U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB/A
(Amendment No. 3)
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS
UNDER SECTION 12(B) OR (G) OF THE SECURITIES EXCHANGE ACT OF 1934.
ECLIPSE ENTERTAINMENT GROUP, INC.
(Name of Small Business Issuer in its charter)
Nevada 91-1766849
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
10900 N.E. 8th Street, Suite 900, Bellevue, Washington 98004
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (425) 990-5969
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None
None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock
(Title of Class)
None
(Title of Class)
PART I.
ITEM 1. DESCRIPTION OF BUSINESS.
(a) Business Development.
Eclipse Entertainment Group, Inc. ("Company") was
incorporated on January 27, 1997 in the State of Nevada with the
objective of satisfying a worldwide demand for quality,
American entertainment that is developed under carefully
managed budgets. Company will work to establish a network of
foreign and domestic buyers to produce or acquire programming
that directly meets their needs in terms of content and cost.
The Company currently has no employees, other than the officers
and directors, but anticipates adding several employees over the
next twelve months. Therefore, the business activities of the
Company are handled by the officers and directors at this time.
(b) Business of the Company.
The business objectives of the Company, 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 Company 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 Company has entered into a distribution agreement with Westar
Entertainment, Inc. ("Westar") on January 1, 1998 pursuant to
which this firm markets the Company's products both domestically
and worldwide (see Exhibit 10.1 to this Form 10-SB) (thus, the
Company will be obligated to distribute its films exclusively
through this company). Under this agreement, the Company and
Westar Entertainment, Inc. will share gross receipts on a 50-50
basis. Under this agreement, Westar has complete authority to
distribute the Company's films. Any and all distribution expense
incurred by Westar are to be reimbursed to Westar by the Company.
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 Company 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 Company 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.
The AFM is an annual one week event which takes place in Santa
Monica, California in late February. Distributors of pictures
and buyers of rights to exhibit pictures from around the world
meet to make deals. Westar rents a suite each year at the Loews
Hotel which is the focal site of the market where there are eight
floors of exhibitor suites. Buyers come to the suite to
negotiate purchases of rights for territories. Distributors and
buyers are registered attendees at the Market. There are
scheduled screenings of pictures at local movie theaters. The
annual Market is organized by the American Film Marketing
Association. Associated with the Market are film finance
conferences and location exhibitions.
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 Company 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 Company (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-SB). The Company 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 Company
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 Company
has the right to use Mr. Columbu's name and likeness in
connection with the distribution of these films.
In addition, the Company 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 Company, is also President of that
company) (see Exhibit 10.3 to this Form 10-SB). The Company 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 Company; (b) on gross receipts between
$250,000 U./S. and $1,000,000 U.S.: 75% to the Company and 25% to
the licensor; (c) on gross receipts between $1,000,000 U.S. and
$2,500,000 U.S.: 80% to the Company and 20% to the licensor; and
(d) on gross receipts above $2,500,000 U.S.: 85% to the Company
and 15% to the licensor. Under this agreement, which has an
initial term of fifty years, the Company 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 Company 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 Company 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, as
follows:
Title Rights Territory Licensee
Beretta's Isl. TH,V,TV Baltics Taiments
Beretta's Isl. V Benelux TRS
Beretta's Isl. HV, TV Brazil Mystic Ent.
Beretta's Isl. ALL Bulgaria Tandem Video
Beretta's Isl. V China NATV
Beretta's Isl. ALL C.I.S. Paradise/MGN
Beretta's Isl. V Germany VCL
Beretta's Isl. TH,V,TV Greece CineNet
Beretta's Isl. TV Indonesia Indo-American
Beretta's Isl. TH,V,TV Japan Shochiku Co.
Beretta's Isl. TV Korea William Cooke
Beretta's Isl. V Korea William Cooke
Beretta's Isl. TH,V,TV Malaysia Award Gallery
Beretta's Isl. V/TV Middle east HABIB
Beretta's Isl. TH, H Pakistan Kamal
Beretta's Isl. TH,V Panama King Trading
Beretta's Isl. ALL Spain Sogedesa/Filmax
Beretta's Isl. V/TV Taiwan Mystic Ent.
Beretta's Isl. ALL Taiwan Ta Lai
Beretta's Isl. V Thailand New World/Star
Beretta's Isl. TV Turkey Piano
Beretta's Isl. V,TV Turkey Saran
Beretta's Isl. V U.A.E. Music Box
Double Cross TH,V,TV Baltics Taiments
Double Cross V China NATV
Double Cross ALL C.I.S. Paradise/MGN
Double Cross TH,V,TV Greece CineNet
Double Cross V Korea TTL Korea
Double Cross TH,V,TV Malaysia Award Gallery
Double Cross TV Mexico Romari
Double Cross V,TV Middle east HABIB
Double Cross TH,H Pakistan Kamal
Double Cross TH,V Panama King Trading
Double Cross ALL Taiwan Ta Lai
Double Cross TH,V,TV Turkey Piano
Double Cross V U.A.E. Music Box
Double Cross ALL Spain Sogedesa/Filmax
Double Cross V Thailand Crystal Disc
Process ALL Baltics Taiments
Process V,DVD,TV Brazil Penta Video
Process V,TV Brazil Preview
Process V China NATV
Process ALL C.I.S. Paradise/MGN
Process ALL C.I.S. Arpenium
Process V,TV Czech/Slovak Indigo Film
Process V France La Petite Reine
Process TH,V,TV Greece CineNet
Process ALL Indonesia PT Menara
Process V,TV Korea CineTank
Process ALL Malaysia Award Gallery
Process FTV Mexico Romari
Process V/TV Middle east HABIB
Process TH, H Pakistan Kamal
Process TH, V Panama King Trading
Process TH,V,TV Singapore CineStar
Process TH/V/TV Taiwan Kings
Process ALL Thailand New World/Star
Process TH,V,TV Turkey Piano
Process V U.A.E. Music Box
Process ALL U.S. Mercury
Process V Vietnam New World/Star
Process ALL Spain Sogedesa/Filmax
V = Home Video
TV = Free TV/Pay TV
TH = Theatrical
DVD = Digital Video Disc
H = Hotel
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
Company may not realize any revenue from these distributions.
Although the Company 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
Company does not currently have any agreements, commitments, or
understandings to make any acquisitions.
(1) The Motion Picture Industry.
The business of the motion picture industry may be broadly
divided into two major segments: production, involving the
development, financing and making of motion pictures, and
distribution, involving the promotion and exploitation of
completed motion pictures in a variety of media.
Historically, the largest companies, the so-called "Majors" and
"mini-Majors," have dominated the motion picture industry by both
producing and distributing a majority of the motion pictures
which generate significant box office receipts. Over the past
decade, however, "Independents" or smaller film production and
distribution companies, such as the Company, have played an
increasing role in the production and distribution of motion
pictures to fill the increasing worldwide demand for filmed
entertainment product.
The Majors (and mini-Majors) include Universal Pictures, Warner
Bros. Pictures, Metro-Goldwyn-Mayer Inc., Twentieth Century Fox
Film Corporation, Paramount Pictures Corporation, Sony Pictures
Entertainment (including Columbia Pictures, TriStar Pictures and
Triumph Releasing) and The Walt Disney Company (Buena Vista
Pictures, Touchstone Pictures and Hollywood Pictures). Generally,
the Majors own their own production studios (including lots,
sound stages and post-production facilities), have nationwide or
worldwide distribution organizations, and provide a continual
source of pictures to film exhibitors. In addition, some of the
Majors have divisions which are promoted as "independent"
distributors of motion pictures. These "independent" divisions of
Majors include Miramax Films (a division of The Walt Disney
Company), Sony Classics (a division of Sony Pictures), The Samuel
Goldwyn Company (a division of Metro-Goldwyn-Mayer), October
Films (a division of Universal), New Line (a division of Time
Warner) and its Fine Line distribution label, and Republic
Pictures (a division of Viacom).
