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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or 12(g) of
The Securities Exchange Act of 1934
PLANET ENTERTAINMENT
[LOGO]
PLANET ENTERTAINMENT CORPORATION
(Exact Name of Registrant as specified in its charter)
Florida 33-0471728
(State or Other Jurisdiction) (IRS Employer I.D. No.)
222 Highway 35
P.O. Box 4085
Middleton, New Jersey 07748
908-530-8819
Securities to be registered pursuant to Section 12(b) of the Act:
NONE
Securities to be registered pursuant to Section 12(g) of the Act:
10,829,055 COMMON STOCK, PAR VALUE .0001
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TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
Item 1. Business................................................. 3
Item 2. Financial Information.................................... 6
Item 3. Properties............................................... 7
Item 4. Security Ownership of
Certain Beneficial Owners
and Management........................................... 7
Item 5. Directors and Executive Officers......................... 8
Item 6. Executive Compensation................................... 10
Item 7. Certain Relationships and
Related Transactions..................................... 10
Item 8. Legal Proceedings........................................ 10
Item 9. Market Price of and Dividends
on the Registrant's Common Equity
and Related Stockholder Matters......................... 11
Item 10. Recent Sales of Unregistered Securities.................. 11
Item 11. Description of Registrant's
Securities to be Registered.............................. 11
Item 12. Indemnification of Directors and Officers................ 11
Item 13. Financial Statements and Supplementary Data.............. 12
Item 14. Changes in and Disagreements
with Accountants on Accounting
and Financial Disclosure................................. 13
Item 15. Financial Statements..................................... 13
</TABLE>
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ITEM 1. BUSINESS.
Planet Entertainment Corporation (the Company or Planet) was
incorporated under the laws of the state of Delaware on May 17, 1996 for the
purpose of acquiring existing libraries of master recordings of various types of
music and to enhance, market and produce new recordings.
RECENT DEVELOPMENT OF BUSINESS.
In June 1996, the Company acquired all of the outstanding Common Stock
of Maestro Holding Corporation ("Maestro") in consideration for 1,500,000 shares
of the Company's Common Stock, valued at approximately $5,850,860. Maestro holds
title to over 5,000 master recordings, publishing rights to over 300 songs, and
a twenty-four track studio in Jackson, New Jersey. In March, 1997 the Company
acquired a forty-eight track studio in Chester Township. These studios will be
utilized to produce enhanced musical compositions and to produce and master new
recordings. The Company's recordings will be distributed both in the United
States and Internationally.
In November 1996, the Company acquired all of the outstanding stock of
Higher Ground Records ("HGR"), one of America's foremost gospel production
companies, in consideration for 25,000 shares of Planet valued at $25,000. HGR's
assets include production and publishing agreements with various artists and
gospel catalogs.
In November 1996, the Company acquired 10,000 master recordings and a
recording studio from Gulf Coast Music, L.L.C. and J.Jake, Inc. in exchange for
1,500,000 shares of Planet common stock valued at approximately $2,150,000 and
the assumption of three promissory notes totaling $1,250,000 payable over 5
years. An agreement was reached subsequently to return 500,000 shares of stock
and not transfer the studio assets.
On October 9, 1996, the Company merged into Ampro International Golf
Tour, Inc., a Florida corporation which changed its name to Planet Entertainment
Corporation. Shares of common stock of Ampro were converted into common stock of
Planet at the rate of one share of Planet for each share of Ampro. Prior to the
said exchange Ampro affected a reverse stock split at the rate of one share for
every three hundred shares previously held.
In March, 1997, the Company entered into a joint venture agreement with
Wilderness Films Incorporated. The joint venture will have seven year worldwide
exclusive marketing rights to the approximately 2700 films contained in the
Wilderness Film Library. In addition, new film products will be created using
the present Planet Record material catalog to orchestrate such film soundtracks.
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BUSINESS SUMMARY
The Company is currently involved in various areas of the recorded
music industry. The Company's principal activities involve the production,
licensing, acquisition, marketing and distribution of high quality music in a
variety of music formats: CDs, video, CD-ROM and, to a lesser extent, tapes. The
Company produces such types of music as gospel, adult contemporary, Reggae, top
40, blues, country, rap, rock, instrumental, rock & roll, jazz, pop rock,
classical, easy listening, big band, rhythm & blues, and various ethnic folk
music recordings. Typically, the Company markets either from its existing
catalog of recordings or repackages compilations of previously recorded music by
utilizing its extensive library of master recordings and studios.
The Company's associated labels include Magnum Records, Ornyx Records,
Century Records, Planet Records, Black Tiger Records and Higher Ground Records.
The Company also has rights to video titles of a Madonna documentary, A Donald
Trump documentary, Catherine Crosay Workout, various cartoons in English and
Spanish, and music titles.
The artists featured in its library of master recordings, include such
well known artists as Bob Marley, The Tokens ("The Lion Sleeps Tonight" and
"Tonight I Fell In Love"), Jeff Beck and Rod Stewart, Daryl Hall and John Oates,
Sly and the Family Stones, Chicago, Sherman Helmsley, Leo Russell, Tony Bennett,
Gladys Knight & The Pips, Sammy Davis, Jr., Roy Orbison, The Harp Tones,
("Favorite Sunday Kind of Love"), Billy & The Essentials ("Maybe You'll Be
There"), Frankie & The Fashions, Chuck Berry ("Live in Concert"), Tony Joe
White, ("Poke Salad Annie"), Willie Nelson, Kenny Rogers, Ray Charles and many
others. The Company currently has five new artists under contract as well as
several established groups recently acquired with the Higher Ground Group
including, GMWA Youth Mass Choir, Charles Fold, Philadelphia Mass Choir, and
others. In total the Company owns or has licenses to over 15,000 master
recordings.
