FN>
<F1>
See Notes to Consolidated Financial Statements
</FN>
</TABLE>
WORLD WIDE MOTION PICTURES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(To be read in conjunction with Consolidated Financial Statements for
yearend December 1998)
NOTE 1 DESCRIPTION AND HISTORY OF THE BUSINESS
The Company was founded in July 1977 and incorporated December 9,
1980 under the laws of the state of Michigan. In March 1981, the
Company acquired G.L. Productions Inc. which was a production and
distribution company for short subjects, docudramas, documentaries
and industrial films, many of which were made in conjunction with
the U.S. Government. As a result of the transaction, the Company
acquired a film and television completed product library and
related film production equipment. The transaction was
facilitated by the exchange of two million (2,000,000) shares of
the Company's common stock class of securities for 100% of the
common stock of G.L. Productions Inc. The Company has also
acquired other completed motion picture and television productions
and acquired marketing/distribution interest in additional motion
picture and television productions. The Company's total completed
product library of live action motion pictures and videotaped
productions consists of 277 works of various lengths and subject
matter applicable for marketing through various media in foreign
and/or domestic markets.
In November 1983 the Company merged with the National Power
Corporation, a publicly-held corporation. The National Power
Corporation's common stock class of securities was traded on the
over-the-counter market with registered broker/dealers throughout
the United States making a market in its stock. The merger
process resulted in a change in the Company's number of shares
issued, outstanding, and authorized and a change in par value.
The Company operates and/or maintains nine wholly-owned
subsidiaries, three of which are currently active, to enhance the
operation of its core business and diversified enterprises. The
Company has an active Board of Directors which currently consists
of eighteen members with staggered terms, all of whom are either a
chairperson or a member of one or more of the four Board
designated committees: executive, finance, audit, and personnel.
The Company also maintains four operating committees which are
production and product development, special projects, minorities,
and standards.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries. It is the opinion
of management that the accompanying statements and notes thereto
present fairly the financial position of the Company and do not
contain misleading information. Because the commercial potential
of individual motion pictures and television programming varies
dramatically, and does not bear any relationship to their
production, acquisition or marketing costs, it is impossible to
predict or project a trend of the Company's income or loss.
However, the likelihood of the Company reporting losses in the
short term is increased by the industry's general method of
accounting which requires the early recognition of the entire loss
(through increased amortization) in instances where a motion
picture or television program produced or acquired is not expected
to recover the Company's investment. On the other hand, the
profit from a successful film or television production is
recognized over the entire period that revenues are generated by
that motion picture or television program. This method of
accounting may also result in significant fluctuations in reported
income or loss, particularly on a quarterly basis, depending on
the Company's release of product into the marketplace and overall
domestic/international marketing schedule and the performance of
individual motion pictures or television programs.
The Company's revenue is derived from a variety of sources.
Currently the most significant of these sources are its fees as
packager and/or the managing production company of various film
and television projects (including feature length motion pictures,
documentaries, docudramas, and television productions), film and
television marketing & distribution fees, fees from the licensing
and/or rental of its completed film and television product library
and related entertainment industry consultation fees.
A significant portion of the Company's assets was purchased with
the issuance of shares of its common and preferred stock. Twelve
million four hundred ninety one thousand one hundred and eleven
dollars ($12,491,111) of the assets is represented by the Net
Realizable Value (prior to depreciation and write-downs) of its
completed film and television product library. In the absence of
a consistent market for the securities issued, the value of the
film and television product purchased by the Company was agreed to
by the sellers and the purchaser in arms length transactions in
accordance with generally accepted accounting standards and,
additionally, internal evaluation and auditing procedures. The
films and television productions in the Company
'
s completed
product library have uncertain future revenues that may be
expected to grow or diminish along with all of the ancillary
markets now and in the future that are available for marketing.
In some cases, individual films or television productions may be
timeless and irreplaceable; in many cases their book value is zero
having been fully amortized based on revenues received several
years ago and the inability to estimate a market value or
reasonable expected revenue. Certain of the inventory product
without book value produce income and, in light of new and
emerging technology, the Company expects additional revenue from
these sources.
The Company's film and television completed product library
consists of newly produced and historical film and videotaped
product and rights thereto purchased as an investment and/or to be
marketed by leasing and/or rental to a wide variety of domestic
and international outlets. Many film and television libraries
such as the Company
'
s that were purchased for investment over a
span of many years, have appreciated considerably in value as a
direct result of new and emerging technologies, revived or newly
created public appeal for a certain performer or genre, unique
applications of particular production process (special digital
effects) and standard and newly developed non-theatrical ancillary
markets throughout the world. New technological advances such as
DVD (Digital Video Disk), HDTV (High Definition Television),
CD-ROM, DVD ROM, DVD Audio and Internet applications have enhanced
and are greatly expanding resale and leasing potential of film or
television product.
The film and television product inventory of the Company is
regularly reviewed and evaluated on a film-by-film basis by the
Company's management and periodicaly appraised by outside
independent appraisal. Forecasting any film or television
project
'
s future revenues is a difficult and uncertain art, even
for major film distributors and television syndicators. The
accounting principles and industry practices in these areas leave
unusual discretion with the film and/or television company
executives and often result in "unusual" changes in individual
periods. There is no generally accepted definitive industry
consensus for valuing motion picture and television inventory, the
value may be buried among films currently in release, television
productions currently in broadcast, film and television
productions under development or in production,
distribution/syndication contracts, participation agreements,
performer and production related contracts, and the ubiquitous
'
other'
. FASB Statement of Financial Accounting Standards No. 53,
paragraph entitled "Inventory Valuation" states "16. Unamortized
production and exploitation costs shall be compared with 'net
realizable value' for each reporting period on a film-by-film
basis;" and in the paragraph entitled "Net Realizable Value" it
states, "Net Realizable Value
"
is the estimated selling price
(rental value) in the ordinary course of business less estimated
cost to complete and exploit in a manner consistent with
realization of that income". The accounting profession is
currently reviewing the problem of how to fairly report film
inventory on financial statements. Since the FASB guidelines do
not apply directly to the Company
'
s particular situation, in an
effort to conform as closely as possible to the guidelines and in
accordance with management
'
s recent receipt of commentary from the
Securities and Exchange Commission, the Company has revalued its
inventory of film and television product, resulting in a reduction
of net realizable value of four million and ninety one thousand
nine hundred and fifty dollars ($4,091,950) in the stated value of
such inventory on the December 31, 1997 balance sheet. In 1998,
management for a second time revalued its inventory based on
management's recent receipt of commentary from the Securities and
Exchange Commission, with an additional appraisal of potential
resale value, encompassing worthiness of the inventory items as
works of art, and potential licensing capabilities, resulting in
an additional reduction of $3,868,380 in the stated value of the
net realizable value of such inventory at December 31, 1998. The
results of the reevaluations effectuated in 1997 and 1998 resulted
in a substantial reduction in book value of approximately 51% for
those items over these two years. The 1997 revaluation and
resulting reduction in value combined with the 1998 revaluation
and its resulting reduction and value lowered the balance sheet
presentation of the asset identified as `completed motion pictures
and television products'. Also, a depreciation policy has been
adopted to amortize the film and television inventory over a
10-year period. The Company has instituted a maximum 10-year
depreciation schedule which will result in the amortization of
33-1/3% of the film and television product inventory to be marketed
over the next three years. Although the Company has on its Board
of Directors and professional staff personnel qualified to
estimate the value of its film and television inventory, for
internal verification purposes, it retained the services of an
independent appraiser who reviewed the Company's film and
television completed product library, ensuring a greater measure
of objectivity as regards the carrying amount of such inventory on
the Company's December 31, 1998 balance sheet.
The Company is continually negotiating with various potential
lessors, both foreign and domestic, of portions of its film and
television product library. The Company currently utilizes
certain state-of-the-art exploitation venues such as Pay-Per-View,
satellite transmission, and the Internet to expose its
catalog of library product to the public. Full marketing of the
Company's investment in its film and television product inventory
is dependent on the acquisition of additional capital. The
Company depreciates each film or television program starting with
its specific marketing by the Company.