In addition to the Majors, the Independents engaged primarily in
the distribution of motion pictures produced by companies other
than the Majors include, among others, Trimark Holdings and
Artisan Entertainment. The Independents typically do not own
production studios or employ as large a development or production
staff as the Majors.
The Process, Beretta's Island, and Double Cross are
termed "independent feature films". This means that the movies
were produced without the initial backing of a major studio.
(2) Motion Picture Production And Financing.
The production of a motion picture usually involves four steps:
development, pre-production, production and post-production. The
development stage includes developing a concept internally, or
obtaining an original screenplay or a screenplay based on a pre-
existing literary work, or acquiring and rewriting a screenplay.
Creative personnel may be contacted to determine availability and
for planning the timing of the project, or in some cases actually
hired. In pre-production, a budget is prepared, the remaining
creative personnel, including a director, actors and various
technical personnel are hired, shooting schedules and locations
are planned and other steps necessary to prepare for principal
photography are completed. Production is the principal
photography of the project and generally continues for a period
of not more than three months. In post-production, the film is
edited and synchronized with music and dialogue and, in certain
cases, special effects are added. The final edited synchronized
product, the negative, is used to manufacture release prints
suitable for public exhibition.
The production of a motion picture requires the financing of the
direct and indirect overhead costs of production. Direct
production costs include film studio rental, cinematography,
post-production costs and the compensation of creative and other
production personnel. Distribution costs (including costs of
advertising and release prints) are not included in direct
production costs.
The Majors generally have sufficient cash flow from their motion
picture and related activities, or in some cases, from unrelated
businesses (e.g., theme parks, publishing, electronics, and
merchandising) to pay or otherwise provide for their production
costs. Overhead costs are, in substantial part, the salaries and
related costs of the production staff and physical facilities
which the Majors maintain on a full-time basis. The Majors often
enter into contracts with writers, producers and other creative
personnel for multiple projects or for fixed periods of time.
Independents generally avoid incurring substantial overhead costs
by hiring creative and other production personnel and retaining
the other elements required for pre-production principal
photography and post-production activities only on a project-by-
project basis. Unlike the Majors, Independents also typically
finance their production activities from various sources,
including bank loans, "pre-sales," equity offerings and joint
ventures. Independents generally attempt to complete their
financing of a motion picture production prior to commencement of
principal photography, at which point substantial production
costs begin to be incurred and require payment.
"Pre-sales" are often used by Independents to finance all or a
portion of the direct production costs of a motion picture. Pre-
sales consist of fees or advances paid or guaranteed to the
producer by third parties in return for the right to exhibit the
completed motion picture in theatres or to distribute it in home
video, television, international or other ancillary markets.
Independents with distribution capabilities may retain the right
to distribute the completed motion picture either domestically or
in one or more international markets. Other independents may
separately license theatrical, home video, television,
international and other distribution rights among several
licensees. Payment commitments in a pre-sale are typically
subject to delivery and to the approval of a number of
prenegotiated factors, including script, production budget, cast
and director.
Both Majors and Independents often acquire motion pictures for
distribution through an arrangement known as a negative pickup"
under which the Major or Independent agrees to acquire from
another production company some or all rights to a film upon its
completion. The Independent often finances production of the
motion picture pursuant to financing arrangements with banks or
other lenders wherein the lender obtains a security interest in
the film and in the Independent's rights under its distribution
arrangement. When the Major or Independent "picks up" the
completed motion picture, it may assume some or all of the
production financing indebtedness incurred by the production
company in connection with the film. In addition, the Independent
is often paid a production fee and is granted a participation in
the profits from distribution of the motion picture.
Both Majors and Independents often grant third-party
participations in connection with the distribution and production
of a motion picture. Participations are contractual rights of
actors, directors, screenwriters, producers, owners of rights and
other creative and financial contributors entitling them to share
in revenues or profits (as defined in the respective agreements)
from a particular motion picture. Except for the most sought-
after talent, participations are generally payable only after all
distribution and marketing fees and costs, direct production
costs (including overhead) and financing costs are recouped by
the producer in full.
(3) Motion Picture Distribution.
Distribution of a motion picture involves the domestic and
international licensing of the picture for (i) theatrical
exhibition, (ii) home video, (iii) presentation on television,
including pay-per-view, video-on-demand, satellites, pay cable,
network, basic cable and syndication, (iv) non-theatrical
exhibition, which includes airlines, hotels, armed forces
facilities and schools and (v) marketing of the other rights in
the picture, which may include books, CD-ROMs, merchandising and
soundtrack recordings.
Theatrical Distribution and Exhibition. Motion pictures are often
exhibited first in theatres open to the public where an admission
fee is charged. Theatrical distribution involves the manufacture
of release prints; licensing of motion pictures to theatrical
exhibitors; and promotion of the motion picture through
advertising and promotional campaigns. The size and success of
the promotional and advertising campaign may materially affect
the revenues realized from its theatrical release, generally
referred to as "box office gross." Box office gross represents
the total amounts paid by patrons at motion picture theatres for
a particular film, as determined from reports furnished by
exhibitors. The ability to exhibit films during summer and
holiday periods, which are generally considered peak exhibition
seasons, may affect the theatrical success of a film. Competition
among distributors to obtain exhibition dates in theatres during
these seasons is significant. In addition, the costs incurred in
connection with the distribution of a motion picture can vary
significantly depending on the number of screens on which the
motion picture is to be exhibited and the ability to exhibit
motion pictures during peak exhibition seasons. Similarly, the
ability to exhibit motion pictures in the most popular theatres
in each area can affect theatrical revenues. Exhibition
arrangements with theatre operators for the first run of a film
generally provide for the exhibitor to pay an amount of ticket
sales in excess of fixed amounts relating to the theatre's costs
of operation and overhead, or a minimum percentage of ticket
sales, decreasing each subsequent week to the final weeks of the
engagement. The length of an engagement depends principally on
the audience response to the film.
Home Video. The home video distribution business involves the
promotion and sale of videocassettes and videodiscs to video
retailers (including video specialty stores, convenience stores,
record stores and other outlets), which then rent or sell the
videocassettes and videodiscs to consumers for private viewing.
The home video marketplace now generates total revenues greater
than the domestic theatrical exhibition market.
Major feature films are usually scheduled for release in the home
video market four to six months after theatrical release to
capitalize on the recent theatrical advertising and publicity for
the film. Promotion of new home video releases is generally
undertaken during the nine to twelve weeks before the home video
release date. Videocassettes of feature films are generally sold
to domestic wholesalers on a unit basis. Unit-based sales
typically involve the sales of individual videocassettes to
wholesalers or distributors and are rented by consumers (with all
rental fees retained by the retailer). Wholesalers who meet
certain sales and performance objectives may earn rebates, return
credits and cooperative advertising allowances. Selected titles
including certain made-for-video programs, are priced
significantly lower to encourage direct purchase by consumers.
The market for direct sale to consumers is referred to as the
"priced-for-sale" or "sell-through" market.
Technological developments, including videoserver and compression
technologies which regional telephone companies and others are
developing, and expanding markets for DVD and laser discs, will
make competing delivery systems economically viable and will
significantly impact the home video market generally and, as a
consequence, the Company's home video revenues.
Pay-per-view. Pay-per-view television allows cable television
subscribers to purchase individual programs, primarily recently
released theatrical motion pictures, sporting events and music
concerts, on a "per use" basis. The fee a subscriber is charged
is typically split among the program distributor, the pay- per-
view operator and the cable operator.
Pay Cable. The domestic pay cable industry (as it pertains to
motion pictures) currently consists primarily of HBO/Cinemax,
Showtime/The Movie Channel, Encore/Starz and a number of regional
pay services. Pay cable services are sold to cable system
operators for a monthly license fee based on the number of
subscribers receiving the service. These pay programming services
are in turn offered by cable system operators to subscribers for
a monthly subscription fee. The pay television networks generally
acquire their film programming by purchasing the distribution
rights from motion picture distributors.