The Company owns and operates a twenty-four track studio in Jackson,
New Jersey and a full service forty-eight track digital studio near
Philadelphia, Pennsylvania. The Company will also have full multi-media
equipment to produce video-enhanced CDs, art work for covers, posters and
production of its own informational material and brochures. The Company believes
that it is in the forefront of the new technology of musical entertainment,
enabling it to create high quality CDs, tapes, ,and video-enhanced CDs. In
addition, these high-tech procedures permit the Company to transform previously
published and unpublished recordings from their original state into the
high-quality state highly appealing to today's entertainment audience. The
Company will possess the ability to complete and join together various musical
compositions within its vast library.
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The Company has recently produced a new Bob Marley enhanced CD (rated
No. 1 by Billboard in the Reggae Category in June 1996) as well as twenty new
musical titles to be released in the fall. Some of the new releases are Hall &
Oates, Atlanta Rhythm Section , Oak Ridge Boys, and a Complete History Series,
"Everything from Rock & Roll to the Classics". The Company will continue to
feature various areas of current interests which its own experience and industry
sources indicate will be extremely appealing to the viewing public. The
Company's Technology Division will continue to concentrate its efforts to create
an Internet World-Wide-Web site for distribution and advertisement of its
products in the homes of millions of consumers and put it on the cutting edge of
technology by allowing the public to sample music and purchase compositions
through their home computers. In order to further this effort, the Company will
focus on the acquisition of technology companies related to the music and film
industry which will increase its library of compositions available for sale or
licensing either individually or as part of corporations.
The Company's experienced engineers are able to convert older
recordings produced under analogue systems into a digital format, which opens up
a vast new market to the Company. The Company has developed its own system to
accomplish the highly sophisticated demands of the conversion and enhancement of
older recordings.
Artists presently under contract to the Company include Nino Rossano
(an Italian opera and Classic singer), Scott Allison Zito (a multi-dimensional
artist/writer and performer), Dakota McLeod and Sherman Helmsley. Panther Studio
in Jackson, New Jersey will continue to produce and enhance musical arrangements
and, in conjunction with its acquisition of the Higher Ground properties will
produce such famous Gospel Groups as Charles Fold, Chris Simpson, 1996 GMWA
Youth Mass Choir and Garland Michel Waller. The Company markets its products
through internationally and nationally recognized distribution companies. It is
in the process of entering into an agreement with a major North American
distributor on standard industry terms as well as a Pacific Rim & European
distributor.
INDUSTRY OVERVIEW.
The creation and distribution of music compositions is highly
competitive and the Company has a substantial number of direct competitors,
including large companies with greater financial and marketing resources.
Although the Company believes that its enhanced compositions are new and unique,
no assurance can be given that competitors possessing greater financial
resources will not be able to develop products which are as appealing and are
offered at lower prices than those available from the Company.
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The Company's success will depend in part on its ability to obtain and
maintain copyright or trademark protection for its compositions in order to
preserve the value of its master recordings library; to maintain revenues and to
operate without infringing on the proprietary rights of third parties. The
Company has not applied for patent protection and does not intend to do so
because it believes that patents would not offer significant protection.
Although the Company holds or has the use of various trademarks and copyrights
associated with its works, even with such protection there is no assurance that
unauthorized use will not occur. The Company will be operating in an industry in
which revenues are often adversely affected by the unauthorized reproduction of
recordings for commercial sale, commonly referred to as "piracy", and by home
taping for personal use. In addition, in the event that another party infringes
on any copyright or trademark covering the Company's products, the enforcement
of such rights is at the option of the Company and can be a lengthy process,
with no guarantee of success.
The Company's ability to succeed in the future and to meet future
competition in the pursuit of satisfying the public's tastes will depend on its
ability to attract talented new artists or persons or companies who control
existing valuable libraries of master recordings.
The Company expects that a material portion of its sales will be made
through unaffiliated distributors. As of the date of this Statement, the Company
has not entered into any distribution agreements with any such distributors. If
the Company is not successful in signing distribution agreements with
distributors, its ability to sell its products may be materially adversely
affected. In addition, distributors generally offer products of several
different companies, including products that may compete with the Company's
products. Agreements with distributors are generally terminable at the
distributor's option. A reduction in sales effort or termination of a
distributor's relationship with the Company may have a material adverse effect
on any future results of operations.
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ITEM 2. FINANCIAL INFORMATION.
SELECTED FINANCIAL AND OPERATING DATA FOR THE
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<S> <C>
Royalty Income 105,000
Net Income/ (loss) (52,447)
Net Income/ (loss) per shares (1) (.02)
Weighted average number of
common shares outstanding (1) 3,377,255
Balance sheet data
Working capital (deficiency) (362,302)
Total assets 14,057,688
Short term debt 504,110
Total liabilities 6,104,110
Stockholders' equity 7,953,578
</TABLE>
(1) On October 9, 1996 the company did a reverse merger into Ampro International
Golf Tour Incorporated and changed its name to Planet Entertainment Corporation.
Accordingly, prior period financial information has been excluded from "Selected
Financial Data" as it is not comparable. See Note 2 to Financial Statements.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The information in this section should be read together with the
consolidated financial statements and notes thereto that are included elsewhere
in the Prospectus. Management believes that a comparative MDA would not be
meaningful as the operations of the Company, formally known as Ampro, commenced
its operations under current management during May, 1996.
The company adopted a December 31 calendar year end as its fiscal year
effective May 17, 1996. The discussion below covers the period May 17, 1996 to
December 31, 1996.
Background
The Company's financial results are generally affected by the strength
of its recorded music catalog, the market appeal of its recorded music catalogs
at any given time and the significant investments the Company has made in
establishing its labels.
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In July 1996 the Company acquired all the outstanding stock of Maestro
Holding Corporation in exchange for 3,060,000 shares of Plant common stock
valued at $5,850,860. Assets acquired include over 5,000 master recordings,
publishing or production rights over 300 songs and a recording studio. This
initial investment established the Company's recorded music catalog.
