GENESIS MEDIA GROUP, INC.
(Exact name of registrant as specified in its charter)
New Jersey 35-2034838
(State of organization) (I.R.S. Employer Identification No.)
5721 Buckingham Pkwy., Stage 6, 2nd Floor, Culver City, CA 90230
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (310)-665-0221
Securities to be registered pursuant to Section 12(b) of the Act: None
Securities to be registered pursuant to Section 12(g) of the Act: Common
ITEM 1. BUSINESS
(a) The Company
GENESIS MEDIA GROUP, INC. (the "Company") is a New Jersey corporation formed
on December 10, 1981, created from the combination
of assets of the Hollywood Showcase Television Network, Inc. and
Genesis Group Inc. Its principal place of business is located at 5721
Buckingham Parkway, Stage 6, 2nd Floor, Culver City, CA 90230. The
Company's common stock is listed on the OTC Bulletin Board with the
symbol GNNX. The Company maintains a web site at www.GNNX.com.
(b) The Nature of the Business
Genesis is a company with a 43,000,000 million-dollar asset base.
The company is in the business of Media Advertising, Media Placement,
Telecommunications, and Networking. The Genesis Media division offers
professional production and post production services. Genesis is also
involved with various advertising and media ventures, including
interactive CD-ROM products and major software for television up-links.
Utilizing their extensive in-house music library, Genesis is able to
RE-SCORE music sound tracks for motion pictures and television
productions.
Entertainment-related industries are extremely competitive, yet
rewarding. It is a form of artistry where the final product involves
combining the talents of a multitude of artists into one piece of art.
From the scriptwriter, we move to the producer, the director, the
actors, actresses, celebrity support staff, make-up artists,
technicians, stunt people, animators, and even specialty equipment.
Upon completion, another group of professionals take over, to edit,
promote, market and distribute the products. Genesis has assembled a
group of the highest caliber of professionals in the industry, to
assist in creating and distributing the finest entertainment that the
industry can offer.
Interactive Multi-Media is another important part of the Genesis
infrastructure, producing CD-I (compact disc interactive) software
titles for clients on a contract basis and multi-media products on 3D
and CD ROM platforms. Management expects that the Company's film and
music library will generate the opportunity for software applications,
such as video games, and that interactive multi-media production and
distribution, with a management group experienced in designing
interactive multi-media software applications, will offer a means to
realize the potential of the multi-media applications arising from its
film production activities. It is believed that the Company's film and
music library will generate significant revenues from interactive
multi-media application.
Plan of Operation - Production
Genesis is an emerging company in the areas of television
programming, commercials, and infomercials, and as a "software"
provider that creates its own entertainment programs leading to the
building of a library to be implemented in all media, including future
interactive and multi-media applications. In addition, the Company's
proposed operating plan includes developing strategies such as the
"shared distribution financing structure", which would enable it to
capture a greater share of the revenues from the distribution process
than traditionally has been available to the independent producer. The
Company's relationships in the industry allow for growth, expansion,
production, distribution, and licensing opportunities, resulting in a
cash flow for and on behalf of our stockholders.
Genesis, with the use of its in-house facilities, has full
production capabilities. The Company is able to produce film, video,
and music projects, as needed. Major studios have reduced their
development activity even as the motion picture industry has grown. The
Hollywood after-market or post-theatrical market has expanded to
include film entertainment of videocassette, pay-per-view television,
video on demand, and interactive multimedia. The merger of software
products, computers, and telecommunications is revolutionizing the way
the audiences all over the world are entertained, communicate,
educated, and how they conduct business.
Revenue will be generated from the Company's operations by a
variety of means in addition to revenues generated from TV programming
and marketing, including licensing arrangements. The Company's success
will depend in part on its ability to utilize current assets to
generate revenue. The Company's current assets are marketable and can
generate substantial revenue throughout our expansion process. Genesis
will also focus on its music and soundtrack licensing for commercial
use, and expects to continually increase its library and distribution
network.
