U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-KSB/A
(x) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period ended December 31, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-27454
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Part I
Item 1. Description of Business.
BUSINESS DEVELOPMENT
INCEPTION THROUGH DECEMBER 1998
World Wide Motion Pictures (a sole proprietorship)(the
"Predecessor") was founded in July of 1977, with the guidance and
consultation of well-known producer and director Otto Preminger,
under the name of World Wide Motion Pictures and later incorporated
under the laws of the state of Michigan on December 9, 1980 under
the name of World Wide Motion Pictures Corporation (the
"Predecessor") and has filed "annual reports" with the state of
Michigan securities bureau as required by Michigan law. The
Predecessor was formed for the purpose of financing, developing,
producing, purchasing and distributing filmed and taped motion
picture and television product for consumption by the general
public. In March of 1981 the Predecessor acquired G.L.
Productions, Inc. and all of its facilities, a Washington, D.C.
company. In November of 1983, the Predecessor, through a
reorganization agreement, merged with the National Power
Corporation (the "Company")(formerly Juggernaut Energy
Corporation), a Utah public corporation. National Power
Corporation's common stock was traded on the over-the-counter
market with registered broker-dealer firms making a market
nationally. Contemporaneously with the merger, the name of the
Company was changed to WWMP Inc. and subsequently changed to World
Wide Motion Pictures Corporation. At the time of this filing, the
Company has shareholders in 32 states and 7 foreign countries
including England, Japan, Singapore, Australia, Germany, Israel,
and Canada including the names of 15 broker-dealer firms holding
the Company's common securities.
The Predecessor formerly was, and currently the Company is,
organized to finance, develop, produce, purchase and
market/distribute a wide variety of motion picture and television
projects including feature films, short subjects, docudramas,
documentaries, industrial films, and television productions using
a formula of high technology, moderate budget, cost control, and
continual flow of product. The Company is engaged in and pursuing
diversified business enterprises with profit potential as
authorized by its charter and bylaws such as new and emerging media
technologies, educational seminars and health care services.
The Company has an active 18 member Board of Directors; Board
designated committees including Executive, Audit, Finance, and
Personnel; staff operating committees including Production and
Product Development, Standards, and Experimental projects; elected
officers, and an Advisory Board of Directors. Certain other
individuals who provide technical, theatrical, marketing, business,
and production services to the Company on a specific ongoing basis
have entered into contracts with the Company.
The following transactions represent certain events that have
transpired throughout the history of the Company's business that
resulted in major developments within the Company's current
corporate strategic plan and the specific developments regarding
the company's business in the last three years.
(bullet) CORPORATE ACQUISITION BY THE PREDECESSOR
In March of 1981, the Predecessor acquired G.L. Productions Inc.,
a Washington, D.C. company ("GLP") and all of its assets. GLP was
a production and distribution company producing and distributing
short subject, docudrama, documentary and industrial motion
pictures. Certain of GLP's productions were produced and
distributed in conjunction with the United States Government. The
Predecessor acquired GLP by the exchange of 12,469 then authorized
and previously unissued shares of the Predecessor which, upon
merger with the Company, became 2,012,814 shares of common stock of
the Company. These shares were issued to GLP's president and sole
owner, George T. Lindsey, for 1000 shares of GLP unregistered
common stock representing 100% of GLP's outstanding common stock.
Mr. Lindsey is currently a Vice President for the Company and is
entitled to a contractual sales commission of five (5%) percent of
any revenue of the product library of the Company that was owned by
GLP prior to its acquisition by the Predecessor from lease or sale
by him personally to third parties. (There have been no
commissions earned by Mr. Lindsey during the past three years.)
(bullet) THE NATIONAL POWER CORPORATION AGREEMENT AND PLAN OF
REORGANIZATION
On February 7, 1980, Juggernaut Energy Corporation was incorporated
under the laws of the state of Utah. In April of 1980, Juggernaut
Energy Corporation had prepared an offering circular for the
issuance of an initial public offering of up to 500,000 shares of
its common stock for the purpose of acquiring a maximum of $100,000
or minimum of $50,000 in working capital. The offering was
underwritten by First Equities Corp. of Salt Lake City, Utah, the
effective date of which was April 18, 1980. The stock offering
price was $.20 per share and the offering was closed upon the
acquisition of the minimum amount of expected proceeds. Combined
with the original incorporator's stock, immediately following the
close of the public offering, the Company's outstanding shares of
common stock totalled 1,350,000 (150,000 initially issued to
Officers, Directors and Founder of the corporation; 500,000 from
offering; 150,000 at par value $0.01 as partial consideration for
the assignment of interest in oil exploration; 550,000 for
$5,500.00 cash). On October 17, 1981, Juggernaut Energy
Corporation amended its Articles of Incorporation to effect a name
change to National Power Corporation, increase the authorized
common stock to 50,000,000 shares, and decrease the par value from
$.01 to $.0025 per share.
On October 14, 1983, National Power Corporation executed a letter
of intent with the Predecessor, the material provisions of which
provided that the Predecessor would exchange 145,578 of its
unregistered common shares for 23,500,000 of the issued and
outstanding capital stock of National Power Corporation. On
February 10, 1984, pursuant to a special meeting of shareholders of
the National Power Corporation, a majority of the National Power
Corporation's issued and outstanding shares adopted resolutions
relating to the consummation of an Agreement and Plan of
Reorganization as between the Predecessor, namely World Wide Motion
Pictures Corporation and the National Power Corporation. In
connection with the foregoing, the Predecessor issued to the
National Power Corporation 145,578 shares of its unregistered
common stock and in consideration therefore, the Predecessor
acquired, in a tax-free stock for stock transaction (calculated to
comply with Internal Revenue Codes), approximately 94% of the
issued and outstanding shares of the National Power Corporation.
Further, the merger process resulted in a change in the Company's
number of shares issued, outstanding and authorized and a change in
par value. Also, as a result of the foregoing transaction, a
change in control of the Company took place and a new board of
directors was elected. The National Power Corporation also amended
its Articles of Incorporation to effect a name change to World Wide
Motion Pictures Corporation, the Company.
(bullet) SECURITIES OFFERINGS OF THE PREDECESSOR AND COMPANY
In June of 1982, the Predecessor's securities counsel, Dykema,
Gossett, Spencer, Goodnow & Trigg, under the direction of the
Predecessor's management, prepared an unregistered private
placement limited partnership offering circular for the production
of one full length feature motion picture. Net proceeds to the
company would have been $1,000,000 (50 units at $20,000 per unit).
The offering was prepared as a self-underwriting financing proposed
by the Predecessor to be formed in compliance with the Uniform
Limited Partnership Act of the State of Michigan. The offering was
abandoned prior to any sales of units as a result of a change in
strategic planning by the Predecessor's management. Essentially,
management concluded that expending all of its production resources
in the preparation of one motion picture was unduly speculative and
that participation in a broad range of film and television
partnership packages would thereby assure a greater degree of
opportunity for success.
In March of 1986, the Company's securities counsel, Berry, Moorman,
King, Cook and Hudson, under the direction of the Company's
management, prepared a registered private placement limited
partnership offering circular for the production of four full
length feature motion pictures. Net proceeds to the Company would
have been $200,000 minimum or $4,960,000 maximum (40 units at
$5,000 per unit minimum/992 units at $5,000 per unit maximum). The
offering was to be underwritten by R.B. Marich Inc., a registered
broker/dealer firm in Denver, Colorado, and W.R. Lazard & Co., a
registered broker/dealer firm in New York, New York. The offering
was withdrawn as a result of impending changes that occurred in the
United States tax laws at that time. All proceeds that were
committed to the offering were returned.
The Company has not proposed a public offering of its common stock
since the initial public offering of the National Power Corporation
in 1980.
(bullet) FILM LIBRARY ACQUISITIONS
The Company acquires various completed motion pictures and
television productions, some of which are totally or partially
purchased in exchange for common stock, preferred stock, and a
revenue participation of the Company. A significant acquisition
occurred in November of 1991, at which time the Company entered
into an agreement with an un-related non-affiliated entity,
Presidio Productions, a California corporation ("Presidio"),
whereby the Company acquired all right, title and interest in 136
motion picture and television productions ("Product") in exchange
for a total consideration aggregating 2,000,000 fully paid,
non-assessable, unregistered Rule 144 shares of common stock of the
Company and 25,000 fully paid, non-assessable, unregistered shares
of preferred stock of the Company. Further terms and conditions of
the Company/Presidio transaction were as follows: a.) The Company
agreed to cause all of the common shares being issued to Presidio
thereunder to be issued immediately following the "closing" of the
Company/Presidio transaction; and, b.) The Company issued the
remaining preferred shares upon the delivery of all physical
elements of the product including 35mm gauge negative film footage,
35mm gauge answer print film footage, 1-inch videotape masters,
3/4" videotape submasters, and 1/2" videotape archival cassettes.
The value of the film library was determined by arms-length
negotiations between the buyer and the seller which included review
of production and replacement costs, previous marketing experience
and marketing potential. Accordingly, the Company has pursuant to
GAAP, reported the transaction in the financial statements at
$12,750,000 under unclassified assets. On December 14, 1992, the
Company/Presidio transaction was considered closed, with all
parties thereto having executed the agreement and Product delivered
to the Company. Under the terms of that same agreement all Product
had been delivered by Presidio to the Company in good condition and
represented to be free of any and all liens or encumbrances along
with a bill of sale regarding the same. A limited amount of
revenue has been received from the leasing of films and television
productions in the library.
(bullet) FORMATION OF OPERATING SUBSIDIARIES OF THE COMPANY
In July, 1993, the Company formed two fully operational, wholly
owned subsidiaries, World Wide Film & Television Institute and
WWMPC Environmental Services Corporation. The Institute's primary
business is the development, production, marketing, and
implementation of educational symposiums, workshops, lectures, and
forums, on a national basis in areas covering the entertainment
industry specifically film and television, financing, packaging,
production, marketing/distribution, and the political/networking
process that accompanies these areas of expertise. Main events
(primarily symposiums and seminars with more than one hundred
participants) are scheduled on an annual basis and workshops,
lectures and forums intermittently throughout the year. The
Company's first entry into a completely diversified field was the
formation of WWMPC Environmental Services Corporation. This
company's primary business was the marketing and distribution of
environmental services (including detection and remediation of
indoor air quality for residential and commercial dwellings and
products)(including indoor air quality testing kits for residential
and commercial dwellings); the orchestration, production,
marketing, and implementation of information seminars and
infomercials designed specifically for contractors and other
professionals in the energy business desirous of augmenting their
existing activity by entering the environmental services field.
Special staff with expertise in this area was retained by the
Company's management to ensure optimum productivity and growth
potential. The Company discontinued the operation of this business
in December 1994. Subsidiary corporations are formed periodically
for the purpose of developing, producing, or distributing one or
more motion picture or television productions owned and/or
controlled by the company. The subsidiary corporations, when
active, individually operate as a separate business with separately
defined boards of directors, executive and operating officers,
investors, liabilities, production or co-production teams and
revenue sharing arrangements. Currently, the company has two
active "production" corporation subsidiaries; World Wide Films
Inc., which was recently used for the production of the feature
length motion picture tentatively entitled "Shattered Illusions"
featuring Morgan Fairchild, Bruce Weitz, Richard Lynch, and Dan
Monahan, and World Wide Productions Inc. for the production of an
upcoming specialty television production entitled "The Classics",
and the feature length motion picture tentatively entitled "Along
for the Ride". A diversified subsidiary corporation, World Wide
Medical Services Ltd. was formed in December 1996 to provide a
variety of home health care and temporary nursing services to the
healthcare delivery system. This new subsidiary expects to begin
producing profits during the third quarter of 1999.
BUSINESS OF COMPANY
PRINCIPAL PRODUCTS AND SERVICES OF THE COMPANY
The principal business of the Company is the development,
financing, production, purchasing and marketing/distribution of
feature films/video productions and various other forms of filmed
and/or televised entertainment. In addition, the Company and its
Associates produce/co-produce documentaries, docudramas, industrial
films, and specialty television productions for consumption by the
general public. Feature films and short subject projects completed
and/or marketed by the Company are generally rented or sold to
national and international theater chains, independent television
stations and television networks. Revenue can be generated from a
variety of sources. The three basic sources are: (1) theatrical
exhibition pursuant to agreements which generally provide for
payment by the exhibitors of a percentage of box office receipts
with or without a guarantee of a fixed minimum, (2) licensing to
television networks, regional broadcasters and syndicated
arrangements pursuant to agreements which provide for a fixed
license fee payable in periodic installments; and (3) wholesale of
film/video product to national and regional home video outlets
encompassing both foreign and domestic markets pursuant to a fixed
retail rental formula. Substantial additional profits may also
accrue from ancillary exploitation of media product including
satellite broadcast, merchandising, literary rights and related
paraphernalia.
The Company produces/co-produces and markets its film and
television product as individual motion pictures and television
productions which are customarily organized and accounted for as
separate businesses with their own management, employees, equipment
and budgets. Currently, the Company is using wholly owned
subsidiary corporations it has formed for motion picture and
television production. The controlling production entity or
co-production entity (in certain cases, the Company) has primary
overall responsibility for all aspects of a project, from
pre-production, principal photography and post production through
marketing and distribution. The individual producer(s) for each
film or television project is responsible for general management
and administrative coordination of the film or video as well as
participation in the planning, principal casting, technical and
creative responsibilities to be performed in conjunction with the
director of the production. The production of a full length motion
picture or feature television project involves a number of related
activities which, in general, can take six months to more than a
year to fully complete.
Producers, directors, performers, writers, and various technicians
who participate in the production of the Company's film and
television projects are generally retained on a project-by-project
basis, and are normally compensated by negotiated fixed fees and/or
all standard guidelines set down by unions and guilds in the motion
picture and television industry.
The Company's various production, development, marketing, and
finance committees continuously review and, in specific cases
consult on or package feature film and television projects for
financing, production, and distribution. Management of the Company
has, since the Company's inception, encouraged "open" screenplay
and teleplay submission in addition to the submission of completed
project acquisition possibilities in all genre of filmed and video
taped entertainment in order to insure the best possible
opportunity for selection of quality and marketable product for the
Company to be involved.
The Company currently owns and maintains a completed screenplay and
teleplay literary library encompassing 57 WGA (Writer's Guild of
America) registered properties from which it periodically reviews
and occasionally selects the most imaginative and promising ones
for either development, production, or marketing. Certain
screenplays and teleplays currently owned or optioned by the
Company have been developed and packaged for production throughout
the history of the Company.
Additionally, the Company currently owns and maintains a completed
film and television library encompassing 277 titles of feature
length motion pictures, documentaries, docudramas, and television
projects. For internal control purposes, the Company's Board of
Directors directed management to retain an independent appraiser in
order to further establish verification of the value of its
completed product library as currently determined by staff and
management. The Company also owns certain film equipment, a sound
effects library, a still slide library, novels and options on
treatments and holds a beneficial interest in certain ongoing
contracts. Options on literary treatments otherwise defined as
developing storylines and creative ideas are occasionally secured
by the Company and company's like the Company for the purpose of
developing the storyline or creative idea into a fully developed
screenplay or teleplay at some unknown time in the future. The
Company may or may not contribute expertise to a film or television
project such as script polishing, script rewriting, packaging,
financing, scheduling, budgeting, and line production. The
Company's "beneficial interest" (percentage of future revenue, if
any) in certain ongoing contracts includes certain of the
above-referred to options or options on already fully prepared
screenplays or teleplays which may or may not be produced into a
film or television production at some unknown time in the future.
None of the ongoing contracts "beneficial interest" entered into by
the Company is significantly material to the Company's current
financial condition and/or operations at the present time. The
full development of the contracts is dependent on the acquisition
of additional capital by the Company.
Distribution of product by the Company initially can be and
currently is generally channeled through the Company's
distribution/marketing network of associated companies, the
Company's Producer's Representatives, television syndicators and
all other established customary channels used by independent
producers and production companies. The Company's
distribution/marketing network of associated companies is comprised
of a wide variety of domestic and foreign film distributors and
television syndicators, all of which have extensive backgrounds of
experience and knowledge in specific areas of marketing and
distribution of film and television product including domestic film
distribution, foreign film distribution, domestic television
syndication, foreign television syndication, domestic home video
distribution, foreign home video distribution, and domestic and
international cable, pay-per-view and satellite broadcast. The
Company's Producer's Representative, in some cases, acts as a
liaison between the Company and the above referred distribution
network relative to specific contractual points of discussion for
a particular transaction the Company may be contemplating for the
exploitation of one of its product.
The principals of the Company have a proven record of professional
experience demonstrating their training and knowledge in high
quality, cost controlled, moderately budgeted film/video
productions and innovative marketing and distribution skills.
Certain of these backgrounds include production and marketing
experience at both large studios and small independent companies.
