SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) of the
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SECURITIES ACT OF 1934
For the Quarterly period ended June 30, 1999
Commission File Number 0-27599
ENTERTECH MEDIA GROUP, INC.
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(Exact Name of Registrant as Specified in Its Charter)
Nevada 88-0222729
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(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
50 West Liberty Street, Suite 880, Reno, NV 89501
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (775) 324-6655
Common Stock, Par Value $0.001 Per Share
(Title of Class)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
[X] Yes [ ] No
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.
11,030,000
NUMBER OF COMMON STOCK SHARES OUTSTANDING
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On April 4, 2000
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Traditional Small Business Disclosure Format (Check One):
[X] Yes [ ] No
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ITEM 1. Financial Statements
Entertech Media Group, Inc.
Balance Sheet
As of June 30, 1999
Jun 30, '99
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ASSETS
Current Assets
Checking/Savings
Cash in Bank of America 6,248.42
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Total Checking/Savings 6,248.42
Other Current Assets
Travel Advance 32,551.26
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Total Other Current Assets 32,551.26
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Total Current Assets 38,799.68
Fixed Assets
Equipment 1,966.00
Vehicle 57,000.00
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Total Fixed Assets 58,966.00
Other Assets
Due from Direct Cinema 5,000.00
Film Advance-No Vacancy 50,000.00
Investments in UNISAT 440.00
Organization Costs 4,059.37
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Total Other Assets 59,499.37
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TOTAL ASSETS 157,265.05
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LIABILITIES & EQUITY
Liabilities
Long Term Liabilities
Loan from Stockholders 2,500.00
Loan from Whyteburg 158,500.00
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Total Long Term Liabilities 161,000.00
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Total Liabilities 161,000.00
Equity
Additional Paid-In Capital 40,066.00
Capital Stock 12,400.00
Net Income -56,200.95
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Total Equity -3,734.95
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TOTAL LIABILITIES & EQUITY 157,265.05
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F-1
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Entertech Media group, Inc.
Profit & Loss
April through June 1999
Apr - Jun '99
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Income 0.00
Expense
Automobile Expense 2,172.70
Bank Service Charges 297.42
Communications 2,536.67
Consultants-Film 19,000.00
Cutting Trailer 2,500.00
Dues & Subscriptions 552.07
Freight & Postage 795.05
Legal & Accounting 1,633.17
Printing & Reproduction 4,963.25
Public Relations 2,500.00
Rent 4,400.00
Secretarial 7,700.52
Travel 7,150.10
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Total Expense 56,200.95
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Net Income -56,200.95
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F-2
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Entertech Media Group, Inc.
Statement of Cash Flows
April through June 1999
Apr - Jun '99
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OPERATING ACTIVITIES
Net Income -56,200.95
Adjustments to reconcile Net Income
to net cash provided by operations:
Travel Advance -32,551.26
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Net cash provided by Operating Activities -88,752.21
INVESTING ACTIVITIES
Equipment -1,966.00
Vehicle -57,000.00
Due from Direct Cinema -5,000.00
Film Advance-No Vacancy -50,000.00
Investments in UNISAT -440.00
Organization Costs -4,059.37
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Net cash provided by Investing Activities -118,465.37
FINANCING ACTIVITIES
Loan from Stockholders 2,500.00
Loan from Whyteburg 158,500.00
Additional Paid-In Capital 40,066.00
Capital Stock 12,400.00
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Net cash provided by Financing Activities 213,466.00
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Net cash increase for period 6,248.42
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Cash at end of period 6,248.42
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F-3
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ENTERTECH MEDIA GROUP, INC.
NOTES TO THE FINANCIAL STATEMENTS
Based on Unaudited Financial Statements at September 30, 1999
NOTE 1-NATURE OF BUSINESS ORGANIZATION
Nature of Business:
Entertech Media Group, Inc. and Subsidiaries (formerly Armas Intl. Mfg. Co.,
Inc., dba Inter-Link Communications Group, Inc.), hereafter referred to as the
Company, is a Development Stage Enterprise as defined by FASB's Statements of
Financial Accounting Standards ("SFAS") 7. Since the beginning of 1999, the
Company devoted all of its efforts to establishing a new business. Planned
principal operations to produce and distribute films have not yet commenced. The
Company plans to reactivate its business operations in early 2000.
Organization:
The Company was incorporated under the laws of the State of Nevada on November
17, 1986, under the name of Stones Stores, Inc. Most of the Company's records
prior to 1995 have been lost or destroyed. The Company anticipates no adverse
consequences as a result of the loss of business records prior to 1995 as the
Company is engaging in a business unrelated to any business in which the Company
was involved previously.
The Company was originally incorporated with one class of stock. The Company had
50,000,000 shares of capital stock with a par value of $0.001 per share
authorized. The Company was incorporated to engage in the business of the retail
and wholesale sales of men's and women's furnishings and related products.
In February of 1987, the Company made a public offering of its securities
pursuant the provisions of Rule 504 adopted under the Securities Act of 1933, as
amended. The Company sold 500,000 shares at $0.10 per share for a total of
$50,000. The organizers of the Company purchased 100,000 shares at $5,000. Thus,
at the conclusion of the offering there were issued and outstanding 600,000
shares of common stock with a par value $0.001 per share.
