U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
JUNE 30, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-27454
-----
WORLD WIDE MOTION PICTURES CORPORATION
(Name of small business issuer in its charter)
MICHIGAN 33-0081215
(State or other jurisdiction (I.R.S. Employer
incorporation or organization) Identification No.)
2120 MAIN STREET, SUITE 180, HUNTINGTON BEACH, CA 92648
(Address of principal executive offices) (Zip Code)
(714) 960-7264
(Issuer's telephone number)
Indicate by check mark whether the registrant (1) filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the past 12 months (or for
such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes [x] No [ ]
Indicate the number of shares outstanding of each of the
Issuer's classes of common stock as of the latest practical date:
48,012,890 shares of Common Stock (par value $.001 per share)
outstanding on July 1, 1999.
Part I. Financial Information
Item 1. Financial Statements
<TABLE>
Consolidated Balance Sheets
<CAPTION>
WORLD WIDE MOTION PICTURES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, Dec 31,
1999 1998
--------- --------
(Unaudited) (Audited)
Assets
<S> <C> <C>
Cash $24,179 $28,726
Accounts receivable 56,752 28,382
Note receivable 150,000 150,000
Work in process 438,606 438,606
Completed motion pictures/Television productions 12,491,11112,491,111
Film properties (screenplays/teleplays) 1,680,967 1,680,967
Property and equipment 49,937 49,937
Other assets 54,500 54,500
Less accumulated depreciation (1,480,493) (1,480,493)
Total Assets $13,465,559 $13,441,736
Liabilities
Accounts payable 18,511 3,246
Common stock payable 11 61
Preferred stock payable 80 80
Notes payable 16,300 16,300
Deferred credit to production costs 150,000 150,000
Total Liabilities 184,902 169,687
Stockholders' Equity
Common Stock $.001 Par Value,
100,000,000 shares authorized
48,012,890 and 47,882,890 shares issued 48,013 47,629
Preferred Stock $.01 Par Value, 1,100,000
shares authorized, 121,217 issued 1,212 1,212
Additional paid-in capital 14,868,058 14,835,152
Retained-earnings deficit (1,636,626) (1,611,944)
Total Stockholders' Equity 13,280,657 13,272,049
Total Liabilities and Stockholder's Equity $13,465,559$13,441,736
<FN>
<F1>
The accompanying 1998 yearend notes are an integral part of these
financial statements.
</FN>
</TABLE>
<TABLE>
Consolidated Statements of Income
<CAPTION>
WORLD WIDE MOTION PICTURES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended
June 30,
-------------------
1999 1998
---- ----
<S> <C> <C>
Revenues $ 0 $ 0
Operating expenses:
Administrative 6,852 4,526
Depreciation (allocated annually) - -
Total operating expense 6,852 4,526
Net income (loss) $(6,852)$(4,526)
Earnings available to common stockholders $0 $0
Earnings per common share, assuming full dilution $0 $0
<FN>
<F1>
The accompanying 1998 yearend notes are an integral part of these
financial statements.
</FN>
</TABLE>
<TABLE>
Consolidated Statement of Cash Flows
<CAPTION>
WORLD WIDE MOTION PICTURES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
Three months ended
June 30,
-------------------
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net Income (loss) $(6,852)$(4,526)
Adjustments to reconcile net income (loss) to
net cash provided by or used in operating activities:
Depreciation - allocated annually
Changes in assets and liabilities:
(Increase) Decrease in accounts receivable $ 0$(1,000)
Increase (Decrease) in accounts payable 265 $(393)
Net cash provided by (used in) operating
activities: 265 $(1,393)
Investing activities:
Investment work-in-process 0 0
Net cash used in investing activities: 0 0
Financing activities:
Proceeds from issuance of stock 6,500 7,000
Net cash provided by financing activities:6,500 7,000
Net increase/decrease in cash (87) $1,082
Cash balance - beginning of quarter 24,266 23,877
Cash balance - end of quarter $ 24,179$ 24,959
<FN>
<F1>
The accompanying 1998 yearend notes are an integral part of these
financial statements.
<F2>
During the second quarter ending June 30, 1999, 130,000 common
shares and 0 preferred shares were issued for product and
services provided by or provided to the Company.
</FN>
</TABLE>
<TABLE>
Consolidated Statement of Stockholder's Equity
<CAPTION>
WORLD WIDE MOTION PICTURES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
DECEMBER 31, 1998 THROUGH END OF QUARTER JUNE 30, 1999
(unaudited)
Number of
Outstanding Additional Retained
Shares Par Paid-In Earnings
Common Preferred Amount Capital (Deficit) Total
-------- ----- --- ----------- --------- -----
<S> <C> <C> <C> <C> <C> <C>
Balances
Dec. 31,
1998 47,629,290 121,217 48,84114,835,152$(1,611,944)$13,272,049
Balances,
March 31,
1999 47,882,890 121,217$49,09514,861,638$(1,629,774)$13,280,959
Shares
issued 130,000 0 130 6,420 6,550
Net loss 6,852 (6,852)
Balances,
June 30,
1999 48,013,890 121,217 49,22514,868,058$(1,636,626) 13,280,657
<FN>
<F1>
The accompanying 1998 yearend notes are an integral part of these
financial statements.
