UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10SB12G/A
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g)
of the Securities Exchange Act of 1934
FILMWORLD, INC.
----------------------------------------------
(Name of Small Business Issuer in its Charter)
Nevada 88-0224817
- ---------------------------- -------------------
(State of other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
4929 Wilshire Blvd., Suite 830, Los Angeles, CA 90010
- ----------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Issuer's Telephone number: (323) 954-0377
--------------------
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 Stock, Par Value $0.001 Per Share
----------------------------------------
(Title of Class)
<PAGE>
- --------------------------------------------------------------------------------
ITEM 1. DESCRIPTION OF BUSINESS
- --------------------------------------------------------------------------------
(a) Business Development
FilmWorld, Inc. (the "Company" or the "Registrant" ) is a Nevada
corporation which was originally incorporated on December 23, 1986 as Hair-Life,
Inc. On June 3, 1987, the Company completed a public offering pursuant to the
provisions of Rule 504 of Regulation D of the Securities Act of 1933, as
amended. During 1987, the Company pursued business activities which were
unsuccessful.
On September 1, 1994, an Exchange Agreement was executed between the
Company and the stockholders of The Patterson Group, Inc., a California
corporation, whereby the California corporation was acquired as a wholly-owned
subsidiary of the Company. This transaction resulted in a name change for the
Company to The Patterson Group, Inc., a reverse split of the Company's stock of
40 to 1, and the issuance to the stockholders of the California corporation of
4,500,000 shares. Until 1996, the Company's business was conducted through its
wholly-owned subsidiary providing hazardous waste transportation. During 1996,
the subsidiary ceased its operations. In June of 1998, the subsidiary sought
relief under Chapter 7 of the Bankruptcy laws of the United States Bankruptcy
Court for the Central District of California. During 1997, the Company organized
another subsidiary, APF Holdings to conduct its business. As part of this
reorganization, the Company changed its name to American Pacific Financial
Services. APF Holdings ceased doing business in 1998.
On July 19, 1999, the Company entered into an Exchange Agreement under
the terms of which the Company acquired certain assets of Daly Consultants,
Inc., a California corporation, and Belfair International, Inc., a corporation
organized pursuant to the laws of the Isle of Jersey, in exchange for 7,013,392
shares of common stock of the Company. The assets acquired are motion picture
movie scripts and $50,000 in cash. The Company now is under new management and
intends to engage in the business of producing, marketing and distributing
motion pictures. As part of the Company's reorganization in July of 1999, the
Company's name was changed to FilmWorld, Inc. and the Company's issued and
outstanding shares underwent a ten (10) for one (1) reverse split. This reverse
split was effective prior to the issuance of the 7,013,392 shares pursuant to
the Exchange Agreement.
As of September 30, 1999, 7,792,658 shares of the Company's authorized
shares of common stock were issued and outstanding.
Except as described above, to management's knowledge, the Company has
not been subject to bankruptcy, receivership or any similar proceeding.
-1-
<PAGE>
The Company maintains offices at 4929 Wilshire Blvd., Suite 830, Los
Angeles, California 90010. The Company owns all of its assets as shown on the
attached financial statements as of August 31, 1999.
(b) Business of the Issuer
The business of the Company is described as follows:
(1) Principal Services
The Company owns and has copyrights to the following feature film
screenplays: Mad Frankie valued at $50,000, Big Buddha valued at $75,000, The
Treasure of Calico Jack and Big Mac valued at $100,000, What do Women Want
valued at $100,000, Gunga Din valued at $100,000, and Forever Natasha valued at
$100,000 for a total of at least $525,000.
The Company is engaged in developing the above scripts with a view to
producing them as full-length, feature films for eventual theatrical and video
release in the usual manner of the film production industry.
The Company intends to acquire rights to additional scripts in the
future and to develop and produce them in the same way as above.
(2) Distribution Methods
The Company intends to derive revenue from its completed feature films
by contractually arranging for them to be released theatrically by third-party
companies that specialize in the business of film releasing and distribution.
Further revenues will be derived from the sale of theatrical rights abroad, as
well as from the sale of video and television rights. Such sales will again be
conducted by appropriately contracted third-party companies.