The Company presents an
'
unclassified'
balance sheet. Cash
includes cash on deposit in checking and savings accounts with no
cash equivalents at December 31, 1998 and 1997.
The Company reviews the current pronouncements of the accounting,
government and industry professionals. In that regard, it
continually analyzes its accounting policies to ensure that it is
current in the presentation of its financial statements,
particularly FASB Statement No. 53 referred to above, and No. 86,
89 and 121, and the Emerging Issues Task Force No. 96-6,
regarding development costs incurred after May 26, 1996, and the
possible substantial impairment of assets. The Company believes
it is not materially affected by any current issues at this time.
NOTE 3 EARNINGS PER SHARE
As a result of a net loss from operations for years ended December
31, 1997 and 1998, there are no earnings per Common share for such
periods. As a result of such net losses, there are no fully
diluted earnings per Common share after potential conversion of
all convertible Preferred shares.
NOTE 4 TAXES
The Company presents its accounting statements on an accrual
basis. Certain state and local tax filings may differ from the
federal returns to take advantage of beneficial local tax law. As
of December 31, 1998, the Company and its subsidiaries have
sustained a cumulative net operating loss which can be offset
against future taxable income. As a result of recorded net
operating losses, the Company has not recognized any state and
federal income tax liability. The Company does not use or expect
to utilize the accelerated depreciation option available under the
U.S. Tax Code.
NOTE 5 LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the
Company is a party or to which any of its assets are subject.
However, the Company is currently in ongoing negotiations for the
reimbursement of lost material which consists of eight 1
"
and/or
3/4"
and/or digital betacam videotape and 35mm film submaster
copies of feature length motion picture and television
productions, owned or controlled by the Company, which were
maintained at a post production film and video facility. The
Company's attorneys are preparing litigation and related processes
relative to the lost material in the event the results of the
negotiations are unsatisfactory. In this regard, the Company is
seeking damages in the amount of three hundred ninety seven
thousand five hundred dollars ($397,500) for the loss of its
"stored material". Further, the co-producers with the Company
'
s
subsidiary, World Wide Films Inc., pertaining to a feature length
film, have commenced litigation to attempt to dissolve the
co-production agreement which exists between the Co-Producer and the
Subsidiary relative to the production processes of that feature
length film. The Company
'
s management and attorneys believe the
lawsuit to be groundless, therefore ultimately resulting in a
favorable judgment or settlement for the Company.
Although no litigation is contemplated or forseeable, various
legal actions, governmental investigations and proceedings and
claims may be instituted or asserted in the future by the Company
to protect its interest or against the Company and/or its
subsidiaries including those arising out of alleged deficiencies
in the Company's products; governmental or industry regulations
relating to safety, financial services; employment-related
matters; distributor, exhibitor, co-producer, vendor, supplier, or
other contractual relationships; intellectual property rights;
product warranties and environmental matters. Some of the
foregoing matters involve or may involve compensatory, punitive or
anti-trust or other treble damage claims in varying amounts,
environmental remediation programs, sanctions or other relief
which, if granted, would require varying expenditures.
Litigation is subject to many uncertainties, and the outcome of
individual litigated matters is not predictable with assurance.
The Company does not reasonably expect, based on its analysis,
that any adverse outcome from such matters would have a material
effect on future consolidated financial statements for a
particular year, although such an outcome is possible.
NOTE 6 SUMMARY OF CORPORATE SECURITIES MATTERS AND
STOCK ISSUANCE
At December 31, 1998, all general voting power was vested in the
holders of the common stock class of securities of the Company.
At that date, the holders of common stock were entitled to one
vote per share and in that aggregate, had 100% of the general
voting power provided in the Company's Restated Certificate of
Incorporation. The Restated Certificate of Incorporation provides
that all shares of common stock share equally in dividends (other
than dividends declared with respect to any outstanding preferred
stock), except that any stock dividends are payable in shares of
common stock to holders of that class of securities. Upon
liquidation, all shares of common stock are entitled to share
equally in the assets of the Company available for distribution to
the holders of such shares. The preferred stock class of
securities of the Company ranks (and any other oustanding
preferred stock of the company would rank) senior to the common
stock in respect of dividends and liquidation rights.
Since November 1983, the Company's shares of Common Stock have
traded on the over-the-counter market. The Company is currently a
fully reporting Rule 144 Regulation D publicly-held corporation.
The Company's NQB (National Quotations Bureau) call symbol is WWMP
and its Standard & Poors Cusip no. is 981536 10 5. The Company
has advised its stockholders and the public that it expects to
apply for NASDAQ quotation and/or quotations on other primary
and/or secondary exchanges. The Company's common stock is thinly
traded at this printing primarily through 'inter-dealer trades'.
The Company has previously been quoted on the OTC
(Over-The-Counter) Electronic Bulletin Board. Castle Securities
Inc.,
located in New York, the Company's most recent active primary
marketmaker, went into bankruptcy resulting in the Company's
temporary removal from quotation on the Electronic Bulletin Board.
The Company has recently filed its Registration Statement on Form
10SB with the U.S. Securities and Exchange Commission and
accordingly, files annual, periodic, and current reports required
pursuant to Section 12(g) of the Exchange Act. It is anticipated
that substantial trading of the Company
'
s Common Stock will not
commence until no further comments have been received from the
Commission relative to the filing of the Registration Statement.
The following illustrates the Company's common and preferred stock
authorized, issued, and outstanding at December 31, 1998.
Common Stock:
Par Value $ .001
Shares Authorized 100,000,000
Shares Issued and Outstanding 47,629,592
Preferred Stock:
Par Value (Stated Value .01) $ 10.00
Shares Authorized 100,000
Shares Issued And Outstanding 20,000
Par Value $ .01
Shares Authorized 1,000,000
Shares Issued And Outstanding 101,217
NOTE 7 SUMMARY OF SUBSIDIARIES
The Company operates and/or maintains 9 wholly-owned subsidiaries.
Certain of these subsidiary corporations are used to produce and/or
market individual motion pictures or television productions.
Currently, three of the motion picture production subsidiary
corporations are active. World Wide Productions, Inc., for the
purpose of producing the specialty television production tentatively
entitled 'Classic Car' (in production) and the feature length motion
picture tentatively entitled "Along for the Ride" (in development);
World Wide Entertainment, Inc., for the purpose of producing the
feature length motion picture tentatively entitled "Mr. Corklesby"
(in development); and World Wide Films Inc., which has recently
completed the production of the feature length motion picture
entitled
"
Shattered Illusions
"
(in distribution). The Company
operates two diversified subsidiaries, one of which is related to
the Company's core industry, World Wide Film and Television
Institute, Inc. The Institute's business is the development,
production, marketing, and implementation of educational symposiums,
workshops, lectures and forums in areas covering the entertainment
industry, specifically film and television financing, packaging,
production, marketing/distribution, and the networking process that
accompanies the entertainment business. Revenue is created
primarily from the sale of tickets to these events. Primary
symposiums are designed to be held annually and to accommodate 250 -
1000 people per event. Workshops are designed to be held in between
the primary symposiums and to accommodate a maximum of 15
individuals. The symposium and workshop events are further designed
to be duplicated in major cities around the country when and if
appropriate.
The Company has made preliminary plans to enter into the diversified
business of providing medical home health care services to the
general public and providing temporary nursing staff to hospitals
and various other health care institutions through its subsidiary
World Wide Medical Services Ltd.