Non-Theatrical Markets. In addition to the distribution media
described above, a number of sources of revenue exist for motion
picture distribution through the exploitation of other rights,
including the right to distribute films to airlines, schools,
libraries, hotels, armed forces facilities and hospitals.
International Markets. The worldwide demand for motion pictures
has expanded significantly as evidenced by the development of new
international markets and media. This growth is primarily driven
by the overseas privatization of television stations,
introduction of direct broadcast satellite services, growth of
home video and increased cable penetration.
(4) Motion Picture Acquisition.
In addition to its own production activities, the Company
continually seeks to acquire rights to films and other
programming from Independent film producers, distribution
companies and others in order to maximize the number of films it
can distribute in the emerging new delivery systems. To be
successful, the Company must locate and track the development and
production of numerous independent feature films.
Types of Motion Pictures Acquired. The Company generally seeks to
produce or acquire motion pictures of the action and
action/adventure genres which will individually appeal to a
targeted audience. The Company will be very selective in
acquiring higher budget (over $10,000,000) films because of the
interest that the Majors have shown in acquiring such films, and
the associated competition and higher production advances,
minimum guarantees and other costs. The Company will acquire
projects when it believes it can limit its financial risk on such
projects through, for example, significant presales, and when it
believes that a project has significant marketability. In most
cases, the Company will attempt to acquire rights to motion
pictures with a recognizable marquis "name" personality with
public recognition, thereby enhancing promotion of the motion
pictures in the home video or international markets. The Company
believes that this approach increases the likelihood of producing
a product capable of generating positive cash flow, ancillary
rights income and the possibility of a theatrical release.
Methods of Acquisition. The Company will typically acquires films
on either a "pick-up" basis or a "pre-buy" basis. The "pick-up"
basis refers to those films in which the Company acquires
distribution rights following completion of most or all of the
production and post-production process. These films will
generally be acquired after management of the Company has viewed
the film to evaluate its commercial viability.
The "pre-buy" basis refers to films in which the Company will
acquire distribution rights prior to completion of a substantial
portion of production and post-production. Management's
willingness to acquire films on a pre-buy basis is based upon
factors generally including the track record and reputation of
the picture's producer, the quality and commercial value of the
screenplay, the "package" elements of the picture, including the
director and principal cast members, the budget of the picture
and the genre of the picture. Before making an offer to acquire
rights in a film on a pre-buy basis, the Company may work with
the producer to modify certain of these elements. Once the
modifications are considered acceptable, the Company's obligation
to accept delivery and make payment will be conditioned upon
receipt of a finished film conforming to the script reviewed by
the Company and other specifications considered important by the
Company.
Sources of Distribution Rights. Typically, projects will be
submitted directly to the Company for consideration. The Company
will rely upon the personal contacts of its senior officers which
have been generated through their prior business and personal
dealings with Majors, other Independents, legal and accounting
firms, business management firms, talent agencies, production
lenders and personal managers who are actively involved in the
production community.
Acquisition Process. If the Company locates a motion picture
project which it believes satisfies its criteria, the Company may
pay an advance or a guaranteed minimum payment conditioned upon
delivery of a completed film ("minimum guarantee") against a
share or participation in the revenue actually received by the
Company from the exploitation of a film in each licensed media.
The minimum guarantee is generally paid prior to the film's
release. Typically, the Company will recoup the minimum guarantee
and certain other amounts from the distribution revenues realized
by the Company prior to paying any additional revenue
participation to the production company.
Film Library. The Company's distribution rights, which may
include either worldwide, foreign, or domestic rights, will
generally range from an initial licensing cycle of seven to 21
years to perpetuity.
(5) Feature Film Production.
The Company intends to produce one or more low-budget films
each year. The Company has contracted with Westar to be the
worldwide distributor of its films. The Company intends to
retain distribution rights for licensing to third parties
internationally through Westar. In unique circumstances, the
Company may undertake limited domestic distribution or co-
distribution activities.
The Company's feature film strategy generally will be to develop
and produce feature films when the production budgets for the
films are expected to be substantially covered through a
combination of pre-sales, output arrangements, equity
arrangements and production loans with "gap" financing. To
further limit the Company's financing risk or to obtain
production loans, the Company often intends to purchase
completion bonds to guarantee the completion of production.
ITEM 2. PLAN OF OPERATION.
(a) Twelve Month Plan of Operation.
The following discussion should be read in conjunction with the
financial statements of the Company and notes thereto contained
hereafter in this Form 10-SB. Also, please refer to the
subsequent section entitled Risk Factors Connected with Plan of
Operation.
For the period from the Company's inception through the
date of this Form 10-SB, there have been no revenues and
operating activities related primarily to establishing the
management and operating infrastructure. The Company created
the ability to acquire and license worldwide or sell
distribution rights to independently produced feature films.
The Company 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.
The Company has a limited operating history. The
Company must establish and maintain distribution on current
rights to motion pictures, implement and successfully execute its
business and marketing strategy, provide superior distribution of
motion pictures, anticipate and respond to competitive
developments and attract and retain qualified personnel. There
is no assurance that the Company will be successful in addressing
these needs.
Film costs represent a major component of the Company'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 Company 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
Company currently has not generated revenues from such film
costs; however, the three movies which the Company has obtained
the distribution rights to (and subsequently assigned to Westar
under the Distribution Agreement) have recently commenced
distribution, and revenue from such distributions is anticipated
during the current fiscal year. Net income in future years is
in part dependent upon the Company's amortization of its film
costs and may be significantly affected by periodic adjustments
in such amortization.
The Company typically acquires distribution rights in a
motion picture for a specified term in one or more
territories and media. In some circumstances, the Company
also acquires the copyright to the motion picture. The
arrangements the Company enters into to acquire rights may
include the Company 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 Company
dramatically increase to the extent the Company takes such
actions.
The Company also incurs significant risk to the extent
it engages in development or production activities itself.
The Company 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 Company
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.
General and administrative expenses consist of related
general corporate functions, including marketing expenses,
professional service expenses and travel. The Company expects
general and administrative expenses to increase as it commences
to promote and market its motion picture distribution rights.
Since inception, the Company has financed operations
primarily through private placements of common stock. The
Company has significant ongoing liquidity needs to support its
existing business and continued growth. The Company may seek
additional funding through public or private financing or other
arrangements prior to such time. 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 Company 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.
Over the next 12 months the Company will continue to attend all
major sales markets to sell its film products. The Company's
existing capital will not be sufficient to meet the Company's
cash needs, including costs of its registration and complying
with its continuing reporting obligations under the Securities
Act of 1934. Accordingly, additional capital will be required.
(b) Risk Factors Connected with Plan of Operation.
Only Limited Prior Operations.
The Company has only limited operations and is subject to all the
risks inherent in the creation of a new business. Since the
Company'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 Company will be able to achieve its business
plans. In addition, the Company has only limited assets. As a
result, there can be no assurance that the Company will generate
significant revenues in the future; and there can be no assurance
that the Company will operate at a profitable level. If the
Company is unable to obtain customers and generate sufficient
revenues so that it can profitably operate, the Company's
business will not succeed.
Need for Additional Financing May Affect Operations.
Current funds available to the Company will not be adequate for
it to be competitive in the areas in which it intends to operate.
Therefore, the Company will need to raise additional funds in
order to fully implement its business plan. The Company 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 Company will be successful in raising such
additional funds. Regardless of whether the Company's cash
assets prove to be inadequate to meet the Company's operational
needs, the Company might seek to compensate providers of
services by issuance of stock in lieu of cash.