Strategies play an important role in the Company's expansion
process. Genesis believes that certain strategies will enable the
Company to produce, develop, and distribute new projects or products at
lower cost than many of its competitors. Some of the principal elements
of the Company's operating strategy include the following:
1. Identify and develop creative new talent, projects, and
products, with high revenue-producing potential;
2. Combine such material with established producers, distribution
avenues, and other key production personnel, such as
directors, and actors, to enhance value, and provide
experience to these emerging new opportunities;
3. Control development, production, and distribution costs of its
projects and products, and limit the financial risk inherent
to any one project;
4. Offer better terms and realistic profit participation for new
projects and products, thereby reducing the negative cost
risks that can be involved; and
5. Enter into strategic alliances with multi-media and
interactive companies to develop new projects and products.
Plan of Operation - Multimedia Applications
Genesis is pursuing strategic alliances with independent
producers to enhance the Company's ability to develop, finance, and
produce interactive multi-media applications. Such alliances will
enable the Company to share the risk of certain segments of its
business with others that may have the experience related to any one
project. Genesis believes that pursuing alliances such as these will
provide the Company with access to expand its scope for this area of
the Company's business much quicker, and with less risk. Genesis, as a
software provider, with a strategy of entering distribution through
innovative alliances, intends to capitalize on this opportunity for
software providers, and capture a greater share of the revenues from
the distribution process.
(c) The Company's Divisions
Genesis has structured the Company into a number of divisions to take
advantage of its current opportunities.
A. Digital Production
B. Dealer Distributor / Thomson Broadcast Systems
C. Music Library
D. The Auto-Plus /Dealer Direct Program
E. Telecommunications Marketing
F. James Dean Project
A. DIGITAL PRODUCTION
Genesis has a state-of-the-art switchable component Digital Editing and
Digital Multi-Camera production studio. The studio features 12-Bit
digital cameras, a 4:2:2 digital component switcher, digital component
beta-cam recorders, and D2 composite digital recorders. Our insert air-
conditioned stage features complete digital multi-camera equipment.
Genesis capabilities include complete digital production and post-
production, as well as analog services. This studio enables Genesis to
produce film, video, and music projects.
B. DEALER DISTRIBUTOR
Genesis is a dealer-distributor for Thomson Broadcast Systems. Thomson
is a worldwide organization with subsidiaries in Asia, Europe and the
U.S. as well as distributors and agents around the world. The company
headquarters are located near Paris with two production sites in
Brittany (France).
Thomson addresses the digital image chain from end to end: image
capture, processing, compression, transmission, and broadcasting. This
is an exciting time, not only because of Thomson's strategic commitment
to digital technologies, but new applications such as digital
television, MPEG2 compression and multi-service fiber networks. There
is a unique synergy that now exists across Thomson's product and
systems divisions. With the worldwide resources of Thomson multi-media,
they are the 4th largest consumer electronics group in the world. From
creating the next generation of broadcast equipment, to implementing
today's most advanced digital solutions, Thomson Broadcast System
shares two essential values: passionate commitment to what they do, and
a vision of the future that is resolutely digital.
C. MUSIC
Genesis has a music library which includes such artists as, Frank
Sinatra, Ray Charles, Johnny Cash, Willie Nelson, Chuck Berry, Rod
Stewart, and many more. This library can be used to re-score music
sound tracts for major motion pictures and television productions.
The Company is in the process of releasing a Frank Sinatra 4 album set.
D. THE AUTO PLUS / DEALER DIRECT PROGRAM
The Auto Plus / Dealer Direct Program is a second chance credit
financing program, With Morton Downey Jr. as our national spokesperson.
Genesis is organizing a national television and radio campaign that
will generate 60,000 qualified auto buyer leads per month, distributed
via the Web.
