SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only (as permitted by
Rule 14a-6(e) (2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
WORLD WIDE MOTION PICTURES CORPORATION
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement is other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
purusant to Exchange Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Fom or Schedule and the
date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
WORLD WIDE MOTION PICTURES CORPORATION
EXECUTIVE OFFICES
2120 MAIN STREET, SUITE 180
HUNTINGTON BEACH, CA 92648
Notice of Special Meeting of Stockholders
to be held August 31, 1999
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that a special Meeting of Stockholders of
World Wide Motion Pictures Corporation, a Michigan corporation (the
Company) will be held at the law offices of Dykema Gossett, 800
Michigan National Tower, Lansing, Michigan, on Tuesday, August 31,
1999 at 3:00 in the afternoon, Eastern Standard Time, for the
following purposes:
1) To approve an amendment to the Company's articles and bylaws
and restated certificate of incorporation for the purpose of
effecting a stock combination (reverse stock split) pursuant to
which the Company's outstanding shares of Common Stock class of
securities would be exchanged for new shares of Common Stock in an
exchange ratio to be approved by the Board of Directors, ranging
from one newly issued share for each five outstanding shares to one
newly issued share for each twenty outstanding shares.
2) To transact such other business as may properly come before
the Annual Meeting or any adjournment or postponements thereof.
The presence, in person or by proxy, of the holders of a majority
of the votes entitled to be cast at the special Meeting is
necessary to constitute a quorum.
In accordance with the Company's special Meeting voting practices,
all stockholder proxies, ballots and voting materials will be
inspected and tabulated by independent inspectors of election
present at the special Meeting.
The Board of Directors has fixed the close of business on the 20th
day of August, 1999, as the record date for the determination of
stockholders entitled to vote at the special Meeting or any
adjournments or postponements thereof, and accordingly, only
stockholders of record of common stock at the close of business on
such date will be entitled to vote at said meeting.
By Order of the Board of Directors,
Larry Epstein, Esq., Secretary
Huntington Beach, California
August 14, 1999
NOTE: THE SPECIAL MEETING OF SHAREHOLDERS WILL START PROMPTLY AT
3:00 P.M. IN THE AFTERNOON, EASTERN STANDARD TIME AND ALL
SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING. TO AVOID
DISRUPTION, ADMISSION MAY BE LIMITED ONCE THE MEETING STARTS.
PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT TO THE
COMPANY WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING. ANY
RECORD HOLDER WHO IS PRESENT AT THE MEETING MAY VOTE IN PERSON
INSTEAD OF BY PROXY, THEREBY CANCELLING ANY PREVIOUS PROXY. YOU
MAY NOT APPOINT MORE THAN THREE PERSONS TO ACT AS YOUR PROXY AT THE
MEETING.
_________________________________________________________________
WORLD WIDE MOTION PICTURES CORPORATION
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS AUGUST 31, 1999
This Proxy is Solicited on Behalf of Management of
World Wide Motion Pictures Corporation and Will Be Voted
The undersigned hereby appoints Richard D. McLellan, Esq.,
Benjamin Whitfield, Jr., Esq., and Marilyn Richards or any one or
more of them acting in the absence of the others, as attorneys and
proxies of the undersigned, with full power of substitution, for
and in the name of the undersigned, to represent the undersigned at
the Special Meeting of the Shareholders of World Wide Motion
Pictures Corporation, a public Michigan corporation, to be held at
the law offices of Dykema Gossett, 800 Michigan National Tower,
Lansing, Michigan, at 3:00 P.M. Eastern Standard Time, August 31,
1999, and at any adjournment or adjournments thereof, and to vote
all shares of stock of said Corporation standing in the name of the
undersigned, with all the powers the undersigned would possess if
personally present at such meeting:
1. To approve an amendment to the Company's articles and
bylaws and restated certificate of incorporation for the purpose of
effecting a stock combination (reverse stock split) pursuant to
which the Company's outstanding shares of Common Stock class of
securities would be exchanged for new shares of Common Stock in an
exchange ratio to be approved by the Board of Directors, ranging
from one newly issued share for each ten outstanding shares to one
newly issued share for each twenty outstanding shares.