The Company's continued operations therefore will depend upon its
ability to raise additional funds through bank borrowings, equity
or debt financing. There is no assurance that the Company will
be able to obtain additional funding when needed, or that such
funding, if available, can be obtained on terms acceptable to the
Company. If the Company cannot obtain needed funds, it may be
forced to curtail or cease its activities. If additional shares
were issued to obtain financing, current shareholders may suffer
a dilutive effect on their percentage of stock ownership in the
Company.
Substantial Competition.
The Company 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
Company and may be in a better position than the Company to
obtain access to attractive products. There are a number of
larger companies which will directly compete with the Company.
Such competition could have a material adverse effect on the
Company's profitability or viability.
Other External Factors May Affect Viability of Company.
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 Company will
result in commercially profitable business. The marketability of
its products will be affected by numerous factors beyond the
control of the Company. 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 Company will
likely have an adverse effect on the Company. The exact effect
of these factors cannot be accurately predicted, but the
combination of these factors may result in the Company not
receiving an adequate return on invested capital.
Control of the Company by Officers and Directors Over Affairs of
the Company.
The Company's officers and directors beneficially own
approximately 27% (see "Security Ownership of Certain Beneficial
Owners and Management") of the outstanding shares of the
Company'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 Company. 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 Company.
Success of Company Dependent on Management.
The Company'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 Company.
Therefore, there can be no assurance that these personnel will
remain employed by the Company. Should any of these individuals
cease to be affiliated with the Company for any reason before
qualified replacements could be found, there could be material
adverse effects on the Company's business and prospects.
In addition, all decisions with respect to the management of
the Company will be made exclusively by the officers and
directors of the Company. Investors will only have rights
associated with minority ownership interest rights to make
decision which effect the Company. The success of the Company,
to a large extent, will depend on the quality of the directors
and officers of the Company. Accordingly, no person should
invest in the Shares unless he is willing to entrust all aspects
of the management of the Company to the officers and directors.
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 Company. As a result, certain conflicts of
interest may exist between the Company 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
Company. 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 Company, any proposed investments for
its evaluation.
Limitations on Liability, and Indemnification, of Directors and
Officers May Result in Expenditures by the Company.
The Company'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 Company for monetary
damages arising from a breach of their fiduciary duties as
directors. The By-Laws of the Company include provisions to the
effect that the Company 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 Company in covering any liability of such persons or in
indemnifying them.
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 Company'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 Company
as well as legal limitations on the payment of dividends out of
paid-in capital.
No Cumulative Voting
Holders of the shares of common stock of the Company 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 Company, and the minority
shareholders will not be able to elect a representative to the
Company's board of directors.
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 Company. The common
stock of the Company is currently quoted on the National
Quotation Bureau's Pink Sheets; the Company intends to reapply
for relisting on the Over the Counter Bulletin Board after
clearing comments on this 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 Company'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 Company's common stock
and thus, ultimately, the ability of the investors to sell their
securities in the secondary market.
Effects of Failure to Maintain Market Makers.
If the Company 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 Company will be able to maintain such market makers.
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
Company'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
Company, including those related to the efforts of customers,
suppliers, or other third parties, will be fully resolved.
The Company currently believes that its systems are Year 2000
compliant in all material respects. The Company 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 Company 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 Company does not currently have any information
about the Year 2000 status of its potential material suppliers.
The Company's Year 2000 plans are based on management's best
estimates.
(c) Forward-Looking Statements.
The foregoing Plan of Operation contains "forward looking
statements" within the meaning of Rule 175 under the Securities
Act of 1933, as amended, and Rule 3b-6 under the Securities Act
of 1934, as amended, including statements regarding, among other
items, the Company's business strategies, continued growth in the
Company's markets, projections, and anticipated trends in the
Company'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 Company's expectations and are subject to a number of
risks and uncertainties, certain of which are beyond the
Company's control. The Company 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 Company's products,
competitive pricing pressures, changes in the market price of
ingredients used in the Company's products and the level of
expenses incurred in the Company'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 Company disclaims any
intent or obligation to update "forward looking statements."
ITEM 3. DESCRIPTION OF PROPERTY.
The Registrant maintains executive offices at 10900 N.E. 8th
Street, Suite 900, Bellevue, Washington, 98004.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth information regarding the
beneficial ownership of shares of the Company's common stock as
of March 31, 2000 (12,016,140 issued and outstanding) by (i) all
stockholders known to the Company to be beneficial owners of more
than 5% of the outstanding common stock; and (ii) all directors
and executive officers of the Company as a group:
Title of Name and Address of Amount of
Class Beneficial Owner Beneficial Percent of
Ownership (1) Class
Common Brent Nelson 2,771,270(2) 1.38%
Stock 10900 N.E. 8th Street
Bellevue, WA 98004
Common Arthur Birzneck 424,500 3.53%
16766 16th Avenue
Surrey, British
Columbia V4P 2P7
Common Franco Columbu 68,750 0.57%
Stock 1732 South Sepulveda Blvd.
Los Angeles, CA 90025
Common David Gideon Thomson 0 0.00%
Stock 1732 South Sepulveda Blvd.
Los Angeles, CA 90025
Common John G. Smith 0 0.00%
Stock 1185 West Georgia Street
Suite 910
Vancouver, British
Columbia V6E 4E6
Common Shares of all directors and 3,264,520 27.17%
Stock executive officers as a
group (5 persons)
(1) Except as noted in footnote 2 below, each person has sole
voting power and sole dispositive power as to all of the shares
shown as beneficially owned by them
(2) This figure includes the 2,605,520 shares owned by Northwest
Capital Partners, L.L.C., 10900 N.E. 8th Street, Bellevue,
Washington 98004, since Mr. Nelson is the managing director of
this firm.
ITEM 5. DIRECTORS, OFFICERS, PROMOTERS, AND CONTROL PERSONS.
The names, ages, and respective positions of the directors and
officers of the Company are set forth below. The Directors named
below will serve until the next annual meeting of the Company's
stockholders or until their successors are duly elected and have
qualified. Directors will be elected for a one-year term
at the annual stockholders' meeting. Officers will hold their
positions at the will of the board of directors, absent any
employment agreement, of which none currently exist or are
contemplated. There are no arrangements, agreements or
understandings between non-management shareholders and management
under which non-management shareholders may directly or
indirectly participate in or influence the management of the
Company's affairs. Messrs. Birzneck and Nelson joined the
Company on its founding in 1997; Mssrs. Thomson, Columbu, and
Smith joined the Company as directors on May 1, 1999.
David Gideon Thomson, Chairman of the Board.
Mr. Gideon Thomson, age 62, is a British entertainment
consultant, executive and producer. He has been semi-retired for
the last five years. Prior to that, he held top management
positions including Managing Director of Polytel (Polygram's
film and TV division), Deputy Chairman of the Robert
Stigwood Organization and Chairman of Charisma Records and
Films. During his tenure at Polytel and Robert Stigwood, Mr.
Gideon Thomson was involved with many award-winning films
and television programs, including such films as Saturday Night
Fever and Grease; the stage production of Evita; McVicar;
and the acclaimed film, Too Far To Go for NBC New York. He
was also the executive producer of the feature film
Quadrophenia. He has been an advisor to many US, UK and other
European film and TV production and distribution companies.
Franco Columbu, Chief Executive Officer/Director.
Dr. Columbu, age 58, oversees all film and television activities
of the Company. Dr. Columbu's extensive career in
bodybuilding and powerlifting has earned him every major title
including the prestigious Mr. Olympia, Mr. World and Mr.
Universe titles. His connections in the film industry are
extensive, having appeared in film such as Pumping Iron, Stay
Hungry, Conan the Barbarian, Running Man, and Terminator. He has
produced two feature films, Beretta's Island and Doublecross,
through his production company Franco Columbu Productions, Inc.
He also has been featured in several national commercials and
been a guest on numerous talk shows. In addition to his
industry experience, Dr. Columbu maintains an active
chiropractic practice and consults with private individuals on
health concerns for over five years. From October 1997 to the
present, Mr. Columbu has also served as a Director of Westar
Arthur Birzneck, President/Director.