The combined number of motion pictures and television productions
the production and marketing personnel of the Company have been
instrumentally involved with encompass over 100 productions. The
production and marketing team is skilled and/or expert in the use
of the latest technological filming and video taping techniques,
state of the art equipment, and administrative control, i.e.,
experienced budget scheduling and production/distribution cost
supervision and distribution capabilities. Certain of the
technological expertise and/or equipment that is used by the
Company's professional personnel include theatrical "Platform
Releasing" (e.g., THE RIVER RUNS THROUGH IT (in current video
release), Tri Star Pictures, in excess of $30 million in gross
revenue worldwide; PULP FICTION (in current video release),
Miramax, in excess of $100 million in gross revenue worldwide; THE
POSTMAN (in current video release), Miramax, in excess of $15
million in gross revenue worldwide), "Regional Break Releasing",
"Test Market Releasing"; Panavision, Kodak, Arroflex, and Nikkagami
camera equipment in 16, Super 16 and 35mm gauge format; Avid,
Protools, and Media 100 post production and editorial equipment for
film and video; Keylight lighting equipment; and DHX, DAK and
Nagomi sound equipment.
The principals of the Company have developed, produced, distributed
and consulted on a wide variety of feature films, documentaries,
docudramas, short subjects, television productions and industrial
motion pictures. They and/or their productions have earned a wide
variety of many national and international film/television
production awards including, as an example: Emmy awards (David
Toma/CBS Movie-of-the-Week, BABIES HAVING BABIES), Emmy
nominations, Drummer awards (former executive vice president and
current advisor Henry Barth/wide variety of industrial and training
films), gold/silver and bronze medals from various international
film festivals (George Lindsey/New York and Chicago Film Festivals
for docudramas and documentaries), Academy awards and academy award
nominations (Charles Newirth/feature film FORREST GUMP) and Academy
award nominations (Fred Baron/feature film ROBOCOP)(John R.
Woodward/feature film THE SHAWSHANK REDEMPTION).
The Company and its principals have entered into various ongoing
agreements and arrangements relative to the consultancy,
production, financing and distribution of motion picture or
television projects. Many of the agreements and arrangements
contain provisions which could result in revenue to the Company.
Although a significant part of the Company's historical operations
has been devoted to developing and consummating these agreements
and arrangements with a wide variety of companies and individuals
within the entertainment industry, the potential revenue resulting
from such agreements and arrangements has not been shown as
receivables or assets on the Company's financial statements.
Potential revenue from the above referred-to ongoing agreements and
arrangements can be acquired by the Company utilizing general and
more specific markets and technologies, which in the opinion of the
Company's management, will also increase in scope and size. As
indicated by a wide variety of industry publications including
Variety and The Hollywood Reporter, current trends indicate that
these future markets and expanding technologies, such as the
increase in the deregulation of the European television industry
and 100+ channel global satellite television programming, will
extend for a lengthy period of time. In the opinion of the
Company's management, these future markets and expanding
technologies will continue to promote further new ways to exploit
film and television entertainment product; i.e., with mass appeal
increasing as specific technological industries such as high
definition television, CD-Rom, DVD, and expanded Internet
communications. Full and complete exploitation of these agreements
and arrangements by the Company will require the acquisition of
additional working capital, which the Company is anticipating to
achieve through financial offerings and/or other traditionally used
methods of private sector, commercial banking, and other methods of
capital acquisition used by small and midsized companies.
Since its creation in July of 1977, the Company's management
continuously researches current data, updates pertinent technical
information, and has subsequently implemented procedures regarding
the production of and consultancy for moderately budgeted feature
film (production budgets of approximately $250,000 to $5,000,000)
and television projects produced on a continual flow of product
basis. (Management of the Company define "continual flow of
product" as the production of motion picture and television product
produced on an overlapping production basis; ie., 3 weeks into 4
weeks of post production for production "A", principal photography
on Production "B" begins; and 3 weeks into 4 weeks of principal
photography on Production "B", pre-production on Production "C"
begins.) It is the Company's opinion that following this
production process will help to ensure a "continual flow of
product" for the marketing and distribution of product by the
Company and subsequently help to ensure and increase a continuous
revenue stream. The above formula is a central basis for the
Company's profit making strategy. It is the opinion of management
that such strategy has a high percentage of opportunity for
success. The full realization of profits from the Company's
strategic preparations is dependent on the acquisition of
additional capital.
The following transactions represent the most significant
potentially revenue-producing arrangements relative to motion
picture and television production, co-production, marketing,
consulting and acquisitions the Company has entered into to date.
(bullet) DOCUMENTARY/DOCUDRAMA/SCREENPLAY ACQUISITION AND MARKETING
On March 18, 1981, the Company acquired G.L. Productions, Inc.
("GLP") of Washington, D.C. and all of its facilities and
productions including twenty-eight 30 and 60-minute documentaries
and docudramas and 42 completed/registered screen and teleplays
("product"). Certain titles include RHOUTES TO GYANA featuring
Leonard Nimoy, YOU'VE COME A LONG WAY MAYBE featuring Barbara
Walters; and THE LOST ANCIENT CITIES OF TOPAN AND TIKAL featuring
Brock Peters. The Company and GLP have entered into various
television syndication and public broadcast agreements since the
acquisition of the product relative to the marketing and
exploitation of the product. According to the terms of the
acquisition, the Company retains 100% of any potential producer's
gross revenue percentage accruing to the Company from any and all
marketing and exploitation of the product worldwide in perpetuity.
(bullet) SCREENPLAY/TELEPLAY ACQUISITION
On November 28, 1983, the Company entered into an acquisition
agreement (Agreement) with Paul Alex Productions of Huntington
Beach, CA for the purpose of acquiring all right, title and
interest in 12 completed screenplays and teleplays ("product").
The product was registered with the Writer's Guild of America West
and consisted of various genre of story content. According to the
terms of the acquisition, the Company retains 80% of any potential
producer's gross revenue percentage accruing to the Company from
any and all marketing and exploitation of the produced product
worldwide in perpetuity.
(bullet) FEATURE FILM CO-PRODUCTION
On March 26, 1987, the Company entered into a co-production
agreement (Agreement) with G.O.D. Entertainment/The Pitch Limited
of Los Angeles, CA for the purpose of co-producing the feature
length motion picture entitled HOLLYWOOD HEARTBREAK aka PITCH
("product"). The product, which stars Mark Moses, Carol Mayo
Jenkins and James LeGro, completed production in June of 1987, and
was distributed by subdistributor, Raystar Distribution Company, to
video outlets throughout the United States and Europe. According
to the terms of the Agreement the Company retains 5% of any of the
potential producer's net revenue percentage accruing to the Company
from any and all marketing and exploitation of the product
worldwide in perpetuity.
(bullet) TELEVISION ACQUISITION
On May 19, 1987, the Company entered into an acquisition agreement
(Agreement) with United Development Industries/Topper Ltd. of Los
Angeles, CA for the purpose of acquiring all right, title and
interest in the television production entitled VEGAS DAZE
("product"). The product, which stars Larry Storch, Forrest
Tucker, Ruth Buzzi and Gary Owens was distributed by
sub-distributor Palm Springs Distribution Company to video outlets
in
regional southwest territories. According to the terms of the
Agreement the Company retains 50% of any of the potential
producer's net revenue percentage accruing to the Company from any
and all marketing and exploitation of the product worldwide in
perpetuity.
(bullet) TELEVISION CO-PRODUCTION
On April 11, 1990, the Company entered into a co-production
agreement ("Agreement") with Pacific Film Group of Los Angeles, CA
for the purpose of co-producing and distributing three 30-minute
television productions entitled HOLLYWOOD HOTTEST STUNTS, THE REAL
GODFATHERS, and THRILLS, CHILLS AND SPILLS ("product"). The three
independently hosted productions were distributed by distributor,
Myntex Corporation through the Handleman Company, in a "video
sell-through" arrangement throughout the United States and Canada.
According to the terms of the Agreement the Company retains 3% of
any potential producer's gross revenue percentage accruing to the
Company from any and all marketing and exploitation of the product
worldwide in perpetuity.
(bullet) FEATURE FILM ACQUISITION
On September 6, 1990, the Company through a purchase agreement
("Agreement") with Tagerick Films of Los Angeles, CA acquired all
right, title and interest in the feature length motion picture
entitled TERROR ON SHADOW MOUNTAIN ("product") starring Richard
Groat and Bill Smith. At the time of this filing the product was
in post production and has not been distributed in any markets or
territories. According to the terms of the Agreement the Company
retains 50% of any potential producer's gross revenue percentage
accruing to the Company from any and all marketing and exploitation
of the product worldwide in perpetuity.
(bullet) FEATURE FILM CO-PRODUCTION
On October 21, 1991, the Company entered into a co-production
agreement ("Agreement") with J.O.E. Productions and Webb Films
International of Los Angeles, CA for the purpose of co-producing
the feature length motion picture entitled BREAKING UP WITH PAUL
aka MOVIES, MONEY AND MURDER ("product"). The product which stars
Martin Mull, Karen Black, and Laine Kazan completed production in
December of 1990, and was distributed by Hills Entertainment Inc.
to video retail outlets throughout the world. According to the
terms of the Agreement the Company retains 2% of any potential
producer's gross revenue percentage accruing to the Company from
any and all marketing and exploitation of the product worldwide in
perpetuity.
(bullet) FEATURE FILM LIBRARY ACQUISITION AND DISTRIBUTION
On November 29, 1991, the Company acquired 136 feature film and
television productions ("product") from Presidio Productions Inc.
of Palm Springs, California ("Presidio") encompassing
ownership/control and collateral marketing and exploitation rights
in all markets and all territories worldwide. At the time of this
filing the product was in various stages of marketing and
distribution. According to the terms of the agreement the Company
retains 50% of any potential producer's gross revenue percentage
accruing to the Company from any and all marketing and exploitation
of the product worldwide in perpetuity.
(bullet) TELEVISION CO-PRODUCTION
On June 22, 1992, the Company entered into a co-production
agreement ("Agreement") with Webb Films International of Los
Angeles, CA for the co-production of a 60-minute television
production special entitled VIDEO MONDO aka THE RAVE ("product").
At the time of this filing the product was in post production and
has not been distributed in any market or territory. According to
the terms of the Agreement the Company retains 2% of any potential
producer's gross revenue percentage accruing to the Company from
any and all marketing and exploitation of the product worldwide in
perpetuity.
(bullet) FEATURE FILM CO-PRODUCTION/CONSULTANCY
On July 9, 1992, the Company entered into a co-production/
consultancy agreement ("Agreement") with Pacific Film Group of Los
Angeles, CA for the purpose of co-producing and rendering financial
and industry related advice to Pacific Film Group for the packaging
and production of the feature length motion picture entitled SWEET
JUSTICE ("product"). The product, which stars Mark Singer, Fynn
Carter and Mickey Rooney, completed production in August of 1992
and was distributed by Trimark Pictures to Blockbuster Video for
video retail outlets throughout the United States and Europe.
According to the terms of the Agreement the Company retains 2% of
the potential producer's gross revenue percentage accruing to the
Company from any and all marketing and exploitation of the product
worldwide in perpetuity.
(bullet) DOCUDRAMA CO-PRODUCTION
On May 8, 1993, the Company entered into a co-production and
distribution agreement ("Agreement") with independent film
producer, Lance Matthews of New York, NY, for the co-production and
distribution of a 60-minute docudrama motion picture entitled
BLUNTS & STUNTS aka TRULY COMMITTED ("product"). At the time of
this filing, the Product was in post production and has not been
distributed in any markets or territories. According to the terms
of the Agreement the Company retains 40% of any potential
producer's gross revenue percentage accruing to the Company from
any and all marketing and exploitation of the product worldwide in
perpetuity.
(bullet) TELEVISION SYNDICATION AGREEMENT
On August 23, 1994, the Company entered into a license agreement
("Agreement") with Media One Broadcasting Company of San Francisco,
CA for the television syndication of certain film and television
product owned or controlled by the Company which a portion of such
product is part of the Company's acquired film and television
library, including 14 feature length motion pictures and 3
television productions. The syndication territories included
Northern California, Arizona and Washington State. According to
the terms of the Agreement the Company retains 50% of any potential
net revenue percentage accruing to the Company from any and all
marketing and exploitation of the product worldwide in perpetuity.
(bullet) FEATURE FILM CO-PRODUCTION
On October 14, 1994, the Company entered into a Co-Production
Agreement ("Agreement") with Pacific Pictures of Los Angeles, CA
for the purpose of co-producing the feature length motion picture
entitled NATURALLY BAD ("product"). The product which stars Robert
Z'dar and Shannon Teare completed production in November of 1994,
and was distributed by Northwest Video Distribution Company to
video retail outlets throughout the United States and Europe.
According to the terms of the Agreement the Company retains 2% of
any potential producer's gross revenue percentage accruing to the
Company from any and all marketing and exploitation of the product
worldwide in perpetuity.
(bullet) FEATURE FILM ACQUISITION
On September 28, 1995, the Company entered into a Purchase
Agreement ("Agreement") with M&D Productions of San Jose, CA, for
the acquisition of all right, title and interest in the feature
length motion picture entitled CITIZEN SOLDIER ("product") starring
Dean Stockwell and Billy Gray. Delivery of all final picture
elements was completed on November 27, 1995. The Company has added
the product to its completed film and television product library
catalog for any and all leasing or rental possibilities. According
to the terms of the Agreement the Company retains 60% of any
potential net revenue percentage accruing to the Company from any
and all marketing and exploitation of the product worldwide in
perpetuity.
(bullet) TELEVISION CO-PRODUCTION II
On November 17, 1995, the Company entered into an agreement
("Agreement") with Pacific Pictures of Los Angeles, CA for the
development, co-production and distribution of a television series
of 5 special interest 30-minute productions entitled TIPS FOR
BETTER HEALTH (three shows) and MARKET PLACES OF THE WORLD (two
shows) ("product"). At the time of this filing, the series has
been distributed to independent, low power (LP) and cable
television outlets throughout the United States and has not yet
realized any material revenues. According to the terms of the
Agreement the Company retains 5% of any potential producer's gross
revenue percentage accruing to the Company from any and all
marketing and exploitation of the product worldwide in perpetuity.
(bullet) SPECIALTY VIDEO DISTRIBUTION ARRANGEMENT
On July 23, 1996, the Company entered into a Distribution Agreement
("Agreement") to market and distribute worldwide the 60-minute
specialty instructional video entitled THE INTERNET TOUR GUIDE
("product"). At the time of this filing, the product was in the
marketing and distribution phase and has not yet realized any
material revenue from such efforts. According to the terms of the
arrangement the Company retains 40% of any potential producer's
gross revenue percentage accruing to the Company from any and all
marketing and exploitation of the product worldwide in perpetuity.
CURRENT AND ANTICIPATED DEVELOPMENTS IN THE COMPANY'S BUSINESS
(bullet) FEATURE FILM CO-PRODUCTION
On February 19, 1997, the Company's wholly-owned subsidiary, World
Wide Films Inc., entered into a Co-Production and Distribution
Agreement ("Agreement") with Best Pictures Inc. of Redondo Beach,
California, for the purpose of producing the feature length motion
picture entitled SHATTERED ILLUSIONS ("Product"). The Product,
which features Morgan Fairchild, Bruce Weitz, Sy Richardson,
Richard Lynch and Dan Monahan, was completed in February of 1998
and is currently being distributed by the Company (represented by
RGH/Lion's Share Pictures [Foreign]/All Channel Films [Domestic]).
According to the terms of the Agreement, World Wide Films Inc.
retains 50% of any potential producer's gross revenue percentage
accruing to the company from any and all marketing and exploitation
of the Product worldwide, in perpetuity and the Company retains 26%
portion of any potential gross distribution revenue percentage
occurring to the Company for any and all marketing and exhibitionof
the product world wide in perpetuity.
(bullet) WEBSITE DEVELOPMENT, CREATION AND IMPLEMENTATION
On January 29, 1998, the Company entered into an agreement
("Agreement") with Mr. Ralph Johnson of Los Angeles, California and
on May 8, 1998, with Steelelink Communications of San Francisco,
CA, respectively, for the development, creation and implementation
of the Company's Internet web site. The Company's web site went
online in June 1998 and was implemented by management for the
purpose of providing a wide variety of information to the general
public and further increasing the marketing reach of its products
and services including its completed film and television product
library. Corporate financing scenarios will also be explored, via
the Internet, such as limited partnerships and stock offerings.
The Company's web page currently links to the U.S. Securities and
Exchange Commission Edgar system, E-Trade and Ameritrade. The
Company updates its website on a perpetual basis taking into
account the latest technologies offered to the Internet. The site's
address is www.wwmpc.com.
(bullet) SPECIALTY TELEVISION PRODUCTION
On August 28, 1998, the Company's wholly-owned subsidiary, World
Wide Productions Inc., entered into a Co-Production Agreement
("Agreement") with Snow Lion Interactive Media of Los Angeles,
California, for the purpose of co-producing the television pilot
and series entitled CLASSIC CAR ("Product"). The Product, which
was designed as a 13-part series, showcases domestic and foreign
production automobiles and is designed for the car enthusiast and
casual viewer. At the time of this filing, the Product was in
production. According to the terms of the Agreement, the Company
retains 50% of any potential producer's gross revenue percentage
accruing the company from any and all marketing and exploitation of
the Product worldwide, in perpetuity.