FOR ________ AGAINST ________ ABSTAIN ________
2. In their discretion on such other matters as may properly
come before the Special Meeting and any adjournments thereof, in
their discretion the proxies are authorized to vote upon such other
business as may properly come before the Special Meeting and any
adjournments or postponements thereof.
Management and the Board of Directors recommend a vote FOR
approval of the proposed Restructuring of the common stock class of
securities of the Company.
This Proxy, when properly executed, will be voted in the
manner directed herein but, where no direction is given, this Proxy
will be voted FOR approval of the Restructuring of the common stock
class of securities of the Company in item 1.
The undersigned hereby acknowledges receipt of (i) the
Notice of Special Meeting dated August 31, 1999, and (ii) the
proxy statement dated August 14, 1999.
PLEASE DATE AND SIGN HERE:
Signature (s) ___________________________________________________
________________________________________________________________
Note: Please sign exactly as name appears hereon. Date
Joint owners should each sign.
When signing as attorney,
executor, officer, administrator,
guardian or trustee, please give
full title as such. A Proxy
executed by a corporation should be
signed in its corporate name by an
authorized officer.
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY TO:
World Wide Motion Pictures Corporation
Executive Offices
2120 Main Street, Suite 180
Huntington Beach, CA 92648
Attn: Larry Epstein, Esq., Secretary
Please check here if you plan to attend the meeting. [ ]
WORLD WIDE MOTION PICTURES CORPORATION
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 31, 1999
- -----------------------------------------------
PROXY STATEMENT
- -----------------------------------------------
The enclosed Proxy is solicited by the Board of Directors of World
Wide Motion Pictures Corporation (the "Company"), a Michigan
corporation, for the purposes set forth in the accompanying Notice
of Special Meeting of Shareholders and use at the Special Meeting
of Shareholders to be held at the Law Offices of Dykema Gossett,
800 Michigan National Tower, Lansing, Michigan on August 31, 1999
at 3:00 p.m. Eastern Standard Time or at any adjournment or
adjournments thereof. This solicitation is being made by mail and
electronic transmission. The Company may also use its officers and
regular employees to solicit proxies from shareholders either in
person or by telephone, telegraph or letter without additional
compensation. The Company will pay the entire cost of
solicitation, which represents the amounts normally expended for
solicitation relating to an uncontested election of directors.
Such costs include charges from brokers and other custodians,
nominees and fiduciaries for distributing proxies and other proxy
materials to the beneficial owners of the common stock class of
securities of the Company (the "Common Stock").
The Common Stock of the Company is the only outstanding class of
voting securities. Each shareholder of record at the close of
business on August 20, 1999 (the 'record date') is entitled to vote
at the meeting. As of the close of business on the record date,
the Company had 48,112,890 shares outstanding. Each share is
entitled to one vote on each of the matters to come before the
meeting and is not entitled to cumulative voting rights. A majority
of the oustanding shares of the Common Stock of the Company will
constitute a quorum for the meeting.
The execution of a Proxy will in no way effect a shareholder's
right to attend the Special Meeting of shareholders and vote in
person. Any proxy may be revoked at any time before it is voted by
(i) filing with the Secretary of the Company, at or before the
taking of the vote at the Special Meeting, a written notice of
revocation or a duly executed proxy, in either case later dated
than the prior proxy relating to the same shares or (ii) attending
the Special Meeting and voting in person (although attendance at
the Special Meeting will not of itself revoke a proxy). Any
written notice of revocation or subsequent proxy should be sent so
as to be delivered to World Wide Motion Pictures Corporation,
Executive Offices, 2120 Main Street, Suite 180, Huntington Beach,
California, 92648, Attention: Secretary, or hand delivered to the
Secretary or presiding officer, before the taking of the vote at
the Special Meeting.
Proxies returned to the Company and properly executed will be voted
in accordance with shareholders' instructions. Shareholders are
urged to specify their choices by marking the enclosed Proxy. Any
Proxy which is not revoked and which does not otherwise indicate a
preference will be voted in favor of the stock combination
restructuring (reverse stock split) of the Company's common stock
class of securities. The Proxies also give the Board of Directors
discretionary authority to vote the shares represented thereby on
any matter which was not known on the date of this Proxy Statement
but may properly be presented for action at the meeting. If any
other matters are properly presented at the special meeting for
consideration, the persons named in the enclosed form of Proxy will
have discretion to vote on those matters in accordance with their
own judgment to the same extent as the person signing the Proxy
would be entitled to vote.