On March 30, 1987, the shareholders approved the acquisition of all of the
issued and outstanding shares of stock of PFI, Inc., a Washington corporation
engaged in the business of financial planning. As a result of the corporate
reorganization, on May 1, 1987, the Company changed its name to Stone
International, Inc. and effected a five (5) to one (1) forward split of the
stock and increased the par value to $0.005 per share. The Company's 600,000
shares of outstanding stock with the five (5) to one (1) forward split became
3,000.000 shares outstanding with a par value of $0.005. The Company then issued
12,789,474 shares of it common stock for all of the issued and outstanding stock
of PFI, Inc. The Company then had 15,789,474 shares of its common stock issued
and outstanding. There was no change in the Company's management as a result of
this transaction.
On May 1, 1990, the Company underwent another corporate reorganization. The
Company's named was changed to Armas Intl. Mfg. Co., Inc. and a reverse split of
the issued and outstanding shares at the rate of twenty (20) to one (1) was
effected. From September 4, 1990, through March 9, 1993, the Company acquired
assets in exchange for stock. It issued 1,852,749 shares to acquire property,
cash and services. Current management assumes that any assets so acquired were
lost as part of the failure of the Company's past business operations.
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At some point after 1993, the Company became inactive and remained inactive
until current management took over operations. Current management became
involved with the Company in the fall of 1998 when it inquired of surviving past
management of the availability of the Company for operation of a new business.
At that point in time the Company basically was a shell corporation.
In October of 1998, current management reorganized the Company once again. On
October 23, 1998, the Company's name was changed to Inter-link Communications
Group, Inc. and the Company's issued and outstanding shares underwent a six (6)
for one (1) reverse split. The Company's articles also were amended to authorize
the Company to issue 100,000,000 shares of common stock with a par value of
$0.001 per share.
In late 1998, Management entered into acquisition agreements with two entities
for the acquisition of assets. The parties contracting with the Company breached
those agreements and as a result no assets were acquired pursuant to those
agreements. The circumstances surrounded those agreement are the subject of
litigation commenced by the Company in the State of Nevada and in Great Britain.
This litigation is detailed in below under Contingencies.
During April of 1999, management entered into an Exchange Agreement with a
Nevada corporation named Entertech Limited. Under the terms of that Exchange
Agreement, the Company was obligated to issue a maximum of 11,500,000 shares and
a maximum of 15,000,000 shares of its common stock in exchange for all the
issued and outstanding shares of Entertech Limited. The transaction with
Entertech Limited was not arms length. No fairness opinion was obtained. The
transaction was framed to be a tax-free exchange whereby stockholders of
Entertech Limited would have obtained 92% of the issued stock of the Company. At
the time of the Exchange Agreement, Entertech Limited had 10,000,000 shares of
common issued and outstanding. Entertech Limited was also in the process of
offering a minimum of 1,500,000 shares and a maximum of 5,000,000 shares of its
common stock pursuant to a private placement memorandum.
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company was inactive during the prior years, therefore, many accounting
policies have yet to determined. Depreciation will be computed using estimated
lives on a straight-line basis. The Company will incorporate standard accounting
policies for the film production and/or retail sales industries as Company
policies become applicable. The application of such standards is not expected to
have any effect on the current financial statements.
Principles of Consolidation:
The accompanying consolidated financial statements include the accounts of
Entertech Media Group, Inc., and its wholly-owned subsidiary, Entertech Limited
(along with Entertech Limited's subsidiaries, Entertech Picture Corporation and
Entertech Releasing Corporation). All significant intercompany balances and
transactions have been eliminated.
Use of Estimates:
The preparation of financial statements in conformity with generally accepted
accounting principals requires management to make estimates and assumptions that
affect certain reported accounts and disclosures. Accordingly, actual results
could differ from these estimates.
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Revenue Recognition:
Revenues on motion pictures are recognized on show dates under both percentage
of receipts and flat fee arrangements. Non refundable guarantees are deferred
and recognized as revenue as show dates occur. Outright sales of motion pictures
are recognized as revenue as of date of sale.
Earnings per share:
The earnings per share calculation is based on the weighted average number of
shares outstanding during the period: shares in 1999; 431,944 shares in 1998;
and 383,333 shares in 1997.
Income Tax:
Because of losses sustained since inception, no provision has been made for
income tax. Current period losses will be available to offset future taxable
income for 15 years.
NOTE 3-INCOME TAXES
The Company has federal net operating loss carryforwards for financial statement
purposes, which will be used to offset future earnings of the Company. The loss
carryforwards will expire during the year 2014.
NOTE 4-CONTINGENCIES
The Company is not party, and none the Company's property is subject to, any
pending or threatened legal, governmental, administrative or judicial
proceedings. All such matters previously reported on Form 10-SB and any
amendments thereto, have been resolved.