The Company initially intends to contract with EnterTech Releasing
Corporation, a subsidiary of EnterTech Media Group, Inc., a company of which
John Daly, Mark Tolner and Alexander H. Walker, Jr. are also directors, to
arrange to release and sell some or all of its completed films.
(3) Status of Publicly Announced New Products or Services
On July 20, 1999, the Company issued two press releases announcing the
terms of the Company's restructuring pursuant to the Exchange Agreement with
Daly Consultants, Inc. and Belfair International, Inc. The press releases
-2-
<PAGE>
outlined the change of the Company's name, the ten (10) for one (1) reverse
split of the Company's stock, the identity of the new officers and directors of
the Company, and the Company's new business endeavors. The Company also sent a
letter to all of its shareholders outlining these items on July 19, 1999.
(4) Competition
The Company faces well-established and well-funded competition. Motion
pictures are produced and marketed by major film studios as well as a large
number of smaller independent production companies. The Company will compete
with these smaller independent production companies in the production and
marketing of feature films. Many of the Company's competitors are well
established organizations with extensive knowledge of the industry, marketing
staffs and organizations, and financial resources greatly in excess of those
available to the Company.
(5) Dependence on Major Customers
As indicated throughout this Item 1, the Company is in a
reorganizational stage and is in the process of developing its screenplays and
producing them as feature films. At this point in time, the Company has no major
customers. Of course, the Company intends to develop a number of feature films
so its success is not dependent upon a single success.
(6) Patents, Trademarks, Licenses, Copyrights, etc.
The Company owns the exclusive world-wide copyrights to its feature
film screenplays: Mad Frankie valued at $50,000, Big Buddha valued at $75,000,
The Treasure of Calico Jack and Big Mac valued at $100,000, What do Women Want
valued at $100,000, Gunga Din valued at $100,000, and Forever Natasha valued at
$100,000 for a total of at least $525,000.
The Company attempts to minimize unauthorized copying of these products
by a variety of methods, however, there can be no assurance that unauthorized
copying will not occur. The Company attempts, and will continue to attempt, to
protect its feature film screenplays by relying on copyright laws and
non-disclosure and confidentiality agreements with its employees and certain
other persons who have access to its intellectual properties, or who have
agreements with the Company.
(7) Governmental Approval, Effect of Governmental Regulations and Costs and
Effects of Compliance with Environmental Laws
At this point in time, there is no need for governmental approval of
the Company's intended principal products or services. However, recent high
profile events have focused attention on the content of products and services
offered by the entertainment industry. Specifically, some governmental review of
a link, if any, between the violent content of some movies and crimes committed
by members of the society viewing those movies has emerged. While the Company
believes that it is unlikely that such scrutiny will result in governmental
-3-
<PAGE>
restrictions placed on the content of products in the entertainment industry,
including those the Company intends to produce, such governmental restrictions
have rarely been given such consideration and it is possible that restrictions
on entertainment content could be imposed. At the time of the filing of this
Form 10-SB, however, it is unclear what form any such restrictions would take or
how they would be enforced. Nonetheless, the Company is mindful of the fact that
such matters are being reviewed on a national level.
The Company notes that past management engaged in the business of
hazardous and non-hazardous waste transportation. To current management's
knowledge, such activities ceased in 1996. To date, management is unaware of any
liabilities or claims which may exist in connection with the Company's past
businesses. Nonetheless, the Company notes that pursuant to Federal
environmental laws, the Company may be liable for any environmental
contaminations which were the result of the Company's past operations. Depending
on the materials involved and the nature of any claimed discharge of such
materials, the Company's liability for the actions of past management could be
financially devastating to the Company's operations. In this regard, it is
management's understanding that past management of the Company obtained
insurance in a form and in an amount sufficient to guard against the devastating
effects of any claimed discharge of the materials the Company handled in the
past.
(8) Research and Development in the Last Two Years
To current management's knowledge, the Company has engaged in no
research and development during the past two years.
(9) Employees
As of September 30, 1999, the Company had one (1) full-time employee.