(bullet) FILM AND TELEVISION PRODUCTION ACQUISITION
On November 22, 1998, the Company entered into a Purchase Agreement
("Agreement") with Snow Lion Interactive Media of Los Angeles to
acquire a variety of film and television product ("Product") from
Snow Lion Interactive Media. Acquired Product consists of four
film and television productions of various lengths and subject
matter and additional archival film footage including a children's
television show and three specialty television shows ranging in
length from 30-60 minutes. At the time of this filing, certain of
the Product had been distributed by IQ Entertainment in the foreign
markets. According to the terms of the Agreement, the Company
retains 50% of any potential producer's gross revenue percentage
accruing the company from any and all marketing and exploitation of
the Product worldwide, in perpetuity.
BUSINESS ENTERPRISES UNDER CONTEMPLATION BY THE COMPANY
* (bullet) CORPORATE ACQUISITION NEGOTIATIONS
* For the past five years, the Company has been in the process of
reviewing and analyzing various potential corporate acquisitions
and merger possibilities, certain of which are highly diversified
such as Internet technology, instructional, and medical services.
Management of the Company has conducted indepth internal
discussions concerning the risks, requirements, potential and
overall viability of associating with a highly diversified
business. In the opinion of the Company's management, so long as
the diversified business maintains a significant level of potential
revenue producing capability, management expertise for sustaining
such ongoing revenue potential, clarity of mission statement and
objectives, and cash flow potential which could be used in the
development of the Company's core business, management of the
Company will encourage such mergers and acquisitions,
investigations and possibilities for the express purpose of
increasing, overall, shareholder value of the Company. In addition
to the quantitative and qualitative aspects of the Company's
diversification decisions, the articles, bylaws and corporate
charter of the Company provide for flexibility in the Company's
ability to explore and enter into diversified fields of enterprise.
MARKETING OF THE COMPANY'S PRODUCTS AND SERVICES
The combined experiences of the Company's management and companies
in its distribution network creates a strong and diverse marketing
position for the Company. Marketing outlets and techniques which
have been successfully utilized for the Company's products or
services in the past and/or which will be utilized in the future
either domestically or in foreign territories include: THEATRICAL
EXHIBITION, HOME VIDEO SALES, HOME VIDEO RENTAL, BROADCAST
(NETWORK) TELEVISION, SYNDICATED TELEVISION, CABLE TELEVISION,
PAY-PER-VIEW, SATELLITE TRANSMISSION, LOW POWER (LP) REGIONAL
TELEVISION, PUBLIC BROADCAST (PBS) TELEVISION, AND ANCILLARY
PRODUCT MERCHANDISING (ancillary product merchandising includes
revenues created from non-theatrical or non-broadcast exploitation
such as merchandising of clothing, toys, books and music). All or
some of these outlets are customarily incorporated into a marketing
strategy on either a regional, national, or international exposure
basis with quality, genre public appeal, and rating, all being
factors. The Company's network of marketing and distribution
companies includes independent and major industry leaders such as
UNITED ARTISTS INC. (relationship between the Company and the
company includes foreign and domestic theatrical exhibition of
feature film product), MIRAMAX FILMS INC. (relationship between the
Company and the company includes domestic theatrical exhibition of
feature film product), MGM/UA INC. (relationship between the
Company and the company includes foreign and domestic theatrical
exhibition of feature film product), RGH/LIONS SHARE PICTURES
(relationship between the Company and the company includes foreign
theatrical and all ancillary exhibition of feature film and
television product), ALL CHANNEL FILMS (relationship between the
Company and the company includes all ancillary domestic exhibition
of feature film product), CINETRUST Entertainment Co. (relationship
between the Company and the company includes foreign and domestic
broadcast, television and home video exhibition of feature film and
television product), TWENTIETH CENTURY FOX FILM CORPORATION
(relationship between the Company and the company includes foreign
and domestic theatrical exhibition of feature film product),
SHAPIRO GLICKENHAUS ENTERTAINMENT (relationship between the Company
and the company includes all ancillary foreign and domestic
exhibition of feature film and television product), PARAGON CABLE
TELEVISION (relationship between the Company and the company
includes regional cable broadcast of television product), CENTURY
CABLE TELEVISION (relationship between the Company and the company
includes regional cable broadcast of television product), MNTEX
CORPORATION (relationship between the Company and the company
includes sell-thru specialty video product) and the HANDLEMAN
COMPANY (relationship between the Company and the company includes
sell-thru specialty video product). Primary expected revenue
sources include but are not limited to:
THEATRICAL EXPLOITATION - An average of approximately 60% of
theatrical revenue within the industry as a whole is derived from
the North American market with respect to English language films.
The balance comes from overseas outlets with the most significant
being Japan, France, Germany, Italy, the United Kingdom and
Australia. The overseas market is very important to the overall
gross revenues of a film and is once again on the incline due to
the decrease in the value of the dollar. Foreign markets
fluctuate, but in general can be responsible for 60% of the total
box office revenue of the film.
The Company has acquired immaterial revenue at this time from
theatrical exhibition for the feature film products known as PITCH
aka HOLLYWOOD HEARTBREAK; MOVIES, MONEY AND MURDER aka BREAKING UP
WITH PAUL; SWEET JUSTICE; NATURALLY BAD and CITIZEN SOLDIER.
(Further exploitation of this product by the Company will require
additional working capital.)
According to Richard Fay of AMC Theater circuit, the second largest
exhibitor of feature length motion picture product in the world,
there is currently a building boom occurring among exhibitors with
the number of screens in the United States beginning to increase in
the 1980's by 7.4% to more than 20,300. It is the Company's
opinion that, due to a widely known increase in public consumption
in, and desire for more feature filmed entertainment domestically
along with the increased desire by foreign markets for United
States produced feature film entertainment, this trend of expansion
for the number of screens in both the United States and foreign
territories will continue throughout this decade and well into the
next century. The exhibitors or movie theater owners generally
retain an average of 50% of the box office receipts as their fee
and remit the other 50% frequently referred to as "domestic
theatrical film rentals" to the film's distributor. Home video
advances for feature films can range from $10,000 to more than
$5,000,000 plus escalators based upon such variables as box office
performance, print and advertising expenditures and the number of
screens secured during theatrical release.
CABLE TV, PAY TV, DBS, AND MATV EXPLOITATION - Pay television has
shown tremendous growth over the past decade. The market leaders,
past and present, have been Home Box Office (HBO), Cinemax, and
Showtime/The Movie Channel. These pay television services have
recently exhibited over 300 films per year. Of the approximately
$20 (basic) price per month that a pay television subscriber pays
to a cable company, about $10 is returned to the pay television
service and in turn, $3 to $6 is returned to the distributor.
Distributors, on exclusive multi-picture studio arrangements, have
been able to command prices of $3 to $8 million per film. On a
non-exclusive basis, prices range from $500,000 to $2 million per
film where the film has achieved average success. Certain of the
Company's film and/or television product are or have been shown
periodically on cable television throughout the world (see Page 17
in Management Discussion and Analysis).
A relatively new area of exhibition is PAY-PER-VIEW. At present,
there are approximately 12 million homes equipped to receive the
service and that number is expected to increase to 30 million by
the end of the decade. Prices generally charged for pay-per-view
range from $10 to $50 per show to the consumer depending on the
nature of the entertainment, of which approximately 60% is being
returned to the distributor. The expanding growth in this area
will continue to be a major new revenue source for film
distribution.
MATV (Master Antenna Television) systems available in North America
produce an additional though relatively small revenue source for
films and DBS (Direct Broadcast Satellite) is beginning to make
substantial inroads, primarily throughout Europe in those countries
where residential cable service is not readily available.
The Company has acquired immaterial revenue at this time from cable
television, pay television, DBS and MATV for the feature film
projects entitled PITCH aka HOLLYWOOD HEARTBREAK; MOVIES, MONEY AND
MURDER aka BREAKING UP WITH PAUL; SWEET JUSTICE, NATURALLY BAD,
CITIZEN SOLDIER, and television production specials entitled KJ
COUNTRY, specialty videos entitled THRILLS, CHILLS & SPILLS; THE
REAL GODFATHERS; HOLLYWOOD'S HOTTEST STUNTS, and fifteen public
domain classic feature film production prints owned by the
Company.
(Further exploitation of this product by the Company will require
additional working capital.)
NETWORK TELEVISION EXPLOITATION - The broadcast television industry
in North America is dominated by three networks, ABC, CBS and NBC.
With the recent development of Fox Broadcasting in addition, the
network's generally license 75 to 150 theatrical films annually and
commission approximately 125 made-for-television movies (MOWs) from
independent producers such as the Company. In addition, they
broadcast over 100 hours of miniseries. American and foreign
television networks are still very significant buyers of feature
films. In the United States they have become less aggressive than
the pay television companies in their pricing policies. The price
range for multiple broadcast of a film by a major network is
between $500,000 and $5 million. Exceptional films may command
substantially higher prices.
The Company has acquired immaterial revenue at this time from
network television exploitation for the feature film product known
as PITCH aka HOLLYWOOD HEARTBREAK; MOVIES, MONEY AND MURDER aka
BREAKING UP WITH PAUL; SWEET JUSTICE, NATURALLY BAD, and CITIZEN
SOLDIER. (Further exploitation of this product by the Company
and/or its associates will require additional working capital.)
SYNDICATED TELEVISION EXPLOITATION - Revenue from rights granted to
individual independent television stations (of which there are over
250 in North America), has increased in recent years as the number
(over 300 in U.S./Canada) and financial strength of local stations
has increased. These stations usually described as the
"syndication market" and often loosely associated for product
buying purposes now rival the traditional standard (broadcast)
television networks in competing for viewers. As the core of their
programming, these stations use syndicated (after network)
television series and feature length films.
The Company has acquired immaterial revenue at this time from
syndicated television exploitation for the television production
special known as KJ COUNTRY. (Further exploitation of this product
by the Company will require additional working capital.)
OTHER REVENUE - i.) Non-theatrical revenue results from a film or
television project being made available to airlines, schools,
public libraries, community groups, ships at sea, prisons, and
bases for the military forces; and
ii.) Ancillary markets such as the rights to use the images of
characters in a film or television project for merchandising
purposes in connection with video games, toys, t-shirts, posters,
and like paraphernalia; and
iii.) Revenue may also be realized from the novelization of the
screenplay/teleplay and other related publications, music used in
the film and television projects sold as soundtracks, records, CDs,
cassettes, and mechanical performance and sheet music publication.
The Company has acquired no revenues at this time from these
particular sources of non-theatrical, television, or ancillary
markets.
The Company has participated in a variety of the preceding type of
marketing and distribution arrangements over the past sixteen
years. The Company's major effort has been focused on syndication
of film and television product and regional broadcast of film and
television product in the state of California. As previously
referenced, in order to further expedite and create revenue from
marketing and distribution efforts of the Company and its
distributor network, the Company requires significant additional
working capital to more fully and properly exploit any appropriate
markets and media while creating additional viable desire by the
general public to acquire or consume this product. The Company's
future plans include the acquisition of additional working capital
through financial offerings and/or other customarily used methods
of capital acquisition by small and midsize companies, including
debt or equity financing or a combination of both, to acquire
certain of this additionally needed working capital.
THE COMPANY'S COMPETITION IN THE MOTION PICTURE AND TELEVISION
INDUSTRY
The motion picture and television industry is highly competitive.
Management of the Company believes that a picture's theatrical
success is dependent upon general public acceptance, marketing
technology, advertising and the quality of the production. The
Company's motion picture and television productions compete with
numerous independent and foreign productions as well as productions
produced and distributed by a number of major domestic companies,
many of which are units of conglomerate corporations with assets
and resources substantially greater than the Company's. Management
of the Company believes that in recent years there has been an
increase in competition in virtually all facets of the Company's
business. The motion picture industry itself competes with
television and other forms of leisure-time entertainment. The
growth of pay television and the use of home video products may
have an effect upon theater attendance and non-theatrical motion
picture distribution. Since the Company may distribute product to
all of these markets, it is not possible to determine how its
business as a whole will be affected by these developments and
accordingly, the resultant impact on the financial statements.
Obtaining motion pictures for distribution and the distribution of
motion pictures are highly competitive endeavors. In the
distribution of motion pictures, there is very active competition
to obtain bookings of pictures in theaters and on television
networks and stations throughout the world. A number of major
motion picture companies have acquired motion picture theaters.
Such acquisitions may have an adverse effect on the Company's
distribution operation, endeavors, and its ability to book certain
theaters, which, due to their prestige, size and quality of
facilities, are deemed to be especially desirable for motion
picture bookings.
In producing and distributing television programs, competition is
intense because the number of available broadcast hours is limited,
other forms of programming compete to fill such time and there are
numerous suppliers of such programming, including the networks,
other motion picture companies and independent producers.
Management believes that the decision by the networks, individual
television stations and cable systems to license a motion picture
is based primarily on the quality of the picture, its
appropriateness for a general television audience, its box office
and critical success and, if the picture has previously been shown
on television, audience response as measured by ratings.
The Company's ability to compete in certain foreign territories
with either film or television product is affected by local
restrictions and quotas. In certain countries, local governments
require that a minimum percentage of locally produced productions
be broadcast, thereby further reducing available time for
exhibition of the product.
Recent regulations effecting the Company's competitive position in
the motion picture and television industry, include the United
States inability in 1994 to reach agreement with its major
international trading partners to include audiovisual works, such
as television programs and motion pictures, under the terms of the
General Agreement on Trade and Tariffs Treaty ("GATT"). The
failure to include audiovisual works under GATT allows many
countries (including members of the European Union, which consists
of Belgium, Denmark, Germany, Greece, Spain, France, Ireland,
Italy, Luxembourg, the Netherlands, Portugal and the United
Kingdom) to continue enforcing quotas that restrict the amount of
American programming which may be aired on television in such
countries. The Council of Europe has adopted a directive requiring
all member states of the European Union to enact laws specifying
that broadcasters must reserve a majority of their transmission
time (exclusive of news, sports, games shows and advertising) for
European works. The directive does not itself constitute law, but
must be implemented by appropriate legislation in each member
country. In addition, France requires that original French
programming constitute a required portion of all programming aired
on French television. These quotas generally apply only to
television programming and not to theatrical exhibition of motion
pictures, but quotas on the theatrical exhibition of motion
pictures could also be enacted in the future. There can be no
assurance that additional or more restrictive theatrical or
television quotas will not be enacted or that countries with
existing quotas will not more strictly enforce such quotas.
Additional or more restrictive quotas or more stringent enforcement
of existing quotas could materially and adversely affect the
business of the Company by limiting its ability to fully exploit
its productions internationally.
Distribution rights to motion picture and television productions
specifically are granted legal protection under the copyright laws
of the United States and most foreign countries. These laws
provide substantial civil and criminal sanctions for unauthorized
duplication and exhibition of motion pictures. Motion pictures,
musical works, sound recordings, art work, still photography and
motion picture properties are separate works, subject to copyright
under most copyright laws, including the United States Copyright
Act of 1976, as amended. The Company plans to take appropriate and
reasonable measures to secure, protect and maintain or obtain
agreements to secure, protect and maintain copyright protection for
its film and television projects under the laws of applicable
jurisdictions. Management is aware of reports of extensive
unauthorized misappropriation of videocassette rights to motion
pictures. Motion picture piracy is an industry-wide problem. The
Motion Picture Association of America, an industry trade
association (the "MPAA"), operates a piracy hotline and
investigates all reports of such piracy. Depending upon the
results of such investigations, appropriate legal action may be
brought by the owner of the rights. Depending upon the extent of
the piracy, the Federal Bureau of Investigation may assist in these
investigations and related criminal prosecutions.
Motion picture piracy is an international as well as a domestic
problem. Motion picture piracy is extensive in many parts of the
world, including South America, Asia (including Korea, China and
Taiwan), the countries of the former Soviet Union and the former
Eastern bloc countries. In addition to the MPAA, the Motion
Picture Export Association, the American Film Marketing Association
and the American Film Export Association monitor the progress and
efforts made by various countries to limit or prevent piracy. In
the past, these various trade associations have enacted voluntary
embargoes of motion picture exports to certain countries in order
to pressure the governments of those countries to become more
aggressive in preventing motion picture piracy. In addition, the
United States government has publicly considered trade sanctions
against specific countries which do not prevent copyright
infringement of United States produced motion pictures. There can
be no assurance that voluntary industry embargoes or United States
government trade sanctions will be enacted. If enacted, such
actions could impact the Company's competitive position in the
industry and the amount of revenue that the Company realizes from
the international distribution of its programs depending upon the
countries subject to such action and the duration of such action.
If not enacted or if other measures are not taken, the motion
picture industry (including the Company) may continue to lose an
indeterminate amount of revenues as a result of motion picture
piracy.
Further, the Code and Ratings Administration of the MPAA assigns
ratings indicating age-group suitability for theatrical
distribution of motion pictures. The Company expects to follow,
when appropriate, the practice of submitting applicable film
projects for such ratings.
United States television stations and networks, as well as foreign
governments, impose additional restrictions on the content of film
and television productions which may restrict in whole or in part
theatrical or television exhibition in particular territories.