During August 1996 the Company acquired a Gospel music catalog, in
exchange for 25,000 shares of the Company's common stock, and formed Higher
Ground, Inc. The assets acquired included selected master recordings, the rights
to artists contracts, production agreements and publishing contracts.
During September 1996, the Company acquired all the outstanding shares
of Gulf Coast Music, L.L.C. and J. Jake, Inc., in exchange for 1,500,000 shares
of the Company's common stock valued at $2,150,000 and the assumption of
promissory notes totaling $1,250,000. This acquisition added 10,000 master
recordings to the Company's recorded music catalog.
Results of Operation
The following table set forth, for the period indicated certain items
derived from the Company's statements of operations as a percentage of gross
revenues.
PERIOD FROM MAY 17, 1996 - DECEMBER 31, 1996
<TABLE>
<S> <C>
Royalty Income $105,000
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Total net revenues $105,000
Cost of Sales -
Gross Profit $105,000
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Depreciation and amortization $ 10,005
Selling general and
administrative expenses $104,342
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$114,247
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Operation Income/(loss) $(9,347)
Interest expense $43,100
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Pre-tax income/(loss) $(52,447)
Income tax expense -
Net Income/(loss) $(52,447)
</TABLE>
Royalty income consists of producers and publishers royalties with
respect to the Bob Marley Album, "Soul Almighty", which has gone platinum.
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Selling general and administrative expenses consist primarily of office
expenses, professional fees and travel expenses. Interest expense relates to
debt assumed as part of the acquisition of 10,000 master recordings.
Quarterly Results and Seasonality
The Company's results of operation are subject to seasonal variations.
In accordance with industry practice, the Company records revenues for music
products when such products are shipped to retailers. The industry has
historically experienced a decline in revenues and net income during December,
January and February. This decline is primarily due to the fact that retailers
purchase products from the Company prior to November 30 in anticipation of
holiday sales followed by heavier than normal returns after the holidays.
Liquidity and Capital Resources
The Company's cash balance was $6,998 at December 31, 1996. Net cash
utilized in operations was $63,245 for the period from May 17, 1996 to December
31, 1996. This cash was provided by two shareholders loans totaling $70,243.
Related party borrowing from two principal shareholders have funded the
Company's operating expenses to date, and are expected to continue to fund the
cash needs of the business in the immediate future.
The Company is dependent upon these loans until such time as other
sources of capital are obtained or cash flow from operating is adequate to do
so.
Effective March 1, 1997, the Company acquired from Albert's Onstage,
Ltd., all of the assets of a recording studio in Chester, Pennsylvania, from Al
Albert's Onstage, Ltd., in exchange for 100,000 shares of Planet common stock
valued at $437,500.
Inflation
The impact of inflation during the current year has been reflecting low
rates of inflation in the economy. While inflation has not had a material impact
on operating results, there is no assurance that the Company's business will not
be adversely affected by inflation in the future.
ITEM 3. PROPERTIES.
The Company's principal office is 222 Route 35 South, Middletown, New
Jersey 07748, on a rent-free, month-to-month basis and operates from a full
service, 24-track recording studio in Jackson, New Jersey.
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ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth, as of the date hereof, information
regarding ownership of the Company's Common Stock by each person known by the
Company to be the beneficial owner of more than 5% of the Company's outstanding
Common Stock, by each director, by certain related shareholders, and by all
executive officers and directors of the Company as a group. All persons named
have sole voting and investment power over their shares except as otherwise
noted.
<TABLE>
<CAPTION>
NAME OF
BENEFICIAL OWNER OR NUMBER OF PERCENT OF
IDENTITY OF GROUP(1) SHARES OWNED CLASS (2)
- -------------------- ------------ ---------
<S> <C> <C>
Wallace Giakas 2,545,000* 24.6%
Joseph Venneri 2,545,000* 24.6%
John Arnone 2,545,000* 24.6%
J. William Valenziano 1,306,000 12.6%
Richard Bluestine 400,000** 3.9%
All officers, directors
and principal shareholders
as a Group (5 persons) 9,341,00 90.3%
</TABLE>
(1) See table under "Management" for offices and directorships
held by the persons listed above.
(2) Does not give effect to the potential dilutive effect that the issuance
of Shares in this offering may have on percentage ownership.
- - Does not include 100,000 warrants to purchase 10 shares of Common Stock
issued by the Company. Said warrants are exercisable up to ten years
from January 29, 1997 at $20.00 per warrant equivalent to $2.00 per
share.
**Does not include 16,000 warrants to purchase 10 shares of Common Stock issued
by the Company. Said warrants are exercisable for ten years from January 29,
1997 at $20.00 per warrant equivalent to $2.00 per share.
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS.
The directors and executive officer of the Company and their ages as of
the date of this Memorandum are set forth below. None of the directors and
executive officers are related to one another:
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<TABLE>
<CAPTION>
Name Age Position(s) Held
---- --- ----------------
<S> <C> <C>
Wallace Giakas 42 Chairman of the Board.
Joseph Venneri 58 President, Chief Executive Officer,
Director
John Arnone 39 Secretary, Director
Richard Bluestine 54 Executive Vice-President, Chief
Financial officer, Director, and
Chairman of Audit Committee
</TABLE>
The Bylaws of the Company currently provide for a minimum of two (2)
directors. All directors hold office until the next annual meeting of
stockholders and until their successors have been duly elected and qualified.
The Company's officers are appointed by the Board of Directors. A copy of the
Company's Bylaws are available upon request.
Wallace M. Giakas, age 42, is the Chairman of the Board. Mr. Giakas has
been the President and owner of several successful investment banking firms
whose clients were both public and private, domestic and international
companies. He has been in the investment banking industry for more than 16
years.