The four (4) officers and directors of the Company also perform services on
behalf of the Company but do so on a non-exclusive basis. None of the Company's
employees or independent contractors is subject to a collective bargaining
agreement and the
Company believes its relations with its employees and independent contractors
are good.
(c) Reports to Security Holders
Prior to filing this Form 10-SB, the Company has not been required to
deliver annual reports. To the extent that the Company is required to deliver
annual reports to security holders through its status as a reporting company,
the Company shall deliver annual reports. Also, to the extent the Company is
required to deliver annual reports by the rules or regulations of any exchange
upon which the Company's shares are traded, the Company shall deliver annual
reports. If the Company is not required to deliver annual reports, the Company
will not go the expense of producing and delivering such reports. If the Company
is required to deliver annual reports, they will contain audited financial
statements as required.
-4-
<PAGE>
Prior to the filing of this Form 10-SB, the Company has not filed
reports with the Securities and Exchange Commission. Once the Company becomes a
reporting company, management anticipates that Forms 3, 4, 5, 10K-SB, 10Q-SB,
8-K and Schedules 13D along with appropriate proxy materials will have to be
filed as they come due. If the Company issues additional shares, the Company may
file additional registration statements for those shares.
The public may read and copy any materials the Company files with the
Securities and Exchange Commission at the Commission's Public Reference Room at
450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain
information on the operation of the Public Reference Room by call the Commission
at 1-800-SEC-0330. The Commission maintains an Internet site that contains
reports, proxy and information statements, and other information regarding
issuers that file electronically with the Commission. The Internet address of
the Commission's site is (http://www.sec.gov).
---------------------
(d) Year 2000 Disclosure
The Company does not anticipate any problem in dealing with computer
entries in the year 2000 or thereafter, with any computers currently used at any
of their facilities. All of the Company's computer systems are new and have been
year 2000 compliant from their acquisition. The Company keeps current with all
updates and revisions with all software the Company currently use. It is
anticipated that the software updates reflect required revisions to accommodate
transactions in the year 2000 and thereafter. Though it is not anticipated that
the Company will have a problem at the turn of the century, the Company intends
to coordinate the resolution of any year 2000 problems with the vendors of the
software the Company utilizes. Nonetheless, the Company recognizes the problems
which may arise in connection with the Year 2000 issue.
- --------------------------------------------------------------------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF
OPERATION
- --------------------------------------------------------------------------------
Plan of Operation
The Company intends to develop and produce a number of the scripts that
it owns during the next twelve months. It is unlikely that more than four will
be completed or commenced during this first twelve month period of operations.
Thereafter, the Company intends to develop and produce six or more each year.
-5-
<PAGE>
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.
The Company will, however, require a small amount of funds to maintain
its offices and to develop the films that it decides to produce. Such amounts
are considered by management to be relatively minor and are unlikely to exceed a
total of U.S. $125,000 in the first twelve months of operations and management
is confident that such sums will be available to the Company by way of loans or
equity sales.
Once the Company begins to generate fees from the production of its
films and sees profits being derived from the release and sale of its completed
films, management is confident that the Company will easily be able to meet is
modest overhead requirements. The Company will then have sums available for the
acquisition of further rights to scripts and screenplays that it can then
develop on an on-going basis.
- --------------------------------------------------------------------------------
ITEM 3. DESCRIPTION OF PROPERTY
- --------------------------------------------------------------------------------
(a) Principal Plants and Property and Description of Real Estate and
Operating Data.
The Company has the use of offices at 4929 Wilshire Blvd., Suite 830,
Los Angeles, California 90010.
(b) Investment Policies
The Company's plan of operations is focused on the development of its
film production and marketing endeavors described in Item (1) of this part.
Accordingly, the Company has no particular policy regarding each of the
following types of investments:
(1) Investments in real estate or interests in real estate;
(2) Investments in real estate mortgages; or
(3) Securities of or interests in persons primarily engaged in real
estate activities.
