U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
JUNE 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
______________ TO ______________
COMMISSION FILE NUMBER: 000-28219
ECLIPSE ENTERTAINMENT GROUP, INC.
(Exact name of registrant as specified in its charter)
Nevada 91-1766849
(State or jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
10990 N.E. 8th Street, Suite 900, Bellevue, Washington 98004
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (425) 990-5969
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 Par Value
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) been subject to such filing
requirements for the past 90 days. Yes X No .
As of June 30, 2000, the Registrant had 12,016,140 shares of
common stock issued and outstanding.
Transitional Small Business Disclosure Format (check one): Yes No X.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION PAGE
ITEM 1. FINANCIAL STATEMENTS
BALANCE SHEET AS OF JUNE 30, 2000 3
STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 2000 AND JUNE 30, 1999 4
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED
JUNE 30, 2000 AND JUNE 30, 1999 5
NOTES TO FINANCIAL STATEMENTS 6
ITEM 2. PLAN OF OPERATION 7
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 14
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 14
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS 14
ITEM 5. OTHER INFORMATION 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 15
SIGNATURE 15
PART 1 - FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
ECLIPSE ENTERTAINMENT GROUP, INC.
BALANCE SHEET
JUNE 30, 2000
(Unaudited)
ASSETS
Current assets
Cash $ 547
Note receivable 258,000
Total current assets 258,547
Film costs 1,109,895
Fixed assets, net 530
Deposits 175,000
Other assets 685
Total assets $1,544,657
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 66,262
Due to related party 447,004
Stock subscriptions payable 210,000
Total current liabilities 723,266
Total liabilities 723,266
Stockholders' equity
Preferred stock, $.001 par value; 10 million
shares authorized;
no shares issued --
Common stock, $.001 par value;
50 million shares authorized;
12,016,140 shares issued and outstanding 12,016
Additional paid-in capital 1,414,329
Accumulated deficit (604,954)
Total stockholders' equity 821,391
Total liabilities and stockholders' equity $1,544,657
See Accompanying Notes to Financial Statements
ECLIPSE ENTERTAINMENT GROUP, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
For the Three For the Three For the Six For the Six
Months Ended Months Ended Months Ended Months Ended
June 30, 2000 June 30, 1999 June 30, 2000 June 30, 1999
Revenues $ -- $ -- $ -- $ --
General and
Administrative
expenses 790 33,407 18,589 99,313
Loss from
operations (790) (33,407) (18,589) (99,313)
Other expenses
Interest
Expense 5,014 2,483 11,092 3,327
Total
Other
Expenses 5,014 2,483 11,092 3,327
Provision for
income taxes -- -- -- --
Net loss $(5,804) $(35,890) $(29,681) $(102,640)
Basic and fully
diluted loss per
common share $(.001) $(.004) $(.002 (.011)
Weighted
average number
of common
shares used
in per share
calculation 12,016,140 9,710,620 12,016,140 9,710,620
See Accompanying Notes to Financial Statements
ECLIPSE ENTERTAINMENT GROUP, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Six For the Six
Months Ended Months Ended
June 30, 2000 June 30, 1999
Cash flows from operating activities:
Net loss $ (29,681) $(102,640)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation 103 209
Services paid with common stock -- 41,502
Changes in operating assets and
liabilities:
Increase in film costs -- (97,010)
Increase in deposits (175,000) --
Decrease in accounts payable and
accrued expenses (23,050) (2,513)
Net cash used by operating activities (227,628) (160,452)
Cash flows from investing activities:
Increase in promissory note
Receivable (258,000) --
Net cash used by investing activities (258,000) --
Cash flows from financing activities:
Net increase in due to related parties 273,839 45,635
Proceeds from stock subscriptions
Payable 210,000 --
Proceeds from common stocks issued -- 115,425
Net cash provided by financing
Activities 483,839 161,060
Net change in cash (1,789) 608
Cash-beginning balance 2,336 --
Cash-ending balance 547 608
See Accompanying Notes to Financial Statements
ECLIPSE ENTERTAINMENT GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying consolidated financial statements have been
prepared in accordance with Securities and Exchange Commission
requirements for interim financial statements. Therefore, they
do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. The financial statements should be read in
conjunction with the financial statements of Eclipse
Entertainment Group, Inc. ("the Company") for the fiscal year
ended December 31, 1999, included in the Form 10-KSB filed by the
Company.