Management's current policy is to distribute film and television
productions for which there will be no material restrictions on
exhibition in any major territories or media. This policy often
requires production of "cover" shots or alternate photography and
recording of certain scenes for insertion in versions of a
production exhibited on television or theatrically in certain
territories. There can be no assurance that current and future
restrictions on the content of the Company's productions may not
limit or affect the Company's ability to exhibit it in certain
territories and media.
DEPENDENCE ON A FEW MAJOR CUSTOMERS
The Company and its affiliated companies, due to the
diversification of interests as discussed supra, are not dependent
on a few major production successes or customers. Although the
Company has and will continue to utilize the services of a number
of experienced and well-known performers and technicians, the
Company's diversification is such that the loss of any one such
professional would not be a material matter that would seriously
adversely affect the Company's business operations.
THE COMPANY'S FUTURE CAPITAL REQUIREMENTS
The Company has currently been negotiating with various
broker-dealer investment banking firms to underwrite public
offerings of
the Company's securities in the total amount of $7,000,000. Terms
of the proposed public offerings have not been finalized but it is
anticipated by management that the Company will utilize the net
proceeds from such offering in the following general manner.
$ 700,000 administrative expenses
300,000 development expenses
3,000,000 production expenses
1,250,000 acquisition expenses
1,750,000 marketing expenses
$7,000,000 Total
The Company intends to further resolve and provide for its
liquidity needs as well as provide for the needed capital resources
to expand its operations through private placements on a
project-by-project basis in limited partnership form. To meet the
Company's interim liquidity and capital resources needs while the
Company's proposed future public offering and private placement
offerings are being prepared and examined, the Company, in addition
to short term borrowings, is presently contemplating further sales
of its unregistered common equity to accredited investors under one
or more exemptions that provide for the same.
EMPLOYEES
The Company presently has under contract eight officially elected
officers of the Company, one fulltime and two part-time
assistants.
Certain of the contracts have provisions that are contingent upon
the acquisition of substantial working capital by the Company.
Accordingly, certain of the officers do not devote their full time
to the business of the Company. Full and parttime employees
involved in motion picture and/or television development production
or distribution operations number between approximately 5-60
depending on the number of projects in process, the complexity of
a particular project, and production and/or marketing timetables.
Employees involved in the healthcare subsidiary currently number
approximately 25 year round. The educational seminar subsidiary
only uses personnel when presenting a seminar or similar event at
which time approximately 3 to 5 employees are required.
Item 2. Description of Property.
The Company owns no real properties. The Company's present offices
and facilities, located in both suburban and metropolitan
geographic areas, encompass approximately 5,500 square feet in
buildings of good condition. Locations which are occupied on a
month-to-month or yearly lease basis include the Company's
executive offices since 1984 at Seacliff Office Park, 2120 Main
Street, Suite 180, Huntington Beach, California, 92648; A film
production office at 13437 Ventura Blvd, Suite 228, Sherman Oaks,
California; and a video production office at 1119 Colorado Avenue,
Santa Monica, California. The Company's corporate records office
at 561 E. Jefferson, Detroit, Michigan, 48226; and a branch office
of the Company at 42 King Street, New York, New York, 10014.
Item 3. Legal Proceedings.
There are no material pending legal proceedings to which the
Company is a party or to which any of its assets are subject.
However, the Company is currently in ongoing negotiations for the
reimbursement of lost material which consists of eight 1" and/or
3/4"
and/or digital betacam videotape and 35mm film submaster copies of
feature length motion picture and television productions, owned or
controlled by the Company which were maintained at a post
production film and video facility. The Company's attorneys are
preparing litigation and related processes relative to the lost
material in the event the results of the negotiations are
unsatisfactory. The Company is seeking damages in the amount of
three hundred ninety seven thousand five hundred ($397,500) dollars
for the loss of its "stored material". Further, the co-producers
with the Company's subsidiary, World Wide Films Inc., pertaining to
a feature length film have commenced litigation to attempt to
desolve the Co-Production Agreement which exists between the
Co-Producer and the Subsidiary relative to the production
processes of
that feature length film. The Company's management and attorneys
believe the lawsuit to be groundless, therefore ultimately
resulting in a favorable Judgment for the Company.
Various legal actions, governmental investigations and proceedings
and claims may be instituted or asserted in the future by the
Company or against the Company and/or its subsidiaries including
those arising out of alleged deficiencies in the company's
products; governmental or industry regulations relating to safety,
financial services; employment-related matters; distributor,
exhibitor, co-producer, vendor, supplier, or other contractual
relationships; intellectual property rights; product warranties and
environmental matters. Some of the foregoing matters involve or
may involve compensatory, punitive or anti-trust or other treble
damage claims in varying amounts, environmental remediation
programs, sanctions or other relief which, if granted, would
require varying expenditures.
Litigation is subject to many uncertainties, and the outcome of
individual litigated matters is not predictable with assurance.
The Company does not reasonably expect, based on its analysis, that
any adverse outcome from such matters would have a material effect
on future consolidated financial statements for a particular year,
although such an outcome is possible.
Item 4. Submission of Matters to a Vote to Security Holders.
N/A
Part II
Item 5. Market for Common Equity and Related Stockholder Matters.
N/A
Item 6. Management's Discussion and Analysis or Plan of
Operations.
Management's discussion and analysis of financial condition and
results of operation should be read in conjunction with the
consolidated financial statements and related notes.
RESULTS OF OPERATIONS
The Company's revenue at 1998 yearend was $28,772, as compared to
$287,837 for the comparable period of 1997. The decrease is
primarily attributable to less fee income received for the
production of motion picture and television product. The 1998 net
loss prior to depreciation expense was $(30,971),and net profit
before depreciation for the comparable period ending 1997 of
$276,330, and after allowance for depreciation the loss for 1998
was $(228,100) and $(164,310) for 1997. Year Ending December 31,
1998, expenses for the Company's development, production and
distribution operations were $40,621 and its miscellaneous
operations were $19,122, totalling $59,743, compared to $424,744
and its miscellaneous operations were $11,507 totalling $452,147
for the comparable period of 1997. The increase in development and
production operating expenses of 1997 was primarily attributable to
the development and production of the feature length film entitled
"Shattered Illusions". The increase in administrative expense from
$18,143 in 1997 to $59,743 in 1998 is primarily due to the cost of
marketing and distribution of completed film and television
productions. The resultant per share earnings to common
stockholders was $0 in 1998 and $0 in 1997.
The Company derives its revenues from the licensing of its newly
created film and television productions, the licensing of its
inventory of previously produced films or television productions
and fees received for professional services provided to the
industry. The Company also receives revenue for the marketing and
distribution of product produced or owned by 3rd party producers
and production companies. The generation of revenue in the motion
picture and television industry is highly competitive which may
have a material impact on the Company's financial statements.
<TABLE>
The following table presents operations data for the periods
indicated.
<CAPTION>
Years Ended December 31,
1998 1997 1996
<S> <C> <C> <C>
Revenues $28,772 287,837 75,000
Costs and Expenses
Operating &
Administration expenses 59,743 18,143 13,921
Depreciation and
amortization *197,129 *463,654 306,463
Income (Loss) $(228,100) (164,310) (243,086)
* Reflects revaluing of net realizable value of inventory referred
to below.
</TABLE>
The Company has presented a consolidated balance sheet which
includes five wholly-owned active subsidiaries: World Wide Films
Inc., World Wide Productions Inc., World Wide Film & Television
Institute, World Wide Entertainment Inc., and Environmental
Services Corporation. The Company's charter allows it to branch
into diversified fields of enterprise provided management concludes
there is a significant potential for profit. It is the decision of
management to continue the major portion of the Company's
operations in the motion picture and television industry, but since
the primary business objective of the Company is to increase the
value of its stockholders' equity, if and when opportunities arise
to make profits for the corporation in a diversified industry, the
Company shall investigate and if appropriate, pursue such
opportunities. The motion picture and television segment of the
Company's current or planned operations is the only segment
material to the Company's financial statements or condition.
The Company's motion picture and television participation strategy
has been to expend its resources and to set in place relationships
and contracts in preparation for the continued development,
acquisitions, production and/or marketing/distribution of quality
moderate budget feature length motion pictures, documentaries,
docudramas and television productions. The strategy additionally
includes the acquisition of screenplays and teleplays suitable for
development/packaging and completed motion pictures and television
projects for licensing and marketing/distribution opportunities for
all applicable sales territories throughout the world. At such
time that the above-referred to additional working capital is
secured, it is the Company's opinion that substantial revenue will
be generated by the existing film and television library and future
distribution of potential new product, ultimately realizing its
projected return on investment.
Arrangements for participation by the Company in various feature
film and television productions for the last 24-month period
include gross and net revenue participations in the following
feature film and television production ranging between 2-60% of
worldwide revenue potential including all markets and all media
that the particular production is distributed in. (1) In 1997,
post production and distribution of the documentary entitled THE
OUTLAW TRAIL, 100 YEARS REVISITED, in association with Western
Sunset Films, an 8-year old Los Angeles based documentary
production company. (2) In 1998, development and production of the
television production entitled CLASSIC CAR, in association with
SLIM, Inc., a 4-year old Los Angeles based television production
company. Other arrangements include marketing and distribution of
a feature length film acquired by the Company entitled CITIZEN
SOLDIER originally produced by M&D Productions, a 7-year old Los
Angeles based film production company, purchased by the Company in
1995 and providing a 60% gross revenue participation to the Company
in perpetuity. Also, in 1995, the Company purchased thirty-seven
feature film submaster (videotape) prints from Stanley Pappas
providing 20% of any gross revenue of the product in perpetuity,
and the television production series entitled TIPS FOR BETTER
HEALTH and MARKET PLACES OF THE WORLD, both owned and produced by
Pacific Pictures Inc., a 9-year old Los Angeles based film and
television production company, and providing 5% gross revenue
co-production participation to the Company in perpetuity.
Additionally
in 1995, the Company licensed to Media One Broadcasting, a 12-year
old television syndication company, for $71,000 and 40%of net
revenue the right to telecast four feature motion pictures and
seventeen television productions which the Company owns as part of
its completed product library. In 1996 the Company licensed to
Wittman Productions Inc., a 4-year old Los Angeles based film
production company, twenty feature films and television productions
for $75,000 and 40% of net revenue for the right to telecast and
exploit those productions which the Company owns as part of its
library.
In 1995 and 1996, certain other film and television participations
of the Company included development and packaging arrangements, the
Company's review and in certain cases, advice and counsel on
screenplays and screenplay development scenarios for the subsequent
possible packaging and production and distribution of a particular
project. The most significant of these productions, their
production companies, and percentage of future gross revenue
allocated to the Company, were the feature length film entitled
CHOICE offered by production company Best Pictures Inc., a 4-year
old Los Angeles based production company, (50%); and the feature
length film entitled ALONG FOR THE RIDE offered by production
company Wittman Productions Inc., a 4-year old Los Angeles based
production company, (50%).
In 1999 and 2000, the Company expects to produce and/or distribute
two full length feature films or specialty television projects for
theatrical and ancillary worldwide exploitation. The productions
will be entirely or in large part under the responsibility, control
and ownership of the Company. All financing for the completion of
the recently completed feature length production entitled SHATTERED
ILLUSIONS featuring Morgan Fairchild, Bruce Weitz, Richard Lynch
and Dan Monahan was secured and the production was completed and is
now in distribution. The feature length production, ALONG FOR THE
RIDE and/or MR. CORKLESBY, has approximately 50% of the financing
secured and negotiations for the remainder in process.
<TABLE>
The following is a table showing the comparison of balance sheet
data between 1997 and 1998.
<CAPTION>
CATEGORY 1997 1998 % CHANGE
<S> <C> <C> <C>
Net Profit (Loss) (164,310) *(228,100) +(39%)
Assets 13,454,607 *9,840,060 -27%
Stockholder Equity 13,282,100 *9,670,373 27%
Liability 172,507 169,687 -1%
Net Revenues 287,837 28,772 -90%
Inventory 13,707,078 *10,303,698 -25%
* Reflects revaluing of net realizable value of inventory referred
to below.
</TABLE>
GENERAL
In fiscal 1997 and 1998 the Company continued its involvement in a
variety of film and television projects relative to development,
acquisitions, packaging, production and marketing/distribution
activities. The Company also continued to pursue potential
diversified business opportunities that have cash flow
possibilities. Management believes that a film or television
production's economic success is dependent upon several overlapping
factors including general public appetite of a potential genre or
performer at the time of release, domestic and international
marketing philosophy, applicable usage of existing and new and
emerging technology, advertising strategy with resultant
penetration and the overall quality of the finished production. The
Company's film and television productions may compete for sales
with numerous independent and foreign productions as well as
projects produced and distributed by a number of major domestic and
foreign companies, many of which are units of conglomerate
corporations with assets and resources substantially greater than
the Company's.
Management of the Company believes that in recent years there has
been an increase in competition in virtually all facets of the
Company's business. Specifically, the motion picture industry
competes with television and other forms of leisure-time
entertainment. Since the Company may for certain undetermined
markets and products distribute its product to all markets and
media worldwide, it is not possible to determine how its business
as a whole will be affected by these developments and accordingly,
the resultant impact on the financial statements.
The Company has currently obtained the investment capital to
produce and/or distribute a minimum of two full length feature
films or specialty television productions within the next two
years.In addition to the development, financing, production, and
distribution of motion picture and television product, the Company
expects to continue to exploit a portion or portions of the
Company's completed film and television library to a wide variety
of distribution outlets including network television, cable
television, satellite broadcast, pay-per-view, and home video
sales. Specifically, live action motion pictures are generally
licensed for broadcast on commercial television following limited
or wide release distribution to theatrical outlets (theaters),
homevideo and pay television.
Licensing to commercial television is generally accomplished
pursuant to agreements which allow a fixed number of telecasts over
a prescribed period of time for a specified license fee. Television
license fees vary widely, from several thousand to millions of
dollars depending on the film or television production, the number
of times it may be broadcast, whether it is licensed to a network
or a local station and, with respect to local stations, whether
the agreement provides for prime-time or off-time telecasting.
Licensing to domestic and foreign television stations (syndication)
is an important potential source of revenue for the Company,
although in recent years the prices obtainable for individual film
and television product in domestic syndication have declined as pay
television licensing has grown. The growth of pay television and
home video technologies,i.e. DVD (Digital Video Disk) and HDTV
(High Definition television), has had an adverse effect on the fees
obtainable from the licensing of film and television product to
networks and local television stations. Thereby potentially
effecting the Company's ability to generate substantive revenue
from this particular venue; however increasing revenue potential in
other areas.
Conversely, the Company may derive revenue from the marketing and
sale, either directly or through licensees, of motion pictures and
other filmed or videotaped product on videocassette or Digital
Video Disk for playback on a television set or monitor through the
use of videocassette recorders ("VCRs"), digital video
diskrecorders and continued advancements of pay television (cable),
satellite broadcast technologies, and Internet applications
domestically and internationally.
The Company currently holds the distribution rights to 277 motion
picture and television titles.The revenue competition relative to
existing or pending exploitation agreements of the Company's film
and television product library and current and future production
and distribution of projects is volatile due to the many
technological and innovative changes in the industry and also
changes regularly occurring in the international economy.
LIQUIDITY AND CAPITAL RESOURCES
Although the Company experienced positive cash flow prior to
provisions for depreciation expense, the Company experienced net
losses and negative cash flow from operations for yearend 1998, and
also, as of the comparable period in 1997. At December 31, 1997,
the Company had $56,541 in cash and no cash equivalents. At
December 31, 1998, the Company had $28,726 in cash and no cash
equivalents. The decrease in cash was due primarily to the decrease
in fee income for the development/production and/or
marketing/distribution of motion picture and television product.
The Company anticipates that its existing capital resources may be
adequate to satisfy its capital requirements for the forseeable
future. However, to accomplish the Company's planned activities, it
will need to raise additional funds through public or private
financings in the form of debt or equity. The Company has
available substantial loss carry forwards for federal income tax
purposes. The exact amount of the loss carryforwards is uncertain
until the Company reaches an understanding with the Internal
Revenue Service in that regard. In order to finance its
operations, working capital needs and capital expenditures, the
Company utilized revenue from licensing fees, loans, proceeds from
the private sale of equity securities, deferred compensation,
profit participation, and equity in exchange for services and
product.
In accordance with the Securities and Exchange Commission
"Regulation D", and subject to Rule 144 restrictions, the Company
issued 380,000 shares of its common stock and 0 shares of its
preferred stock in 1998 for cash and 215,500 shares of its common
stock and 0 shares of its preferred stock for product and services.
In 1997, the Company issued 385,500 shares of its common stock and
0 shares of its preferred stock for cash and 549,000 shares of its
common stock and 0 shares of its preferred stock for product and
services acquired by or provided to the Company. No proceeds from
the sale of the corporation's common stock or preferred stock has
ever been used to pay compensation to employees or executives of
the Company.
The Company was issued a standby irrevocable Letter of Credit from
the Huntington Bank, Cleveland, Ohio (now Society Bank), in the
amount of fifty thousand ($50,000). The terms of the Huntington
Bank Letter of Credit required that, if utilized, the Company would
pledge as collateral a portion of its film and television product
library. If the Letter of Credit were exercised, the resultant loan
would be secured by a commensurate portion of the Company's film
and television product library. The Huntington Bank terms also
provided that the Company would continue to be able to sell or
lease any portion of the product library as long as it retained
sufficient material to secure any loans made as a result of the
Letter of Credit.