<F2>
</TABLE>
REED & TAYLOR
CERTIFIED PUBLIC ACCOUNTANTS
PROFESSIONAL CORPORATION
561 E. JEFFERSON AVE.
DETROIT, MI 48226-4324
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.
Reed & Taylor, CPAs, P.C.
Detroit, Michigan
April 12, 1999
WORLD WIDE MOTION PICTURES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(To be read in conjunction with Consolidated Financial
Statements for the year 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. 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 ($12,491,111) of the assets is represented by the
Net Realizable Value (prior to depreciation) 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. Also, a depreciation policy has been adopted to
amortize the film and television inventory over a 10-year
period. The Company has instituted a 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 2.Management's Discussion and Analysis or Plan of Operation
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. 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. The generation of
revenue in the motion picture and television industry is highly
competitive and may have a material impact on the Company's
financial statements. Management believes that a film or
television production's economic success is dependent upon
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 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), home
video 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 disk
recorders 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
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. In fiscal
1997 and 1998 the Company continued its involvement in a variety of
feature 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. 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, during the second quarter ending June 30,
1998, the Company issued 130,000 shares of common stock and 0
shares of preferred stock for cash and 36,430 shares of common
stock and 0 shares of preferred stock for product and services
provided by or provided to the Company. During the second quarter
ending June 30, 1999, the Company issued 130,000 shares of common
stock and 0 shares of preferred stock for cash and 0 shares of
common stock and 0 shares of preferred stock for product and
services provided by or provided to the Company. Further, in 1994,
the Company entered into a loan agreement with Huntington National
Bank whereby the Company obtained a letter of credit in the
aggregate maximum amount of $50,000. The letter of credit was for
a period of 12 months and the agreement expired in February, 1995.
The Company did not find it necessary to borrow under that
agreement. This credit arrangement remains available to the
registrant under the same above terms and conditions. The Company
uses its primary business loan ($50,000) line of credit provided by
Wells Fargo Bank for current cash flow needs and occasionally its
credit lines at other financial institutions, and with its
suppliers.
The Company's principal liquidity at June 30, 1998 included cash of
$24,959 and net accounts receivable of $25,706 and at June 30, 1999
included cash of $24,179 and net accounts receivable of $56,752.
The Company's liquidity position has remained sufficient enough 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 two television projects. Although the
Company during 1997 and 1998 experienced revenue, 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
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 the same. In the event a loan is
obtained, one of the terms may provide that the same 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 film, television
library, participations in completed films, and the continued
development, production and marketing/distribution of new film and
television production opportunities.
RESULTS OF OPERATIONS
The Company has presented a consolidated balance sheet which
includes three active wholly-owned subsidiaries: World Wide Films
Inc., World Wide Productions Inc., and World Wide Film & Television
Institute. 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 make profits for the corporation in a diversified industry, the
Company shall investigate and pursue such opportunities.
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 and television
productions. The strategy additionally includes the acquisition of
screenplays and teleplays suitable for development 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. (2) In 1998, development and production of
the television production entitled CLASSIC CAR, in association with
SLIM, Inc.
Other arrangements include marketing and distribution of a feature
length film acquired by the Company entitled CITIZEN SOLDIER
originally produced by M&D Productions, 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. and providing 5% gross revenue co-production
participation to the Company in perpetuity. Additionally in 1995,
the Company licensed to Media One Broadcasting 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. 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. (50%); and the feature length film entitled ALONG FOR
THE RIDE offered by production company Wittman Productions Inc.
(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.
Relative to the Company's completely diversified subsidiary
activity in health care, the federal government has temporarily
placed a moratorium on certain businesses in the home health care
industry which will adversely effect the Company's projected
revenues of this subsidiary, World Wide Medical Services Ltd.
Part II. Other Information
Item 1. Legal Proceedings
INVOLVEMENT IN CERTAIN 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 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
N/A
Item 4. Submission of Matters to a Vote of Security Holders
N/A
Item 5. Other Information
N/A
Item 6. Exhibits and Reports on Form 8-K
N/A
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- --------- -----------
27.1 Financial Data Schedule
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
August 25, 1999 /s/ A. Robert Sobolik
A. Robert Sobolik
Executive Vice President/Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Exhibit 27
Financial Data Schedule
"This schedule contains summary financial information extracted
from June 30, 1999 10QSB and is qualified in its entirety by
reference to such financial statements."
</LEGEND>
<S> <C>
<PERIOD-START> APR-01-1999
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1999
<CASH> 24,179
<SECURITIES> 0
<RECEIVABLES> 56,752
<ALLOWANCES> 0
<INVENTORY> 14,276,515
<CURRENT-ASSETS> 80,931
<PP&E> 49,937
<DEPRECIATION> (1,480,493)
<TOTAL-ASSETS> 13,465,559
<CURRENT-LIABILITIES> 18,602
<BONDS> 16,300
0
1,212
<COMMON> 48013
<OTHER-SE> 13,223,208
<TOTAL-LIABILITY-AND-EQUITY> 13,465,559
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 6,852
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (6,852)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,852)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,852)
<EPS-BASIC> .000
<EPS-DILUTED> .000
</TABLE>