The results of operations for the interim periods shown in this
report are not necessarily indicative of results to be expected
for the full year. In the opinion of management, the information
contained herein reflects all adjustments necessary to make the
results of operations for the interim periods a fair statement of
such operation. All such adjustments are of a normal recurring
nature.
NOTE 2 - RELATED PARTY TRANSACTIONS
Due to related parties at June 30, 2000 consist of the following:
Advances payable to an entity controlled by an
officer and shareholder of the Company represent
advances, unsecured, imputed interest at 8%, and due
on demand $333,504
Promissory note payable to a shareholder, unsecured,
bearing interest at 8%, and due on demand 113,500
Total due to related parties $447,004
NOTE 3 - STOCK SUBSCRIPTIONS PAYABLE
At June 30, 2000, stock subscriptions payable consist of several
subscription agreements totaling $210,000 for the future issuance
of 700,000 shares of the Company's common stock. The Company has
subsequently issued such shares of common stock in July 2000.
ITEM 2. PLAN OF OPERATION.
The following discussion should be read in conjunction with the
financial statements of the Registrant and notes thereto
contained elsewhere in this report.
Twelve Month Plan of Operation.
The business objectives of the Registrant, as developed by its
Board of Directors, are strongly focused on the production and
acquisition of action oriented feature films with strong domestic
and universal appeal that have been developed and/or produced
within well managed low to medium budgets. The Registrant
intends to develop a well integrated portfolio of these feature
films by producing or co-producing one or two action feature
films each year and by acquiring the rights to other similar
films which are available at attractive prices.
The Registrant has entered into a distribution agreement with
Westar Entertainment, Inc. ("Westar") on January 1, 1998 pursuant
to which this firm markets the Registrant's products both
domestically and worldwide (see Exhibit 10.1 to this Form 10-QSB)
(thus, the Registrant will be obligated to distribute its films
exclusively through this company). Under this agreement, the
Registrant and Westar Entertainment, Inc. will share gross
receipts on a 50-50 basis. Under this agreement, Westar has
complete authority to distribute the Registrant's films. Any and
all distribution expense incurred by Westar are to be reimbursed
to Westar by the Registrant. The initial term of this agreement
is five years; it is to continue for successive one year periods
thereafter, unless cancelled by either party on sixty days prior
written notice.
Working with Westar, the Registrant is working toward
establishing a strong network of domestic and foreign buyers and
will produce and/or acquire motion pictures that meet their needs
in terms of content and cost. The Registrant intends to develop
its portfolio to respond quickly and effectively to market needs,
and has attended and will continue to attend the major film
markets in order to stay in touch with the dictates of the
domestic and international markets. The major markets include
the American Film Market ("AFM") in Santa Monica, California, the
Cannes Film Market (Marche du Film de Cannes) in Cannes, France,
and MIFED ("E.P. Fiera Internazionale Di Milano") in Milan,
Italy.
MIFED is an annual five day film Market that takes place in
Milan, Italy at the beginning of October. The venue is the Fiera
di Milano (Milan Convention Center) and operates under the same
aforementioned system as the American Film Market except that
films are viewed in screening rooms and theatres located within
the Fiera di Milano itself. Buyers and Distributors do not have
to leave the convention center.
The Registrant has acquired the worldwide distribution rights to
the action/adventure films Beretta's Island and Double Cross
through a distribution agreement dated September 2, 1997, with
Franco Columbu, an officer and director of the Registrant (this
agreement also covered another film to be called Assault of the
Lost Goddess, which was not produced) (see Exhibit 10.2 to this
Form 10-QSB). The Registrant paid the sum of $75,000 for the
rights to Beretta's Island and $150,000 for the rights to Double
Cross; the gross receipts from the distribution from each film
are to be shared equally. Under the terms of this agreement, the
Registrant has a right of first refusal for a term of five years
to meet any bona fide offer to produce, finance, or develop any
film project which Mr. Columbu is developing as a producer.
Also, the Registrant has the right to use Mr. Columbu's name and
likeness in connection with the distribution of these films.