These leads will match the desires of the buyer with the inventory of
Dealers. A buyer will place an inquiry through our system. The buyer,
by making this one phone call, has now made multi-dealers aware of his
or her needs, thus offering the buyer a selection and price favorable
to his or her needs. Multi-dealers review the buyer's specific
requests, and match them with their inventory. Upon purchase, buyer
will receive an unsecured Mastercard with a 500 dollar credit limit.
The program provides numerous benefits to the participating dealers.
The Dealers are able to receive thousands of qualified leads that match
their inventory, reducing the cost of buying leads in bulk. The Dealer
gets the use of the "Buy-a-Car, Get-a-Mastercard" endorsement, in
conjunction with major finance companies that have the funds available
for impaired credit buyers. Dealers also receive national television
and radio advertising, up to 600 commercials per month through the use
of co-op advertising proceeds. There is also ability for other national
sponsors to benefit such as oil and tire companies.
E. TELECOMMUNICATIONS MARKETING.
Genesis provides wholesale long distance service to different countries
such as China and India, and is in the process of developing its own
fiber network to the country of Mexico. These and other contracts will
enable Genesis to proceed with its current plan of operation.
F. JAMES DEAN PROJECT
Genesis is in the process of producing a feature length documentary on
the life of James Dean. The project is designed to be distributed on
home video, as a commercially sponsored TV program, as a stand-alone
special for Pay-TV, or for release on 35mm as an exclusive engagement
in highly selected theaters around the world. The running time for the
project is estimated to be 93 minutes, so that it will have the
flexibility of adapting to any film or video format. The working title
as of this writing is: "The Diary of James Dean." The production will
especially appeal to the estimated 165 million Dean fans worldwide
(over 20 million domestically), spanning more than four decades and
three generations.
The production style of the project will combine elements of a
documentary and a drama, weaving a story with photographs, film
footage, exclusive interviews and a powerful dramatic portrayal of
James Dean. Much of the production takes place on location in James
Dean's hometown of Fairmount Indiana, on the family farm, and other
locations where he worked, lived and developed his talent. An original
soundtrack used as a backdrop will be embellished by selected well
known songs which help tell the story of the world's greatest screen
legend. Amazing and realistic dramatic portrayals will bring to life
the "little-known" facts of the real character and personality of James
Dean.
ITEM 2 FINANCIAL INFORMATION
The Registrant's financial data presented below has been derived from
the Financial Statements of the Company, including the notes thereto,
appearing elsewhere herein.
GENESIS MEDIA GROUP, INC.
Year Ended December 31
<TABLE>
<S> <C> <C> <C> <C>
1997 1996 1995 1994
Summary of Operations
Net Revenues $5,288,317 $2,575.73
Cost of Sales 2,215,664
Gross Profit 4,072,653
Operating Expenses 581,465 90,090.31
Net Profit $3,475,455 ($87,514.58)
Summary Balance Sheet Data
Total Assets $47,108,829 $335,647.04 $0 $0
Total Liabilities 2,402,063 0 $4,996 $4,996
Shareholders' Equity $44,706,766 $335,647.04 ($4,996) ($4,996)
Note: The financial information for years prior to 1997 are for
Hollywood Showcase Television Network, Inc.
ITEM 3. PROPERTIES.
The Company currently leases property at 5721 Buckingham Parkway Stage
6-2nd Floor, Culver City, CA 90230.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
(a) Security Ownership of Certain Beneficial Owners
</TABLE>
<TABLE>
<S> <C> <C> <C>
Title Shares Percent
of Name/Address Beneficially of
Class of Owner Owned Class
Common Badco
1013 Centre Road
Wilmington, DE 19805 2,500,000 11.61%
Common CEDE
P.O. Box 20
Bowling Green Station
New York, NY 10004 1,812,280 8.42%
Common All Officers and 9,200,000 42.73%
and Directors over
5% (2 Individuals)