NOTE 8 SUMMARY OF STOCK OPTIONS, EMPLOYMENT CONTRACTS,
ASSOCIATES, POTENTIAL DILUTION, CONTINGENT
LIABILITY AND ACCRUED PROFESSIONAL FEES
The Company has provisions for the issuance of options to purchase
shares of its Common Lettered Stock and certain of its Preferred
Stock now issued has conversion provisions wherein the holder may
convert his/her Preferred shares to Common Lettered Stock under
certain conditions. There are one hundred and twenty one thousand
two hundred seventeen (121,217) shares of Preferred Stock
outstanding that is potentially convertible to shares of Common,
dependent upon the market price of the Common Stock as determined by
one or more exchanges. (See table below for potential conversion
of Preferred Stock to Common Stock.) The Company, from time to
time, has entered into agreements to issue its Common Lettered Stock
for certain goods and services and arrangements beneficial to the
ongoing activities of the Company. Further, various employee
contracts, non-exclusive associates agreements, and service or
purchase contracts contain provisions for stock issuance. The
Company expects to continue to enter into such agreements subject to
all applicable securities law. The potential contingent dilution
from the issuance of the above Common Stock for these purposes is
nine million four hundred and ninety eight thousand three hundred
forty (9,498,340) shares. At December 31, 1998, the Company had an
unpaid contingent salary liability to its President and Chief
Executive Officer, Paul D. Hancock. Mr. Hancock has waived this
accumulated back salary of three million eighty thousand dollars
($3,080,000). However, the corporation expects to approve either
the issuance of Preferred and/or Common Stock or stock options as
compensation therefor. Payment of accrued and previously expensed
professional fees of two hundred and sixty nine thousand one hundred
ninety one dollars ($269,191) (including legal, accounting and
financial advisory services) have been waived by the providers of
those services, who are also stockholders, and accounted for as
contributed capital.
<TABLE>
OUTSTANDING CONVERSION RATIO FROM PREFERRED TO COMMON:
<CAPTION>
Preferred Stock
Price per Share Conversion Common
----------------------
Par No. of Conversion Market Shares
Series Value Shares Ratio* Price After Exchange
- ------- ------- ------- ------- ------- -------
<C> <C> <C> <C> <C>
<C>
A $10.00 20,000 1x1 $10.00 20,000
B .01 717 1x20 10.00 14,340
C .01 1,000 1x20 3.00 20,000
D&E .01 26,000 1x20 5.00 520,000
F&G .01 51,000 1x2 5.00 102,000
H&I .01 15,000 1x10 5.00 150,000
J .01 7,500 1x20 .10 150,000
Totals 121,217 976,340
</TABLE>
* Preferred to Common
NOTE 9 COMMON STOCK RESTRUCTURING
Pursuant to recent shareholder action (Annual Shareholder
'
s
Meeting of January 30, 1999) to approve management
recommendations, on September 24, 1998, the corporation
'
s Board of
Directors adopted resolutions (a) 'to amend Article 3 of the
Articles of Incorporation of the Company to add Section (12)
stating that "the Board of Directors may effect a stock
combination restructuring (reverse stock split) of the
Corporation
'
s outstanding shares of Common Stock class of
securities if the Board of Directors in their sole judgment
believe such restructuring is in the best interest of the
Corporation" and (b) "file the foregoing amendment with the State
of Michigan Securities Bureau, the Company's state of
incorporation, to restate the Company's certificate of
incorporation." This action, if taken by the Company
'
s Board of
Directors, would amend the Company's Restated Certificate of
Incorporation and Articles of Incorporation (the "Amendment") to:
(i) effect a stock combination restructuring (reverse stock split)
of the Company
'
s outstanding shares of the Common Stock class of
securities (the
'
Reverse Split
'
), and (ii) to provide for the
payment of cash in lieu of fractional shares otherwise issuable in
connection therewith. In this regard, the Reverse Split, if
effected, will not change the number of the Company
'
s authorized
shares of Common Stock or the par value of the Common Stock.
NOTE 10 NOTE RECEIVABLE, NOTE PAYABLE, LETTERS OF CREDIT,
LINES OF CREDIT, PROMISSORY NOTE
The Company holds a Promissory Note for one hundred fifty thousand
dollars ($150,000) from Mr. Gary T. Wittman payable to the
Company in annual installments of twenty five thousand dollars
($25,000) each beginning April 30, 2000. The Note is secured by a
pledge of high grade stocks comprising a portion of the Dow Jones
Industrial average or similar quality securities and are valued at
December 31, 1998 at two hundred and fifty thousand dollars
($250,000) or greater.
The Company has a note payable in the amount of sixteen thousand
three hundred dollars ($16,300). The note holder holding the note
payable has agreed to waive payment until such time that the
Company has sufficient working capital to accomplish its
objectives.
The Company was issued a standby irrevocable Letter of Credit from
the Huntington Bank, Cleveland, Ohio (now Society Bank), in the
amount of fifty thousand dollars ($50,000) to serve as a secondary
standby line of credit. The terms of the Huntington Bank Letter
of Credit required that, if utilized, the Company would pledge as
collateral a portion of its film and television product library.
If the Letter of Credit were exercised, the resultant loan would
be secured by a commensurate portion of the Company's film and
television product library. The Huntington Bank terms also
provided that the Company would continue to be able to sell or
lease any portion of the product library as long as it retained
sufficient material to secure any loans made as a result of the
Letter of Credit.
The Company currently utilizes a fifty thousand dollars ($50,000)
primary line of credit with the Wells Fargo Bank of California to
accommodate its daily cash flow needs and occasionally uses its
credit lines at other financial institutions and with its vendors
and suppliers.
NOTE 11 RECLASSIFICATION OF DEFERRED CREDIT
The Promissory Note in the amount of one hundred fifty thousand
dollars ($150,000) referred to above in Note 10 was received in
1997 and represents a credit to production costs to be incurred
for motion pictures and/or television projects expected to be made
in the near future. Upon receipt of the Promissory Note for one
hundred fifty thousand dollars ($150,000) in 1997, income in like
amount was recorded at that time rather than being recognized as a
deferred credit to future production costs. This amount has been
reclassified as a deferred credit in the 1997 financial statements
herein and income previously shown for 1997 has been reduced
accordingly with an offsetting increase in retained-earnings
deficit at December 31, 1997.
NOTE 12 YEAR 2000 ISSUE
The Year 2000 issue is the result of computer programs being
written using two digits instead of four to define the applicable
year. Any of the Company's computer programs that have
time-sensitive software or facilities or equipment containing
embedded
micro-controllers may recognize a date using "00" as the year 1900
rather than the Year 2000. This could cause a system failure or
miscalculations resulting in potential disruptions of operations,
including, among other things, a temporary inability to process
transactions, send invoices or engage in similar normal business
activities.
The Company has assessed its hardware and software systems, which
are comprised solely of an internal personal computer network and
commercially available software products. Based on this
assessment, the Company believes that its hardware and software
systems are Year 2000 compliant. The Company has begun to assess
the embedded system contained in its leased or expected to be
leased equipment and expects to finish this assessment by the end
of June 1999. At this time, the Company is uncertain whether the
embedded systems contained in its leased or expected to be leased
equipment are ready for the Year 2000. In addition, the Company
is contacting its key vendors, suppliers,customers and other third
parties to determine if there are any significant Year 2000
exposures which would have a material effect on the Company.
The Company is not yet aware of any Year 2000 issues relating to
those vendors, suppliers, customers and other third parties with
which the Company has a material relationship. There can be no
assurance, however,that the systems of those vendors, suppliers,
customers and other third parties on which the Company or its
systems rely will not present Year 2000 problems that could have a
material adverse effect on the Company.
The Year 2000 issue presents a number of other risks and
uncertainties that could impact the Company, such as disruptions
of service from critical third parties such as utilities providing
electricity, water or telephone service. If such critical third
party providers experience difficulties resulting in disruption of
service to the Company, a shutdown of the Company's operations at
individual facilities could occur for the duration of the
disruption. The Year 2000 project cost has not been material to
date and, based on preliminary information, is not currently
anticipated to have a material adverse effect on the Company's
financial condition, results of operations or cash flow in future
periods. However, if the Company, its vendors, suppliers,
customers or other third parties are unable to resolve any Year
2000 compliance problems in a timely manner, there could result a
material financial impact on the Company.