The affirmative vote of a simple majority of the votes duly cast by
the holders of the Common Stock of the Company is required to
approve the stock combination restructuring (reverse stock split)
of the Company's Common Stock and other matters to be acted upon at
the Special Meeting.
An abstention is deemed 'present' but is not deemed a 'vote cast.'
As a result, abstentions and broker 'non-votes' are not included in
the tabulation of the voting results on the approval of a majoriy
of the votes cast and, therefore, do not have the effect of votes
in opposition. A broker 'non-vote' occurs when a nominee holding
shares for a beneficial owner does not vote on a particular
proposal because the nominee does not have discretionary voting
power on that item and has not received instructions from the
beneficial owner. Broker 'non-votes' and the shares as to which a
shareholder abstains are included in determining whether a quorum
is present.
In accordance with the Company's bylaws, the Special Meeting may be
adjourned or postponed, including by the Chairman, in order to
permit the solicitation of additional Proxies.
BUSINESS AT THE SPECIAL MEETING
At the special meeting, the Company's shareholders will consider
and vote upon the following matters:
To propose an amendment to the Company's Articles of Incorporation
and restated Certificate of Incorporation to effect a stock
combination restructuring (reverse stock split) of the Company's
common stock class of securities pursuant to which the Company's
outstanding shares of the Common Stock would be exchanged for new
shares of the Common Stock in an exchange ratio to be approved by
the Board of Directors, ranging from one newly issued share for
each five outstanding shares to one newly issued share for each
twenty outstanding shares (the 'reverse split proposal')(see
"Purposes of Reverse Split" below), and
To transact such other business as may properly come before the
special meeting and any adjournments or postponements thereof.
Unless contrary instructions are indicated on the enclosed Proxy,
all shares represented by valid proxies received pursuant to this
solicitation (and which have not been revoked in accordance with
the procedures set forth in this Proxy Statement) will be voted in
favor of each of the following:
- - approval of the stock combination restructuring reverse stock
split proposal.
- - such other business as may properly come before the special
meeting and any adjournments or postponements thereof.
In the event a shareholder specifies a different choice by means of
the enclosed Proxy, his or her shares will be voted in accordance
with the specifications so made.
Proposal To Amend Articles of Incorporation and Restated
Certificate Of Incorporation
On September 24, 1998, the Company's Board of Directors adopted
resolutions, ("(a) to amend Article 3 of the Articles of
Incorporation to add Section (12) "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 to restate the company's certificate of
incorporation") subject to approval by the Company's shareholders,
to 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 (the "Reverse Split"), and
(ii) to provide for the payment of cash in lieu of fractional
shares otherwise issuable in connection therewith. The Reverse
Split will not change the number of the Company's authorized shares
of Common Stock or the par value of the Common Stock.
If the Reverse Split is approved, the Company's Board of Directors
will have authority, without further shareholder approval, to
effect the Reverse Split pursuant to which the Company's
outstanding shares (the "Old Shares") of Common Stock would be
exchanged for new shares (the "New Shares") of Common Stock in an
exchange ratio to be approved by the Board of Directors, ranging
from one New Share for each five Old Shares to one New Share for
each twenty Old Shares. The number of Old Shares for which each
New Share is to be exchanged is referred to as the "Exchange
Number." The Exchange Number may, within such range, be a whole
number or a whole number and fraction of a whole number. The
Reverse Split will be effected simultaneously for all outstanding
Common Stock of the Company and the Exchange Number will be the
same for all outstanding Common Stock of the Company.
In addition, the Company's Board of Directors will have the
authority to determine the exact timing of the effective date of
the Reverse Split, which may be any time prior to December 31,
1999, without further shareholder approval. Such timing and
Exchange Number will be determined in the judgment of the Board of
Directors, with the intention of maximizing the Company's ability
to be in compliance with the listing and maintenance requirements
of various and appropriate national, international and/or regional
stock exchanges and other intended benefits of the Reverse Split to
shareholders and the Compay. See "Purpose of the Reverse Split,"
below.