Mr. Birzneck, age 31, has been with the Company since its
inception and is responsible for overseeing all operating
activities and the development of its domestic and international
ventures. He is an executive producer of Westar's current
feature film, The Process. Prior to Eclipse, Mr. Birzneck spent
three years as president of Bask Entertainment Inc., a
Vancouver, Canada based production company. He has
participated financially in several film projects, most
recently as an investor in Canadian-based HPP Production's
Hero of the Planet. Mr. Birzneck also has been involved in
promoting numerous Hip-Hop music groups. As a principal of MB
Productions, his clients included Hip Hop artists Candy Man,
Lighter Shade of Brown and the Rascalz. From October 1997 to the
present, Mr. Birzneck has also served as a Director of Westar
John G. Smith, Vice President Legal Affairs/Director.
Mr. Smith, age 62, is a Cambridge, England-educated lawyer,
who has practiced corporate and commercial law in Western Canada
for more than 30 years, with a specialization in
entertainment and communications law. He is a principal,
co-owner, and corporate counsel of The Beacon Group of Companies
that manages the production, marketing, distribution and
financing of motion pictures, studio projects and
entertainment software. He is a member of the Canadian Bar
Association and the Law Society of British Columbia; and was
previously a governor of the Canadian Tax Foundation and a
director of the BC Motion Picture Foundation, as well as a
variety of performing arts organizations. From January 1998
to the present, Mr. Smith has also served as a Director of Westar
Brent Nelson, Secretary/Treasurer/Director.
Mr. Nelson, age 38, has been with the Company since its
inception. He has more than 15 years experience in corporate
and project financing and serves on the boards of several
companies in the United States and abroad: Palmworks, Inc.,
CybeRecord, Inc., Interactive Objects, Inc., International
Digital Technology, Inc., Mobile PET Systems, Inc. and Polar
Cargo Systems, Inc. Mr. Nelson has participated financially
in several film and music industry projects, including
MB Productions and the Canadian Hip Hop label Masiv Music.
Approximately 5 years ago, he founded and became Managing
Director of Northwest Capital Partners, L.L.C. a Bellevue,
Washington based venture capital company. Northwest Capital is
very active in both private and public financing on an
international basis. Mr. Nelson also is executive producer of
the Company's current feature film The Process. During 1997, Mr.
Nelson also served as a Director of Westar
ITEM 6. EXECUTIVE COMPENSATION.
(a) The current officers and directors have not received
any compensation to date. They will not be remunerated until the
Company turns profitable.
(b) There are no annuity, pension or retirement benefits
proposed to be paid to officers, directors, or employees of the
Company in the event of retirement at normal retirement date as
there is no existing plan provided for or contributed to by the
Company.
(c) No remuneration is proposed to be paid in the future
directly or indirectly by the Company to any officer or director
since there is no existing plan which provides for such payment,
including a stock option plan.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Other than as set forth below, there are no relationships,
transactions, or proposed transactions to which the Company was
or is to be a party, in which any of the named persons set forth
previously had or is to have a direct or indirect material
interest.
There was a promissory note for $442,285 payable to
Northwest Capital Partners, L.L.C., a shareholder of the Company
controlled by Brent Nelson, a Director of the Company. The note
was unsecured and payable on demand. In October 1999 the Company
issued 2,305,520 shares of Common Stock pursuant to Rule 504
Regulation D of the Securities Act of 1933 in satisfaction of
that note.
Northwest Capital Partners, L.L.C. has advanced the Company
the sum of $51,165. There are no specific repayment terms on
this advance. The purpose of this advance was that the Company
required additional funding to continue operating.
The Company entered into a marketing agreement with Westar
Entertainment, Inc., on January 1, 1998 under which this firm is
providing marketing for the Company's products both domestically
and worldwide (see Exhibit 10.1 to this Form 10-SB). At the time
this agreement was entered, and to this date, Messrs. Columbu,
Birzneck, and Nelson are directors of Westar Entertainment, Inc.;
Mr. Smith became a director at a later time. Currently, Messrs.
Birzneck and Columbu each own approximately 40% of the issued and
outstanding shares of Westar Entertainment, Inc.; Messrs. Smith
and Nelson each currently own approximately 10% of such shares.
The Company has entered into distribution agreement with Mr.
Columbu, an officer and director of the Company, covering the
films Beretta's Island and Double Cross (see Exhibit 10.2 to this
Form 10-SB). In addition, the Company has entered into a
distribution agreement with Pinoy Productions, Inc. covering the
film The Process (Mr. Birzneck, an officer and director of the
Company, is also President of that company) (see Exhibit 10.3 to
this Form 10-SB).
For each of the transactions noted above, the transaction was
negotiated, on the part of the Company, on the basis of what is
in the best interests of the Company and its shareholders. In
addition, in each case the interested affiliate did vote in favor
of the transaction; however, the full board of directors did make
the determination that the terms in each case were as favorable
as could have been obtained from non-affiliated parties.
Certain of the officers and directors of the Company are engaged
in other businesses, either individually or through partnerships
and corporations in which they have an interest, hold an office,
or serve on a board of directors. As a result, certain potential
conflicts of interest, such as those set forth above with the
transactions, may arise between the Company and its officers and
directors. The Company will attempt to resolve such conflicts of
interest in favor of the Company by carefully reviewing each
proposed transaction to determine its fairness to the Company and
its shareholders and whether the proposed terms of the
transaction are at least as favorable as those which could be
obtained from independent sources. The officers and directors of
the Company are accountable to it and its shareholders as
fiduciaries, which requires that such officers and directors
exercise good faith and integrity in handling the Company's
affairs. A shareholder may be able to institute legal action on
behalf of the Company or on behalf of itself and other similarly
situated shareholders to recover damages or for other relief in
cases of the resolution of conflicts is in any manner prejudicial
to the Company.
ITEM 8. DESCRIPTION OF SECURITIES.
General Description.
The authorized capital stock of the Company consists of
50,000,000 shares of common stock, par value $0.001 per
share, and 10,000,000 shares of preferred stock, par value
$0.001. The holders of the Shares: (a) have equal ratable rights
to dividends from funds legally available therefore, when, as,
and if declared by the Board of Directors of the Company; (b) are
entitled to share ratably in all of the assets of the Company
available for distribution upon winding up of the affairs of the
Company; and (c) are entitled to one non-cumulative vote per
share on all matters on which shareholders may vote at all
meetings of shareholders. These securities do not have any of the
following rights: (a) cumulative or special voting rights; (b)
preemptive rights to purchase in new issues of shares; (c)
preference as to dividends or interest; (d) preference upon
liquidation; or (e) any other special rights or preferences. In
addition, the Shares are not convertible into any other security.
There are no restrictions on dividends under any loan other
financing arrangements or otherwise. See a copy of the Articles
of Incorporation, and an amendment thereto, and Bylaws of the
Company, attached as Exhibits to this Form 10-SB. As of the date
of this Form 10-SB, the Company had 12,016,140 shares of common
stock issued and outstanding. No preferred stock has been issued
to date.
Non-Cumulative Voting.
The holders of shares of common stock of the Company do not have
cumulative voting rights, which means that the holders of more
than 50% of such outstanding Shares, voting for the election of
directors, can elect all of the directors to be elected, if they
so choose. In such event, the holders of the remaining Shares
will not be able to elect any of the Company's directors.
Dividends.
The Company does not currently intend to pay cash dividends. The
Company's proposed dividend policy is to make distributions of
its revenues to its stockholders when the Company's Board of
Directors deems such distributions appropriate. Because the
Company does not intend to make cash distributions, potential
shareholders would need to sell their shares to realize a return
on their investment. There can be no assurances of the projected
values of the shares, nor can there be any guarantees of the
success of the Company.