Accordingly, management plans to devote the resources it considers
appropriate to resolve all significant Year 2000 problems in a
timely manner. This assessment is estimated to be completed no
later than mid-1999. After completion of its Year 2000
assessment, the Company will develop contingency plans to reduce
its Year 2000 exposure and expects to have such contingency plans
in place by September 1999. Readers should understand that the
dates on which the Company believes the Year 2000 project will be
completed are based upon management's best estimates, which were
derived utilizing assumptions of future events, including the
availability of certain resources, third-party modification plans
and other factors. However, there can be no guarantee that these
estimates will be achieved, or that there will not be a delay in,
or increased costs associated with, the implementation of the
Company's Year 2000 compliance project. A delay in specific
factors that might cause differences between estimates and actual
results include, but are not limited to, the availability and cost
of personnel trained in these areas, the ability of locating and
correcting all relevant computer codes, timely responses to and
corrections by third parties and suppliers, the ability to
implement interfaces between the new systems and the systems not
being replaced, and similar uncertainties.Due to the general
uncertainty inherent in the Year 2000 problem, resulting in part
from the uncertainty of the Year 2000 readiness of third parties
and the interconnection of national and international businesses,
the Company cannot ensure that its ability to timely and cost
effectively resolve problems associated with the Year 2000 issue
will not affect its operations and business, or expose it to third
party liability.
Item 8. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure.
N/A
Part III
Item 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance With Section 16(a) of the
Exchange Act.
The Board of Directors is divided into three classes as nearly
equal in number as may be, with the term of office of one class
expiring each year.
When the number of directors is changed, any newly created
directorships or any decrease in directorships are so apportioned
among the classes as to make all classes as nearly equal in number
as possible. When the number of directors is increased by the
Board and any newly created directorships are filled by the Board,
there are no classifications of the additional directors until the
next annual meeting of shareholders. Notwithstanding the
foregoing, unless voting rights thereon are equated to those on
the Common Stock, whenever the holders of any series of Preferred
Stock are entitled, voting separately as a class, to elect
directors, the terms of all directors elected by such holders
expires at the next succeeding annual meeting of shareholders.
Subject to the foregoing, at such annual meeting of shareholders
the successors to the class of directors whose term then expires
are elected to hold office for a term expiring at the third
succeeding annual meeting. At each annual meeting of the
shareholders for the election of the directors (or special meeting
of shareholders in lieu thereof) at which a quorum is present,
those persons equal in number to the number of director positions
for which a class, series or aggregation of classes and/or series
are voting, who receive the highest number of votes in such class,
series or aggregation which is voting for directors, counting all
shareholders voting in person or by proxy entitled to vote
therefor, are elected as directors.
Vacancies that occur prior to the expiration of the then current
term (whether as a result of a newly created director position on
the Board or otherwise), if filled by the Board shall be filled
only until the next succeeding annual meeting. Each of the
directors of the Company hold office until the annual meeting of
shareholders at which the class to which the director has been
elected has expired and until his successor is elected and
qualified or until his earlier death, resignation or removal.
<TABLE>
The following sets forth the names and ages of all of the
Directors and Executive Officers of the Company, positions held by
such person, length of service, when first elected or appointed
and term of office.
<CAPTION>
DIRECTOR AND/OR
EXECUTIVE OFFICER FIRST ELECTED
TERM OF
NAME AND AGE POSITION OR APPOINTED
OFFICE
<S> <C> <C>
<C>
Charles Bailey Chairman of the 1985
2000
Age 66 Board of Directors
Paul D. Hancock President/Chief 1977
Director/2000
Age 43 Executive Officer
Officer/2015
and Director
A. Robert Sobolik Exec. Vice President1981
Director/2000
Age 63 Treasurer and Director
Officer/
Indefinite
Larry Epstein, Esq. Secretary 1989
Director/1999
Age 50 Director
Officer/
Indefinite
John R. Woodward Vice President, Film1982
Director/2001
Age 48 Production and Officer/
Director
Indefinite
George T. Lindsey Vice President, Creative1982
Director/2001
Age 61 Development and
Officer/
Director
Indefinite
James J. Aitken, C.P.A. Vice President, Finance1982
Director/2001
Age 62 and Administration
Officer/
Director
Indefinite
John Levingston Vice President/Marketing 1983
Officer/
Age 72 and Distribution
Indefinite
John D. Foley Director 1990
1999
Age 48
Robert E. Capps, Jr. Director 1990
1999
Age 48
Ben Whitfield Jr. Esq. Director 1980
1999
Age 49
Brendan Cahill Director 1986
2000
Age 52
Alex Trebek Director 1987
1999
Age 58
Leroy J. Steele Director 1987
1999
Age 76
Joseph Dyson, C.P.A. Director 1983
2000
Age 66
Peter Lallos Director 1988
2000
Age 65
Philip Langwald Director 1985
2001
Age 92
Fred Baron Director 1994
2001
Age 47
Charles Newirth Director 1994
2001
Age 43
Brian J. Patnoe Associate V.P. 1986
Indefinite
Age 40 Administration
Michael Maghini Associate V.P. 1985
Indefinite
Age 41 Finance
David A. Toma Associate V.P. 1990
Indefinite
Age 49 Production
</TABLE>
CHARLES C. BAILEY, age 66* - Mr. Bailey is the Chairman of the
Board of the Company. Mr. Bailey has most recently been the
producer of a variety of Broadway and other theatrical stage
productions including the award winning musical "My One and
Only" with Twiggy and Tommy Tune, "Stardust" with Sean Young,
'
Lucky Guy
'
with Faith Prince, and "Dream" with Lesley Ann
Warren and Margaret Whiting. In addition, he is the Executive
Producer of King Street Productions, a theatrical production
company in New York City, which develops and produces Broadway
and regional stage productions. Prior to his professional
Broadway activities, Mr. Bailey was Senior Vice President of
Thompson McKinnon Securities Inc. and previously Vice President
of Prudential Bache Securities (now Prudential Securities), both
in New York and two of Wall Street's leading investment banking
firms. As a fully licensed investment banker with Prudential
Bache and Thompson McKinnon, Mr. Bailey prepared a wide variety
of multi-million dollar national municipal bond issues for the
capital markets and was responsible for the underwriting of
those and other issues. In conjunction with Mr. Bailey
'
s
investment banking responsibilities, he was the principal of
O.B. Bailey Associates, a financial advisory service. He has
been involved in international business and finance for more
than 35 years, encompassing organizations and enterprises
throughout the Orient, Europe, South America and the Middle
East. He is a graduate of Hamilton College in New York and a
member of several professional organizations including past
National Director, International Director of the United States
Junior Chamber of Commerce and Commission Chairman of Junior
Chamber International (JCI).
PAUL D. HANCOCK*, age 43 - Mr. Hancock is the President and
Chief Executive Officer of the Company. He is the founder and
developer of its film/television production concept and
corporate mission objectives, and has served as President and
Chief Executive Officer since its inception. Prior to and during
his tenure with the corporation, he has functioned as a
production and business advisor to various film financing and
production companies and has supervised the
development/packaging and production of a wide variety of
moderately budgeted/cost-controlled feature film and television
projects. Mr. Hancock was responsible for leading one of the
first exploratory film finance teams to the Wall Street capital
markets in the late 1970's in order to develop and encourage
motion picture financing by the investment banking community.
He was instrumental in the formulation of entertainment industry
relationships specifically in moderate budget feature film
production financing with companies such as E.F. Hutton & Co.;
Kidder, Peabody and Prudential-Bache Securities. Mr. Hancock
has also been a lecturer on various aspects of the entertainment
industry, entrepreneurship and finance at University Graduate
Schools of Business, seminars and conferences, is a frequent
radio talk show guest discussing independent film financing,
production and marketing, and is published in various print
media encompassing film and television industry topics. He has
developed and maintained a specialized expertise in and
conducted diverse consulting for motion picture and television
financial packaging, specifically for public securities
offerings, private sector investments and commercial banking.
He was previously employed in a variety of management capacities
in the theater and hotel businesses for Farber Enterprises and
Ramada Incorporated. Mr. Hancock attended the Cranbrook
Academies, Eastern Michigan University, and the University of
California at Los Angeles. He belongs to several professional
organizations including the Academy of Television Arts and
Sciences.