The Board of Directors also reserves the right, notwithstanding
shareholder approval and without further action by shareholders, to
not proceed with the Reverse Split, if, at any time prior to filing
the Amendment with the Securities Bureau of the State of Michigan,
the Board of Directors, in its sole discretion, determines that the
Reverse Split is no longer in the best interests of the Company and
its shareholders. The Board of Directors may consider a variety of
factors in determining whether or not to implement the Reverse
Split and in determining the Exchange Number including, but not
limited to, overall trends in the stock market, future changes and
anticipated trends in the per share market price of the Company's
Common Stock, business and transactional developments, and the
Company's actual and projected financial performance.
The Reverse Split will not change the proportionate equity
interests of the Company's shareholders, nor will the respective
voting rights and other rights of shareholders be altered, except
for possible immaterial changes due to the Company's purchase of
fractional shares. The Common Stock of the Company which is issued
pursuant to the Reverse Split will remain fully paid and
non-assessable. The Company will continue to be subject to the
reporting requirements of the Securities Exchange Act of 1934.
Purposes Of The Reverse Split
The purpose for the stock combination restructuring (reverse stock
split) of the Common Stock of the Company is to reduce the number
of issued and outstanding shares presently in the hands of security
holders, and thereby create a more manageable and effective
financial infrastructure of the Company. The proposed stock
combination restructuring (reverse stock split) of shareholders
Common Stock of the Company, Item 1 on the Proxy (for example if
effected at a 10:1 ratio) will result in a reduction of the issued
and outstanding shares of Common Stock of the Company to 4,788,289
shares with a par value of .01 per share (present issued and
outstanding number of shares of Common Stock of the Company are
47,882,890, with a par value of .001 per share). Total book value
does not change, however the per share value changes. The per
share book value will be greater than the per share book value
prior to the stock combination restructuring (reverse stock split)
of common stock. The Board of Directors believes that there will be
no material differences concerning operations of the Company that
will result from the stock combination restructuring of the Common
Stock of the Company as described herein. There will be no arrears
in dividends or as to defaults in principal or interest in respect
to the outstanding securities which are to be exchanged.
Upon effectiveness of the Reverse Split, it is the Board of
Director's intention that the Common Stock of the Company apply for
quotation on Nasdaq's National Market System (Nasdaq/NMS) and/or
other national, international and/or regional exchanges such as the
American Stock Exchange, Boston Stock Exchange, Philadelphia Stock
Exchange, and Pacific Stock Exchange. In order for the Common
Stock of the Company to be quoted on Nasdaq and/or other national,
international and/or regional exchanges, the Company and its Common
Stock are required to comply with various listing and maintenance
standards established by the exchanges.
Furthermore, the Company believes that listing on Nasdaq/NMS and/or
other national, international and/or regional exchanges such as the
American Stock Exchange, Boston Stock Exchange, Philadelphia Stock
Exchange, and Pacific Stock Exchange, may provide the Company with
a broader market for its Common Stock and more greatly facilitate
the use of the Common Stock in acquisitions and financing
transactions in which the Company may engage. There can be no
assurance that, even after effectuating the Reverse Split, the
Company will meet and maintain the minimum bid price and otherwise
meet any other of the requirements of various exchanges for
continued inclusion for trading on the exchanges.
<TABLE>
Certain Effects Of The Reverse Split
<CAPTION>
The following tables illustrate the principal effects of the
Reverse Split on the Company's Common Stock:
After 1-for-5 After 1-for-10 After 1-for-15 After 1-for-20
Reverse Stock Reverse Stock Reverse Stock Reverse Stock
Split Split Split Split
<S> <C> <C> <C>
Number of Shares
Common Stock:
Authorized
100,000,000 100,000,000 100,000,000 100,000,000
Outstanding (1)
9,576,578 4,788,289 3,591,216 2,394,144
Available for
Future Issuance (2)
90,423,422 95,211,711 96,408,784 97,605,856
Financial Data: (3)
Stockholder's Equity:
Common Stock
$95,766 47,883 35,912 23,941
Additional Paid-in Capital
$14,861,638 14,861,638 14,861,638 14,861,638
Accumulated Deficit
$1,479,774 $1,479,774 1,479,774 1,479,774
Total Stockholder's Equity
$13,430,959 $13,430,959 13,430,959 13,430,959
<FN>
<F1>
Gives effect to the Reverse Split as if it occurred on the Record
Date, subject to adjustment resulting from the repurchase of
fractional shares.