</TABLE>
(b) Security Ownership of Management
<TABLE>
<S> <C> <C> <C>
Title Shares Percent
of Name/Address Beneficially of
Class of Owner Owned Class
Common Don & Barrie Logan
23355 Gondor Dr.
Lake Forest, CA 90710 9,200,000 42.73%
Common Milton Miller
5 Moraine Rd.
Edison, NJ 08820 500,000 2.32%
Common Glen Morinaka
16136 Sunnyview Terrace
Hacienda Heights, CA 91755 210,000 0.98%
Common Carl J. Conte
13508 Moorpark St. #3
Sherman Oaks, CA 91423 100,000 0.46%
Common David Lambersten
1551 Fairway Dr. #3102
Naperville, IL 60563 86,750 0.40%
Common John Logan
23355 Gondor Dr.
Lake Forest, CA 92630 50,000 0.23%
</TABLE>
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
Don R. Logan
Mr. Logan is currently the Chairman of the Board, President, and COO of
Genesis Media Group, Inc. Mr. Logan has been the President, CEO and has
served as director for many large corporations as well as President and
COO of Genesis Group, Inc. from 1981 - 1998. President of USA
Investment Casting, President of Quadrillion Entertainment, President
of Jade Point Productions and Packy Syndications, former US Coast Guard
Officer, past officer and member of Gray Iron and Ductile Founders
Society, past officer and member of Gray Iron Institute, Rotary
International member and graduate of USC. Mr. Logan's experience and
expertise in the Entertainment field should prove to be a key asset in
the success of Genesis Media Group, Inc.
Glen Morinaka
Mr. Morinaka is the Chief Financial Officer/Director of the Company. He
has many years of accounting and financial experience. He has been a
partner since 1988 with the accounting firm of Ikegami, Ikegami &
Morinaka CPA. He is also active with the American Institute of
Certified Public Accountants and the California Society of Certified
Public Accountants.
David Lambersten
Mr. Lambersten is currently a director of the Company. He is a
decorated veteran of the United States Army, and graduated the
University of Wisconsin with a Bachelor's degree in Finance and
Economics. He began his banking career in 1971, was elected Vice
President of Lending by 1973, and by 1976 was named the CEO and elected
to the Board of Directors of a prestigious Illinois Bank, becoming the
youngest CEO in Illinois banking history. His bank was one of the first
ten in the nation to be authorized to issue self-directed IRAs. From
1981-1982, Mr. Lambersten directed the efforts of Ernst & Ernst to
develop a Savings and Loan Association Program. During this same
period, he and a former S&L executive created Midstates Group, Inc. to
market a Stepped Payment Adjustable Note (SPAN) mortgage, used
exclusively for commercial properties. While at Midstates, Mr.
Lambersten obtained the necessary capital and negotiated the regulatory
approval to form a bank chartered Independent Trust Corporation in
1984. During his tenure, Independent Trust Corporation attained an
asset base exceeding one billion dollars. Independent Trust Corporation
was sold and Mr. Lambersten joined Deloitte Touche to establish a
venture capital fund for small to medium acquisitions. From 1991 until
1996, he established another company which was involved in
manufacturing & developing software applications directed to the
precision machine parts industry.
Carl J. Conte
Mr. Conte is currently the Corporate Secretary/Vice President of
Operations and a Director of the Company. He graduated Rutgers
University with a BA in business. Mr. Conte was also a paratrooper in
the United States Army. He brings to the Company the sales and
marketing knowledge and expertise needed to build a solid revenue
stream for the Company. He was a Series 7 registered stockbroker early
in his career, became the Senior Sales Manager for a prestigious
Investment Banking firm in New York. Mr. Conte was the Vice President
of Sales and Marketing for Kelly's Coffee Group, Inc., a publicly
traded company, where he was responsible for management development,
succession planning, and sales and marketing. Mr. Conte developed a
profit-sharing plan for Kelly's Coffee Group, Inc. as part of an
incentive plan for the company.
Bruce Braatelien
Mr. Braatelien is a Senior Vice President of the Company. He has been
the president and COO of many large corporations, as well as COO of
Greenglobe Engineering, Inc. from 1990 to 1997, President of LendNet,
and President of American marketing. He is a graduate of the University
of Colorado, where his studies included Geology, Mathematics,
Communications, and Physics. He is currently a director of other public
companies.