Joseph Venneri, age 58, President and Chief Executive Officer, and
Director, has 38 years experience in the entertainment industry, beginning as an
artist with the original "Tokens" and moving into the production side of the
industry, where he has more than 100 gold records to his credit. Mr. Venneri has
worked for such industry giants as EMI, RCA, MGM, Atlantic Records, Warner
Brothers Records, Mercury Records, Plantation Records, and Sun Records. He is
recognized as one of the top producers, engineers and restoration experts in the
music industry. He has recorded and re-recorded such stars as Bob Marley, Sammy
Davis, Jr., Jethro Tull, Grateful Dead, REM, Cher, Michael Bolton, Kenny Rogers,
Willie Nelson, Luciano Pavarotti, and hundreds more. Mr. Venneri is the creator
of the new Company-owned technology which enables it to perfect older tape and
record recordings of famous artists by enhancing the quality and combining them
with visual graphics and video clips. This technology allows the Company to
produce an entirely new product by utilizing the tapes and combining them with
outstanding musical and visual effects through the use of the Company's
forty-eight track studio. This state of the art technology has been under
development for several years and the Company believes it will be one of the
keys to its success in the future because of the large reservoir of wonderful
recordings that have been made during the twentieth century but which until now
have not met the sound quality the public has come to expect. Through the
technological innovations being developed by the Company, the lock on these
musical treasurers is being opened, permitting the world to enjoy high quality
recordings of the great artists of the past. Also, the Company's advanced
editing and
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sound purification techniques, combined with the Company's library of
recordings, opens new vistas of entertainment which parallel the advancements in
the computer world during this decade and particularly in the last 5 years.
John Arnone, age 39, is the Secretary and Director of the Board of the
Company. Mr. Arnone is in the investment banking industry and has been the
President and owner of several successful investment banking firms whose clients
were both public and private, domestic and international companies. He has been
in the investment banking industry for more than 15 years.
Richard C. Bluestine, C.P.A., age 54, Executive Vice-President and
Chief Financial Officer, is a Certified Public Accountant with experience in the
record and film industry. Mr. Bluestine was previously a partner in several
highly respected accounting firms. As a partner in an international accounting
firm he was the engagement partner for a Fortune 500 company and performed all
of the company's merger and acquisition reviews. In addition, he was the second
partner responsible for the U.S. work for a large international record and film
company. He has served as a pension trustee for the New York City Fire
Department, as a member of the Mayor's Investment Fiscal Policy Committee for
the City of New York. He is also currently Vice President of SBR Industries,
Inc., a manufacturer and distributor in the apparel industry. He received his
accounting degree from New York University and has served on various AICPA and
NYSSCPA committees.
ITEM 6. EXECUTIVE COMPENSATION.
The following table sets forth the remuneration expected to be paid by
the Company to each executive officer of the Company.
<TABLE>
<CAPTION>
CAPACITIES IN ANNUAL CASH
NAME OF INDIVIDUAL WHICH SERVES COMPENSATION
- ------------------ ------------ ------------
<S> <C> <C>
Wallace Giakas Chairman of the Board, $125,000
Joseph Venneri President, Chief Executive
Officer, Director $125,000
John Arnone Secretary, Director $125,000
Richard Bluestine Executive Vice- $ 75,000
President, Finance
Director, Chairman of
Audit Committee
</TABLE>
EMPLOYMENT AGREEMENTS
The Board of Directors has approved the employment agreements,
effective January 1, 1997, for Wallace Giakas, Joseph Venneri, John Arnone and
Richard Bluestine. Said agreements provide for annual
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bonuses of 5% of any pre-tax profits to all officers and directors except
Richard Bluestine who will receive 3% of any pre-tax profits.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
There are no material agreements and/or contract between the Company,
its officers, directors and/or shareholders.
ITEM 8. LEGAL PROCEEDINGS.
There are currently no threatened or pending legal proceedings against
the Company.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS.
There is currently only limited public trading market for the Company's
outstanding stock. There can be no assurance that an active public market will
develop for this outstanding Common Stock. Further, no assurance can be given
that, in the event that such a public market does develop, the price of the
outstanding debt or equity will be equal to or higher than the price established
by the Company upon the issuance of such debt or equity.
To date, the Company has neither declared nor paid any cash dividends
on shares of its Common Stock. The Company presently intends to retain all
profits for its business and it does not anticipate paying cash dividends on its
Common Stock in the foreseeable future.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
None.
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
COMMON STOCK
The authorized voting Common Stock of the Company consists of
50,000,000 shares of Common Stock, with a par value of .0001 following a three
hundred to one reverse stock-split. As of May 7, 1997, the Company had
10,829,055 shares of Common Stock outstanding.
WARRANTS
Warrants to purchase 3,160,000 shares of the Company's Common Stock
were also outstanding as of May 7, 1997.
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ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Certification of Incorporation and the Bylaws provide that the
Company shall indemnify each officer and director of the Company (and each
officer and director of another entity serving at the request of the Company)
who is a party to, or is threatened to be made a party to, any threatened,
pending or completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, against expenses (including attorney's fees),
judgment, fines, and amounts paid in settlement, actually and reasonably
incurred in connection with such action, suit or proceeding, had no reasonable
cause to believe his conduct was unlawful. They further provide that the Company
shall indemnify each such officer and director in any derivative action, suit or
proceeding, if he acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of the Company or its shareholders;
except that no indemnification shall be made with respect to any such derivative
action, suit or proceeding as to which he shall have been adjudged to be liable
for gross negligence or misconduct in the performance of his duties to the
Company (unless and only to the extent that the court in which such action or
suit was brought shall determine, upon application, that, despite the
adjudication or liability, but in view of all of the circumstances of the case,
he is fairly and reasonably entitled to indemnity for such expenses which such
court shall deem proper).
The Certificate of Incorporation and the Bylaws also provide that costs
in defending any action, suit or proceeding referred to above may be paid by the
Company in advance of the final disposition thereof under certain circumstances.