A distribution of revenues will be made only when, in the
judgment of the Company's Board of Directors, it is in the best
interest of the Company's stockholders to do so. The Board of
Directors will review, among other things, the investment quality
and marketability of the securities considered for distribution;
the impact of a distribution of the investee's securities on its
customers, joint venture associates, management contracts, other
investors, financial institutions, and the company's internal
management, plus the tax consequences and the market effects of
an initial or broader distribution of such securities.
Possible Anti-Takeover Effects of Authorized but Unissued Stock.
The Company's authorized but unissued capital stock consists
of 37,983,860 Shares of common stock. One effect of the existence
of authorized but unissued capital stock may be to enable the
Board of Directors to render more difficult or to discourage an
attempt to obtain control of the Company by means of a merger,
tender offer, proxy contest, or otherwise, and thereby to protect
the continuity of the Company's management. If, in the due
exercise of its fiduciary obligations, for example, the Board of
Directors were to determine that a takeover proposal was not in
the Company's best interests, such shares could be issued by the
Board of Directors without stockholder approval in one or more
private placements or other transactions that might prevent, or
render more difficult or costly, completion of the takeover
transaction by diluting the voting or other rights of the
proposed acquiror or insurgent stockholder or stockholder group,
by creating a substantial voting block in institutional or other
hands that might undertake to support the position of the
incumbent Board of Directors, by effecting an acquisition that
might complicate or preclude the takeover, or otherwise.
Transfer Agent.
The Company has engaged the services of Liberty Transfer Company,
191 New York Avenue, Huntington Station, New York 11743, to act
as transfer agent and registrar for the Company.
PART II.
ITEM 1. MARKET PRICE FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
(a) Market Information.
From June 27, 1997 to November 5, 1999, the Company's common
stock was traded on the Over the Counter Bulletin Board. After
the latter date, the shares have been traded in the National
Quotation Bureau's Pink Sheets (symbol ECLE) and the range of
closing prices shown below is reported while trading on the
Bulletin Board and the Pink Sheets. The quotations shown reflect
inter-dealer prices, without retail mark-up, mark-down or
commission and may not necessarily represent actual transactions.
Per Share Common Stock Bid Prices by Quarter
For the Fiscal Year Ending on December 31, 2000
High Low
Quarter Ended March 31, 2000 1.37 0.47
Per Share Common Stock Bid Prices by Quarter
For the Fiscal Year Ending on December 31, 1999
High Low
Quarter Ended March 31, 1999 0.48 0.25
Quarter Ended June 30, 1999 0.37 0.25
Quarter Ended September 30, 1999 0.69 0.50
Quarter Ended December 31, 1999 * 1.00 0.19
*The shares only traded for 13 days in the fourth quarter.
Per Share Common Stock Bid Prices by Quarter
For the Fiscal Year Ended December 31, 1998
High Low
Quarter Ended March 31, 1998 0.75 0.50
Quarter Ended June 30, 1998 1.31 0.64
Quarter Ended September 30, 1998 1.50 0.38
Quarter Ended December 31, 1998 0.81 0.37
In order to qualify for relisting on the Bulletin Board, the
Company must comply with the new eligibility rules of the
Bulletin Board (that is, all listed companies must be reporting
companies), and accordingly the Company filed its Form 10-SB
Registration Statement with the Securities and Exchange
Commission on November 19, 1999.
(b) Holders of Common Equity.
As of June 1, 2000, there were approximately 60 shareholders of
record of the Company's common stock.
(c) Dividends.
The Company has not declared or paid a cash dividend to
stockholders since it became a "C" corporation. The Board of
Directors presently intends to retain any earnings to finance the
Company's operations and does not expect to authorize cash
dividends in the foreseeable future. Any payment of cash
dividends in the future will depend upon the Company's earnings,
capital requirements and other factors.
ITEM 2. LEGAL PROCEEDINGS.
The Company is not a party to any material pending legal
proceedings and, to the best of its knowledge, no such action by
or against the Company has been threatened.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
Not Applicable.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
On April 11, 1997, the Company sold 2,000,000 (post reverse
split) shares to the 15 founding shareholders of the Company for
$0.01 per share (post reverse split), resulting in total proceeds
of $20,000.
On May 28, 1997, the Company sold 1,000,000 (post reverse
split) shares to 39 individual for $0.10 per share, (post reverse
split) resulting in total proceeds of $100,000. The shares did
not commence trading on the Bulletin Board until June 27, 1997.
Between November 19, 1998 and December 31, 1998, the Company
sold 215,000 (post reverse split) shares to 2 individuals for
$1.51 per share (post reverse split), resulting in total proceeds
of $325,407. This per share price was above the highest public
trading price of $0.87 during this period.
On January 1, 1999, the Company sold 24,125 (post reverse
split) shares of its common stock to 4 non-affiliates for $0.79
per share (post reverse split), resulting in total proceeds of
$19,000. The public trading price for the shares on this date
was $0.37.
On January 11, 1999, the Company sold 150,000 (post
reverse split) shares of its common stock to 2 non-affiliates for
$0.24 per share (post reverse split), for a total consideration
of $36,425, and issued 15,000 (post reverse split) shares of its
common stock to a non-affiliate in consideration of legal
services rendered. The public trading price of the shares on
this date was $0.40.
On January 18, 1999, the Company issued 8,995 (post
reverse split) shares of its common stock to a non-affiliate in
consideration of legal services rendered. The public trading
price of the shares on the last trading date prior to this date
was $0.50.
On April 4, 1999, the Company issued 7,500 (post reverse
split) shares of its common stock to 2 non-affiliates in
consideration of legal services rendered. The public trading
price of the shares on the last trading date before this date was $0.44.
On April 5, 1999, the Company sold 6,000,000 (post reverse
split) shares of its common stock to 10 non-affiliates for $0.01
per share (post reverse split), for a total consideration of
$60,000. This sale was done to being needed capital into the
Company, and the pricing of the shares was done with a view to
attracting this capital. The public trading price of the shares
on this date was $0.37.
On April 6, 1999, the Company issued 40,000 shares of
its common stock to a non-affiliate in consideration for legal
services rendered. The public trading price of the shares on
this date was $0.25.
On October 27, 1999, the Company issued 2,305,520
shares of restricted common stock to an affiliate in
consideration of cancellation of a promissory note in the amount
of $442,285. The public trading price of the share on the
nearest trading date was $0.25.
No commissions or fees were paid in connection with these
sales. All of the above sales, except for the last one, were
undertaken pursuant to the limited offering exemption from
registration under the Securities Act of 1933 as provided in Rule
504 under Regulation D as promulgated by the U.S. Securities and
Exchange Commission, and all the offerings were made to
sophisticated investors; that is, the investor either alone or
with his purchaser representative(s) has such knowledge and
experience in financial and business matters that he is capable
of evaluating the merits and risks of the prospective investment,
or the issuer reasonably believes immediately prior to making any
sale that such purchaser comes within this description (the last
sale was made under Rule 506 of Regulation D).
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
No director of the Company will have personal liability to the
Company or any of its stockholders for monetary damages for
breach of fiduciary duty as a director involving any act or
omission of any such director since provisions have been made in
the Articles of Incorporation limiting such liability (see
Exhibit 3.1 to this Form 10-SB). The foregoing provisions shall
not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or,
which involve intentional misconduct or a knowing violation of
law, (iii) under applicable Sections of the Nevada Revised
Statutes, (iv) the payment of dividends in violation of Section
78.300 of the Nevada Revised Statutes or, (v) for any transaction
from which the director derived an improper personal benefit.
The Articles of Incorporation and By-laws provide for
indemnification of the directors, officers, and employees of the
Company in most cases for any liability suffered by them or
arising out of their activities as directors, officers, and
employees of the Company if they were not engaged in willful
misfeasance or malfeasance in the performance of his or her
duties; provided that in the event of a settlement the
indemnification will apply only when the Board of Directors
approves such settlement and reimbursement as being for the best
interests of the Corporation (see Exhibit 3.2 to this Form 10-
SB). The Bylaws, therefore, limit the liability of directors to
the maximum extent permitted by Nevada law (Section 78.751).