A. ROBERT SOBOLIK*, age 63 - Mr. Sobolik is the Executive Vice
President and Treasurer of the Company. He has previously held
senior corporate positions including Vice President of
Operations for Stratavision Inc. in Southern California
specializing in computer software development. Mr. Sobolik has
been a financial consultant and advisor to various international
and U.S. Fortune 500 corporations including HRT Industries;
Senior Consultant/financial services, Saudi Airlines in Saudi
Arabia and Senior Project Manager for Sierra Power Co. and the
Texas Legislative Counsel. Prior to his consulting services, he
was Project Manager and Director for computer systems in
corporate development with the U.S. Borax Chemical Corporation
and before that supervised computer operations, computer systems
and corporate data processing. He has also been a Manager and
Controller of computer operations for a major Los Angeles based
corporation. Mr. Sobolik has served in corporate management for
more than twenty-five years in business, finance and industry
throughout the western U.S. and abroad.
LARRY EPSTEIN, age 50 - Mr. Epstein is the Secretary of the
Company. He is a practicing attorney in Southern California He
has been a sole practitioner since 1987 specializing in
business, family and entertainment law. He was previously
involved for three years as Executive Vice President and in-house
legal counsel to Cherrystone Pictures, Inc., an
independent feature film production company based in Los
Angeles, and in that capacity oversaw all corporate and
administrative fiduciary responsibilities of the company and
orchestrated all documentation for domestic and international
co-ventures and related agreements. Prior to his production
company involvement, Mr. Epstein was a Senior Partner in the Los
Angeles-based law firm of Abouaf, Epstein, Meyers & Gronemeier,
specializing in business, tax, and entertainment law. He is a
member of the State Bar of California, San Fernando Valley Bar
Association, Los Angeles County Bar Association and The American
Bar Association. Mr. Epstein has sat for 7 years as special
referee and judge for the State Bar of California and is also
currently Judge Pro Tem for the Superior Court, State of
California, County of Los Angeles.
JOHN R. WOODWARD, age 48 - Mr. Woodward is the Vice President
for Film Production of the Company. He is responsible for the
technical production procedures of the film and television
projects the Company produces or co-produces. His career has
spanned more than 20 years of both independent and studio film
and television production for numerous companies such as
Twentieth Century Fox, Paramount Pictures, Sony Pictures, Jerry
Bruckheimer Films and Castle Rock Entertainment. Including
studio involvement, he was executive in charge of production
for independent production company Melco General, Incorporated
in Los Angeles. He has been a senior member of the production
team for a wide variety of film and television projects,
including most recently "Liar Liar", "Gattaca", "Wild Thing",
"Sweet Dreams", "Flashdance", "The Manitou", "Tales from the
Crypt", "Young Guns II", "Universal Soldier", and the recent
Academy Award nominated "Shawshank Redemption", among many
others. Mr. Woodward has additionally been associated with and
instrumental in productions at other major studios such as
Warner Brothers, Columbia, Disney, the C.B.S. Studio Center,
Samuel Goldwyn, and Bavaria-Atelier Studio in Germany. His
television commercial background is varied having worked on
commercials for the Sony Corporation, Lincoln- Mercury, and
Pepsi. He has specialized training and expertise in
pre-production through post production coordination and
requirements, and film production budget control. He holds a
Bachelor of Arts degree in Visual Arts, a Masters degree in
Cinema Production, and is a member of the Director's Guild of
America.
GEORGE T. LINDSEY, age 61 - Mr. Lindsey is the Vice President of
Creative Development of the Company. He is responsible, with
the production committee, for the selection and development of
film projects for the Company. His film career spans over
twenty-five years of literary and production film work. He has
most recently completed writing feature film projects for New
West Films Corp. He has been associated in the past with film
production houses and television stations, including service as
an executive producer and director on the staff of the National
Broadcasting Company and its affiliate W.R.C.-T.V. and W.I.T.F.
Formerly, as President of a motion picture production company,
he produced documentaries and docudramas throughout Europe,
Africa, and South America. He has worked with such talent as
Eli Wallach, Henry Fonda, Raymond Massey, Leonard Nimoy, Brock
Peters and Lorne Green. Mr. Lindsey has done in-depth work in
the field of pre-production of motion picture projects and has
earned over eighteen national film awards for film and
television productions, including regional emmy awards, local
emmy awards, the N.E.T. award for excellence in film production
along with gold, silver and bronze medals in film production
from the New York International Film Festival. He is a member
of the Writer's Guild of America, West, Inc. and the Director's
Guild of America.
JAMES J. AITKEN, age 62 - Mr. Aitken is the Vice President of
Finance and Administration of the Company. He is responsible
for the overall business management and administrative systems
of the Company. He is a Certified Public Accountant and was
formerly a Partner and Regional Manager for Ernst & Whinney (now
Ernst & Young), a national and international public accounting
firm. His experience while engaged in public accounting
encompassed a wide variety of clients including many companies
in the entertainment industry including television, radio,
cablevision and professional sports teams. Mr. Aitken has led
many conferences and advanced workshops in professional
management and accounting sponsored by Ernst & Whinney. He has
also been an instructor and professor of business and finance
and accounting courses at the University level. He is a member
of the American Institute of Certified Public Accountants and
several other professional societies and organizations related
to business management and finance.
JOHN D. FOLEY, age 48 - Mr. Foley is currently President,
Worldwide Distribution for October Films and was previously
Executive Vice President of City Cinemas, a theatrical
exhibition corporation in New York, and Executive Vice President
of Miramax Films overseeing all theatrical acquisitions and
distribution. Prior to Miramax, he was President of MGM/UA and
was recruited by MGM in 1987 as Vice President/Sales where he
managed domestic sales in the Southern and Western divisions of
the United States. In 1989 he was named President, managing all
North American activities for the company. Certain recent
Miramax and MGM production successes he was instrumental in
include "Pulp Fiction", "Benny and Joon" and "Untamed Heart".
Other past productions he has been instrumental in include
"Rainman", "A Fish Called Wanda", and "Moonstruck". Mr. Foley
began his film career in 1975 on the East Coast with Columbia
Pictures. He held various management positions with Columbia
during his tenure with the company, encompassing regional sales
throughout the midwest and southern United States. In 1986,
DeLaurentis Entertainment Co. recruited him as Vice President of
Distribution to establish the distribution operations for the
company's opening in 1986.
JOHN LEVINGSTON, age 72 - Mr. Levingston has been involved in
the distribution, marketing, television syndication and
packaging of motion picture projects both nationally and
internationally for more than twenty years, working with such
companies as A.B.C., Gotham-Rhodes Inc., Thompson International
and has served as President of Cinema Systems Inc. His film
industry background also includes authorship of original
stories, one of which was for the feature film NAPOLEON &
SAMANTHA and an original musical composition/co- production for
ERA Records. Prior to his work in the motion picture industry,
he created and marketed internationally high technological
industrial instruments while working as a Vice President with
companies such as Setco, Dynalube Incorporated, British-American
Tobacco Co. in London and Batco Corporation in East Africa. He
is the founder of the consulting firm of Levingston-Lehman
specializing in financing and marketing research.
ROBERT E. CAPPS, JR., age 48 - Mr. Capps, most recently
Executive Vice President-Film for United Artists, has been
involved in the marketing, distribution and exhibition of
feature motion pictures for more than 25 years. Formerly,
Senior Vice President and General Sales Manager for Tri Star
Pictures, he has been instrumental in the development of new
film marketing technology strategies for the motion picture
industry, primarily the theatrical market. He has been directly
involved in the building and expansion of distribution
departments for companies such as Columbia Pictures, Paramount
Pictures, and MGM. Mr. Capps was an instrumental force over the
span of his career in the distribution and exhibition of a wide
variety of both major and independent feature films including
such classic film productions as the "Terminator" films, "Legend
of Boggy Creek", and "Where the Red Fern Grows". He has also
been a consultant to such major domestic and international
exhibitor chains as Mann, Loew
'
s and AMC.
BENJAMIN WHITFIELD, JR., ESQ., age 49 - Mr. Whitfield is
presently a practicing civil attorney with an emphasis in the
field of entertainment law. He has served as United States
Assistant District Attorney and as an Assistant Attorney
General. Mr. Whitfield is a member of the law firm of Wright,
Reed & Whitfield, P.C., one of the entertainment law firms
serving the corporation.