-6-
<PAGE>
- --------------------------------------------------------------------------------
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- --------------------------------------------------------------------------------
(a) Security Ownership of Certain Beneficial Owners:
The following information sets forth certain information as of
September 30, 1999 about each person who is known to the Company to be the
beneficial owner of more than five percent (5%) of the Company's Common Stock:
<TABLE>
<CAPTION>
(2)
(1) Name and Address (3) (4)
Title of Beneficial Amount and Nature of Percent of
of Class Owner Beneficial Ownership Class
- --------- ---------------------------------- -------------------- ----------
<S> <C> <C> <C>
Common Daly Consultants, Inc. 2,922,247 1 37.5%
1255 Norman Place
Los Angeles, CA 90212
Common Belfair International, Inc. 2,922,247 2 37.5%
600 S. Curson Avenue, #347
Los Angeles, CA 90036
</TABLE>
- --------
1Such shares are beneficially owned by John Daly, President and a
Director of FilmWorld, Inc., through his ownership and control of Daly
Consultants, Inc. Daly Consultants, Inc. is the owner of record of all 2,922,247
shares.
2Such shares are beneficially owned by Menahem Golan, Chairman of the
Board and a Director of FilmWorld, Inc., through his ownership and control of
Belfair International, Inc. Belfair International, Inc. is the owner of record
of all 2,922,247 shares.
-7-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Common Mark Tolner 1,168,898 15.0%
4929 Wilshire Blvd., Suite 830
Los Angeles, CA 90010
Common Hidden Splendor Resources 459,450 3 5.9%
50 West Liberty Street, Suite 880
Reno, NV 89501
(b) Security Ownership of Management:
(2)
(1) Name and Address (3) (4)
Title of Beneficial Amount and Nature of Percent of
of Class Owner Beneficial Ownership Class
- --------- ---------------------------------- -------------------- ----------
Common John Daly 2,922,247 4 37.5%
1255 Norman Place
Los Angeles, CA 90049
Common Menahem Golan 2,922,247 5 37.5%
600 S. Curson Avenue, #347
Los Angeles, CA 90036
Common Mark Tolner 1,168,898 15.0%
4929 Wilshire Blvd., Suite 830
Los Angeles, CA 90010
Common Alexander H. Walker, Jr. 459,450 6 5.9%
50 West Liberty Street, Suite 880
Reno, Nevada 89501
Common All Directors and 7,472,842 95.9%
Officers as a Group
</TABLE>
- --------
3Such shares are beneficially owned by Alexander H. Walker, Jr.,
Treasurer and a Director of FilmWorld, Inc., through his ownership and control
of Hidden Splendor Resources. Hidden Splendor Resources is the owner of record
of all 459,450 shares.
4Such shares are beneficially owned by John Daly, President and a
Director of FilmWorld, Inc., through his ownership and control of Daly
Consultants, Inc. Daly Consultants, Inc. is the owner of record of all 2,922,247
shares.
5Such shares are beneficially owned by Menahem Golan, Chairman of the
Board and a Director of FilmWorld, Inc., through his ownership and control of
Belfair International, Inc. Belfair International, Inc. is the owner of record
of all 2,922,247 shares.
6Such shares are beneficially owned by Alexander H. Walker, Jr.,
Treasurer and a Director of FilmWorkd, Inc., through his ownership and control
of Hidden Splendor Resources is the owner of record of all 459,450 shares.
-8-
<PAGE>
(c) Changes in Control:
There is no arrangement which may result in a change in control.
- --------------------------------------------------------------------------------
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
- --------------------------------------------------------------------------------
(a) Directors and Executive Officers
As of September 30, 1999, the directors and executive officers of the
Company, their ages, positions in the Company, the dates of their initial
election or appointment as director or executive officer, and the expiration of
the terms as directors are as follows:
Period Served As
Name Age Position Officer/Director*
- ------------------------ --- ---------------------- ------------------
Menahem Golan 70 Chairman of the Board 7-19-99 to Present
And a Director
John Daly 62 President and Director 7-19-99 to Present
Alexander H. Walker, Jr. 73 Secretary and Director 7-1-99 to Present
Mark Tolner 43 CEO, Treasurer 7-19-99 to Present
and Director
- --------
6Such shares are beneficially owned by Alexander H. Walker, Jr.,
Treasurer and a Director of FilmWorld, Inc., through his ownership and control
of Hidden Splendor Resources. Hidden Splendor Resources is the owner of record
of all 459,450 shares.