ITEM 13.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
<TABLE>
<CAPTION>
QUARTER ENDING
--------------
6/30/96 9/30/96 12/31/96
------- ------- --------
<S> <C> <C> <C>
ROYALTY INCOME $35,000 $52,500 $17,500
------ ------- -------
CONSULTING $ 5,000
DEPRECIATION AMORTIZATION $10,005
GENERAL & ADMINISTRATIVE $10,258
INTEREST EXPENSE RELATED PARTY $43,100
OUTSIDE SERVICES $ 2,300
PROFESSIONAL FEES $73,141
</TABLE>
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<TABLE>
<S> <C> <C> <C>
TRAVEL & ENTERTAINMENT $13,643
TOTAL EXPENSES 157,447
- -------------- --------- -------- ---------
GAIN(LOSS) BEFORE
INCOMES TAXES $35,000 $52,500 ($139,947)
------- ------- ---------
PROVISION FOR INCOME TAXES $ 7,000 $10,000 ($17,000)
------- ------- ---------
NET GRAIN (LOSS) $28,000 $42,500 ($122,947)
======= ======= =========
</TABLE>
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
AJ. Robbins, PC of Denver, Colorado was retained by the Company on
August 6, 1996, replacing Fung T. Yen, C.P.A, of San Gabriel California.
The Board of Directors retained AJ. Robbins, PC voluntarily and without
any disagreement with the Company's prior accountant.
ITEM 15. FINANCIAL STATEMENTS.
a. Financial Statements: The financial statements filed
herewith are set forth in the Index to Financial
Statements, which financial statements are incorporated
herein by reference.
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
Dated: May 8, 1997
PLANET ENTERTAINMENT CORPORATION.
By: /s/ Wallace Giakas
----------------------------
Wallace Giakas, Chairman
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INDEX
<TABLE>
<S> <C>
Independent Auditors' Report F-2
Financial Statements:
Consolidated Balance Sheet F-3
Consolidated Statement of Operations F-4
Consolidated Statement of Changes in Stockholders' Equity F-5
Consolidated Statement of Cash Flows F-6
Notes to Consolidated Financial Statements F-7
</TABLE>
F-1
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INDEPENDENT AUDITORS' REPORT
TO THE BOARD OF DIRECTORS
PLANET ENTERTAINMENT CORPORATION
MIDDLETON, NEW JERSEY
We have audited the accompanying consolidated balance sheet of Planet
Entertainment Corporation and subsidiaries, as of December 31, 1996, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for the period from inception, May 17, 1996 to December 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Planet Entertainment
Corporation and subsidiaries as of December 31, 1996, and the results of its
operations and its cash flows for the period from inception, May 17, 1996 to
December 31, 1996 in conformity with generally accepted accounting principles.
As discussed in Note 8 to the financial statements, on December 17, 1996, the
Company entered into an agreement of terms to amend and restate certain
agreements relating to the acquisition of masters and copyrights. The conditions
of the restated agreement are contingent on the approval by the bankruptcy
court. Should the bankruptcy court approval not be obtained, the original
agreements will remain in full force and effect. The effects are more fully
explained in the proforma balance sheet at Note 8.
DENVER, COLORADO A.J. ROBBINS, P.C.
JANUARY 28, 1997 CERTIFIED PUBLIC ACCOUNTANTS
EXCEPT FOR NOTE 11[B] & CONSULTANTS
AS TO WHICH THE DATE
IS FEBRUARY 3, 1997
F-2
<PAGE> 18
PLANET ENTERTAINMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS:
Cash $ 6,998
Royalty receivable, net 105,000
Prepaid expenses 29,810
------------
Total Current Assets 141,808
------------
EQUIPMENT, at cost, net 47,500
------------
OTHER ASSETS:
Organizational costs, net 67,500
Publishing rights, net 880
Masters and Copyrights 13,800,000
------------
Total Other Assets 13,868,380
------------
$ 14,057,688
============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 65,767
Accrued interest expense, related party 43,100
Due to stockholders 145,243
Current portion of long-term debt, related party 250,000
------------
Total Current Liabilities 504,110
LONG-TERM DEBT, less current portion, related party 1,000,000
DEFERRED INCOME TAXES 4,600,000
------------
Total Liabilities 6,104,110
------------
COMMITMENTS AND CONTINGENCIES:
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value; 50,000,000
shares authorized; 9,826,055 shares issued
and outstanding 9,826
Additional paid-in capital 7,996,199
Accumulated (deficit) (52,447)
------------
Total Stockholders' Equity 7,953,578
------------
$ 14,057,688
============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-3
<PAGE> 19
PLANET ENTERTAINMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD MAY 17, 1996 (INCEPTION) TO DECEMBER 31, 1996
<TABLE>
<S> <C>
ROYALTY INCOME $ 105,000
-----------
EXPENSES:
Depreciation and amortization 10,005
General and administrative 104,342
Interest expense, related party 43,100
-----------
Total Expenses 157,447
-----------
LOSS BEFORE INCOME TAXES (52,447)
PROVISION FOR INCOME TAXES --
-----------
NET LOSS $ (52,447)
===========
NET LOSS PER COMMON SHARE $ (.02)
===========
Weighted Average Number of
Common Shares Outstanding 3,377,255
===========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-4
<PAGE> 20
PLANET ENTERTAINMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD MAY 17, 1996 (INCEPTION) TO DECEMBER 31, 1996
<TABLE>
<CAPTION>
Additional
Common Stock Paid-In Accumulated
---------------------------------
Shares Amount Capital (Deficit) Total
------ ------ ------- --------- -----
<S> <C> <C> <C> <C> <C>
Issuance of common stock to
organizers of the Company
as founders shares,
$.001 per share 75,000 $ 75 $ -- $ -- $ 75
Issuance of common stock for
services rendered,
$.001 per share 5,065,000 5,065 -- -- 5,065
Issuance of common stock to
acquire Higher Ground Records,
$.001 par value 25,000 25 -- -- 25
Effect of recapitalization:
Issuance of common stock to
Ampro International
Golf Tour, Incorporated shareholders
in reverse merger,
$.001 per share 101,055 101 (101) -- --
Issuance of common stock to
acquire music masters,
$1.43 per share 1,500,000 1,500 2,148,500 -- 2,150,000
Issuance of common stock to
acquire Maestro Holding
Corporation, $1.91 per share 3,060,000 3,060 5,847,800 -- 5,850,860
Net loss for the period -- -- -- (52,447) (52,447)