The officers and directors of the Company are accountable to the
Company as fiduciaries, which means they are required to exercise
good faith and fairness in all dealings affecting the Company.
In the event that a shareholder believes the officers and/or
directors have violated their fiduciary duties to the Company,
the shareholder may, subject to applicable rules of civil
procedure, be able to bring a class action or derivative suit to
enforce the shareholder's rights, including rights under certain
federal and state securities laws and regulations to recover
damages from and require an accounting by management..
Shareholders who have suffered losses in connection with the
purchase or sale of their interest in the Company in connection
with such sale or purchase, including the misapplication by any
such officer or director of the proceeds from the sale of these
securities, may be able to recover such losses from the Company.
PART F/S.
ECLIPSE ENTERTAINMENT GROUP, INC.
BALANCE SHEET
(Unaudited)
March 31, 2000
ASSETS
Cash $ 183,973
Note receivable 266,000
Film costs 1,109,895
Property and equipment, net 582
Other assets 685
Total assets $ 1,561,135
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued expenses $ 83,119
Due to related party 437,004
Total liabilities 520,123
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
Stock subscriptions payable 210,000
Additional paid-in capital 1,364,360
Accumulated deficit (545,364)
Total stockholders' equity 1,041,012
Total liabilities and stockholders' equity $ 1,561,135
See Accompanying Notes to Financial Statement
ECLIPSE ENTERTAINMENT GROUP, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
For the Three For the Three
Months Ended Months Ended
March 31, 2000 March 31, 1999
Revenues $ -- $ --
General and administrative expenses 20,061 66,750
Loss before provision for income taxes (20,061) (66,750)
Provision for income taxes -- --
Net loss $ (20,061) $ (66,750)
Basic and fully diluted loss per
common share $ (nil) $ (nil)
Weighted average number of common
shares used in per share calculation 12,016,140 9,710,620
See Accompanying Notes to Financial Statement
ECLIPSE ENTERTAINMENT GROUP, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three For the Three
Months Ended Months Ended
March 31, 2000 March 31, 1999
Cash flows from financing activities:
Net income $ (20,061) $ (66,750)
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 51 51
Services paid with common stock -- 41,502
Changes in operating assets and liabilities:
Increase in film costs -- (97,101)
Decrease in accounts payable and accrued expenses (6,193) (26,758)
Increase in due to related party 263,840 37,840
Net cash provided (used) by operating activities 237,637 (111,216)
Cash flows from investing activities:
Proceeds from issuance of note receivable (266,000) --
Net cash used by investing activities (266,000) --
Cash flows from financing activities:
Proceeds from stock subscriptions payable 210,000 --
Proceeds from common stocks issued -- 115,425
Net cash provided by financing activities 210,000 115,425
Net change in cash 181,637 4,209
Cash-beginning balance 2,336 --
Cash-ending balance $ 183,973 $ 4,209
See Accompanying Notes to Financial Statement
ECLIPSE ENTERTAINMENT GROUP, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying consolidated financial statements have been
prepared in accordance with U.S. Securities and Exchange
Commission ("SEC") 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 year ended December 31,
1999 financial statements of Eclipse Entertainment Group, Inc.
("Company") included in the Form 10-KSB filed with the SEC by the
Registrant.
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 March 31, 2000 consist of the
following:
Advances payable to an entity controlled by an
officer and shareholder of the Registrant
represent advances, unsecured, bearing no
interest, and due on demand $323,504
Promissory note payable to a shareholder, unsecured,
bearing interest at 8%, and due on demand 113,500
Total due to related parties $437,004
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Eclipse Entertainment Group, Inc.
Bellevue, Washington
We have audited the accompanying balance sheet of Eclipse
Entertainment Group, Inc. as of December 31, 1999, and the
related statements of operations, stockholders' equity and cash
flows for the years ended December 31, 1999 and 1998. 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 Eclipse Entertainment Group, Inc. as of December 31, 1999, and
the results of its activities and cash flows for the years ended
December 31, 1999 and 1998 in conformity with generally accepted
accounting principles.
/s/ L.L. Bradford & Company
L.L. Bradford & Company
March 24, 2000
Las Vegas, Nevada
ECLIPSE ENTERTAINMENT GROUP, INC.
BALANCE SHEET
December 31, 1999
ASSETS
Cash $ 2,336
Film costs 1,109,895
Fixed assets, net 633
Other assets 685
Total assets $ 1,113,549
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued liabilities $ 89,312
Due to related parties 173,165
Total liabilities 262,477
Stockholders' equity
Preferred stock - $.001 par value,
10,000,000 shares authorized, no shares issued -
Common stock - $.001 par value, 50,000,000
shares authorized, 12,016,140 shares issued and
outstanding 12,016
Additional paid in capital 1,364,360
Accumulated deficit (525,304)
Total stockholders' equity 851,072
Total liabilities and stockholders' equity $ 1,113,549
The accompanying notes are an integral part of these financial
statements
ECLIPSE ENTERTAINMENT GROUP, INC.
STATEMENTS OF OPERATIONS
For the For the
Year Ended Year Ended
December 31 December 31
1999 1998
Revenues $ - $ -
General and administrative
Expenses 186,456 268,786
Loss from operations (186,456) (268,786)
Provision for income taxes - -
Net loss $ (186,456) $ (268,786)
Basic and diluted loss per
common share $ (0.02) $ (0.08)
Weighted average number of
Common shares used in per share
Calculation $ 8,565,042 $ 3,275,329
The accompanying notes are an integral part of these financial statements
ECLIPSE ENTERTAINMENT GROUP, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
Common Stock Additional Total
Accumu Stockholders
Number Paid-In lated Equity
of Amount Capital Deficit
Shares
Balance at
January 1, 1998 3,250,000 $ 3,250 $ 404,063 $ (70,062) $ 337,251
Issuance of
common stock
$1.51 weighted
average price
per share 215,000 215 325,407 - 325,622
Met loss - - - (268,786) (268,786)
Balance at
December 31, 1998 3,465,000 3,465 729,470 (338,848) 394,087
Issuance of
common stock
$0.02 weighted
average price
per share 6,174,125 6,174 109,251 - 115,425
Issuance of
common stock for
past services
$0.58 71,495 71 41,431 - 41,502
Issuance of
common stock in
satisfaction of
a $486,514
promissory note
(including
interest of
$44,229), $0.21 2,305,520 2,306 484,209 - 486,514
Net loss - - - (186,456) (186,456)
Balance at
December 31
1999 12,016,140 12,016 1,364,360 (525,304) 851,072
The accompanying notes are an integral part of these financial
statement
ECLIPSE ENTERTAINMENT GROUP, INC.
STATEMENTS OF CASH FLOWS
For the For the
Year Ended Year Ended
December 31 December 31
1999 1998
Cash flows from operating activities:
Net loss $ (186,456) $ (268,786)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation 421 703
Expenses paid with common stock 86,731 -
Changes in operating assets and
liabilities:
Increase in film costs (133,420) (561,625)
Increase (decrease) in accounts
Payable and accrued liabilities 16,835 56,527
Increase in due to related
Parties 103,800 447,500
Net cash used by operating
Activities (113,089) (325,681)
Cash flows from financing
activities:
Proceeds from issuance of common
Stock 115,425 325,622
Net cash provided by financing
activities 115,425 325,622
Net increase (decrease) in cash 2,336 (59)
Beginning balance - 59
Ending balance 2,336 -
Noncash financing activities:
2,305,520 shares of common stock
issued in satisfaction
of promissory note 486,514 -
The accompanying notes are an integral part of these financial
statements
ECLIPSE ENTERTAINMENT GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
1. Organization and summary of significant accounting policies.
Organization - Eclipse Entertainment Group, Inc. (hereinafter
referred to as the "Company") was incorporated in the state of
Nevada in January 1997 to engage in the business of developing,
producing and marketing films for worldwide distribution. The
fiscal year ends on December 31.