*The Company's directors are elected at the annual meeting of stockholders and
hold office until their successors are elected and qualified. The Company's
officers are appointed annually by the Board of Directors and serve at the
pleasure of the Board.
-9-
<PAGE>
(b) Business Experience:
Menahem Golan, age 70, is the Chairman of the Board and a Director of
FilmWorld, Inc. During the 1980's, Mr. Golan served as the Chairman of the
Cannon Group, Inc., an independent film production company. Through the Cannon
Group, Mr. Golan produced over 150 films, including "The Assault," a film which
won the Academy Award in the category of best foreign film; "Love Streams";
"Satin Slippers"; "Runaway Train"; "Over the Top"; "Cobra"; "Little Dorrit"; "A
Cry in the Dark"; "Hannah's War"; "Delta Force"; "Over the Brooklyn Bridge";
"The Magician of Lublin"; "Superman"; and "Operation Thunderbolt". Accordingly,
Mr. Golan has extensive experience in producing motion pictures. In addition,
Mr. Golan has directed motion pictures during the last five (5) years.
John Daly, age 62, is the President and a Director of the Company. He
has dedicated his life to the entertainment industry. With a partner, Mr. Daly
formed Hemdale which has packaged, financed and produced motion pictures.
Through Hemdale, Mr. Daly has been involved in the production of many motion
pictures including the Oscar- winning Best Pictures, "Platoon" and "Last
Emperor", the award winning "Hoosiers" and "At Close Range". Other films in
which he and Hemdale participated include "The Terminator", the Cannes award
winner "Images," "The Triple Echo", "The Falcon and the Snowman" and "Hidden
Agenda".
Mark Tolner, age 43, is the CEO, Treasurer and a Director of the
Company. Mr. Tolner background is in international business, financial and
investment management, areas in which he generally has worked during the last
eight years. In this regard, Mr. Tolner has been involved with the
conceptualizing, negotiating, funding and managing the joint venture vehicle
used in the expansion of the a chain of specialist sandwich retailers in London,
England. He has negotiated the acquisition from a Danish Venture Capital company
of a controlling interest in an company with joint ventures in television data
broadcasting with CNN and Reuters. He also has worked on a debt restructuring
for the Brazilian State owned shipping line Lloyd Brasiliero cn.
Alexander H. Walker, Jr., age 73, received his B.A. from Waynesburg
College in 1950 and his J.D. from the University of Pittsburgh School of Law in
1952. Since 1956, Mr. Walker has been a practicing attorney, with his practice
including trial and transactional work, with an emphasis on corporate securities
matters. From 1955 to 1956, he served as the Attorney in Charge of the Salt Lake
City, Utah Branch of the United States Securities and Exchange Commission, first
serving as the Attorney Advisor for the Division of Corporate Finance in
Washington, D.C. from 1954 to 1955. From 1956 through the present, Mr. Walker
has maintained a private practice. He maintains licenses in both Utah and
Pennsylvania.
(c) Directors of Other Reporting Companies:
Messrs. Daly, Walker and Tolner are officers and directors of Entertech
Media Group, Inc., a corporation which filed a Form 10-SB with the Commission on
or about June 11, 1999. As of the filing of this Form 10-SB, Entertech is
responding to the comments from the Staff. Accordingly, Entertech has not made
application for the trading of its shares on the OTC Bulletin Board market and
Entertech's shares are not quoted on any quotation system.
-10-
<PAGE>
Mr. Walker also is a director of Talk Visual Corp. whose shares are
traded under the symbol TVCP on the OTC Bulletin Board market.
(d) Employees:
The officers and directors who are identified above are the significant
employees of the Company.
(e) Family Relationships:
There are no family relationships between the directors, executive
officers or any other person who may be selected as a director or executive
officer of the Company.