BRENDAN CAHILL, age 52 - Mr. Cahill was most recently Vice
President for Music and Creative Affairs for Universal Studios.
Prior to his employment with Universal, he was Vice President in
charge of creative affairs and musical director at Columbia
Pictures and is currently a development and production
consultant in the film/television industry and production
consultant to Michael Phillips and Michael Douglas (Michael
Douglas Productions). He has in the past been a personal
advisor for production and musical affairs to Steven Spielberg
(Amblin Light Entertainment), having been involved with such
film projects as BACK TO THE FUTURE, CLOSE ENCOUNTERS OF THE
THIRD KIND and E.T., THE EXTRA TERRESTRIAL. In the 1960's, Mr.
Cahill was credited with being intregal in the success of such
musical groups as the Birds, Jefferson Starship, and the
Monkees, and was executive producer on the successfully
syndicated television show, THE PARTRIDGE FAMILY for ABC. Other
feature film and television production credits for Mr. Cahill
include CALIFORNIA SUITE, THE BREAKFAST CLUB, OUT OF AFRICA,
MIAMI VICE, and the Emmy Award winning MURDER SHE WROTE.
ALEX TREBEK, age 58 - Mr. Trebek has been involved in the
television industry for over twenty-five years as a producer,
host and innovator of a wide variety of entertainment shows. He
has produced and hosted the internationally successful gameshow
JEOPARDY which has been the second highest rated television show
in syndication. Mr. Trebek was also the host of the successful
television game show CLASSIC CONCENTRATION. As a television
media executive, he is currently developing other projects for
television and film as well. Mr. Trebek, originally from
Sudbury, Ontario, Canada, worked for the Canadian broadcasting
company (C.B.C.) throughout the 1960's and early 70's before
relocating to the United States in 1973.
LEROY J. STEELE, age 76 - Mr. Steele's background encompasses
over 40 years as an executive with various corporations within
the United States and in Canada, including Executive Vice
President and Chief Operating Officer for Bullock's company in
Los Angeles, Vice President and General Manager for the Boston
stores on the Eastern seaboard, and Chairman of the Board/Chief
Executive Officer for A.J. Freeman Ltd. in Ottawa, Canada. Mr.
Steele has also been a business management consultant and
advisor for many years.
JOSEPH DYSON*, age 66 - Mr. Dyson is currently the President and
Chief Executive Officer of Health Care Capital Corp. of
California. He was formerly Vice President and Manager of
Merrill Lynch's Western Regional Health Care Finance Department
and Vice President of First America, a financial consulting
firm. In addition he was Managing Vice President of Telco
Capital Corporation and employed by a national accounting firm.
Prior to his private sector work, he was engaged at the
Department of Health, Education and Welfare where he served as
acting Regional Program Director of the Hill-Burton Program as
well as special consultant to other regional loan offices. He
is a Certified Public Accountant and has served as an official
for the U.S. Securities and Exchange Commission.
PETER LALLOS, age 65 - Mr. Lallos was most recently Senior Vice
President for the investment banking firm of Bear, Sterns & Co.
in New York City. He has previously held senior corporate
positions including Managing Director for Manufacturer's Hanover
Trust Company, Senior Vice President - E.F. Hutton & Co. and
Senior Vice President - Donaldson, Luftkin & Jenrette. Mr.
Lallos' Wall Street expertise encompasses more than 25 years of
investment banking, commercial banking and specialized public
and corporate financing around the world.
PHILIP LANGWALD, age 92 - Mr. Langwald is Chairman Emeritus of
the Board of Directors of the Company and is currently a retired
municipal administrative executive. He has been involved with
land development and appraising for real estate and managing the
construction and development of shopping and residential areas
in the midwestern United States. He was formerly with the
United States Department of Labor and Internal Revenue Audit
Division.
FRED BARON, age 47 - Mr. Baron is currently Senior Production
Executive for Twentieth Century Fox Film Corp. where he is
responsible for all phases of production oversight for all
feature film production at the studio. Prior to his studio
involvement, he was production representative at HBO, overseeing
a wide range of features and M-O-Ws. Mr. Baron has also acted
as co-producer on television productions such as TALES FROM THE
CRYPT and production coordinator and production supervisor on a
wide variety of independent motion picture/television
production.
CHARLES NEWIRTH, age 43 - Mr. Newirth is currently an
established independent producer and executive producer in the
motion picture industry and has been responsible for the
production of such major motion pictures as the recently
released "Patch Adams" with Robin Williams, "City of Angels"
with Meg Ryan and Nicolas Cage, the Academy Award winning and
highly successful "Forrest Gump" with Tom Hanks, as well as
"Bugsy" with Warren Beatty, "Toys" with Robin Williams, and "The
American President" with Michael Douglas. His career in feature
film production has also included production manager for such
films as "Pretty in Pink", "Robocop", and "The Abyss". In
addition, he has worked in other diverse senior production
positions as production supervisor, production coordinator, and
location manager.
BRIAN J. PATNOE, age 40 - Mr. Patnoe's tenure with the
corporation began in 1987 as Executive Assistant in the areas of
finance and administration. In 1989, he was elevated to the
post of Associate Vice President, Administration, working as key
liaison between senior officers of the corporation and members
of the Board of Directors. His responsibilities also included
monitoring and maintaining WWMPC's corporate due diligence data
information, finance material information, and monitoring basic
stockholder relations. He has worked closely with senior
management of the company in the negotiations of co-financing
production scenarios with domestic and foreign companies,
consortiums, and independent financiers. Mr. Patnoe has also
been associated with Siemen's and Motorola ISG as national
accounts manager and McDonnell Douglas Corporation as a
configuration management analyst and product definition
specialist; both senior technical and analytical corporate
administrative positions assuring quality control and
infrastructure communications. He maintains a degree in
Business Administration and Economics from California State
University, Fullerton and a Masters in Business Administration
from the University of Southern California.
MICHAEL MAGHINI, age 41 - Mr. Maghini was most recently Vice
President with Eden Financial Group, a Wall Street investment
banking firm providing wholesale financial products to associate
brokerage firms around the country, as well as a Managing
Partner and Vice President with Famco, Inc. a real estate
holding company in New York City. Mr. Maghini's well
established financial experience, including his executive
association for investment with the Putnam's Golden Scale
Council, and his membership in the Million Dollar Round Table
Club, complement his past investment management and development
training with Paine Webber. Prior to Paine Webber, he held an
investment executive position with Thompson McKinnon Securities.
Mr. Maghini has helped develop the investment banking division
of a major New York financial firm and has also managed a
variety of many diverse institutional and, private investment
portfolios. He is a graduate of Southern Connecticut University
where he received his Bachelor of Science Degree in Political
Science and Economics.
DAVID A. TOMA, age 49 - Mr. Toma has most recently been
associated with Cinema Research Corporation and Complete Post
Inc. in Los Angeles responsible for managing all aspects of film
and video post production and production processing. He has
been instrumental in the development and growth of both
companies to become two of the largest and highly sophisticated
post production facilities in the motion picture industry. He
has further been a consultant and advisor on post production
techniques and procedures for several companies including
Lorimar Entertainment. Mr. Toma was also engaged in several
film production, marketing and editing capacities for the motion
picture and television industry including Executive in Charge of
Production for Laserus Entertainment Inc., a leading
entertainment commercial company producing a wide variety of
television programming; production/ marketing executive for
Pacific Video Inc., a major post production facility; and post
production supervisor for independent production company, Sun
Classic Pictures Inc. Mr. Toma has specialized expertise in the
implementation of favored nations agreements, extensive
knowledge of electronic post production techniques, state of the
art and conventional theatrical and video editing, as well as
new mastering technologies for European and domestic delivery.
His film and television credits include Robert Altman's POPEYE,
THE LINCOLN CONSPIRACY, BEYOND AND BACK, the long-running
television series SOAP and BENSON, and he was the recipient of
an achievement Emmy Award from the Academy of Television Arts
and Sciences for his contributions to the CBS Movie-of-the-Week
BABIES HAVING BABIES.