--------- ------ ----------- -------- -----------
Balances, December 31, 1996 9,826,055 $9,826 $ 7,996,199 $(52,447) $ 7,953,578
========= ====== =========== ======== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-5
<PAGE> 21
PLANET ENTERTAINMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD MAY 17, 1996 (INCEPTION) TO DECEMBER 31, 1996
<TABLE>
<S> <C>
CASH FLOWS FROM (TO) OPERATING ACTIVITIES:
Net loss $ (52,447)
Adjustments to reconcile net loss to net cash
provided (used) by operations:
Depreciation and amortization 10,005
Stock issued for services 5,140
Changes in:
Royalty receivable, net (105,000)
Prepaid expenses (29,810)
Accounts payable 65,767
Accrued interest expense, related party 43,100
---------
Cash Flows (Used)
by Operating Activities (63,245)
---------
CASH FLOWS FROM (TO) FINANCING ACTIVITIES:
Loan from stockholder 70,243
---------
Cash Flows Provided by
Financing Activities 70,243
---------
NET CHANGE IN CASH 6,998
CASH, beginning of period --
---------
CASH, end of period $ 6,998
=========
</TABLE>
- -------------------
See Note 12
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-6
<PAGE> 22
PLANET ENTERTAINMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
History and Activity
Planet Entertainment Corporation (the Company or Planet) was incorporated under
the laws of Delaware on May 17, 1996 for the purpose of acquiring existing
libraries of master recordings of various types of music and to enhance, market
and produce new recordings to be licensed or marketed domestically or
internationally.
During the year, the Company acquired all the outstanding shares of common stock
of Maestro Holding Corporation (Maestro) in exchange for 3,060,000 shares of
Planet common stock valued at $5,850,860. Assets acquired include over 5,000
master recordings, publishing rights to 300 songs, royalty income and a
recording studio located in New Jersey.
During the year, the Company acquired all the outstanding shares of common stock
of Higher Ground Records in exchange for 25,000 shares of Planet common stock
valued at $25. Assets acquired include the rights to artists' contracts,
production agreements and publishing contracts.
During the year, the Company acquired over 10,000 master recordings from Gulf
Coast Music, L.L.C. (Gulf Coast) and J. Jake, Inc. (Jake) in exchange for
1,500,000 shares of Planet common stock valued at $2,150,000 and the assumption
of promissory notes totaling $1,250,000. See Note 8.
During the year, the Company merged into Ampro International Golf Tour, Inc., a
Florida corporation which changed its name to Planet Entertainment Corporation.
Shares of common stock of Ampro were converted into common stock of Planet at
the rate of one share of Planet for each share of Ampro. Prior to the said
exchange Ampro affected a reverse stock split at the rate of one share for every
three hundred shares previously held. (See Note 2.)
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries; Higher Ground Records, Planet Records Corporation
(inactive) and Maestro Holding Corporation. All significant intercompany
accounts and transactions have been eliminated.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and revenues and expenses during the reporting period.
Actual results could differ from those estimates and assumptions.
Cash and Cash Equivalents
For purposes of the statements of cash flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months or less to be
cash equivalents.
F-7
<PAGE> 23
PLANET ENTERTAINMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
Equipment
Equipment is carried at cost and depreciated on a straight-line basis over the
estimated useful lives of five to ten years. Depreciation expense for the period
ended December 31, 1996 was $2,500.
Revenue Recognition
Royalties derived from the licensing of recording masters are recognized upon
notification of retail sales by the distributor. A reserve in the amount of 30%
of sales has been recorded since the distribution agreement allows up to 30% of
sales to be returned.
Publishing Rights
Publishing rights consist of rights to 300 songs acquired in the Maestro
acquisition and are stated at predecessor cost.
Amortization of publishing rights is computed based on the ratio that current
years' revenues will bear to anticipated total gross revenues over the estimated
life of the publishing right (generally 5-10 years). Amortization expense for
the period ended December 31, 1996 was $5.
Record Masters
Record masters consist of record titles acquired in the Maestro acquisition and
Gulf Coast and Jake record master purchases and are stated at predecessor cost.
Amortization of record masters will be computed based on the ratio that current
years' revenues will bear to anticipated total gross revenues over the estimated
life of the record master (generally 5-10 years). As of December 31, 1996, no
amortization has been recorded.
Organization Cost
Amortization of organizational costs is calculated using the straight-line
method over five years. Amortization expense for the period ended December 31,
1996 was $7,500.
Income Taxes
The Company has adopted Statement of Financial Accounting Standards No. 109 (FAS
109), Accounting for Income Taxes. Under this method, deferred income taxes are
recorded to reflect the tax consequences in future years of temporary
differences between the tax basis of the assets and liabilities and their
financial statement amounts at the end of each reporting period. Valuation
allowances will be established when necessary to reduce deferred tax assets to
the amount expected to be realized. Income tax expense is the tax payable for
the current period and the change during the period in deferred tax assets and
liabilities. The deferred tax assets and liabilities have been netted to reflect
the tax impact of temporary differences. The adoption of FAS 109 did not have a
material effect on the Company's financial statements.
F-8
<PAGE> 24
PLANET ENTERTAINMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
Earnings Per Common Share
Earnings per common share is computed based upon the weighted average number of
common and dilutive common equivalent shares outstanding during the period.