Use of estimates - 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 and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimates.
Film costs and amortization - Film costs represent costs incurred
in the acquisition of rights to distribute certain motion
pictures. These costs have been capitalized in accordance with
Statement of Financial Accounting Standards No. 53 (SFAS 53).
Film costs are amortized using the individual film forecast
method whereby expense is recognized in proportion to current
year revenues based upon management's estimate of future
revenues. Film costs are valued at the lower of unamortized cost
or estimated net realizable value. Revenue and cost forecasts
for films are regularly reviewed by management and revised when
warranted by changing conditions. When estimates of total
revenues and costs indicate that a film will result in an overall
loss, additional amortization will be provided to fully recognize
such loss.
Fixed assets - Fixed assets are stated at cost less accumulated
depreciation. Depreciation is provided principally on the
straight-line method over the estimated useful lives of the
assets, which are generally 5 to 7 years. The cost of repairs
and maintenance is charged to expense as incurred. Expenditures
for property betterments and renewals are capitalized. Upon sale
or other disposition of a depreciable asset, cost and accumulated
depreciation are removed from the accounts and any gain or loss
is reflected in other income (expense).
The Company periodically evaluates whether events and
circumstances have occurred that may warrant revision of the
estimated useful lives of fixed assets or whether the remaining
balance of fixed assets should be evaluated for possible
impairment. The Company uses an estimate of the related
undiscounted cash flows over the remaining life of the fixed
assets in measuring their recoverability.
Loss per share - Primary and fully-diluted loss per share is
based on the weighted-average number of outstanding common shares
during the applicable period.
Comprehensive income - The Company has no components of other
comprehensive income. Accordingly, net income equals
comprehensive income for all periods.
Advertising costs - Advertising costs incurred in the normal
course of operations are expensed accordingly. No advertising
costs were incurred for the years ended December 31, 1999 and
1998.
Income taxes - The Company accounts for its income taxes in
accordance with Statement of Financial Accounting Standards No.
109, which requires recognition of deferred tax assets and
liabilities for the future tax consequences attributable to
differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases
and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period that includes the enactment
date.
Impairment of long-lived assets to be disposed - The Company
continually monitors events and changes in circumstances that
could indicate carrying amounts of long-lived assets may not be
recoverable. When such events or changes in circumstances are
present, the Company assesses the recoverability of long-lived
assets by determining whether the carrying value of such assets
will be recovered through undiscounted expected future cash
flows. If the total of the future cash flows is less than the
carrying amount of those assets, the Company recognizes an
impairment loss based on the excess of the carrying amount over
the fair value of the assets. Assets to be disposed of are
reported at the lower of the carrying amount or the fair value
less costs to sell.
2. Film costs.
Film costs totalling $1,109,895 at December 31, 1999 consist of
completed but not released films. As of December 31, 1999 and
1998, amortization expenses have not been recorded since revenues
have been not recognized for these periods. Management believes
that these capitalized film costs will provide future revenue
benefits. Accordingly, these costs will be amortized in the
related periods when such revenues are generated in accordance
with SFAS 53 as discussed in Note 1.
3. Fixed assets.
Fixed assets consist primarily of office equipment with a
historical cost of $2,196 and accumulated depreciation of $1,564
at December 31, 1999.
4. Related party transactions.
Due to related parties at December 31, 1999 consist of the
following:
Advances payable to an entity controlled by an officer
and shareholder of the Company represent advances,
unsecured, bearing no interest, and due on demand $ 51,165
Promissory note payable to a shareholder, unsecured,
bearing interest at 8%, and due on demand 115,000
Total due to related parties $ 173,165
5. Common stock.
On April 5, 1999, the Company's Board of Directors adopted a
resolution whereby it approved a 1 for 4 reverse stock split of
the issued and outstanding shares of common stock. Accordingly,
the accompanying financial statements have been retroactively
restated to reflect the 1-for-4 reverse stock split as if such
reverse stock split occurred as of the Company's date of
inception.
6. Income taxes.
The Company did not record any current or deferred income tax
provision or benefit for any of the periods presented due to
continuing net losses and nominal differences.
The Company has provided a full valuation allowance on the
deferred tax asset, consisting primarily of net operating loss,
because of uncertainty regarding its realizabillity.
As of December 31, 2000, the Company had a net operating loss of
approximately $500,000. Utilization of net operating loss, which
begins to exp[ire at various times starting in 2012, may be
subject to certain limitations under Section 382 of the Internal
Revenue Code of 1986, as amended, and other limitations under
state and foreign tax laws.
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used
for income tax purposes. Significant components of the Company's
deferred tax assets are approximately as follows:
December 31, 1999 December 31, 1998
Net operating loss $(186,456) $(268,786)
Depreciation - -
Total deferred tax assets (186,456) (268,786)
Valuation allowance for deferred
tax assets 186,456 268,786
Net deferred tax assets - -
7. Fair value of financial instruments.
The carrying amounts of cash, accounts payable, accrued
liabilities, and due to related parties approximate fair value
because of the short-term maturity of these instruments.
8. Common stock.
In October 1999, the Company issued 125,000 shares of common
stock in error to an unrelated company. The Company has since
placed a stop on the 125,000 shares issued. Accordingly, the
12,016,140 shares of common stock issued and outstanding as of
December 31, 1999 does not reflect the 125,000 shares since these
shares were issued in error and a stop has been placed.
PART III.
ITEMS 1 and 2. INDEX TO EXHIBITS; DESCRIPTION OF EXHIBITS.
The Exhibits required by Item 601 of Regulation S-B, and an index
thereto, are attached.
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the Company caused this registration
statement to be signed on its behalf by the undersigned,
thereunto duly authorized.
Eclipse Entertainment Group, Inc.
Date: June 26, 2000 By: /s/ Arthur Birzneck
Arthur Birzneck, President
Special Power of Attorney
The undersigned constitute and appoint Arthur Birzneck their true
and lawful attorney-in-fact and agent with full power of
substitution, for him and in his name, place, and stead, in any
and all capacities, to sign any and all amendments, including
post-effective amendments, to this Form 10-SB Registration
Statement, and to file the same with all exhibits thereto, and
all documents in connection therewith, with the U.S. Securities
and Exchange Commission, granting such attorney-in-fact the full
power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the
premises, as fully and to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that such
attorney-in-fact may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Exchange Act of
1934, this registration statement has been signed below by the
following persons on behalf of the Company and in the capacities
and on the dates indicated:
Signature Title Date
/s/ David Gideon Thomson Chairman of the Board June 26, 2000
David Gideon Thomson
/s/ Franco Columbu Chief Executive Officer/ June 26, 2000
Franco Columbu Director
/s/ Arthur Birzneck President/Director June 26, 2000
Arthur Birzneck
/s/ John G. Smith Vice President Legal June 26, 2000
John G. Smith Affairs/Director
/s/ Brent Nelson Director June 26, 2000
Brent Nelson
EXHIBIT INDEX
Number Exhibit Description
3.1 Articles of Incorporation (see below).
3.2 Bylaws (see below).
10.1 Distribution Agreement between the Company and Westar
Entertainment, Inc., dated January 1, 1998 (incorporated by
reference to Exhibit 10 to the Form 10-KSB filed on April 11, 2000)
10.2 Agreement between the Company and Franco Columbu, dated
September 2, 1997 (see below).
10.3 Distribution Agreement between the Company and Pinoy
Productions, Inc., dated January 30, 1997 (see below).
24 Special Power of Attorney (see signature page above).
27 Financial Data Schedule (see below).