ITEM 2: Management's Discussion and Analysis or Plan of Operation
Plan of Operation
Statements contained herein that are not historical facts are
forward-looking statements as that term is defined by the Private Securities
Litigation Reform Act of 1995. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, the
forward-looking statements are subject to risks and uncertainties that could
cause actual results to differ from those projected. The Company cautions
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investors that any forward- looking statements made by the Company are not
guarantees of future performance and that actual results may differ materially
from those in the forward-looking statements. Such risks and uncertainties
include, without limitation: well established competitors who have substantially
greater financial resources and longer operating histories, regulatory delays or
denials, ability to compete as a start-up company in a highly competitive
market, and access to sources of capital.
During the next twelve-month period, the Company intends to develop its
operations from capital contributions made by management. At this point in time
the success of the Company's future operation is entirely dependent on
managements funding of operations. Management believes that it can provide
sufficient funding for the Company's operations for the next 12 months. Also
management will attempt to finance the production of its films through "off
balance sheet" financing. Generally speaking, "off balance sheet financing"
refers to the use of funds from venture partners or from subsidies from third
parties. By using such financing, the Company does not intend to use its own
funds for the production of the films it produces. It will use established
methods of film financing to avoid as far as is possible any financial risk or
burden to its shareholders in relation to such costs. For example, it is common
practice in the film industry to bring in joint venture partners who provide the
necessary production funds in return for a profit participation in the film.
Additionally, the Company intends to make use of any appropriate tax subsidies
and grants that are available for film making in various parts of the world. If
such funding is insufficient to operate the Company, management will look to
outside sources of funding such offerings of debt and equity securities. If
management is unable to raise funds from sources outside of management, it is
unlikely that the Company will be able to fund its plans to produce and market
films and the Company's business plan will fail. The Company has no liquidation
plans if appropriate funding is not received. The Company has not produced any
films to date and its only basis for indicating that a any profit may be
realized from its endeavors is the past experience of management, specifically
John Daly, in the film industry.
Management anticipates that the Company will require funds to operate
as planned as follows: approximately $850,000 for acquiring feature films, on
productions and co-productions of feature films and music production and
licensing, $175,000 on technology development and infrastructure including
creating a web site for the Company, $100,000 on sales and marketing, $100,000
for general and administration and $125,000 for working capital and other
general corporate purposes. Additional funds will be needed for broader sales
and marketing efforts required in connection with the Company's plan.
The Company intends to employ approximately 12 people in the next six
months, of which 5 will be directly related to film and soundtrack production, 3
to film distribution, 1 will be directly related to the design and development
of the Company's web site, 1 will be directly related to technology support and
development and 2 will be directly related to general and administrative.
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During the period ending December 31, 1999 management identified a
number of feature films that it wishes the Company to produce and distribute and
it began seeking the necessary off balance sheet funding for them. Production
began on one such film entitled "Level 9" and principal photography was
completed in December of 1999. The company expects to complete the film by June
30, 2000.
The Company is also seeking to acquire rights to distribute films made
by third parties and in particular is looking to acquire rights to groups of
films or "Libraries" of films. As of December 31,1999 the Company has acquired
such rights in respect to 3 full length feature films and it expects to
theatrically release these in the USA in the year 2000.
Management have been seeking to raise the profile of the Company in the
marketplace in which it operates and have made a number of staff appointments
which it has announced in the trade press. These appointments have been in the
area of film sales, acquisitions and distribution and have helped the Company to
be able to actively pursue its objectives.
Management have also been investigating the possibility of close
relationships with companies engaged in complementary activities which would
enable the Company to better exploit the revenue earning potential of its
products. In particular the Company has been carefully exploring the merits of
becoming the visual entertainment content provider to Talk Visual Corporation, a
provider of Video Telephone services.
The Company has been developing in house its own Internet Web Site
which can be found at http://www.entertechmedia.com and also a site to promote
Level 9 which can be found at http://level9themovie.com. In order to develop its
Internet presence management intends to develop relationships for the Company
with existing Internet sites.
From time to time the Company may evaluate potential acquisitions
involving complementary businesses, content, products or technologies. The
Company has no present agreements or understanding with respect to any such
acquisition.
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PART II
Other Information
ITEM 1: Legal Proceedings
The Company is not party to, and none of the Company's property is
subject to, any pending or threatened legal, governmental, administrative or
judicial proceedings
ITEM 2: Changes in Securities and Use of Proceeds
None.
ITEM 3: Defaults Upon Senior Securities
None
ITEM 4: Submission of Matters to a Vote of Security Holders
No matters have been submitted to a vote of the security holders during
the period covered by this report through the solicitation of proxies or
otherwise.
ITEM 5: Other Information
None.
ITEM 6: Exhibits and Reports on Form 8-K
A. Exhibits
(2) Plan of acquisition, reorganization, liquidation or succession:
NONE.
(3) (i) Articles of Incorporation *
(ii) By-laws *
(27) Financial Data Schedule.
* Incorporated by reference from the Registrant's Form 10-SB.
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B. Reports on Form 8-K.
The Registrant did not file reports on Form 8-K during the quarter
covered by this report.
Signatures
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Dated: May 26, 2000.
ENTERTECH MEDIA GROUP, INC.
By /s/ Mark Tolner
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Mark Tolner
President