Dilutive equivalent shares consist of stock options and warrants (calculated
using the treasury stock method). In loss periods, dilutive common equivalent
shares are excluded as the effect would be anti-dilutive.
NOTE 2 - BUSINESS RECAPITALIZATION AND RESTATEMENT
On October 1, 1996, Ampro International Golf Tour, Incorporated (Ampro), a
public corporation, acquired Planet. The transaction has been treated as a
reverse merger. The statement of operations as of December 31, 1996 does not
include any operations of Ampro prior to the merger date.
NOTE 3 - PRODUCER AGREEMENT/ROYALTY RECEIVABLE
Effective July 1, 1996, Planet assumed a producer agreement dated August 1, 1995
between Maestro (as producer, re-recorder and restorer of master recordings
embodying the performances of Bob Marley) and Anansi Records. The term of the
agreement shall continue until such time as the services are completed.
The publishing rights royalty revenue on the sale of the "Bob Marley" enhanced
CD has been estimated based on sales of one million copies.
NOTE 4 - EQUIPMENT
Equipment consists of the following at December 31, 1996:
<TABLE>
<S> <C>
Recording studio equipment $ 50,000
Less accumulated depreciation and amortization (2,500)
--------
$ 47,500
========
</TABLE>
F-9
<PAGE> 25
PLANET ENTERTAINMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - MASTERS AND COPYRIGHTS
The Company has entered into two agreements to secure rights to certain master
recordings and assets as follows:
A) The Company issued 3,060,000 shares of common stock to acquire 5,000
masters, publishing rights to 300 songs and a recording studio located
in New Jersey from a related party. The masters are valued at
predecessor cost of $9,200,000.
B) The Company issued 1,500,000 shares of common stock and assumed a
promissory note for $1,250,000 to acquire 10,000 masters from an
unrelated third party valued at predecessor cost of $4,600,000.
The Company has the non-exclusive right to manufacture, distribute, advertise,
sell, and promote in all configurations, the performances contained on the
masters.
NOTE 6 - LONG-TERM DEBT RELATED PARTY
Long-term debt consists of the following at December 31, 1996:
Note payable to Gulf Coast due September, 2001; interest at 9.75% per annum.
Payments of $250,000 principal plus interest are due annually beginning
September, 1997, unsecured.
<TABLE>
<S> <C>
$ 1,250,000
Less current portion 250,000
------------
$ 1,000,000
============
</TABLE>
Estimated maturities on long-term debt are as follows for the years ending:
<TABLE>
<S> <C>
1997 $ 250,000
1998 250,000
1999 250,000
2000 250,000
2001 250,000
------------
$ 1,250,000
============
</TABLE>
Interest expense at December 31, 1996 was $43,100.
F-10
<PAGE> 26
PLANET ENTERTAINMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7 - INCOME TAXES
The components of deferred tax assets and (liabilities) are as follows:
<TABLE>
<S> <C>
Total deferred tax assets $ 1,600
Less valuation allowance (1,600)
-----------
--
Total deferred tax (liabilities) (4,600,000)
-----------
Net deferred tax (liabilities) $(4,600,000)
===========
</TABLE>
A deferred tax liability in the amount of $4,600,000 has been recorded for the
difference between the assigned values and tax basis of the assets and
liabilities acquired in the purchase method acquisitions of subsidiaries and
assets.
The tax effects of temporary differences that give rise to deferred tax assets
and (liabilities) are as follows:
Temporary differences:
<TABLE>
<S> <C>
Net operating loss carryforward $ 1,600
Valuation allowance (1,600)
Masters and copyrights (4,600,000)
-----------
$(4,600,000)
===========
</TABLE>
No provision for income taxes has been recorded for December 31, 1996 due to the
net operating loss. The net operating loss carryover of approximately $4,000 as
of December 31, 1996 expires in 2011 and represents a deferred tax asset. The
Company is providing a valuation allowance in the full amount of the deferred
tax asset since there is no assurance of future taxable income.
The primary difference between the amount of income tax expense that results
from applying statutory rates to pretax income and the reported amount of income
tax expense is undeductible accrued interest to related parties in the amount of
$43,100.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Restated Agreement
The financial statements have been prepared based on the assumption of the
formation of Gulf Coast. Gulf Coast is to be formed upon confirmation of a plan
of reorganization in the bankruptcy proceedings of an individual not related to
Planet. The terms and conditions of the formation and details of the transaction
are described below.
F-11
<PAGE> 27
PLANET ENTERTAINMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 - COMMITMENTS AND CONTINGENCIES (Continued)
Restated Agreement (Continued)
On December 17, 1996, Planet entered into an agreement of terms to amend and
restate certain agreements entered into by Planet on September 17, 1996 between
Music Marketeers, Incorporated (Music) and J. Jake, Incorporated (Jake). These
agreements were for the acquisition of 10,000 master recordings, an option to
acquire a mortgage note on a recording studio and a consulting services
agreement with an individual in exchange for 2,000,000 shares of common stock of
Planet and promissory notes for $1,350,000. The agreements have been amended and
restated as an Asset Purchase Agreement between Planet, Gulf Coast and Jake for
the purchase of 10,000 master recordings and an amended and restated consulting
agreement between Planet and an individual in exchange for 1,500,000 shares of
common stock of Planet and a promissory note for $1,250,000.
The conditions of the restated agreement are contingent on the approval of the
bankruptcy court. Should such bankruptcy court approval not be obtained, the
original agreements will remain in full force. The financial statements have
been presented to reflect the amended and restated agreement.
Following is a proforma balance sheet for December 31, 1996 which reflects the
original agreements to acquire Music and Jake, which will be recorded if the
bankruptcy court approval is not obtained for the restated agreement.