The Company currently utilizes a fifty thousand ($50,000) dollar
primary line of credit with the Wells Fargo Bank of California, to
accommodate its daily cash flow needs and occasionally uses its
credit lines at other financial institutions and with its vendors
and suppliers.
The Company holds a Promissory Note for one hundred fifty thousand
($150,000) dollars from Mr.Gary T. Wittman payable to the Company
in annual installments of twenty five thousand ($25,000) dollars
each beginning April 30, 2000. The Note is secured by a pledge of
high grade stocks comprising a portion of the Dow Jones Industrial
average or higher quality securities and are valued at two hundred
and fifty thousand ($250,000) dollars or greater.
The Company's principal liquidity at yearend 1998 included cash
of$28,726 and net accounts receivable of $28,382 and at yearend
1997 included cash of $56,541 and net accounts receivable of
$25,226. 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 specialty 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) if any.
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 completed product
film and television library, participations in completed films, and
the continued development, production and marketing/distribution of
new film and television production opportunities.
<TABLE>
The following table presents equity and cash flow data for the
periods indicated.
<CAPTION>
December, 1998 1997 1996
<S> <C> <C> <C>
Stockholders' Equity *$9,670,373 *$13,282,100 $17,407,742
Common Stock Outstanding 47,629,592 47,033,790 46,099,592
Deficit (after depreciation) 228,100 164,310 243,086
Accumulated Deficit 1,345,240 1,117,140 802,828
Cash 28,726 56,541 196,318
*Reflects reduction in net realizable value referred to below.
</TABLE>
In 1998, management, for a second time, revalued its inventory
based on management's recent receipt of commentary from the
Securities and Exchange Commission, with an additional appraisal of
potential resale value, encompassing worthiness of the inventory
items as works of art, and potential licensing capabilities,
resulting in a reduction in management's estimate of a net
realizable value of $3,868,380. The results of the revaluations
effectuated in 1997 and 1998 resulted in a substantial reduction in
book value of approximately 51% for those items.
The Company expects its marketing operations to expand considerably
over the next three years. The current inventory and contracts
acquired by the Company are now beginning to be more vigorously
exploited. As the Company's focus moves from extensive
accumulation of product and contracts in an ownership capacity to
capital acquisition specifically for marketing purposes using
recently developed technologies. A substantial increase in income
and/or receivables are anticipated to take place beginning in the
last quarter of 1999. Although the Company is conservative
regarding its policy concerning the use of borrowed operating
capital, it is now in a position to use its reputation and contacts
in the industry to leverage operating funds profitably.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
The statements which are not historical facts contained in this
Form 10-KSB are "forward looking statements' within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, that
involve risks and uncertainties. The words "anticipate",
"believes", "expect", "intend", "may" or similar expressions used
in this Form 10-KSB as they relate to the Company or its Management
are generally intended to identify such forward looking
statements.
These risks and uncertainties contained in this Form 10-KSB include
but are not limited to, product demand and market acceptance risks,
the effect of economic conditions generally and retail/wholesale
in the motion picture and television industry and marketing
conditions specifically, the impact of competition, technological
difficulties, capacity and supply constraints or difficulties, the
results of financing efforts, changes in consumer preferences and
trends, the effect of the Company's accounting policies, weather
conditions, acts of God, and other risks detailed in the Company's
Security and Exchange Commission filings.
Item 7. Financial Statements.
REED & TAYLOR
CERTIFIED PUBLIC ACCOUNTANTS
PROFESSIONAL CORPORATION
561 E. JEFFERSON AVE.
DETROIT, MI 48226-4324
_________
ROBERT E. REED, CPA
LINDA W. TAYLOR, CPA
Telephone (313) 961-7258
Fax (313) 961-3110
INDEPENDENT AUDITOR'S REPORT
To the Shareholders and Board of Directors
World Wide Motion Pictures Corporation
We have audited the accompanying consolidated balance sheets of
World Wide Motion Pictures Corporation and subsidiaries as of
December 31, 1998 and 1997, and the related statements of income,
stockholders' equity, and cash flows for the years then ended.
These financial statements and accompanying notes are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted
standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above and accompanying notes present fairly, in all material
respects, the financial position of World Wide Motion Pictures
Corporation and subsidiaries as of December 31, 1998 and 1997, and
the results of its operations and its cash flows for the years then
ended in conformity with generally accepted accounting principles.
/s/ REED & TAYLOR, CPAs, P.C.
Reed & Taylor, CPAs, P.C.
Detroit, Michigan
April 19, 1999
<TABLE>
Consolidated Balance Sheets
<CAPTION>
WORLD WIDE MOTION PICTURES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
AUDITED
1998 1997
Assets ------- -------
<S> <C> <C>
Cash 28,726 56,541
Accounts receivable 28,382 25,226
Note receivable 150,000 150,000
Work in process 438,606 436,985
Completed motion pictures/
Television productions 8,622,731 12,026,111
Film properties (screenplays/teleplays) 1,680,967 1,680,967
Equipment 49,937 46,437
Other assets 54,500 49,000
Less accumulated depreciation (1,213,789) (1,016,660)
Total assets $9,840,060 $13,454,607
Liabilities
Accounts payable 3,246 5,053
Common stock payable 61 1,124
Preferred stock payable 80 30
Notes payable 16,300 16,300
Deferred credit to production costs 150,000 150,000
Total liabilities 169,687 172,507
Stockholders' equity
Common Stock $.001 Par Value, 100,000,000
shares authorized, 47,629,592 issued 47,629 47,034
Preferred Stock $.01 Par Value, 1,000,000
shares authorized, $10.00 Par Value 100,000
Shares authorized, 121,217 issued 1,212 1,212
Additional paid-in capital 10,966,772 14,350,994
Retained earnings deficit (1,345,240) (1,117,140)
Total Stockholders' Equity $9,670,373 $13,282,100
Total Liabilities and
Stockholders' Equity $9,840,060 $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 197,129 434,004
Total operating expense 523,576 452,147
Net income (loss) $(228,100)$(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) $(228,100) $(164,310)
Adjustments to reconcile net income (loss) to net
cash provided by or used in operating activities:
Depreciation $197,129 463,654
Deferred credit to production costs 150,000
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)
Decrease in fixed assets valuation 3,868,3804,091,950
Adjustment to contributed capital $(3,854,380)$(4,091,950)
Cash used in investing activities (5,121) $(436,991)
Financing activities:
Proceeds from issuance of restricted stock $ 14,253280,620
Net decrease in cash $(27,815) (139,777)
Cash balances - beginning of year $ 56,541 196,318
Cash balances - end of year $ 28,726 $ 56,541
Supplemental cash flow information
Schedule of noncash transactions
Stock issued for services and product 215,500 549,000
Reduction in inventory valuation<F1> $3,854,380 $4,091,950
Reclassification of Note Receivable<F2> $150,000 $150,000
<FN>
<F1>
The substantial decrease in fixed asset value was the result of
the Company's survey of its motion picture and television film
inventory. After consulting with its accountants and the review
of current Financial Accounting Standards Board (FASB)
pronouncements and comments from the Securities and Exchange
Commission Staff to management, the reduced value from film by
film analysis and accelerated amortization of $4,091,950 (1997)
and $3,854,380 (1998) is appropriate. See Note 2 of Notes to
Consolidated Financial Statements.
<F2>
Upon conferring with the Company's Accountants, the Company
reclassified the Promissory Note from income to a deferred credit
to production costs as explained in Note 11 to the Notes to
Consolidated Financial Statements.
<F3>
See Notes to Consolidated Financial Statements
</FN>
</TABLE>
<TABLE>
Stockholders' Equity
<CAPTION>
WORLD WIDE MOTION PICTURES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
AUDITED
Number of
Outstanding
Shares Par Additional Retained
Common Preferred Amount Paid-in Capital Earnings Total
------- --------- ------- ----------- --------- ------
<S> <C> <C> <C> <C> <C> <C>
Balances,
Dec. 31,
1997 47,033,790 121,217 48,246 14,350,994 (1,117,140)13,282,100
Stock
issued 595,500 0 595 (3,868,380) (3,868,380)
- - Cash 380,000
- - Services 215,500
- - Film 0
Net loss, 228,100 (228,100)
year ended
Dec. 31,
1998
Balances,
Dec. 31,
1998 47,629,290 121,217 48,841 10,966,772 (1,345,240)9,840,060
<FN>
<F1>
See Notes to Consolidated Financial Statements
</FN>
</TABLE>
WORLD WIDE MOTION PICTURES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(To be read in conjunction with Consolidated Financial Statements for
yearend December 1998)
NOTE 1 DESCRIPTION AND HISTORY OF THE BUSINESS
The Company was founded in July 1977 and incorporated December 9,
1980 under the laws of the state of Michigan. In March 1981, the
Company acquired G.L. Productions Inc. which was a production
and distribution company for short subjects, docudramas,
documentaries and industrial films, many of which were made in
conjunction with the U.S. Government. As a result of the
transaction, the Company acquired a film and television completed
product library and related film production equipment. The
transaction was facilitated by the exchange of two million
(2,000,000) shares of the Company's common stock class of
securities for 100% of the common stock of G.L. Productions Inc.
The Company has also acquired other completed motion picture and
television productions and acquired marketing/distribution
interest in additional motion picture and television productions.
The Company's total completed product library of live action
motion pictures and videotaped productions consists of 277 works
of various lengths and subject matter applicable for marketing
through various media in foreign and/or domestic markets.
In November 1983 the Company merged with the National Power
Corporation, a publicly-held corporation. The National Power
Corporation's common stock class of securities was traded on the
over-the-counter market with registered broker/dealers throughout
the United States making a market in its stock. The merger
process resulted in a change in the Company's number of shares
issued, outstanding, and authorized and a change in par value.
The Company operates and/or maintains nine wholly-owned
subsidiaries, three of which are currently active, to enhance the
operation of its core business and diversified enterprises. The
Company has an active Board of Directors which currently consists
of eighteen members with staggered terms, all of whom are either
a chairperson or a member of one or more of the four Board
designated committees: executive, finance, audit, and personnel.
The Company also maintains four operating committees which are
production and product development, special projects, minorities,
and standards.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries. It is the opinion
of management that the accompanying statements and notes thereto
present fairly the financial position of the Company and do not
contain misleading information. Because the commercial potential
of individual motion pictures and television programming varies
dramatically, and does not bear any relationship to their
production, acquisition or marketing costs, it is impossible to
predict or project a trend of the Company's income or loss.
However, the likelihood of the Company reporting losses in the
short term is increased by the industry's general method of
accounting which requires the early recognition of the entire
loss (through increased amortization) in instances where a motion
picture or television program produced or acquired is not
expected to recover the Company's investment. On the other hand,
the profit from a successful film or television production is
recognized over the entire period that revenues are generated by
that motion picture or television program. This method of
accounting may also result in significant fluctuations in
reported income or loss, particularly on a quarterly basis,
depending on the Company's release of product into the
marketplace and overall domestic/international marketing schedule
and the performance of individual motion pictures or television
programs.
The Company's revenue is derived from a variety of sources.
Currently the most significant of these sources are its fees as
packager and/or the managing production company of various film
and television projects (including feature length motion
pictures, documentaries, docudramas, and television productions),
film and television marketing & distribution fees, fees from the
licensing and/or rental of its completed film and television
product library and related entertainment industry consultation
fees.
A significant portion of the Company's assets was purchased with
the issuance of shares of its common and preferred stock. Twelve
million four hundred ninety one thousand one hundred and eleven
($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. In 1998, management for a second time revalued its
inventory based on management's recent receipt of commentary from
the Securities and Exchange Commission, with an additional
appraisal of potential resale value, encompassing worthiness of
the inventory items as works of art, and potential licensing
capabilities, resulting in management's estimate of a net
realizable value of $3,868,380. The results of the reevaluations
effectuated in 1997 and 1998 resulted in a substantial reduction
in book value of approximately 51% for those items. The 1997
revaluation and resulting reduction in value combined with the
1998 revaluation and its resulting reduction and value lowered
the balance sheet presentation of the asset identified as
"completed motion pictures and television products". Also, a
depreciation policy has been adopted to amortize the film and
television inventory over a 10-year period. The Company has
instituted a maximum 10-year depreciation schedule which will
result in the amortization of 33-1/3% of the film and television
product inventory to be marketed over the next three years.
Although the Company has on its Board of Directors and
professional staff personnel qualified to estimate the value of
its film and television inventory, for internal verification
purposes, it retained the services of an independent appraiser
who reviewed the Company's film and television completed product
library, ensuring a greater measure of objectivity as regards the
carrying amount of such inventory on the Company's December 31,
1998 balance sheet.
The Company is continually negotiating with various potential
lessors, both foreign and domestic, of portions of its film and
television product library. The Company currently utilizes
certain state-of-the-art exploitation venues such as
Pay-Per-View, satellite transmission, and the Internet to expose
its
catalog of library product to the public. Full marketing of the
Company's investment in its film and television product inventory
is dependent on the acquisition of additional capital. The
Company depreciates each film or television program starting with
its specific marketing by the Company.
The Company presents an "unclassified" balance sheet. Cash
includes cash on deposit in checking and savings accounts with no
cash equivalents at December 31, 1998 and 1997.
The Company reviews the current pronouncements of the accounting,
government and industry professionals. In that regard, it
continually analyzes its accounting policies to ensure that it is
current in the presentation of its financial statements,
particularly FASB Statement No. 53 referred to above, and No. 86,
89 and 121, and the Emerging Issues Task Force No. 96-6,
regarding development costs incurred after May 26, 1996, and the
possible substantial impairment of assets. The Company believes
it is not materially affected by any current issues at this time.
NOTE 3 EARNINGS PER SHARE
As a result of a net loss from operations for years ended
December 31, 1997 and 1998, there are no earnings per Common
share for such periods. As a result of such net losses, there
are no fully diluted earnings per Common share after potential
conversion of all convertible Preferred shares.
NOTE 4 TAXES
The Company presents its accounting statements on an accrual
basis. Certain state and local tax filings may differ from the
federal returns to take advantage of beneficial local tax law.
As of December 31, 1998, the Company and its subsidiaries have
sustained a cumulative net operating loss which can be offset
against future taxable income. As a result of recorded net
operating losses, the Company has not recognized any state and
federal income tax liability. The Company does not use or expect
to utilize the accelerated depreciation option available under
the U.S. Tax Code.
NOTE 5 LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the
Company is a party or to which any of its assets are subject.
However, the Company is currently in ongoing negotiations for the
reimbursement of lost material which consists of eight 1" and/or
3/4" and/or digital betacam videotape and 35mm film submaster
copies of feature length motion picture and television
productions, owned or controlled by the Company, which were
maintained at a post production film and video facility. The
Company's attorneys are preparing litigation and related
processes relative to the lost material in the event the results
of the negotiations are unsatisfactory. In this regard, the
Company is seeking damages in the amount of three hundred ninety
seven thousand five hundred dollars ($397,500) for the loss of
its "stored material". Further, the co-producers with the
Company's subsidiary, World Wide Films Inc., pertaining to a
feature length film, have commenced litigation to attempt to
dissolve the co-production agreement which exists between the
Co-Producer and the Subsidiary relative to the production processes
of that feature length film. The Company's management and
attorneys believe the lawsuit to be groundless, therefore
ultimately resulting in a favorable judgment or settlement for
the Company.
Although no litigation is contemplated or forseeable, various
legal actions, governmental investigations and proceedings and
claims may be instituted or asserted in the future by the Company
to protect its interest or against the Company and/or its
subsidiaries including those arising out of alleged deficiencies
in the Company's products; governmental or industry regulations
relating to safety, financial services; employment-related
matters; distributor, exhibitor, co-producer, vendor, supplier,
or other contractual relationships; intellectual property rights;
product warranties and environmental matters. Some of the
foregoing matters involve or may involve compensatory, punitive
or anti-trust or other treble damage claims in varying amounts,
environmental remediation programs, sanctions or other relief
which, if granted, would require varying expenditures.
Litigation is subject to many uncertainties, and the outcome of
individual litigated matters is not predictable with assurance.
The Company does not reasonably expect, based on its analysis,
that any adverse outcome from such matters would have a material
effect on future consolidated financial statements for a
particular year, although such an outcome is possible.
NOTE 6 SUMMARY OF CORPORATE SECURITIES MATTERS AND
STOCK ISSUANCE
At December 31, 1998, all general voting power was vested in the
holders of the common stock class of securities of the Company.
At that date, the holders of common stock were entitled to one
vote per share and in that aggregate, had 100% of the general
voting power provided in the Company's Restated Certificate of
Incorporation. The Restated Certificate of Incorporation
provides that all shares of common stock share equally in
dividends (other than dividends declared with respect to any
outstanding preferred stock), except that any stock dividends are
payable in shares of common stock to holders of that class of
securities. Upon liquidation, all shares of common stock are
entitled to share equally in the assets of the Company available
for distribution to the holders of such shares. The preferred
stock class of securities of the Company ranks (and any other
oustanding preferred stock of the company would rank) senior to
the common stock in respect of dividends and liquidation rights.