Upon effectiveness of the Reverse Split, each option right would
entitle the holder to acquire a number of shares equal to the
number of shares which the holder was entitled to acquire prior to
the Reverse Split multiplied by the Exchange Number.
<F2>
Upon effectiveness of the Reverse Split, the number of authorized
shares of Common Stock that are not issued or outstanding would
increase depending on the Exchange Number, as reflected in this
table. Although this increase could, under certain circumstances,
have an anti-takeover effect (for example, by permitting issuances
which would dilute the stock ownership of a person seeking to
effect a change in the composition of the Board of Directors or
contemplating a tender offer or other transaction for the
combination of the Company with another company), the Reverse Split
Proposal is not being proposed in response to any effort of which
the Company is aware to accumulate the Company's shares of Common
Stock or obtain control of the Company, nor is it part of a plan by
management to recommend a series of similar amendments to the Board
of Directors and shareholders. Other than the Reverse Split
Proposal, the Board of Directors does not currently contemplate
recommending the adoption of any other amendments to the Company's
Certificate of Incorporation and Articles of Incorporation that
could be construed to affect the ability of third parties to take
over or change control of the Company.
<F3>
Balance sheet data gives effect to the Reverse Split as if it
occurred on March 31, 1999, subject to adjustment resulting from
the repurchase of fractional shares, exercise of stock options or
issuance of Rule 144, Regulation D stock.
</FN>
</TABLE>
Shareholders should recognize that if the Reverse Split is
effectuated they will own a fewer number of shares than they
presently own (a number equal to the number of shares owned
immediately prior to the filing of the Amendment divided by the
Exchange Number) but that the total value, minus any cash buyout
for fractional shares, will be equal to the total value prior to
the Reverse Split. While the Company expects that the Reverse
Split will result in an increase in the market price of the Common
Stock, there can be no assurance that the Reverse Split will
increase the market price of the Common Stock by a multiple equal
to the Exchange Number or result in the permanent increase in the
market price (which is dependent upon many factors, including the
Company's performance and prospects). Also, should the market
price of the Company's Common Stock decline, the percentage decline
may be greater than would pertain in the absence of a Reverse
Split. Furthermore, the possibility exists that liquidity in the
market price of the Common Stock could be adversely affected by the
reduced number of shares that would be outstanding after the
Reverse Split. In addition, the Reverse Split will increase the
number of shareholders of the Company who own odd lots (less than
100 shares). Shareholders who hold odd lots typically will
experience an increase in the cost of selling their shares, as well
as greater difficulty in effecting such sales. Consequently, there
can be no assurance that the Reverse Split will achieve the desired
results that have been outlined above.
Procedure For Effecting Reverse Split And Exchange Number
If the Amendment is approved by the Company's shareholders, and if
the Board of Directors still believes that the Reverse Split is in
the best interests of the Company and its shareholders, the Company
will file the Amendment with the Securities Bureau of the State of
Michigan at such time as the Board of Directors has determined the
appropriate Exchange Number and the appropriate effective time for
such split. The Board of Directors may delay effecting the Reverse
Split until December 31, 1999 without re-soliciting such
shareholder approval. The Reverse Split will become effective on
the date of filing the Amendment (the "Effective Date"). Beginning
on the Effective Date, each certificate representing Old Shares
will be deemed for all corporate purposes to evidence ownership of
New Shares; therefore, it will not be necessary to forward a
certificate representing the Old Shares to the Company for
replacement.
As soon as practicable after the Effective Date, shareholders will
be notified that the Reverse Split has been effected and of the
exact Exchange Number. Concurrently, with the calculation of the
Exchange Number, the Company will apply for the reissuance of a
separate and distinct CUSIP NO. from the NASD (National Association
of Securities Dealers) identifiying the Exchange Number and
issuable Common Stock of the Company. At the time of new CUSIP NO.
issuance, the Company's transfer agent and registrar will be
officially notified and supplied with a list of all of the
individual, recalculated holdings of each individual shareholder.