<TABLE>
<CAPTION>
Music Jake
Proforma Proforma Proforma
Planet Adjustment Adjustment Balances
------ ---------- ---------- --------
<S> <C> <C> <C> <C>
ASSETS:
Current Assets $ 141,808 $ -- $ -- $ 141,808
Equipment 47,500 -- -- 47,500
Other Assets 13,868,380 -- 570,000(2) 14,438,380
----------- -------- ----------- -----------
Total Assets $14,057,688 $ -- $ 570,000 $14,627,688
=========== ======== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities $ 504,110 $ 20,000(1) $ 570,000(2) $ 1,094,110
Long-Term Debt 1,000,000 80,000(1) -- 1,080,000
Deferred Income Taxes 4,600,000 -- -- 4,600,000
Stockholders' Equity 7,953,578 (100,000) -- 7,853,578
----------- -------- ----------- -----------
Total Liabilities and
Stockholders' Equity $14,057,688 $ -- $ 570,000 $14,627,688
=========== ======== =========== ===========
</TABLE>
F-12
<PAGE> 28
PLANET ENTERTAINMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 - COMMITMENTS AND CONTINGENCIES (Continued)
Restated Agreement (Continued)
Proforma adjustments relating to the original agreements were recorded as
follows:
1. To record additional $100,000 note payable to stockholder of Music.
2. To record option to acquire mortgage note receivable and remaining debt
owed to acquire the recording studio located in New Orleans.
Insurance
The Company does not maintain insurance to cover damages from fire, flood or
other casualty losses to its music master libraries. Costs resulting from
uninsured property losses will be charged against income upon occurrence. No
amounts for uninsured casualty property losses were charged to operations for
the year ended December 31, 1996.
Recording Agreements
Higher Ground Records has entered into several artist recording contracts at
varying dates in 1996. The contracts are for an initial period of one year with
options to renew for one to two years. Recording costs are to be paid by Higher
Ground Records and shall be recouped from royalties due the artist. All masters
records and reproductions are the property of Higher Ground Records.
Joint Venture and Distribution Agreement
Effective July 1, 1996 Planet assumed a joint venture and a distribution
agreement dated June 1, 1996 between Maestro and an unrelated individual
(jointly) and Anansi Records (as distributor). The agreement is for an initial
period of three years with options for additional contract periods of one year
each. Under the agreement certain master recordings are to be exploited under
the company name "Black Tiger Records". All expenses are to be borne by the
joint venture to be reimbursed by Black Tiger Records.
Production Agreement
Higher Ground Records has entered into an agreement with an unrelated individual
for production services. The agreement is for an initial period of one year with
two one year options. The contract calls for a commitment of at least $2,000 per
project advance and a royalty. The royalty is payable only after recoupment of
all recording costs under the applicable recording contract.
Employment Agreements
Higher Ground Records has entered into two employment agreements with its former
stockholders for amounts and terms to be negotiated in the future.
F-13
<PAGE> 29
PLANET ENTERTAINMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 - COMMITMENTS AND CONTINGENCIES (Continued)
Consulting Agreement
Planet has entered into an agreement for consulting services with an unrelated
individual. The agreement is for a term of five years. Consulting services will
include maintenance and administration of existing licenses; and negotiation and
acquisition of new licenses for master sound recordings A monthly contractor fee
of $10,000 is to be paid once Planet has received physical possession of all
master recordings and contracting services have begun.
NOTE 9 - PLANET ENTERTAINMENT CORPORATION STOCK PLAN
On October 1, 1996, the Company adopted a plan known as Planet Entertainment
Corporation Stock Plan (the "Plan") pursuant to which the Board of Directors
shall issue awards, options and grants. Pursuant to the Plan 1,000,000 shares of
the Company's common stock have been reserved for issuance as awards. An awardee
must be in the employ of the Company as an officer or director of, or consultant
to, the Company for six months prior to receiving an award and the shares of
common stock issued as an award are forfeited in the event employment is
terminated prior to the expiration of two years from the date of this award.
Further, said shares of common stock issued pursuant to an award are
non-transferable for a period of two years and the awardee must agree to assign
all know-how, patents and proprietary information developed while in the
Company's employ to the Company. The maximum number of shares of common stock
that may be issued to each individual is 200,000. The per share option exercise
price shall be determined by the Board of Directors upon granting the option and
the exercise period is two years from the date of grant. All options are
non-transferable and unexercised options are forfeitable in the event employment
is terminated within two years of the grant. No options have been issued to
date.
NOTE 10 - RELATED PARTY TRANSACTIONS
In addition to transactions with related parties discussed throughout the notes
to financial statements, the following related party transactions have occurred:
A stockholder/director of the Company has provided the Company with working
capital funds of $75,708. As of December 31, 1996, $5,465 has been repaid which
results in a balance of $70,243.
Twelve stockholders of the Company provided services in exchange for 5,065,000
shares of common stock valued at $5,065.
F-14
<PAGE> 30
PLANET ENTERTAINMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11 - SUBSEQUENT EVENTS
[A] Planet has a letter of intent for a lease purchase agreement with an
unrelated third party to lease a production studio with an option to purchase
the studio, acquire production equipment and record masters for shares of Planet
common stock.
[B] On February 3, 1997 the Company entered into employment agreements with four
of its officers for a term of 10 years beginning January 1, 1997. The agreements
require aggregate payments of $450,000 in the initial year with annual increases
of at least 10% per year and a bonus of up to 5% of pre-tax profits each year.
NOTE 12 - SUPPLEMENTAL INFORMATION TO STATEMENT OF CASH FLOWS FOR NONCASH
INVESTING AND FINANCING ACTIVITIES
The Company issued 3,060,000 common shares of stock for the acquisition of the
New Jersey recording studio, publishing rights to 300 songs and the rights to
5,000 master recordings.
The Company issued 25,000 common shares of stock for the acquisition of the
Higher Ground Records.
The Company issued 1,500,000 shares of stock assumed and $1,250,000 in
promissory notes for the rights to 10,000 master recordings.
The Company issued 101,055 common shares in a reverse stock split.
The Company accrued organization costs of $75,000 as due to stockholders.
F-15