Since November 1983, the Company's shares of Common Stock have
traded on the over-the-counter market. The Company is currently
a fully reporting Rule 144 Regulation D publicly-held
corporation. The Company's NQB (National Quotations Bureau) call
symbol is WWMP and its Standard & Poors Cusip no. is 981536 10 5.
The Company has advised its stockholders and the public that it
expects to apply for NASDAQ quotation and/or quotations on other
primary and/or secondary exchanges. The Company's common stock
is thinly traded at this printing primarily through "inter-dealer
trades". The Company has previously been quoted on the OTC
(Over-The-Counter) Electronic Bulletin Board. Castle Securities
Inc., located in New York, the Company's most recent active
primary marketmaker, went into bankruptcy resulting in the
Company's temporary removal from quotation on the Electronic
Bulletin Board. The Company has recently filed its Registration
Statement on Form 10SB with the U.S. Securities and Exchange
Commission and accordingly, files annual, periodic, and current
reports required pursuant to Section 12(g) of the Exchange Act.
It is anticipated that substantial trading of the Company's
Common Stock will not commence until no further comments have
been received from the Commission relative to the filing of the
Registration Statement.
The following illustrates the Company's common and preferred
stock authorized, issued, and outstanding at December 31, 1998.
Common Stock:
Par Value $ .001
Shares Authorized 100,000,000
Shares Issued and Outstanding 47,629,592
Preferred Stock:
Par Value (Stated Value .01) $ 10.00
Shares Authorized 100,000
Shares Issued And Outstanding 20,000
Par Value $ .01
Shares Authorized 1,000,000
Shares Issued And Outstanding 101,217
NOTE 7 SUMMARY OF SUBSIDIARIES
The Company operates and/or maintains 9 wholly-owned
subsidiaries. Certain of these subsidiary corporations are
used to produce and/or market individual motion pictures or
television productions. Currently, three of the motion picture
production subsidiary corporations are active. World Wide
Productions, Inc., for the purpose of producing the specialty
television production tentatively entitled 'Classic Car' (in
production) and the feature length motion picture tentatively
entitled "Along for the Ride" (in development); World Wide
Entertainment, Inc., for the purpose of producing the feature
length motion picture tentatively entitled "Mr. Corklesby" (in
development); and World Wide Films Inc., which has recently
completed the production of the feature length motion picture
entitled "Shattered Illusions" (in distribution). The Company
operates two diversified subsidiaries, one of which is related
to the Company's core industry, World Wide Film and Television
Institute, Inc. The Institute's business is the development,
production, marketing, and implementation of educational
symposiums, workshops, lectures and forums in areas covering
the entertainment industry, specifically film and television
financing, packaging, production, marketing/distribution, and
the networking process that accompanies the entertainment
business. Revenue is created primarily from the sale of
tickets to these events. Primary symposiums are designed to be
held annually and to accommodate 250 - 1000 people per event.
Workshops are designed to be held in between the primary
symposiums and to accommodate a maximum of 15 individuals. The
symposium and workshop events are further designed to be
duplicated in major cities around the country when and if
appropriate.
The Company has made preliminary plans to enter into the
diversified business of providing medical home health care
services to the general public and providing temporary nursing
staff to hospitals and various other health care institutions
through its subsidiary World Wide Medical Services Ltd.
NOTE 8 SUMMARY OF STOCK OPTIONS, EMPLOYMENT CONTRACTS,
ASSOCIATES, POTENTIAL DILUTION, CONTINGENT
LIABILITY AND ACCRUED PROFESSIONAL FEES
The Company has provisions for the issuance of options to
purchase shares of its Common Lettered Stock and certain of its
Preferred Stock now issued has conversion provisions wherein
the holder may convert his/her Preferred shares to Common
Lettered Stock under certain conditions. There are one hundred
and twenty one thousand two hundred seventeen (121,217) shares
of Preferred Stock outstanding that is potentially convertible
to shares of Common, dependent upon the market price of the
Common Stock as determined by one or more exchanges. (See
table below for potential conversion of Preferred Stock to
Common Stock.) The Company, from time to time, has entered
into agreements to issue its Common Lettered Stock for certain
goods and services and arrangements beneficial to the ongoing
activities of the Company. Further, various employee
contracts, non-exclusive associates agreements, and service or
purchase contracts contain provisions for stock issuance. The
Company expects to continue to enter into such agreements
subject to all applicable securities law. The potential
contingent dilution from the issuance of the above Common Stock
for these purposes is nine million four hundred and ninety
eight thousand three hundred forty (9,498,340) shares. At
December 31, 1998, the Company had an unpaid contingent salary
liability to its President and Chief Executive Officer, Paul D.
Hancock. Mr. Hancock has waived this accumulated back salary
of three million eighty thousand dollars ($3,080,000).
However, the corporation expects to approve either the issuance
of Preferred and/or Common Stock or stock options as
compensation therefor. Payment of accrued and previously
expensed professional fees of two hundred and sixty nine
thousand one hundred ninety one dollars ($269,191) (including
legal, accounting and financial advisory services) have been
waived by the providers of those services, who are also
stockholders, and accounted for as contributed capital.
<TABLE>
OUTSTANDING CONVERSION RATIO FROM PREFERRED TO COMMON:
<CAPTION>
Preferred Stock
Price per Share Conversion
Common ----------------------
Par No. of Conversion Market Shares
Series Value Shares Ratio* Price After Exchange
- ------- ------- ------- ------- ------- -------
<C> <C> <C> <C> <C> <C>
A $10.00 20,000 1x1 $10.00 20,000
B .01 717 1x20 10.00 14,340
C .01 1,000 1x20 3.00 20,000
D&E .01 26,000 1x20 5.00 520,000
F&G .01 51,000 1x2 5.00 102,000
H&I .01 15,000 1x10 5.00 150,000
J .01 7,500 1x20 .10 150,000
Totals 121,217 976,340
</TABLE>
* Preferred to Common
NOTE 9 COMMON STOCK RESTRUCTURING
Pursuant to recent shareholder action (Annual Shareholder's
Meeting of January 30, 1999) to approve management
recommendations, on September 24, 1998, the corporation's Board
of Directors adopted resolutions (a) 'to amend Article 3 of the
Articles of Incorporation of the Company to add Section (12)
stating that "the Board of Directors may effect a stock
combination restructuring (reverse stock split) of the
Corporation's outstanding shares of Common Stock class of
securities if the Board of Directors in their sole judgment
believe such restructuring is in the best interest of the
Corporation" and (b) "file the foregoing amendment with the State
of Michigan Securities Bureau, the Company's state of
incorporation, to restate the Company's certificate of
incorporation." This action, if taken by the Company's Board of
Directors, would amend the Company's Restated Certificate of
Incorporation and Articles of Incorporation (the "Amendment") to:
(i) effect a stock combination restructuring (reverse stock
split) of the Company's outstanding shares of the Common Stock
class of securities (the "Reverse Split"), and (ii) to provide
for the payment of cash in lieu of fractional shares otherwise
issuable in connection therewith. In this regard, the Reverse
Split, if effected, will not change the number of the Company's
authorized shares of Common Stock or the par value of the Common
Stock.
NOTE 10 NOTE RECEIVABLE, NOTE PAYABLE, LETTERS OF CREDIT,
LINES OF CREDIT, PROMISSORY NOTE
The Company holds a Promissory Note for one hundred fifty
thousand dollars ($150,000) from Mr. Gary T. Wittman payable to
the Company in annual installments of twenty five thousand
dollars ($25,000) each beginning April 30, 2000. The Note is
secured by a pledge of high grade stocks comprising a portion of
the Dow Jones Industrial average or similar quality securities
and are valued at December 31, 1998 at two hundred and fifty
thousand dollars ($250,000) or greater.
The Company has a note payable in the amount of sixteen thousand
three hundred dollars ($16,300). The note holder holding the
note payable has agreed to waive payment until such time that the
Company has sufficient working capital to accomplish its
objectives.
The Company was issued a standby irrevocable Letter of Credit
from the Huntington Bank, Cleveland, Ohio (now Society Bank), in
the amount of fifty thousand dollars ($50,000) to serve as a
secondary standby line of credit. The terms of the Huntington
Bank Letter of Credit required that, if utilized, the Company
would pledge as collateral a portion of its film and television
product library. If the Letter of Credit were exercised, the
resultant loan would be secured by a commensurate portion of the
Company's film and television product library. The Huntington
Bank terms also provided that the Company would continue to be
able to sell or lease any portion of the product library as long
as it retained sufficient material to secure any loans made as a
result of the Letter of Credit.
The Company currently utilizes a fifty thousand dollars ($50,000)
primary line of credit with the Wells Fargo Bank of California to
accommodate its daily cash flow needs and occasionally uses its
credit lines at other financial institutions and with its vendors
and suppliers.
NOTE 11 RECLASSIFICATION OF DEFERRED CREDIT
The Promissory Note in the amount of one hundred fifty thousand
dollars ($150,000) referred to above in Note 10 was received in
1997 and represents a credit to production costs to be incurred
for motion pictures and/or television projects expected to be
made in the near future. Upon receipt of the Promissory Note for
one hundred fifty thousand dollars ($150,000) in 1997, income in
like amount was recorded at that time rather than being
recognized as a deferred credit to future production costs. This
amount has been reclassified as a deferred credit in the 1997
financial statements herein and income previously shown for 1997
has been reduced accordingly with an offsetting increase in
retained-earnings deficit at December 31, 1997.
NOTE 12 YEAR 2000 ISSUE
The Year 2000 issue is the result of computer programs being
written using two digits instead of four to define the applicable
year. Any of the Company's computer programs that have
time-sensitive software or facilities or equipment containing
embedded
micro-controllers may recognize a date using "00" as the year
1900 rather than the Year 2000. This could cause a system failure
or miscalculations resulting in potential disruptions of
operations, including, among other things, a temporary inability
to process transactions, send invoices or engage in similar
normal business activities.
The Company has assessed its hardware and software systems, which
are comprised solely of an internal personal computer network and
commercially available software products. Based on this
assessment, the Company believes that its hardware and software
systems are Year 2000 compliant. The Company has begun to assess
the embedded system contained in its leased or expected to be
leased equipment and expects to finish this assessment by the end
of June 1999. At this time, the Company is uncertain whether the
embedded systems contained in its leased or expected to be leased
equipment are ready for the Year 2000. In addition, the Company
is contacting its key vendors, suppliers,customers and other
third parties to determine if there are any significant Year 2000
exposures which would have a material effect on the Company.
The Company is not yet aware of any Year 2000 issues relating to
those vendors, suppliers, customers and other third parties with
which the Company has a material relationship. There can be no
assurance, however,that the systems of those vendors, suppliers,
customers and other third parties on which the Company or its
systems rely will not present Year 2000 problems that could have
a material adverse effect on the Company.
The Year 2000 issue presents a number of other risks and
uncertainties that could impact the Company, such as disruptions
of service from critical third parties such as utilities
providing electricity, water or telephone service. If such
critical third party providers experience difficulties resulting
in disruption of service to the Company, a shutdown of the
Company's operations at individual facilities could occur for the
duration of the disruption. The Year 2000 project cost has not
been material to date and, based on preliminary information, is
not currently anticipated to have a material adverse effect on
the Company's financial condition, results of operations or cash
flow in future periods. However, if the Company, its vendors,
suppliers, customers or other third parties are unable to resolve
any Year 2000 compliance problems in a timely manner, there could
result a material financial impact on the Company.
Accordingly, management plans to devote the resources it
considers appropriate to resolve all significant Year 2000
problems in a timely manner. This assessment is estimated to be
completed no later than mid-1999. After completion of its Year
2000 assessment, the Company will develop contingency plans to
reduce its Year 2000 exposure and expects to have such
contingency plans in place by September 1999. Readers should
understand that the dates on which the Company believes the Year
2000 project will be completed are based upon management's best
estimates, which were derived utilizing assumptions of future
events, including the availability of certain resources,
third-party modification plans and other factors. However, there
can be
no guarantee that these estimates will be achieved, or that there
will not be a delay in, or increased costs associated with, the
implementation of the Company's Year 2000 compliance project. A
delay in specific factors that might cause differences between
estimates and actual results include, but are not limited to, the
availability and cost of personnel trained in these areas, the
ability of locating and correcting all relevant computer codes,
timely responses to and corrections by third parties and
suppliers, the ability to implement interfaces between the new
systems and the systems not being replaced, and similar
uncertainties.Due to the general uncertainty inherent in the Year
2000 problem, resulting in part from the uncertainty of the Year
2000 readiness of third parties and the interconnection of
national and international businesses, the Company cannot ensure
that its ability to timely and cost effectively resolve problems
associated with the Year 2000 issue will not affect its
operations and business, or expose it to third party liability.
Item 8. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure.
N/A
Part III
Item 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance With Section 16(a) of the
Exchange Act.
The Board of Directors is divided into three classes as nearly
equal in number as may be, with the term of office of one class
expiring each year.
When the number of directors is changed, any newly created
directorships or any decrease in directorships are so apportioned
among the classes as to make all classes as nearly equal in
number as possible. When the number of directors is increased by
the Board and any newly created directorships are filled by the
Board, there are no classifications of the additional directors
until the next annual meeting of shareholders. Notwithstanding
the foregoing, unless voting rights thereon are equated to those
on the Common Stock, whenever the holders of any series of
Preferred Stock are entitled, voting separately as a class, to
elect directors, the terms of all directors elected by such
holders expires at the next succeeding annual meeting of
shareholders. Subject to the foregoing, at such annual meeting
of shareholders the successors to the class of directors whose
term then expires are elected to hold office for a term expiring
at the third succeeding annual meeting. At each annual meeting
of the shareholders for the election of the directors (or special
meeting of shareholders in lieu thereof) at which a quorum is
present, those persons equal in number to the number of director
positions for which a class, series or aggregation of classes
and/or series are voting, who receive the highest number of votes
in such class, series or aggregation which is voting for
directors, counting all shareholders voting in person or by proxy
entitled to vote therefor, are elected as directors.
Vacancies that occur prior to the expiration of the then current
term (whether as a result of a newly created director position on
the Board or otherwise), if filled by the Board shall be filled
only until the next succeeding annual meeting. Each of the
directors of the Company hold office until the annual meeting of
shareholders at which the class to which the director has been
elected has expired and until his successor is elected and
qualified or until his earlier death, resignation or removal.
<TABLE>
The following sets forth the names and ages of all of the
Directors and Executive Officers of the Company, positions held
by such person, length of service, when first elected or
appointed and term of office.
<CAPTION>
DIRECTOR AND/OR
EXECUTIVE OFFICER FIRST ELECTED TERM OF
NAME AND AGE POSITION OR APPOINTED OFFICE
<S> <C> <C> <C>
Charles Bailey Chairman of the 1985 2000
Age 66 Board of Directors
Paul D. Hancock President/Chief 1977 Director/2000
Age 43 Executive Officer Officer/2015
and Director
A. Robert Sobolik Exec. Vice President1981 Director/2000
Age 63 Treasurer and Director Officer/
Indefinite
Larry Epstein, Esq. Secretary 1989 Director/1999
Age 50 Director Officer/
Indefinite
John R. Woodward Vice President, Film1982 Director/2001
Age 48 Production and Officer/
Director Indefinite
George T. Lindsey Vice President, Creative1982 Director/2001
Age 61 Development and Officer/
Director Indefinite
James J. Aitken, C.P.A. Vice President, Finance1982 Director/2001
Age 62 and Administration Officer/
Director Indefinite
John Levingston Vice President/Marketing 1983 Officer/
Age 72 and Distribution Indefinite
John D. Foley Director 1990 1999
Age 48
Robert E. Capps, Jr. Director 1990 1999
Age 48
Ben Whitfield Jr. Esq. Director 1980 1999
Age 49
Brendan Cahill Director 1986 2000
Age 52
Alex Trebek Director 1987 1999
Age 58
Leroy J. Steele Director 1987 1999
Age 76
Joseph Dyson, C.P.A. Director 1983 2000
Age 62
Peter Lallos Director 1988 2000
Age 65
Philip Langwald Director 1985 2001
Age 92
Fred Baron Director 1994 2001
Age 47
Charles Newirth Director 1994 2001
Age 43
Brian J. Patnoe Associate V.P. 1986 Indefinite
Age 40 Administration
Michael Maghini Associate V.P. 1985 Indefinite
Age 41 Finance
David A. Toma Associate V.P. 1990 Indefinite
Age 49 Production
</TABLE>
CHARLES C. BAILEY, age 66* - Mr. Bailey is the Chairman of the
Board of the Company. Mr. Bailey has most recently been the
producer of a variety of Broadway and other theatrical stage
productions including the award winning musical "My One and Only"
with Twiggy and Tommy Tune, "Stardust" with Sean Young, "Lucky Guy"
with Faith Prince, and "Dream" with Lesley Ann Warren and Margaret
Whiting. In addition, he is the Executive Producer of King Street
Productions, a theatrical production company in New York City,
which develops and produces Broadway and regional stage
productions. Prior to his professional Broadway activities, Mr.