* (Indicates members of the Executive Committee)
FAMILY RELATIONSHIPS
There are no family relationships among directors, executive
officers or persons chosen by the Company to be nominated as a
director or appointed as an executive officer of the Company or
any of its affiliated subsidiaries.
Item 10. Executive Compensation.
The summary compensation table below sets forth certain
information for all compensation, including: annual, longterm
and stock compensation paid for services rendered to the Company
in all capacities for the fiscal years ended December 31, 1998,
1997, and 1996.
<TABLE>
Summary Compensation Table
<CAPTION>
ANNUAL COMPENSATION
Annual Compensation
Name and Principal Position
(a) Year(b) Salary($)(c) Bonus
($)(d)Other Annual
*, **, ***
Compensation ($)(e)
<S> <C> <C> <C> <C>
Charles Bailey** 1998 0 0 0
Chairman of the Board 1997 0 0 0
1996 0 0 0
Paul D. Hancock*/** 1998 340,000 0 0
President, CEO *** 1997 325,000 0 0
1996 310,000 0 0
A. Robert Sobolik*/** 1998 0 0 0
Exec. V.P./Treasurer 1997 0 0 0
1996 0 0 0
Larry Epstein*/** 1998 0 0 0
Secretary 1997 0 0 0
1996 0 0 0
John R. Woodward*/** 1998 0 0 0
Vice President 1997 0 0 0
1996 0 0 0
George T. Lindsey*/** 1998 0 0 0
Vice President 1997 0 0 0
1996 0 0 0
James J. Aitken*/** 1998 0 0 0
Vice President 1997 0 0 0
1996 0 0 0
John Levingston* 1998 0 0 0
Vice President 1997 0 0 0
1996 0 0 0
John R. Foley** 1998 0 0 0
Director 1997 0 0 0
1996 0 0 0
Robert E. Capps Jr.** 1998 0 0 0
Director 1997 0 0 0
1996 0 0 0
Benjamin Whitfield Jr.** 1998 0 0 0
Director 1997 0 0 0
1996 0 0 0
Brendan Cahill** 1998 0 0 0
Director 1997 0 0 0
1996 0 0 0
Alex Trebek** 1998 0 0 0
Director 1997 0 0 0
1996 0 0 0
LeRoy J. Steele** 1998 0 0 0
Director 1997 0 0 0
1996 0 0 0
Joseph Dyson** 1998 0 0 0
Director 1997 0 0 0
1996 0 0 0
Peter Lallos** 1998 0 0 0
Director 1997 0 0 0
1996 0 0 0
Philip Langwald** 1998 0 0 0
Director 1997 0 0 0
1996 0 0 0
Fred Baron** 1998 0 0 0
Director 1997 0 0 0
1996 0 0 0
Charles Newirth** 1998 0 0 0
Director 1997 0 0 0
1996 0 0 0
Brian J. Patnoe* 1998 0 0 0
Assoc. V.P. 1997 0 0 0
1996 0 0 0
Michael Maghini* 1998 0 0 0
Assoc. V.P. 1997 0 0 0
1996 0 0 0
David A. Toma* 1998 0 0 0
Assoc. V.P. 1997 0 0 0
1996 0 0 0
<CAPTION>
Awards Payouts All
Other
Securities
Compensation
Underlying (#)(i)
Options/SARs(#)(g)
Restricted Securities
Stock Award(s) Underlying
($)(f) Options/SARs(#)(g)
<S> <C> <C> <C> <C>
1998 - 0 0 0 0
Charles Bailey** 1997 - 10,000 0 0 0
Director 1996 - 0 0 0 0
1998 - 0 250,000 0 0
Paul D. Hancock*/** 1997 - 0 250,000 0 0
President, CEO *** 1996 - 0 250,000 0 0
1998 - 0 25,000 0 0
A. Robert Sobolik*/** 1997 - 0 25,000 0 0
Exec. V.P./Treasurer 1996 - 0 25,000 0 0
1998 - 0 500,000 0 0
Larry Epstein*/** 1997 - 25,000 500,000 0 0
Secretary 1996 - 25,000 500,000 0 0
1998 - 0 50,000 0 0
John R. Woodward*/** 1997 - 0 50,000 0 0
Vice President 1996 - 0 50,000 0 0
1998 - 0 25,000 0 0
George T. Lindsey*/** 1997 - 0 25,000 0 0
Vice President 1996 - 0 25,000 0 0
1998 - 0 25,000 0 0
James J. Aitken*/** 1997 - 0 25,000 0 0
Vice President 1996 - 50,000 25,000 0 0
1998- 0 20,000 0 0
John Levingston* 1997- 0 20,000 0 0
Vice President 1996- 0 20,000 0 0
1998 - 0 100,000 0 0
John R. Foley** 1997 - 0 100,000 0 0
Director 1996 - 0 100,000 0 0
1998 - 0 50,000 0 0
Robert E. Capps Jr.** 1997 - 0 50,000 0 0
Director 1996 - 0 50,000 0 0
1998 - 0 25,000 0 0
Benjamin Whitfield Jr.** 1997 - 0 25,000 0 0
Director 1996 - 0 25,000 0 0
1998 - 0 20,000 0 0
Brendan Cahill** 1997 - 0 20,000 0 0
Director 1996 - 0 20,000 0 0
1998 - 0 20,000 0 0
Alex Trebek** 1997 - 0 20,000 0 0
Director 1996 - 0 20,000 0 0
1998 - 0 0 0 0
LeRoy J. Steele** 1997 - 0 0 0 0
Director 1996 - 0 0 0 0
1998 - 0 25,000 0 0
Joseph Dyson** 1997 - 0 25,000 0 0
Director 1996 - 50,000 25,000 0 0
1998 - 0 0 0 0
Peter Lallos** 1997 - 0 0 0 0
Director 1996 - 0 0 0 0
1998 - 0 0 0 0
Philip Langwald** 1997 - 0 0 0 0
Director 1996 - 0 0 0 0
1998 - 0 0 0 0
Fred Baron** 1997 - 0 0 0 0
Director 1996 - 0 0 0 0
1998 - 0 0 0 0
Charles Newirth** 1997 - 0 0 0 0
Director 1996 - 0 0 0 0
1998 - 0 100,000 0 0
Brian J. Patnoe* 1997 - 0 100,000 0 0
Assoc. V.P. 1996 - 0 100,000 0 0
1998 - 0 10,000 0 0
Michael Maghini* 1997 - 0 10,000 0 0
Assoc. V.P. 1996 - 0 10,000 0 0
1998 - 0 0 0 0
David A. Toma* 1997 - 0 0 0 0
Assoc. V.P. 1996 - 0 0 0 0
(/TABLE)
* Indicates - Although many of the corporate officers have
entered into contractual agreements with the Company, certain of
the contract's provisions are contingent upon the acquisition of
substantial working capital by the Company. Accordingly,
certain of the officers do not devote their full-time to the
business of the Company.
** Indicates - Certain members of the Board of Directors who are
not officers of the Company receive a mutually agreeable amount
of restricted Rule 144 common stock of the Company for each
board meeting that they attend and are also periodically
reimbursed for the travel expenses incurred, if any, to attend
such meetings.
*** Indicates - The President and Chief Executive Officer has
waived his accumulated back salary of $3,095,000. Also, he has
agreed to waive his current salary indefinitely as long as the
Company does not have sufficient funds on hand. In return he
has agreed to also accept common stock, or preferred convertible
stock of the Company at $.10 per share equivalent or mutually
agreeable stock options in lieu of cash, at the Company's
discretion, except in the event of a merger or takeover of the
Company in which he descents.
ARRANGEMENTS WITH DIRECTORS
As indicated above, there are certain arrangements or
understandings regarding compensation for services provided by a
director including additional consideration payable for special
assignments. Each of the directors and/or executive officers of
the Company has an understanding with the Company regarding
compensation by the Company as an officer of the Company either
in terms of duties, which will be rendered on behalf of the
Company or in their capacity as an independent associate or as
an associate of one of the Company's wholly-owned subsidiaries.