In addition, the Registrant has entered into a distribution
agreement dated January 30, 1997 with Pinoy Productions, Inc.
covering the martial arts film The Process (Arthur Birzneck, an
officer and director of the Registrant, is also President of that
company) (see Exhibit 10.3 to this Form 10-QSB). The Registrant
paid the sum of $100,000 for the rights to The Process; the gross
receipts are to be shared as follows: (a) on gross receipts to
$250,000 U.S.: 100% to the Registrant; (b) on gross receipts
between $250,000 U./S. and $1,000,000 U.S.: 75% to the Registrant
and 25% to the licensor; (c) on gross receipts between $1,000,000
U.S. and $2,500,000 U.S.: 80% to the Registrant and 20% to the
licensor; and (d) on gross receipts above $2,500,000 U.S.: 85% to
the Registrant and 15% to the licensor. Under this agreement,
which has an initial term of fifty years, the Registrant has the
right to deduct from gross receipts all reasonable expenses
incurred in the distribution of these films. This distribution
agreement is exclusive to the Registrant and has no limitation on
the territory.
Beretta's Island stars Franco Columbu (MR. OLYMPIA) and Ken
Kercheval with a special appearance by Arnold Schwartzenegger.
Double Cross stars Franco Columbu, William Smith (Conan), Frank
Stallone and Barbara Niven. The Process stars and is directed by
Ernie Reyes, Jr. (Red Sonja, Ninja Turtles I & II), Cori Nemec
(Drop Zone) and Ernie Reyes, Sr. (Surf Ninjas). Under the
agreement with Westar, the rights obtained by the Registrant to
these three films have been assigned to Westar for distribution.
To date, Westar has, in the ordinary course of business, entered
into distribution agreements covering the films noted above.
Even though Westar anticipates that such distributions will
result in gross receipts being generated during the current
calendar year, such receipts, under the Westar agreement, must
first be applied to expenses incurred by Westar with respect to
trailers, art work, promotional materials, delivery materials,
advertising, and any and all other expenses incurred for the
sales, marketing and distribution of these films. Therefore, the
Registrant may not realize any revenue from these distributions.
Although the Registrant is, at the moment, focused on the
production, co-production and acquisition of low to medium budget
action films, it is also within its mandate to branch out into
similar genres of television programming as well as documentaries
and docudramas within budgetary constraints. Longer-range
projects include the acquisition of a movie studio project in
Sardinia, Italy, the formation or acquisition of a domestic video
label, and acquisition of a music division. However, such
projects are only possibilities and may not be realized. The
Registrant does not currently have any agreements, commitments,
or understandings to make any acquisitions.
For the period from the Registrant's inception through June
30, 2000, there were no revenues and operating activities
related primarily to establishing the management and
operating infrastructure. The Registrant has created the
ability to acquire and license worldwide, or sell, distribution
rights to independently produced feature films. The Registrant
can obtain rights to motion pictures at various stages of
completion (either completed, in production or in development)
and licenses distribution rights (including video, pay
television, free television, satellite and other ancillary
rights) of motion pictures to various sub-distributors in the
United States and in foreign markets.
Film costs represent a major component of the
Registrant's assets. Film costs represent those costs
incurred in the acquisition and distribution of motion
pictures or in the acquisition of distribution rights to motion
pictures. This includes minimum guarantees paid to producers
or other owners of film rights, recoupable distribution and
production costs. The Registrant will amortize film costs using
the individual film forecast method under which film costs are
amortized for each film in the ratio that revenue earned in the
current period for such film bears to management's estimate of
the total revenue to be realized from all media and markets for
such film. The Registrant currently has not generated
revenues from such film costs, however, management believes
that distribution will commence in the year 2000. Net income in
future years is in part dependent upon the Registrant's
amortization of its film costs and may be significantly affected
by periodic adjustments in such amortization.
General and administrative expenses consist of
related general corporate functions, including marketing
expenses, professional service expenses and travel. The
Registrant expects general and administrative expenses to
increase as it commences to promote and market its motion picture
distribution rights. No material capital expenditures were made
during the quarter ended on June 30, 2000.
Risk Factors Connected with Plan of Operation.
(a) Only Limited Prior Operations.
The Registrant has only limited operations and is subject to all
the risks inherent in the creation of a new business. Since the
Registrant's principal activities to date have been limited to
organizational activities and prospect development, it has no
record of any revenue-producing operations. Consequently, there
is only a limited operating history upon which to base an
assumption that the Registrant will be able to achieve its
business plans. In addition, the Registrant has only limited
assets. As a result, there can be no assurance that the
Registrant will generate significant revenues in the future; and
there can be no assurance that the Registrant will operate at a
profitable level. If the Registrant is unable to obtain
customers and generate sufficient revenues so that it can
profitably operate, the Registrant's business will not succeed.
(b) Need for Additional Financing May Affect Operations.