Bailey was Senior Vice President of Thompson McKinnon Securities
Inc. and previously Vice President of Prudential Bache Securities
(now Prudential Securities), both in New York and two of Wall
Street's leading investment banking firms. As a fully licensed
investment banker with Prudential Bache and Thompson McKinnon, Mr.
Bailey prepared a wide variety of multi-million dollar national
municipal bond issues for the capital markets and was responsible
for the underwriting of those and other issues. In conjunction
with Mr. Bailey's investment banking responsibilities, he was the
principal of O.B. Bailey Associates, a financial advisory service.
He has been involved in international business and finance for more
than 35 years, encompassing organizations and enterprises
throughout the Orient, Europe, South America and the Middle East.
He is a graduate of Hamilton College in New York and a member of
several professional organizations including past National
Director, International Director of the United States Junior
Chamber of Commerce and Commission Chairman of Junior Chamber
International (JCI).
PAUL D. HANCOCK*, age 43 - Mr. Hancock is the President and Chief
Executive Officer of the Company. He is the founder and developer
of its film/television production concept and corporate mission
objectives, and has served as President and Chief Executive Officer
since its inception. Prior to and during his tenure with the
corporation, he has functioned as a production and business advisor
to various film financing and production companies and has
supervised the development/packaging and production of a wide
variety of moderately budgeted/cost-controlled feature film and
television projects. Mr. Hancock was responsible for leading one
of the first exploratory film finance teams to the Wall Street
capital markets in the late 1970's in order to develop and
encourage motion picture financing by the investment banking
community. He was instrumental in the formulation of entertainment
industry relationships specifically in moderate budget feature film
production financing with companies such as E.F. Hutton & Co.;
Kidder, Peabody and Prudential-Bache Securities. Mr. Hancock has
also been a lecturer on various aspects of the entertainment
industry, entrepreneurship and finance at University Graduate
Schools of Business, seminars and conferences, is a frequent radio
talk show guest discussing independent film financing, production
and marketing, and is published in various print media encompassing
film and television industry topics. He has developed and
maintained a specialized expertise in and conducted diverse
consulting for motion picture and television financial packaging,
specifically for public securities offerings, private sector
investments and commercial banking. He was previously employed in
a variety of management capacities in the theater and hotel
businesses for Farber Enterprises and Ramada Incorporated. Mr.
Hancock attended the Cranbrook Academies, Eastern Michigan
University, and the University of California at Los Angeles. He
belongs to several professional organizations including the Academy
of Television Arts and Sciences.
A. ROBERT SOBOLIK*, age 63 - Mr. Sobolik is the Executive Vice
President and Treasurer of the Company. He has previously held
senior corporate positions including Vice President of Operations
for Stratavision Inc. in Southern California specializing in
computer software development. Mr. Sobolik has been a financial
consultant and advisor to various international and U.S. Fortune
500 corporations including HRT Industries; Senior
Consultant/financial services, Saudi Airlines in Saudi Arabia and
Senior Project
Manager for Sierra Power Co. and the Texas Legislative Counsel.
Prior to his consulting services, he was Project Manager and
Director for computer systems in corporate development with the
U.S. Borax Chemical Corporation and before that supervised computer
operations, computer systems and corporate data processing. He has
also been a Manager and Controller of computer operations for a
major Los Angeles based corporation. Mr. Sobolik has served in
corporate management for more than twenty-five years in business,
finance and industry throughout the western U.S. and abroad.
LARRY EPSTEIN, age 50 - Mr. Epstein is the Secretary of the
Company. He is a practicing attorney in Southern California He has
been a sole practitioner since 1987 specializing in business,
family and entertainment law. He was previously involved for three
years as Executive Vice President and in-house legal counsel to
Cherrystone Pictures, Inc., an independent feature film production
company based in Los Angeles, and in that capacity oversaw all
corporate and administrative fiduciary responsibilities of the
company and orchestrated all documentation for domestic and
international co-ventures and related agreements. Prior to his
production company involvement, Mr. Epstein was a Senior Partner in
the Los Angeles-based law firm of Abouaf, Epstein, Meyers &
Gronemeier, specializing in business, tax, and entertainment law.
He is a member of the State Bar of California, San Fernando Valley
Bar Association, Los Angeles County Bar Association and The
American Bar Association. Mr. Epstein has sat for 7 years as
special referee and judge for the State Bar of California and is
also currently Judge Pro Tem for the Superior Court, State of
California, County of Los Angeles.
JOHN R. WOODWARD, age 48 - Mr. Woodward is the Vice President for
Film Production of the Company. He is responsible for the
technical production procedures of the film and television projects
the Company produces or co-produces. His career has spanned more
than 20 years of both independent and studio film and television
production for numerous companies such as Twentieth Century Fox,
Paramount Pictures, Sony Pictures, Jerry Bruckheimer Films and
Castle Rock Entertainment. Including studio involvement, he was
executive in charge of production for independent production
company Melco General, Incorporated in Los Angeles. He has been a
senior member of the production team for a wide variety of film and
television projects, including most recently "Liar Liar",
"Gattaca", "Wild Thing", "Sweet Dreams", "Flashdance", "The
Manitou", "Tales from the Crypt", "Young Guns II", "Universal
Soldier", and the recent Academy Award nominated "Shawshank
Redemption", among many others. Mr. Woodward has additionally been
associated with and instrumental in productions at other major
studios such as Warner Brothers, Columbia, Disney, the C.B.S.
Studio Center, Samuel Goldwyn, and Bavaria-Atelier Studio in
Germany. His television commercial background is varied having
worked on commercials for the Sony Corporation, Lincoln- Mercury,
and Pepsi. He has specialized training and expertise in
pre-production through post production coordination and
requirements, and film production budget control. He holds a
Bachelor of Arts degree in Visual Arts, a Masters degree in Cinema
Production, and is a member of the Director's Guild of America.
GEORGE T. LINDSEY, age 61 - Mr. Lindsey is the Vice President of
Creative Development of the Company. He is responsible, with the
production committee, for the selection and development of film
projects for the Company. His film career spans over twenty-five
years of literary and production film work. He has most recently
completed writing feature film projects for New West Films Corp.
He has been associated in the past with film production houses and
television stations, including service as an executive producer and
director on the staff of the National Broadcasting Company and its
affiliate W.R.C.-T.V. and W.I.T.F. Formerly, as President of a
motion picture production company, he produced documentaries and
docudramas throughout Europe, Africa, and South America. He has
worked with such talent as Eli Wallach, Henry Fonda, Raymond
Massey, Leonard Nimoy, Brock Peters and Lorne Green. Mr. Lindsey
has done in-depth work in the field of pre-production of motion
picture projects and has earned over eighteen national film awards
for film and television productions, including regional emmy
awards, local emmy awards, the N.E.T. award for excellence in
film production along with gold, silver and bronze medals in film
production from the New York International Film Festival. He is a
member of the Writer's Guild of America, West, Inc. and the
Director's Guild of America.
JAMES J. AITKEN, age 62 - Mr. Aitken is the Vice President of
Finance and Administration of the Company. He is responsible for
the overall business management and administrative systems of the
Company. He is a Certified Public Accountant and was formerly a
Partner and Regional Manager for Ernst & Whinney (now Ernst &
Young), a national and international public accounting firm. His
experience while engaged in public accounting encompassed a wide
variety of clients including many companies in the entertainment
industry including television, radio, cablevision and professional
sports teams. Mr. Aitken has led many conferences and advanced
workshops in professional management and accounting sponsored by
Ernst & Whinney. He has also been an instructor and professor of
business and finance and accounting courses at the University
level. He is a member of the American Institute of Certified
Public Accountants and several other professional societies and
organizations related to business management and finance.
JOHN D. FOLEY, age 48 - Mr. Foley is currently President, Worldwide
Distribution for October Films and was previously Executive Vice
President of City Cinemas, a theatrical exhibition corporation in
New York, and Executive Vice President of Miramax Films overseeing
all theatrical acquisitions and distribution. Prior to Miramax, he
was President of MGM/UA and was recruited by MGM in 1987 as Vice
President/Sales where he managed domestic sales in the Southern and
Western divisions of the United States. In 1989 he was named
President, managing all North American activities for the company.
Certain recent Miramax and MGM production successes he was
instrumental in include "Pulp Fiction", "Benny and Joon" and
"Untamed Heart". Other past productions he has been instrumental
in include "Rainman", "A Fish Called Wanda", and "Moonstruck". Mr.
Foley began his film career in 1975 on the East Coast with Columbia
Pictures. He held various management positions with Columbia
during his tenure with the company, encompassing regional sales
throughout the midwest and southern United States. In 1986,
DeLaurentis Entertainment Co. recruited him as Vice President of
Distribution to establish the distribution operations for the
company's opening in 1986.
JOHN LEVINGSTON, age 72 - Mr. Levingston has been involved in the
distribution, marketing, television syndication and packaging of
motion picture projects both nationally and internationally for
more than twenty years, working with such companies as A.B.C.,
Gotham-Rhodes Inc., Thompson International and has served as
President of Cinema Systems Inc. His film industry background also
includes authorship of original stories, one of which was for the
feature film NAPOLEON & SAMANTHA and an original musical
composition/co- production for ERA Records. Prior to his work in
the motion picture industry, he created and marketed
internationally high technological industrial instruments while
working as a Vice President with companies such as Setco, Dynalube
Incorporated, British-American Tobacco Co. in London and Batco
Corporation in East Africa. He is the founder of the consulting
firm of Levingston-Lehman specializing in financing and marketing
research.
ROBERT E. CAPPS, JR., age 48 - Mr. Capps, most recently Executive
Vice President-Film for United Artists, has been involved in the
marketing, distribution and exhibition of feature motion pictures
for more than 25 years. Formerly, Senior Vice President and
General Sales Manager for Tri Star Pictures, he has been
instrumental in the development of new film marketing technology
strategies for the motion picture industry, primarily the
theatrical market. He has been directly involved in the building
and expansion of distribution departments for companies such as
Columbia Pictures, Paramount Pictures, and MGM. Mr. Capps was an
instrumental force over the span of his career in the distribution
and exhibition of a wide variety of both major and independent
feature films including such classic film productions as the
"Terminator" films, "Legend of Boggy Creek", and "Where the Red
Fern Grows". He has also been a consultant to such major domestic
and international exhibitor chains as Mann, Loew's and AMC.
BENJAMIN WHITFIELD, JR., ESQ., age 49 - Mr. Whitfield is presently
a practicing civil attorney with an emphasis in the field of
entertainment law. He has served as United States Assistant
District Attorney and as an Assistant Attorney General. Mr.
Whitfield is a member of the law firm of Wright, Reed & Whitfield,
P.C., one of the entertainment law firms serving the corporation.
BRENDAN CAHILL, age 52 - Mr. Cahill was most recently Vice
President for Music and Creative Affairs for Universal Studios.
Prior to his employment with Universal, he was Vice President in
charge of creative affairs and musical director at Columbia
Pictures and is currently a development and production consultant
in the film/television industry and production consultant to
Michael Phillips and Michael Douglas (Michael Douglas Productions).
He has in the past been a personal advisor for production and
musical affairs to Steven Spielberg (Amblin Light Entertainment),
having been involved with such film projects as BACK TO THE FUTURE,
CLOSE ENCOUNTERS OF THE THIRD KIND and E.T., THE EXTRA TERRESTRIAL.
In the 1960's, Mr. Cahill was credited with being intregal in the
success of such musical groups as the Birds, Jefferson Starship,
and the Monkees, and was executive producer on the successfully
syndicated television show, THE PARTRIDGE FAMILY for ABC. Other
feature film and television production credits for Mr. Cahill
include CALIFORNIA SUITE, THE BREAKFAST CLUB, OUT OF AFRICA, MIAMI
VICE, and the Emmy Award winning MURDER SHE WROTE.
ALEX TREBEK, age 58 - Mr. Trebek has been involved in the
television industry for over twenty-five years as a producer, host
and innovator of a wide variety of entertainment shows. He has
produced and hosted the internationally successful gameshow
JEOPARDY which has been the second highest rated television show in
syndication. Mr. Trebek was also the host of the successful
television game show CLASSIC CONCENTRATION. As a television media
executive, he is currently developing other projects for television
and film as well. Mr. Trebek, originally from Sudbury, Ontario,
Canada, worked for the Canadian broadcasting company (C.B.C.)
throughout the 1960's and early 70's before relocating to the
United States in 1973.
LEROY J. STEELE, age 76 - Mr. Steele's background encompasses over
40 years as an executive with various corporations within the
United States and in Canada, including Executive Vice President and
Chief Operating Officer for Bullock's company in Los Angeles, Vice
President and General Manager for the Boston stores on the Eastern
seaboard, and Chairman of the Board/Chief Executive Officer for
A.J. Freeman Ltd. in Ottawa, Canada. Mr. Steele has also been a
business management consultant and advisor for many years.
JOSEPH DYSON*, age 62 - Mr. Dyson is currently the President and
Chief Executive Officer of Health Care Capital Corporation of
California. He was formerly Vice President and Manager of Merrill
Lynch White Weld Capital Groups, Western Region Health Care Finance
Department and Vice President of First America, a financial
consulting firm. In addition, he was a regional partner at Arthur
Young & Co. and managing Vice President of Telco Capital
Corporation. Prior to his private sector career, he was engaged at
the Department of Health, Education and Welfare where he served as
Acting Regional Program Director of the Hill-Burton Program as well
as special consultant to other Regional Loan Offices. He is a
Certified Public Accountant and has served as an official for the
Securities and Exchange Commission.
PETER LALLOS, age 65 - Mr. Lallos was most recently Senior Vice
President for the investment banking firm of Bear, Sterns & Co. in
New York City. He has previously held senior corporate positions
including Managing Director for Manufacturer's Hanover Trust
Company, Senior Vice President - E.F. Hutton & Co. and Senior Vice
President - Donaldson, Luftkin & Jenrette. Mr. Lallos' Wall Street
expertise encompasses more than 25 years of investment banking,
commercial banking and specialized public and corporate financing
around the world.
PHILIP LANGWALD, age 92 - Mr. Langwald is Chairman Emeritus of the
Board of Directors of the Company and is currently a retired
municipal administrative executive. He has been involved with land
development and appraising for real estate and managing the
construction and development of shopping and residential areas in
the midwestern United States. He was formerly with the United
States Department of Labor and Internal Revenue Audit Division.
FRED BARON, age 47 - Mr. Baron is currently Senior Production
Executive for Twentieth Century Fox Film Corp. where he is
responsible for all phases of production oversight for all feature
film production at the studio. Prior to his studio involvement, he
was production representative at HBO, overseeing a wide range of
features and M-O-Ws. Mr. Baron has also acted as co-producer on
television productions such as TALES FROM THE CRYPT and production
coordinator and production supervisor on a wide variety of
independent motion picture/television production.
CHARLES NEWIRTH, age 43 - Mr. Newirth is currently an established
independent producer and executive producer in the motion picture
industry and has been responsible for the production of such major
motion pictures as the recently released "Patch Adams" with Robin
Williams, "City of Angels" with Meg Ryan and Nicolas Cage, the
Academy Award winning and highly successful "Forrest Gump" with Tom
Hanks, as well as "Bugsy" with Warren Beatty, "Toys" with Robin
Williams, and "The American President" with Michael Douglas. His
career in feature film production has also included production
manager for such films as "Pretty in Pink", "Robocop", and "The
Abyss". In addition, he has worked in other diverse senior
production positions as production supervisor, production
coordinator, and location manager.
BRIAN J. PATNOE, age 40 - Mr. Patnoe's tenure with the corporation
began in 1987 as Executive Assistant in the areas of finance and
administration. In 1989, he was elevated to the post of Associate
Vice President, Administration, working as key liaison between
senior officers of the corporation and members of the Board of
Directors. His responsibilities also included monitoring and
maintaining WWMPC's corporate due diligence data information,
finance material information, and monitoring basic stockholder
relations. He has worked closely with senior management of the
company in the negotiations of co-financing production scenarios
with domestic and foreign companies, consortiums, and independent
financiers. Mr. Patnoe has also been associated with Siemen's and
Motorola ISG as national accounts manager and McDonnell Douglas
Corporation as a configuration management analyst and product
definition specialist; both senior technical and analytical
corporate administrative positions assuring quality control and
infrastructure communications. He maintains a degree in Business
Administration and Economics from California State University,
Fullerton and a Masters in Business Administration from the
University of Southern California.
MICHAEL MAGHINI, age 41 - Mr. Maghini was most recently Vice
President with Eden Financial Group, a Wall Street investment
banking firm providing wholesale financial products to associate
brokerage firms around the country, as well as a Managing Partner
and Vice President with Famco, Inc. a real estate holding company
in New York City. Mr. Maghini's well established financial
experience, including his executive association for investment with
the Putnam's Golden Scale Council, and his membership in the
Million Dollar Round Table Club, complement his past investment
management and development training with Paine Webber. Prior to
Paine Webber, he held an investment executive position with
Thompson McKinnon Securities. Mr. Maghini has helped develop the
investment banking division of a major New York financial firm and
has also managed a variety of many diverse institutional and,
private investment portfolios. He is a graduate of Southern
Connecticut University where he received his Bachelor of Science
Degree in Political Science and Economics.