The Exchange Number sequence of events will help ensure accurate
and expedient transactions when altering a certificate(s) for any
reason.
Fractional Shares
No scrip or fractional certificates will be issued in connection
with the Reverse Split. Shareholders who otherwise would be
entitled to receive fractional shares because they hold a number of
Old Shares not evenly divisible by the Exchange Number, will be
entitled to a cash payment in lieu thereof at a price equal to the
fraction to which the shareholder would otherwise be entitled
multiplied by the closing price of the Common Stock on the last
trading day prior to the Effective Date (or if such price is not
available, the average of the last bid and ask prices of the Common
Stock on such day, book value or other price determined by the
Board of Directors). The ownership of a fractional interest will
not give the holder thereof any voting, dividend, or other rights
except to receive payment therefor as described herein. Checks
representing fractional share cash payments will be mailed to
shareholders at their address of record on the Effective Date.
Shareholders should be aware that, under the escheat laws of the
various jurisdictions where shareholders reside, where the Company
is domiciled, and where the funds will be deposited, sums due for
fractional interests that are not timely claimed after the
Effective Date may be escheated by the Company for each such
jurisdiction, unless correspondence has been received by the
Company concerning ownership of such funds within the time
permitted in such jurisdiction. Thereafter, shareholders otherwise
entitled to receive such funds will have to seek to obtain them
directly from the state to which they were paid.
Federal Income Tax Consequences Of The Reverse Split
The following is a summary of certain material federal income tax
consequences of the Reverse Split, and does not purport to be
complete. It does not discuss any state, local, foreign or minimum
income or other U.S. federal tax consequences. Also, it does not
address the tax consequences to holders that are subject to special
tax rules, such as banks, insurance companies, regulated investment
companies, personal holding companies, foreign entities,
nonresident alien individuals, broker-dealers and tax-exempt
entities. The discussion is based on the provisions of the United
States federal income tax law as of the date hereof, which is
subject to change retroactively as well as prospectively. This
summary also assumes that the Old Shares were, and the New Shares
will be, held as a "capital asset," as defined in the Internal
Revenue Code of 1986, as amended (generally, property held for
investment). The tax treatment of a shareholder may vary depending
upon the particular facts and circumstances of such shareholder.
EACH SHAREHOLDER SHOULD CONSULT WITH SUCH SHAREHOLDER'S OWN TAX
ADVISOR WITH RESPECT TO THE CONSEQUENCES OF THE REVERSE SPLIT. THE
FOLLOWING SUMMARY IS NOT TO BE CONSTRUED AS AN OPINION BY THE
COMPANY AS TO THE TAX CONSEQUENCES IF ANY FOR ANY INDIVIDUAL,
GROUP, OR ENTITY.
No gain or loss should be recognized by a shareholder of the
Company upon such shareholder's exchange of Old Shares pursuant to
the Reverse Split (except to the extent of any cash received in
lieu of a fraction of a New Share). Cash payments in lieu of a
fractional New Share should be treated as if the fractional share
were issued to the shareholder and then redeemed by the Company for
cash. A Company shareholder receiving such payment should
recognize gain or loss equal to the difference, if any, between the
amount of cash received and the shareholder's basis in the
fractional share (determined as provided below). Such gain or loss
will be capital gain or loss if the payment of cash in lieu of the
fractional share is a mere mechanical rounding off of fractions and
not separately bargained for consideration, and the payment is "not
essentially equivalent to a dividend" with respect to the
shareholder under the federal income tax law. For this purpose, a
payment is not essentially equivalent to a dividend if it results
in a 'meaningful reduction' in the shareholder's percentage
interest in the Company, taking into account the constructive
ownership rules and redemptions of fractional shares from all the
shareholders. The Internal Revenue Service has ruled publicly that
any reduction in the percentage interest of a small minority
shareholder in a publicly-held corporation who exercises no control
over corporate affairs should constitute a meaningful reduction.