Current funds available to the Registrant will not be adequate
for it to be competitive in the areas in which it intends to
operate. Therefore, the Registrant will need to raise additional
funds in order to fully implement its business plan. The
Registrant will attempt to raise approximately $1.5 million in
additional funds over the next 12 months through a private
placement for production of its next feature film. However,
there can be no assurance that the Registrant will be successful
in raising such additional funds. Regardless of whether the
Registrant's cash assets prove to be inadequate to meet the
Registrant's operational needs, the Registrant might seek to
compensate providers of services by issuance of stock in lieu of
cash.
Over the next 12 months the Registrant will continue to attend
all major sales markets to sell its film products. The
Registrant's existing capital will not be sufficient to meet
the Registrant's cash needs, including costs of its registration
and complying with its continuing reporting obligations under the
Securities Exchange Act of 1934. Accordingly, additional capital
will be required.
Since inception, the Registrant has financed operations
primarily through private placements of common stock. The
Registrant has significant ongoing liquidity needs to support its
existing business and continued growth. The Registrant's
continued operations therefore will depend upon its ability to
raise additional funds through bank borrowings, equity or debt
financing. Adequate funds may not be available when needed or
may not be available on favorable terms. If funding is
insufficient at any time in the future, the Registrant may be
unable to develop or enhance its service offering, take
advantage of business opportunities or respond to competitive
pressures, any of which could have a negative impact on the
business, operating results and financial condition. In
addition, if additional shares were issued to obtain financing,
current shareholders may suffer a dilutive effect on their
percentage of stock ownership in the Registrant.
(c) Risks in Connection with Distribution of Films.
The Registrant typically acquires distribution rights in a motion
picture for a specified term in one or more territories
and media. In some circumstances, the Registrant also
acquires the copyright to the motion picture. The
arrangements the Registrant enters into to acquire rights
may include the Registrant agreeing to pay an advance or minimum
guarantee for the rights acquired and/or agreeing to advance
print and advertising costs, obligations which are independent
of the actual financial performance of the motion picture being
distributed. The risks incurred by the Registrant increase to
the extent the Registrant takes such actions.
The Registrant also incurs significant risk to the
extent it engages in development or production activities
itself. The Registrant may, in certain circumstances, reduce
some of the foregoing risks by sub-licensing certain
distribution rights in exchange for minimum guarantees from
sub-licensees such as foreign sub-distributors. The investment
by the Registrant in a motion picture includes the cost of
acquisition of the distribution rights (including any advance or
minimum guarantee paid to the producer), the amount of the
production financed, and the marketing and distribution costs
borne.
(d) Substantial Competition.
The Registrant may experience substantial competition in its
efforts to locate and attract customers for its products. Many
competitors in the motion picture industry have greater
experience, resources, and managerial capabilities than the
Registrant and may be in a better position than the Registrant to
obtain access to attractive products. There are a number of
larger companies which will directly compete with the Registrant.
Such competition could have a material adverse effect on the
Registrant's profitability or viability.
(e) Other External Factors May Affect Viability of Registrant.
The motion picture industry in general is a speculative venture
necessarily involving some substantial risk. There is no
certainty that the expenditures to be made by the Registrant will
result in commercially profitable business. The marketability of
its products will be affected by numerous factors beyond the
control of the Registrant. These factors include market
fluctuations, and the general state of the economy (including the
rate of inflation, and local economic conditions), which can
affect peoples' discretionary spending. Factors which leave less
money in the hands of potential customers of the Registrant will
likely have an adverse effect on the Registrant. The exact
effect of these factors cannot be accurately predicted, but the
combination of these factors may result in the Registrant not
receiving an adequate return on invested capital.
(f) Control of the Registrant by Officers and Directors
Over Affairs of the Registrant.
The Registrant's officers and directors beneficially own
approximately 27% of the outstanding shares of the Registrant's
common stock. As a result, such persons, acting together, have
the ability to exercise significant influence over all matters
requiring stockholder approval. Accordingly, it could be
difficult for the investors hereunder to effectuate control over
the affairs of the Registrant. Therefore, it should be assumed
that the officers, directors, and principal common shareholders
who control these voting rights will be able, by virtue of their
stock holdings, to control the affairs and policies of the
Registrant.
(g) Success of Registrant Dependent on Management.
The Registrant's success is dependent upon the hiring and
retention of key personnel. None of the officers or directors
has any employment or non-competition agreement with the
Registrant. Therefore, there can be no assurance that these
personnel will remain employed by the Registrant. Should any of
these individuals cease to be affiliated with the Registrant for
any reason before qualified replacements could be found, there
could be material adverse effects on the Registrant's business
and prospects.