DAVID A. TOMA, age 49 - Mr. Toma has most recently been associated
with Cinema Research Corporation and Complete Post Inc. in Los
Angeles responsible for managing all aspects of film and video post
production and production processing. He has been instrumental in
the development and growth of both companies to become two of the
largest and highly sophisticated post production facilities in the
motion picture industry. He has further been a consultant and
advisor on post production techniques and procedures for several
companies including Lorimar Entertainment. Mr. Toma was also
engaged in several film production, marketing and editing
capacities for the motion picture and television industry including
Executive in Charge of Production for Laserus Entertainment Inc., a
leading entertainment commercial company producing a wide variety
of television programming; production/ marketing executive for
Pacific Video Inc., a major post production facility; and post
production supervisor for independent production company, Sun
Classic Pictures Inc. Mr. Toma has specialized expertise in the
implementation of favored nations agreements, extensive knowledge
of electronic post production techniques, state of the art and
conventional theatrical and video editing, as well as new mastering
technologies for European and domestic delivery. His film and
television credits include Robert Altman's POPEYE, THE LINCOLN
CONSPIRACY, BEYOND AND BACK, the long-running television series
SOAP and BENSON, and he was the recipient of an achievement Emmy
Award from the Academy of Television Arts and Sciences for his
contributions to the CBS Movie-of-the-Week BABIES HAVING BABIES.
* (Indicates members of the Executive Committee)
FAMILY RELATIONSHIPS
There are no family relationships among directors, executive
officers or persons chosen by the Company to be nominated as a
director or appointed as an executive officer of the Company or any
of its affiliated subsidiaries.
Item 10. Executive Compensation.
The summary compensation table below sets forth certain information
for all compensation, including: annual, longterm and stock
compensation paid for services rendered to the Company in all
capacities for the fiscal years ended December 31, 1998, 1997, and
1996.
<TABLE>
Summary Compensation Table
<CAPTION>
ANNUAL COMPENSATION
Annual Compensation
Name and Principal Position
(a) Year(b) Salary($)(c) Bonus ($)(d)Other Annual
*, **, *** Compensation ($)(e)
<S> <C> <C> <C> <C>
Charles Bailey** 1998 0 0 0
Chairman of the Board 1997 0 0 0
1996 0 0 0
Paul D. Hancock*/** 1998 340,000 0 0
President, CEO *** 1997 325,000 0 0
1996 310,000 0 0
A. Robert Sobolik*/** 1998 0 0 0
Exec. V.P./Treasurer 1997 0 0 0
1996 0 0 0
Larry Epstein*/** 1998 0 0 0
Secretary 1997 0 0 0
1996 0 0 0
John R. Woodward*/** 1998 0 0 0
Vice President 1997 0 0 0
1996 0 0 0
George T. Lindsey*/** 1998 0 0 0
Vice President 1997 0 0 0
1996 0 0 0
James J. Aitken*/** 1998 0 0 0
Vice President 1997 0 0 0
1996 0 0 0
John Levingston* 1998 0 0 0
Vice President 1997 0 0 0
1996 0 0 0
John R. Foley** 1998 0 0 0
Director 1997 0 0 0
1996 0 0 0
Robert E. Capps Jr.** 1998 0 0 0
Director 1997 0 0 0
1996 0 0 0
Benjamin Whitfield Jr.** 1998 0 0 0
Director 1997 0 0 0
1996 0 0 0
Brendan Cahill** 1998 0 0 0
Director 1997 0 0 0
1996 0 0 0
Alex Trebek** 1998 0 0 0
Director 1997 0 0 0
1996 0 0 0
LeRoy J. Steele** 1998 0 0 0
Director 1997 0 0 0
1996 0 0 0
Joseph Dyson** 1998 0 0 0
Director 1997 0 0 0
1996 0 0 0
Peter Lallos** 1998 0 0 0
Director 1997 0 0 0
1996 0 0 0
Philip Langwald** 1998 0 0 0
Director 1997 0 0 0
1996 0 0 0
Fred Baron** 1998 0 0 0
Director 1997 0 0 0
1996 0 0 0
Charles Newirth** 1998 0 0 0
Director 1997 0 0 0
1996 0 0 0
Brian J. Patnoe* 1998 0 0 0
Assoc. V.P. 1997 0 0 0
1996 0 0 0
Michael Maghini* 1998 0 0 0
Assoc. V.P. 1997 0 0 0
1996 0 0 0
David A. Toma* 1998 0 0 0
Assoc. V.P. 1997 0 0 0
1996 0 0 0
<CAPTION>
Awards Payouts All Other
Securities Compensation
Underlying (#)(i)
Options/SARs(#)(g)
Restricted Securities
Stock Award(s) Underlying
($)(f) Options/SARs(#)(g)
<S> <C> <C> <C> <C>
1998 - 0 0 0 0
Charles Bailey** 1997 - 10,000 0 0 0
Director 1996 - 0 0 0 0
1998 - 0 250,000 0 0
Paul D. Hancock*/** 1997 - 0 250,000 0 0
President, CEO *** 1996 - 0 250,000 0 0
1998 - 0 25,000 0 0
A. Robert Sobolik*/** 1997 - 0 25,000 0 0
Exec. V.P./Treasurer 1996 - 0 25,000 0 0
1998 - 0 500,000 0 0
Larry Epstein*/** 1997 - 25,000 500,000 0 0
Secretary 1996 - 25,000 500,000 0 0
1998 - 0 50,000 0 0
John R. Woodward*/** 1997 - 0 50,000 0 0
Vice President 1996 - 0 50,000 0 0
1998 - 0 25,000 0 0
George T. Lindsey*/** 1997 - 0 25,000 0 0
Vice President 1996 - 0 25,000 0 0
1998 - 0 25,000 0 0
James J. Aitken*/** 1997 - 0 25,000 0 0
Vice President 1996 - 50,000 25,000 0 0
1998- 0 20,000 0 0
John Levingston* 1997- 0 20,000 0 0
Vice President 1996- 0 20,000 0 0
1998 - 0 100,000 0 0
John R. Foley** 1997 - 0 100,000 0 0
Director 1996 - 0 100,000 0 0
1998 - 0 50,000 0 0
Robert E. Capps Jr.** 1997 - 0 50,000 0 0
Director 1996 - 0 50,000 0 0
1998 - 0 25,000 0 0
Benjamin Whitfield Jr.** 1997 - 0 25,000 0 0
Director 1996 - 0 25,000 0 0
1998 - 0 20,000 0 0
Brendan Cahill** 1997 - 0 20,000 0 0
Director 1996 - 0 20,000 0 0
1998 - 0 20,000 0 0
Alex Trebek** 1997 - 0 20,000 0 0
Director 1996 - 0 20,000 0 0
1998 - 0 0 0 0
LeRoy J. Steele** 1997 - 0 0 0 0
Director 1996 - 0 0 0 0
1998 - 0 25,000 0 0
Joseph Dyson** 1997 - 0 25,000 0 0
Director 1996 - 50,000 25,000 0 0
1998 - 0 0 0 0
Peter Lallos** 1997 - 0 0 0 0
Director 1996 - 0 0 0 0
1998 - 0 0 0 0
Philip Langwald** 1997 - 0 0 0 0
Director 1996 - 0 0 0 0
1998 - 0 0 0 0
Fred Baron** 1997 - 0 0 0 0
Director 1996 - 0 0 0 0
1998 - 0 0 0 0
Charles Newirth** 1997 - 0 0 0 0
Director 1996 - 0 0 0 0
1998 - 0 100,000 0 0
Brian J. Patnoe* 1997 - 0 100,000 0 0
Assoc. V.P. 1996 - 0 100,000 0 0
1998 - 0 10,000 0 0
Michael Maghini* 1997 - 0 10,000 0 0
Assoc. V.P. 1996 - 0 10,000 0 0
1998 - 0 0 0 0
David A. Toma* 1997 - 0 0 0 0
Assoc. V.P. 1996 - 0 0 0 0
(/TABLE)
* Indicates - Although many of the corporate officers have entered
into contractual agreements with the Company, certain of the
contract's provisions are contingent upon the acquisition of
substantial working capital by the Company. Accordingly, certain
of the officers do not devote their full-time to the business of
the Company.
** Indicates - Certain members of the Board of Directors who are
not officers of the Company receive a mutually agreeable amount of
restricted Rule 144 common stock of the Company for each board
meeting that they attend and are also periodically reimbursed for
the travel expenses incurred, if any, to attend such meetings.
*** Indicates - The President and Chief Executive Officer has
waived his accumulated back salary of $3,095,000. Also, he has
agreed to waive his current salary indefinitely as long as the
Company does not have sufficient funds on hand. In return he has
agreed to also accept common stock, or preferred convertible stock
of the Company at $.10 per share equivalent or mutually agreeable
stock options in lieu of cash, at the Company's discretion, except
in the event of a merger or takeover of the Company in which he
descents.
ARRANGEMENTS WITH DIRECTORS
As indicated above, there are certain arrangements or
understandings regarding compensation for services provided by a
director including additional consideration payable for special
assignments. Each of the directors and/or executive officers of
the Company has an understanding with the Company regarding
compensation by the Company as an officer of the Company either in
terms of duties, which will be rendered on behalf of the Company or
in their capacity as an independent associate or as an associate of
one of the Company's wholly-owned subsidiaries.
The Company has evaluated the experience and reputation of its
directors and allocated compensation of common stock accordingly.
Executive officers of the Company maintain various terms and
conditions relative to compensation in their specific employment
contracts.
</TABLE>
<TABLE>
The following sets forth the security ownership of Management of
the Company and any holders of the Company's common stock known to
own 5% or more of the Company's issued and outstanding common
stock. (in alphabetical order)
<CAPTION>
AMOUNT & NATURE
TITLE NAME OF BENEFICIAL PERCENT
OF CLASS BENEFICIAL OWNERSHIP OWNERSHIP OF CLASS
OFFICERS AND DIRECTORS
<S> <C> <C> <C>
Common James J. Aitken 200,000 .43%
Vice President, Fin. & Adm. Sole Ownership
Corporate Director Sole Voting Power
12199 55th Ave.
Remus, MI 48340
Common Charles C. Bailey 195,000 .40%
Chairman of the Board Sole Ownership
42 King Street Sole Voting Power
New York, NY 10014
Common Fred Baron 100,000 .22%
Corporate Director Sole Ownership
531 N. Lillian Way Sole Voting Power
Los Angeles, CA 90004
Common Brendan Cahill 250,000 .54%
Corporate Director Sole Ownership
1141 Marilyn Drive Sole Voting Power
Beverly Hills, CA 90210
Common Robert E. Capps, Jr. 350,000 .76%
Corporate Director Sole Ownership
c/o 2120 Main St., Suite 180 Sole Voting Power
Huntington Beach, CA 92648
Common Joseph Dyson 215,000 .47%
Corporate Director Sole Ownership
8720 Cliffridge Sole Voting Power
La Jolla, CA 92037
Common Larry Epstein, Esq. 601,667 1.25%
Secretary Sole Ownership
Corporate Director Sole Voting Power
11733 Baird Ave.
Northridge, CA 91326
Common John D. Foley 300,000 .65%
Corporate Director Sole Ownership
c/o 2120 Main St., Suite 180 Sole Voting Power
Huntington Beach, CA 92648
Common Paul D. Hancock 8,770,444 19.03%
President/C.E.O. Sole Ownership
Corporate Director Sole Voting Power
124 8th Street, #8
Huntington Beach, CA 92648
Common Peter Lallos 125,000 .27%
Corporate Director Sole Ownership
31 Woodfield Court Sole Voting Power
Laurel Hollow, NY 11791
Common Philip Langwald 500,000 1.08%
Chairman Emeritus/ Sole Ownership
Corporate Director Sole Voting Power
16032 Lemond Hills Trail #173
Del Ray Beach, FL 33446
Preferred Philip Langwald 2,500
Chairman Emeritus/ Sole Ownership
Corporate Director Sole Voting Power
16032 Lemond Hills Trail #173
Del Ray Beach, FL 33446
Common John Levingston 15,000 .03%
Vice President, Marketing Sole Ownership
& Distribution Sole Voting Power
13642 Havenwood Drive
Garden Grove, CA 92643
Common George T. Lindsey 692,750 1.50%
Vice President, Creative Sole Ownership
Development/Corporate Director Sole Voting Power
10412 Pacific St., #106
Omaha, NE 68114
Common Michael Maghini 283,750 .55%
Associate Vice President, Finance Sole Ownership
48 Stonewall Lane Sole Voting Power
Madison, CT 06443-2248
Common Charles Newirth 125,000 .27%
Corporate Director Sole Ownership
c/o 2120 Main St., Suite 180 Sole Voting Power
Huntington Beach, CA 92648
Common Brian J. Patnoe 932,202 2.02%
Associate Vice President, Sole Ownership
Administration Sole Voting Power
12553 Wedgewood Circle
Tustin, CA 92780
Preferred Brian J. Patnoe 55,000 2.02%
Associate Vice President,
Administration
12553 Wedgewood Circle
Tustin, CA 92780
Common A. Robert Sobolik 202,000 .44%
Executive Vice President/Treasurer Sole Ownership
Corporate Director Sole Voting Power
11453 Tortuga St.
Cypress, CA 90630
Common LeRoy J. Steele 50,000 .11%
Corporate Director Sole Ownership
1977 Gramercy Place Sole Voting Power
Los Angeles, CA 90068
Common David A. Toma 125,000 .27%
Associate Vice President, Production Sole Ownership
21000 Burton Street Sole Voting Power
Canoga, CA 91304
Common Alex Trebek 350,000 .76%
Corporate Director Sole Ownership
c/o 2120 Main St., Suite 180 Sole Voting Power
Huntington Beach, CA 92648
Common Benjamin Whitfield, Jr., Esq. 78,000 .17%
Corporate Director Sole Ownership
9000 E. Jefferson, Apt. 14-3 Sole Voting Power
Detroit, MI 48214
Common John R. Woodward 175,071 .38%
Vice President, Film Production Sole Ownership
Corporate Director Sole Voting Power
850 Alabama Dr., Rte. 2
Lone Pine, CA 93545
OFFICERS & DIRECTORS AS A GROUP 15,110,884 32.71%
<CAPTION>
OWNERS OF 5% OR MORE OF THE COMPANY'S COMMON EQUITY
<S> <C> <C> <C>
Common Paul D. Hancock 8,770,444 19.03%
President/C.E.O. Sole Ownership
Corporate Director Sole Voting Power
124 8th St., #8
Huntington Beach, CA 92648
Common Richard D. McLellan, Esq. 2,559,164 7.72%
c/o 2120 Main St., Suite 180 Sole Ownership
Huntington Beach, CA 92648 Sole Voting Power
Common Gordon Estate 2,658,097 5.77%
c/o 2120 Main St., Suite 180 Sole Ownership
Huntington Beach, CA 92648 Sole Voting Power
</TABLE>
The foregoing totals are based upon Forty Seven Million Six Hundred
Twenty Nine Thousand and Five Hundred and Ninety Two (47,629,592)
common shares of the Company issued and outstanding stock as of
December 31, 1998.
To the best knowledge and belief of the Company, there are no
arrangements, understandings, or agreements relative to the
disposition of the Company's securities, the operation of which
would at a subsequent date result in a change in control of the
Company.
Item 12. Certain Relationships and Related Transactions.
As of this filing, there have been and are presently no transactions
to which the Company was or is to be a party in which any of the
directors, executive officers or immediate family members thereof
have been a party to. It is contemplated, however, that in certain
instances directors, executive officers, or immediate family members
thereof will be a party to future transactions.
Item 13. Exhibits and Reports on Form 8-K.
N/A
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereto duly authorized.
WORLD WIDE MOTION PICTURES CORPORATION
September 24, 1999 /s/ A. Robert Sobolik
A. Robert Sobolik
Executive Vice President/Treasurer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
[TEXT]
<ARTICLE> 5
<LEGEND>
Exhibit 27
Financial Data Schedule
"This schedule contains summary financial information extracted
from December 31, 1998 10KSB and is qualified in its entirety by
reference to such financial statements."
</LEGEND>
<S> <C>
<PERIOD-START> JAN-01-1998
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 28,726
<SECURITIES> 0
<RECEIVABLES> 178,382
<ALLOWANCES> 0
<INVENTORY> 10,358,198
<CURRENT-ASSETS> 0
<PP&E> 49,937
<DEPRECIATION> (1,213,789)
<TOTAL-ASSETS> 9,840,060
<CURRENT-LIABILITIES> 0
<BONDS> 16,300
0
1,212
<COMMON> 47,629
<OTHER-SE> 9,621,532
<TOTAL-LIABILITY-AND-EQUITY> 9,840,060
<SALES> 0
<TOTAL-REVENUES> 28,772
<CGS> 0
<TOTAL-COSTS> 256,872
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (228,100)
<INCOME-TAX> 0
<INCOME-CONTINUING> (228,100)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (228,100)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