The Company has evaluated the experience and reputation of its
directors and allocated compensation of common stock
accordingly. Executive officers of the Company maintain various
terms and conditions relative to compensation in their specific
employment contracts.
</TABLE>
<TABLE>
The following sets forth the security ownership of Management of
the Company and any holders of the Company's common stock known
to own 5% or more of the Company's issued and outstanding common
stock. (in alphabetical order)
<CAPTION>
AMOUNT & NATURE
TITLE NAME OF BENEFICIAL PERCENT
OF CLASS BENEFICIAL OWNERSHIP OWNERSHIP OF
CLASS
OFFICERS AND DIRECTORS
<S> <C> <C> <C>
Common James J. Aitken 200,000
.43%
Vice President, Fin. & Adm. Sole Ownership
Corporate Director Sole Voting Power
12199 55th Ave.
Remus, MI 48340
Common Charles C. Bailey 195,000
.40%
Chairman of the Board Sole Ownership
42 King Street Sole Voting Power
New York, NY 10014
Common Fred Baron 100,000
.22%
Corporate Director Sole Ownership
531 N. Lillian Way Sole Voting Power
Los Angeles, CA 90004
Common Brendan Cahill 250,000
.54%
Corporate Director Sole Ownership
1141 Marilyn Drive Sole Voting Power
Beverly Hills, CA 90210
Common Robert E. Capps, Jr. 350,000
.76%
Corporate Director Sole Ownership
c/o 2120 Main St., Suite 180 Sole Voting Power
Huntington Beach, CA 92648
Common Joseph Dyson 215,000
.47%
Corporate Director Sole Ownership
8720 Cliffridge Sole Voting Power
La Jolla, CA 92037
Common Larry Epstein, Esq. 601,667
1.25%
Secretary Sole Ownership
Corporate Director Sole Voting Power
11733 Baird Ave.
Northridge, CA 91326
Common John D. Foley 300,000
.65%
Corporate Director Sole Ownership
c/o 2120 Main St., Suite 180 Sole Voting Power
Huntington Beach, CA 92648
Common Paul D. Hancock 8,770,444 19.03%
President/C.E.O. Sole Ownership
Corporate Director Sole Voting Power
124 8th Street, #8
Huntington Beach, CA 92648
Common Peter Lallos 125,000
.27%
Corporate Director Sole Ownership
31 Woodfield Court Sole Voting Power
Laurel Hollow, NY 11791
Common Philip Langwald 500,000
1.08%
Chairman Emeritus/ Sole Ownership
Corporate Director Sole Voting Power
16032 Lemond Hills Trail #173
Del Ray Beach, FL 33446
Preferred Philip Langwald 2,500
Chairman Emeritus/ Sole Ownership
Corporate Director Sole Voting Power
16032 Lemond Hills Trail #173
Del Ray Beach, FL 33446
Common John Levingston 15,000
.03%
Vice President, Marketing Sole Ownership
& Distribution Sole Voting Power
13642 Havenwood Drive
Garden Grove, CA 92643
Common George T. Lindsey 692,750
1.50%
Vice President, Creative Sole Ownership
Development/Corporate Director Sole Voting Power
10412 Pacific St., #106
Omaha, NE 68114
Common Michael Maghini 283,750
.55%
Associate Vice President, Finance Sole Ownership
48 Stonewall Lane Sole Voting Power
Madison, CT 06443-2248
Common Charles Newirth 125,000
.27%
Corporate Director Sole Ownership
c/o 2120 Main St., Suite 180 Sole Voting Power
Huntington Beach, CA 92648
Common Brian J. Patnoe 932,202
2.02%
Associate Vice President, Sole Ownership
Administration Sole Voting Power
12553 Wedgewood Circle
Tustin, CA 92780
Preferred Brian J. Patnoe 55,000
2.02%
Associate Vice President,
Administration
12553 Wedgewood Circle
Tustin, CA 92780
Common A. Robert Sobolik 202,000
.44%
Executive Vice President/Treasurer Sole Ownership
Corporate Director Sole Voting Power
11453 Tortuga St.
Cypress, CA 90630
Common LeRoy J. Steele 50,000
.11%
Corporate Director Sole Ownership
1977 Gramercy Place Sole Voting Power
Los Angeles, CA 90068
Common David A. Toma 125,000
.27%
Associate Vice President, Production Sole
Ownership
21000 Burton Street Sole Voting Power
Canoga, CA 91304
Common Alex Trebek 350,000
.76%
Corporate Director Sole Ownership
c/o 2120 Main St., Suite 180 Sole Voting Power
Huntington Beach, CA 92648
Common Benjamin Whitfield, Jr., Esq. 78,000
.17%
Corporate Director Sole Ownership
9000 E. Jefferson, Apt. 14-3 Sole Voting Power
Detroit, MI 48214
Common John R. Woodward 175,071
.38%
Vice President, Film Production Sole Ownership
Corporate Director Sole Voting Power
850 Alabama Dr., Rte. 2
Lone Pine, CA 93545
OFFICERS & DIRECTORS AS A GROUP 15,110,884
32.71%
<CAPTION>
OWNERS OF 5% OR MORE OF THE COMPANY'S COMMON EQUITY
<S> <C> <C> <C>
Common Paul D. Hancock 8,770,444 19.03%
President/C.E.O. Sole Ownership
Corporate Director Sole Voting Power
124 8th St., #8
Huntington Beach, CA 92648
Common Richard D. McLellan, Esq. 2,559,164 7.72%
c/o 2120 Main St., Suite 180 Sole Ownership
Huntington Beach, CA 92648 Sole Voting Power
Common Gordon Estate 2,658,097 5.77%
c/o 2120 Main St., Suite 180 Sole Ownership
Huntington Beach, CA 92648 Sole Voting Power
</TABLE>
The foregoing totals are based upon Forty Seven Million Six
Hundred Twenty Nine Thousand and Five Hundred and Ninety Two
(47,629,592) common shares of the Company issued and outstanding
stock as of December 31, 1998.
To the best knowledge and belief of the Company, there are no
arrangements, understandings, or agreements relative to the
disposition of the Company's securities, the operation of which
would at a subsequent date result in a change in control of the
Company.
Item 12. Certain Relationships and Related Transactions.
As of this filing, there have been and are presently no
transactions to which the Company was or is to be a party in
which any of the directors, executive officers or immediate
family members thereof have been a party to. It is
contemplated, however, that in certain instances directors,
executive officers, or immediate family members thereof will be
a party to future transactions.
Item 13. Exhibits and Reports on Form 8-K.
N/A
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereto duly authorized.
WORLD WIDE MOTION PICTURES CORPORATION
September 24, 1999 /s/ A. Robert Sobolik
A. Robert Sobolik
Executive Vice President/Treasurer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
[TEXT]
<ARTICLE> 5
<LEGEND>
Exhibit 27
Financial Data Schedule
"This schedule contains summary financial information extracted
from December 31, 1998 10KSB and is qualified in its entirety by
reference to such financial statements."
</LEGEND>
<S> <C>
<PERIOD-START> JAN-01-1998
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 28,726
<SECURITIES> 0
<RECEIVABLES> 178,382
<ALLOWANCES> 0
<INVENTORY> 10,798,804
<CURRENT-ASSETS> 0
<PP&E> 49,937
<DEPRECIATION> (1,248,664)
<TOTAL-ASSETS> 9,805,185
<CURRENT-LIABILITIES> 0
<BONDS> 16,300
0
1,212
<COMMON> 47,629
<OTHER-SE> 9,586,657
<TOTAL-LIABILITY-AND-EQUITY> 9,805,185
<SALES> 0
<TOTAL-REVENUES> 28,772
<CGS> 0
<TOTAL-COSTS> 291,747
<OTHER-EXPENSES> 3,868,380
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (4,131,355)
<INCOME-TAX> 0
<INCOME-CONTINUING> (262,975)
<DISCONTINUED> 0
<EXTRAORDINARY> (3,868,380)
<CHANGES> 0
<NET-INCOME> (4,131,355)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