Dennis Jacobsen
Mr. Jacobsen is the Vice President of Telecommunications. He has an
extensive background in the telecommunications industry. During his 14
years in the industry, he has owned and operated an equipment
interconnect company. Mr. Jacobson has been President of an Operator
Service Company, and was involved in the start-up of numerous other
telecommunications companies. He has also served as consultant to Bell
Atlantic and Frontier, the fifth largest long-distance company.
Milton Miller
Mr. Miller is a Director of the Company. He is the former President and
CEO of Lane Leather, one of the largest billfold and leather
manufacturers and importers in North America. After 30 years of
experience, he retired in 1995. He served as Director of Hollywood
Showcase Television Network, Inc., Hollingsworth Investments, and Tri-
County Financial Holdings, Ltd.
Barrie M. Logan
Ms. Logan is the Treasurer. She has vast knowledge in corporate legal
matters, as well as organizational, accounting, and advertising
experience. Ms. Logan assisted in production and advertising, and was
in charge of operations for Boxing Event Ticketing. She has been
involved with all the banking, accounting, general administrative,
payroll, and client-liaison for the Company. Other experience includes
being Executive Secretary to the Vice President and President of
California Boxing Promotions and Channel Plus, Inc.
John Logan
Mr. Logan is a Vice President of the Company. He has been active for 20
years in the giftware industry, and multiple store owner with one of
the largest card manufacturers in the world. Previously he was a
controller for a large trucking company, and was the founding
administrator of Friendly Hills Medical Group. Mr. Logan is a graduate
of U.S.C., with a degree in accounting and finance.
ITEM 6. EXECUTIVE COMPENSATION
(a) No remuneration has been paid to or is contemplated for
officers and directors except reimbursement for out of pocket
expenditures for activities on the Issuer's behalf.
(b) For the fiscal year ended December 31, 1997, the Issuer paid
no compensation or consulting fees to its executive officers as a
group.
(c) The Issuer is not a party to any employment agreements. No
advances have been made or are contemplated to be made by the Issuer to
any of its officers or directors.
(d) The Issuer has no retirement pension, profit shearing or
stock option plans or insurance or medical reimbursements plans
covering its officers and directors, and does not contemplate
implementing any such plans at this time.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There are no relationships or transactions to be reported.
ITEM 8. 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 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS.
Registrant's common stock is traded in the over-the-counter
market in the United States under the symbol "GNNX." There are
approximately 15 market makers. The stock price has ranged from $0.125
to $4.00 during the previous year. As of May 18, 1998, there are 276
record owners of Registrant's stock. The Registrant has never paid a
cash dividend and has no present intention of so doing.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
The Company recently completed an offering under Regulation D
Rule 504. As of May 18, 1998, there were 21,529,607 shares of the
Company's common stock outstanding. Of these shares, 5,452,857 shares
are freely trading, while 16,076,750 are subject to trading
restrictions.
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
The securities to be registered are Common Stock, $0.0001 par
value per share. The shares are non-assessable, without pre-emptive
rights, and without cumulative voting.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company and its affiliates may not be liable to its
shareholders for errors in judgment or other acts, or omissions not
amounting to intentional misconduct, fraud or a knowing violation of
the law, since provisions have been made in the Articles of
incorporation and By-laws limiting such liability. The Articles of
Incorporation and By-laws also provide for indemnification of the
officers and directors of the Company in most cases for any liability
suffered by them or arising from their activities as officers and
directors of the Company if they were not engaged in intentional
misconduct, fraud or a knowing violation of the law. Therefore,
purchasers of these securities may have a more limited right of action
than they would have except for this limitation in the Articles of
Incorporation and By-laws.
The officers and directors of the Company are accountable to the
Company as fiduciaries, which means such officers and directors are
required to exercise good faith and integrity in handling the Company's
affairs. A shareholder may be able to institute legal action on behalf
of himself and all others similarly stated shareholders to recover
damages where the Company has failed or refused to observe the law.