In addition, all decisions with respect to the management of
the Registrant will be made exclusively by the officers and
directors of the Registrant. Investors will only have rights
associated with minority ownership interest rights to make
decision which effect the Registrant. The success of the
Registrant, to a large extent, will depend on the quality of the
directors and officers of the Registrant. Accordingly, no person
should invest in the Shares unless he is willing to entrust all
aspects of the management of the Registrant to the officers and
directors.
(h) Conflicts of Interest May Affect Independence of Officers
and Directors.
The officers and directors have other interests to which they
devote time, either individually or through partnerships and
corporations in which they have an interest, hold an office, or
serve on boards of directors, and each will continue to do so
notwithstanding the fact that management time may be necessary to
the business of the Registrant. As a result, certain conflicts of
interest may exist between the Registrant and its officers and/or
directors which may not be susceptible to resolution.
In addition, conflicts of interest may arise in the area of
corporate opportunities which cannot be resolved through arm's
length negotiations. All of the potential conflicts of interest
will be resolved only through exercise by the directors of such
judgment as is consistent with their fiduciary duties to the
Registrant. It is the intention of management, so as to minimize
any potential conflicts of interest, to present first to the
Board of Directors to the Registrant, any proposed investments
for its evaluation.
(i) Limitations on Liability, and Indemnification, of
Directors and Officers May Result in Expenditures by the
Registrant.
The Registrant's Articles of Incorporation include
provisions to eliminate, to the fullest extent permitted by the
Nevada Revised Statutes as in effect from time to time, the
personal liability of directors of the Registrant for monetary
damages arising from a breach of their fiduciary duties as
directors. The By-Laws of the Registrant include provisions to
the effect that the Registrant may, to the maximum extent
permitted from time to time under applicable law, indemnify any
director, officer, or employee to the extent that such
indemnification and advancement of expense is permitted under
such law, as it may from time to time be in effect. Any
limitation on the liability of any director, or indemnification
of directors, officer, or employees, could result in substantial
expenditures being made by the Registrant in covering any
liability of such persons or in indemnifying them.
(j) Absence of Cash Dividends.
The Board of Directors does not anticipate paying cash
dividends on the common stock for the foreseeable future and
intends to retain any future earnings to finance the growth of
the Registrant's business. Payment of dividends, if any, will
depend, among other factors, on earnings, capital requirements
and the general operating and financial conditions of the
Registrant as well as legal limitations on the payment of
dividends out of paid-in capital.
(k) No Cumulative Voting.
Holders of the shares of common stock of the Registrant are not
entitled to accumulate their votes for the election of directors
or otherwise. Accordingly, the holders of a majority of the
shares present at a meeting of shareholders will be able to elect
all of the directors of the Registrant, and the minority
shareholders will not be able to elect a representative to the
Registrant's board of directors.
(l) No Assurance of Continued Public Trading Market; Risk
of Low Priced Securities.
Since June 27, 1997, there has been only a limited
public market for the common stock of the Registrant. The common
stock of the Registrant is currently quoted on the National
Quotation Bureau's Pink Sheets; the Registrant intends to reapply
for relisting on the Over the Counter Bulletin Board after
clearing comments its Form 10-SB registration statement. As a
result, an investor may find it difficult to dispose of, or to
obtain accurate quotations as to the market value of the
Registrant's securities. In addition, the common stock is subject
to the low-priced security or so called "penny stock" rules that
impose additional sales practice requirements on broker-dealers
who sell such securities. The Securities Enforcement and Penny
Stock Reform Act of 1990 ("Reform Act") requires additional
disclosure in connection with any trades involving a stock
defined as a penny stock (generally, according to recent
regulations adopted by the U.S. Securities and Exchange
Commission, any equity security that has a market price of less
than $5.00 per share, subject to certain exceptions), including
the delivery, prior to any penny stock transaction, of a
disclosure schedule explaining the penny stock market and the
risks associated therewith. The regulations governing low-
priced or penny stocks sometimes limit the ability of broker-
dealers to sell the Registrant's common stock and thus,
ultimately, the ability of the investors to sell their securities
in the secondary market.
(m) Effects of Failure to Maintain Market Makers.