The aggregate tax basis of the New Shares received in the Reverse
Split (including any fraction of a New Share deemed to have been
received) will be the same as the shareholder's aggregate tax basis
in the Old Shares exchanged therefor. The stockholer's holding
period for the New Shares will include the period during which the
shareholder held the Old Shares surrendered in the Reverse Split.
Shareholder Proposals
If a shareholder desires to submit a proposal for consideration at
the next Annual Shareholders Meeting and would like to have that
proposal submitted on the Company's proxy statement and form of
proxy, such proposal must be received by the Company no later than
November 20, 1999 or 120 days before mailing of the Proxy Statement
for the next Annual Shareholders Meeting, whichever is later. The
Company anticipates that it will hold its next Annual Shareholders
Meeting in April 8, 2000.
Vote Required and Recommendation
Management and the Board of Directors recommend a vote FOR approval
of the stock combination restructuring (reverse stock split) of the
Common Stock class of securities of the Company (Item 1 on the
proxy).
Miscellaneous Matters
As of the date of this Proxy Statement, the Board of Directors
knows of no other matters which may properly be, or are likely to
be, brought before the meeting. However, if any proper matters are
brought before the meeting, the person named in the enclosed Proxy
will vote them as the Board of Directors may recommend.
At the Special Meeting of Shareholders, in addition to the matters
described above, there will be an address by the Chairman of the
Board of Directors and/or President of the Company and a general
discussion period during which shareholders will have an
opportunity to ask questions about the business and operations of
the Company. Representatives of Reed & Taylor, P.C., the Company's
independent auditors, will be present at the Special Meeting and
will have the opportunity to make a statement if they so desire.
Those representatives are also expected to be available to respond
to appropriate questions.
All shareholders of record on August 20, 1999 are or upon request
will be provided a copy of the Company's 1998 Annual Report to
Shareholders (by U.S. mail or electronic forms of transmission)
which contains audited financial statements of the Company for the
fiscal year ended December 31, 1998 and/or a copy of the Company's
Annual Report on Form 10-KSB for 1998.
The mailing address of the Company's principal corporate office is
2120 Main Street, Suite 180, Huntington Beach, California 92648,
the telephone number is (714) 960-7264 and the facsimile number is
(714) 374-0452. The approximate date on which this Proxy Statement
and the enclosed Proxy are being mailed to shareholders is August
14, 1999.
By order of the Board of Directors
World Wide Motion Pictures Corporation
Executive Offices
2120 Main Street, Suite 180
Huntington Beach, CA 92648
/S/ Larry Epstein
Larry Epstein, Esq.
August 14, 1999
Secretary
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 12,491,111 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 (1,480,493) (1,016,660)
Total assets $13,441,736 $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
Total liabilities 19,687 22,507
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 14,835,152 14,350,994
Retained earnings deficit (1,461,944) (967,140)
Total Stockholders' Equity $13,422,049 $13,432,101
Total Liabilities and
Stockholders' Equity $13,441,736 $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 $ 28,772 287,837
Operating expenses:
Administrative 59,743 18,143
Provision for depreciation 463,833 434,004
Total operating expense 523,576 452,147
Net income (loss) (494,804) $(164,310)
Earnings available to common stockholders $0 $0
Earnings per common share, assuming
full dilution $0 $0
<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) $(494,804) $(164,310)
Adjustments to reconcile net income (loss) to net
cash provided by or used in operating activities:
Depreciation $463,833 434,004
Allocation of overhead to asset 29,650
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 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
Noncash investing and financing activities
Common and preferred stock
issued for services and product $26,800
<FN>
<F1>
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 14,350,994 (967,139) 13,432,101
Stock
issued 595,500 0 595 (484,158) 484,753
Net loss,
year
ended
Dec. 31,
1998 494,804 (494,804)
Balances,
Dec. 31,
1998 47,629,290 121,217 48,841 14,835,152 (1,461,944)
13,422,049
<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. 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 ($4,091,950) dollars
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.
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". 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 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 ($3,080,000) dollars. 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 ($269,191)
dollars (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 mend 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, LINE
OF CREDIT, PROMISSORY NOTE
The note holder holding the note payable in the amount of $16,300
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. 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 ($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 similar
quality securities and are valued at December 31, 1998 at two
hundred and fifty thousand dollars ($250,000) or greater.
NOTE 11 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.