Shareholders may, subject to applicable rules of civil procedure,
be able to bring a class action or derivative suit to enforce their
rights, including rights under certain federal and state securities
laws and regulations. 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.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
LIST OF EXHIBITS
A. INDEPENDENT AUDITORS' REPORT
B. BALANCE SHEET
C. STATEMENT OF OPERATIONS
D. STATEMENT OF CASH FLOWS
E. NOTES TO FINANCIAL STATEMENTS
INDEPENDENT AUDITORS' REPORT
Herbert Woll
Certified Public Accountant
2891 Gant Quarters Drive 23611 Chagrin Blvd., Suite 101
Marietta, GA 30068 Beechwood, OH 44122
(770) 565-7299 (216) 292-7505
To the Board of Directors
HOLLYWOOD SHOWCASE TELEVISION NETWORK, INC.
Culver City, CA
I have audited the accompanying Balance Sheet of HOLLYWOOD
SHOWCASE TELEVISION NETWORK, INC. as of December 31, 1997, and the
related Statement of Operations, and Cash Flows for the period then
ended. These financial statements are the responsibility of the
Company's management. My responsibility is to express an opinion on
these financial statements based on my audit.
I conducted my audit in accordance with generally accepted
auditing standards. These standards require that I plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatements. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures set forth 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. I believe that my audit provides a
reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of HOLLYWOOD
SHOWCASE TELEVISION NETWORK, INC., as of December 31, 1997 and the
results of its operations and its cash flows for the period then ended,
in conformity with generally accepted accounting principles.
/s/ Herbert Woll
Herbert Woll, CPA
Marietta, Georgia 30068
May 13, 1998
BALANCE SHEET
AS AT DECEMBER 31, 1997
<TABLE>
<S> <C>
ASSETS
Current Assets
Cash in Banks $10,025
Accounts Receivable 13,814
Contract Receivables
- Note 1 1,800,000
Inventory - Note 1, 2 41,012,500
Prepaid Expenses 51,416
Total Current Assets $42,887,755
Property & Equipment
(net of $15,733 Depr
Note 1 & 4) 162,034
Other Assets (Note 1) 4,059,040
Total Assets $47,108,829
LIABILITIES & STOCKHOLDERS'
EQUITY
Current Liabilities
Accounts Payable $100,000
Accrued Expenses 17,588
Current Portion of
Long Term Debt 820,777
Total Current Liabilities $938,365
Long Term Debt $1,463,698
Stockholders' Equity
Common Stock $687
At $.0001 par value.
Issued and outstanding
6,869,500 shares
Paid in Capital 41,396,401
Retained Earnings
December 31, 1997 3,310,678
Total Stockholders' Equity 44,706,766
Total Liabilities &
Stockholders' Equity $47,108,829
</TABLE>
The accompanying footnotes are an integral part of these financial
statements
STATEMENT OF OPERATIONS
AS AT DECEMBER 31, 1997
<TABLE>
<S> <C>
Sales $5,483,334
Other Income 804,983
Less: Cost of Sales 2,215,664
Gross Profit on Sales $4,072,653
Operating Expenses
Auto & Parking $3,124
Bank Charges 2,533
Equipment Rental 9,360
Insurance 1,173
Miscellaneous 5,895
Moving Expenses 4,433
Outside Services 166,791
Professional Fees 39,385
Printing 1,214
Rent & Storage 51,605
Repairs 13,790
Salaries 174,013
Samples 1,530
Stock Transfer 1,981
Supplies - Office 6,877
Taxes - Miscellaneous 1,946
Taxes - Payroll 34,734
Telephone 12,461
Travel & Trade Prom. 48,620
Total Operating Expenses 581,465
Profit before Depreciation $3,491,188
Less: Depreciation 15,733
Profit before Income Tax $3,475,455
Corporate Income Tax -0-
Net Profit on Operations $3,475,455
</TABLE>
The accompanying footnotes are an integral part of these
financial statements
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<S> <C>
Cash Flows from Operations
Net Income $3,475,455
Adjustments to reconcile
net income to net cash
provided by operating
activities
Depreciation 15,733
3,491,188
Changes in Operating
Assets & Liabilities
(Increase) in accounts receivable (13,814)