If the Registrant is unable to maintain a National
Association of Securities Dealers, Inc. member broker/dealers as
market makers, the liquidity of the common stock could be
impaired, not only in the number of shares of common stock which
could be bought and sold, but also through possible delays in the
timing of transactions, and lower prices for the common stock
than might otherwise prevail. Furthermore, the lack of market
makers could result in persons being unable to buy or sell shares
of the common stock on any secondary market. There can be no
assurance the Registrant will be able to maintain such market
makers.
(n) Uncertainty Due to Year 2000 Problem.
The Year 2000 issue arises because many computerized systems
use two digits rather than four to identify a year. Date
sensitive systems may recognize the year 2000 as 1900 or some
other date, resulting in errors when information using the year
2000 date is processed. In addition, similar problems may arise
in some systems which use certain dates in 1999 to represent
something other than a date. The effects of the Year 2000 issue
may be experienced after January 1, 2000, and if not addressed,
the impact on operations and financial reporting may range from
minor errors to significant system failure which could affect the
Registrant's ability to conduct normal business operations. This
creates potential risk for all companies, even if their own
computer systems are Year 2000 compliant. It is not possible to
be certain that all aspects of the Year 2000 issue affecting the
Registrant, including those related to the efforts of customers,
suppliers, or other third parties, will be fully resolved.
The Registrant currently believes that its systems are Year 2000
compliant in all material respects. The Registrant estimates
that it has incurred minimal costs of less than $10,000 related
to its Year 2000 initiative. Although management is not aware of
any material operational issues or costs associated with
preparing its internal systems for the Year 2000, the Registrant
may experience serious unanticipated negative consequences (such
as significant downtime for one or more of its suppliers) or
material costs caused by undetected errors or defects in the
technology used in its internal systems. Furthermore, the
purchasing patterns of customers may be affected by Year 2000
issues. The Registrant does not currently have any information
about the Year 2000 status of its potential material suppliers.
The Registrant's Year 2000 plans are based on management's best
estimates.
Forward Looking Statements.
The foregoing Plan of Operation contains "forward looking
statements" within the meaning of Rule 175 of the Securities Act
of 1933, as amended, and Rule 3b-6 of the Securities Act of 1934,
as amended, including statements regarding, among other items,
the Registrant's business strategies, continued growth in the
Registrant's markets, projections, and anticipated trends in the
Registrant's business and the industry in which it operates. The
words "believe," "expect," "anticipate," "intends," "forecast,"
"project," and similar expressions identify forward-looking
statements. These forward-looking statements are based largely
on the Registrant's expectations and are subject to a number of
risks and uncertainties, certain of which are beyond the
Registrant's control. The Registrant cautions that these
statements are further qualified by important factors that could
cause actual results to differ materially from those in the
forward looking statements, including, among others, the
following: reduced or lack of increase in demand for the
Registrant's products, competitive pricing pressures, changes in
the market price of ingredients used in the Registrant's products
and the level of expenses incurred in the Registrant's
operations. In light of these risks and uncertainties, there can
be no assurance that the forward-looking information contained
herein will in fact transpire or prove to be accurate. The
Registrant disclaims any intent or obligation to update "forward
looking statements."
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Registrant is not a party to any material pending legal
proceedings and, to the best of its knowledge, no such action by
or against the Registrant has been threatened.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Reports on Form 8-K. No Reports on Form 8-K were filed
during the three month period covered this Form 10-QSB.
(b) Exhibits. Exhibits included or incorporated by reference
herein: See Exhibit Index.
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Eclipse Entertainment Group, Inc.
Dated: August 18, 2000 By: /s/ Arthur Birzneck
Arthur Birzneck, President
EXHIBIT INDEX
Number Exhibit Description
3.1 Articles of Incorporation (incorporated by reference to
Exhibit 3.1 of the Form 10-SB/A filed on June 27, 2000).
3.2 Bylaws (incorporated by reference to Exhibit 3.2 of the Form
10-SB/A filed on June 27, 2000).
10.1 Distribution Agreement between the Registrant and Westar
Entertainment, Inc., dated January 1, 1998 (incorporated by
reference to Exhibit 10 of the Form 10-KSB filed on April 11,
2000).
10.2 Agreement between the Registrant and Franco Columbu, dated
September 2, 1997 (incorporated by reference to Exhibit 10.2 of
the Form 10-SB/A filed on June 27, 2000).
10.3 Distribution Agreement between the Registrant and Pinoy
Productions, Inc., dated January 30, 1997 (incorporated by
reference to Exhibit 10.3 of the Form 10-SB/A filed on June 27,
2000).
27 Financial Data Schedule (see below).