(Increase) in contract receivable (1,800,000)
(Increase) in inventory (41,012,500)
(Increase) in Prepaid Expenses (51,416)
Decrease in Accounts Payable 100,000
Decrease in Accrued Expenses 17,588
Decrease in current portion of Long Term Debt 820,777
(41,939,365)
Net Cash Provided by Operations 45,430,553
Cash Flows form Investments
Additional paid in capital (42,663,152)
Other Assets (4,059,040)
Purchase of Equipment & Furniture (162,034)
(46,884,226)
Financing Activities
Increase in Long Term Debt 1,463,698
Net Cash Increase 10,025
Cash on Hand - 1/1/1997 -0-
Cash on Hand - 12/31/1997 $10,025
</TABLE>
The accompanying footnotes are an integral part of these
financial statements
NOTES TO FINANCIAL STATEMENTS
AS AT DECEMBER 31, 1997
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The summary of significant accounting policies of Hollywood
Showcase Television Network, Inc. is presented to assist in
understanding the Company's financial statements. The financial
statements and notes are representations of the Company policies
conform to generally accepted accounting principles and have been
consistently applied in the preparation of the financial statements.
Note 1. Contract Receivable
In August 1997, Hollywood Showcase Television Network, Inc.
purchased in a tax free exchange a company named Genesis Group Inc. One
of the assets received is a contract for the sale of certain films. The
terms of the contract call for monthly payments beginning March 1, 1998
in the amount of $100,000 per month for six months and $200,000 per
month for the next 24 months totaling $3,000,000. Beginning October 1,
1999 a licensing fee of $100,000 will be paid to the Company monthly,
until September 1, 2002. Total of contract being $5,400,000. Analysis
of the available records of Genesis Group indicates that the cost of
the 380 films purchased was $2,184,625. This transaction will be
treated as an installment sale, and will be reported for taxation on
the same basis.
Note 2. Inventory
The inventory was acquired from Genesis Group, Inc. and consists
of Movie Films and music tapes and CD ROM Interactive tapes. With the
inventory comes the rights to reconfigure, compile, manufacture,
distribute, license, sell, and lease. Each item is one of a kind. The
company has an appraisal that identifies each item of inventory, and
evaluates it. Inventory is carried at appraised value.
Note 3. Office Furniture & Equipment
Acquired in the same transaction was office furniture and
equipment that cost the company $3,120. Depreciation based on the
remaining useful life of the items will be calculated on the straight
line method beginning September 1, 1997.
Note 4. Stockholders' Equity
The Company has 50,000,000 shares of Stock authorized at $.0001
par value, 6869,500 were issued The assets of Genesis Group Inc. were
acquired by trading 6,869,500 shares of Hollywood Showcase for 100% of
the stock of Genesis. The assets acquired are now shown on the Balance
Sheet.
Note 5. Depreciation
Depreciation has been provided on the same basis for tax and
financial accounting purposes using the straight line method. The
estimated useful lives of the assets are as follows:
Shop Equipment 5-7 Years
Office Furniture & Fixtures 5-10 Years
Leasehold Improvements 3-10 Years
Commitments
The Company is committed under a lease dated October 1, 1997, for
a minimum annual rental (exclusive of real estate taxes, maintenance,
etc.) as follows:
Year ending December 31, 1998 $97,772
1999 19,200
2000 16,000
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
None
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
A. Financial Statements
B. Articles of Incorporation
C. Bylaws
D. 15c2-11
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the Registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized.
GENESIS MEDIA GROUP, INC.
By: /s/ Don Logan
Don Logan, Chairman