(f) Involvement in Certain Legal Proceedings:
None of the officers, directors, promoters or control persons of the
Company have been involved in the past five (5) years in any of the following:
(1) Any bankruptcy petition filed by or against any business of
which such person was a general partner or executive officer
either at the time of the bankruptcy or within two years prior
to that time;
(2) Any conviction in a criminal proceedings or being subject to a
pending criminal proceeding (excluding traffic violations and
other minor offenses);
(3) Being subject to any order, judgment or decree, not
subsequently reversed, suspended or vacated, or any Court of
competent jurisdiction, permanently or temporarily enjoining,
barring, suspending or otherwise limiting his involvement in
any type of business, securities or banking activities; or
(4) Being found by a court of competent jurisdiction (in a civil
action), the Commission or the Commodity Futures Trading
Commission to have violated a federal or state securities laws
or commodities law, and the judgment has not been reversed,
suspended, or vacated.
-11-
<PAGE>
- --------------------------------------------------------------------------------
ITEM 6. EXECUTIVE COMPENSATION
- --------------------------------------------------------------------------------
The following table sets forth information about compensation paid or
accrued by the Company during the years ended December 31, 1998, 1997 and 1996
to the Company's officers and directors. None of the Executive Officers of the
Company earned more than $100,000 during the years ended December 31, 1998, 1997
and 1996.
<TABLE>
Summary Compensation Table
Long Term Compensation
--------------------------------------------
Annual Compensation Awards Payouts
---------------------- ------------- ---------------
<CAPTION>
(e) (g)
Other (f) Securities (i)
(a) Annual Restricted Under- (h) Other
Name and (c) (d) Compen- Stock Lying LTIP Compen-
Principal (b) Salary Bonus sation Awards Options/ Payouts sation
Position Year $ ($) ($) ($) SARs(#) ($) ($)
- -------- ------ ------ ----- ------ ------ -------- ------ -------
Mehahem Golan
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Chairman of 1998 $ None $ None $ None $ None None None None
the Board 1997 $ None $ None $ None $ None None None None
1996 $ None $ None $ None $ None None None None
John Daly
President and 1998 $ None $ None $ None $ None None None None
Director 1997 $ None $ None $ None $ none None None None
1996 $ None $ None $ None $ None None None None
Alexander H. Walker, Jr.
Secretary and 1998 $ None $ None $ None $ None None None None
Director 1997 $ None $ None $ None $ none None None None
1996 $ None $ None $ None $ None None None None
Mark Tolner
CEO, Treasurer 1998 $ None $ None $ None $ None None None None
and Director 1997 $ None $ None $ None $ none None None None
1996 $ None $ None $ None $ None None None None
</TABLE>
-12-
<PAGE>
- --------------------------------------------------------------------------------
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------------------------------
During the past two (2) years, the Company has not entered into a
transaction with a value in excess of $60,000 with a director, officer or
beneficial owner of 5% or more of the Company's capital stock, except as
follows:
On July 19, 1999, the Company issued a total of 7,013,392 shares of its
common stock to the following in the following amounts:
Daly Consultants, Inc. 2,922,247
Belfair International, Inc. 2,922,247
Mark Tolner 1,168,898
The shares issued to Daly Consultants, Inc. and Belfair International,
Inc. were issued in consideration for $50,000 in cash and the intellectual
property purchased by the Company pursuant to the Exchange Agreement dated July
19, 1999. Such property had a value of at least $525,000. It is carried on the
Company's financial statement at predecessor cost due to the relationship
between directors and these shareholders. The shares issued to Mr. Tolner were
issued in consideration for his future services to the Company. All such shares
were issued in reliance on the exemption from registration contained in Section
4(2) of the Securities Act of 1933, as amended, and the certificates
representing such shares bear a restrictive legend reflecting the limitations on
future transfer of those shares.
The Company is indebted to Hidden Splendor Resources, Ltd. in the
amount of $150,000. Alexander H. Walker, Jr. is the beneficial owner of Hidden
Splendor Resources, Ltd. This debt is for legal and accounting services,
transfer fees, filing fees and other expenses incurred as a result of this
corporate reorganization.
- --------------------------------------------------------------------------------
ITEM 8. 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 that will have a materially adverse effect upon the
Company's financial condition or operation.
-13-
<PAGE>
- --------------------------------------------------------------------------------
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
- --------------------------------------------------------------------------------
Market Information:
Prior to August 2, 1999, shares of the Company's common stock were
traded on the system of the National Association of Securities Dealers, Inc.
("NASDAQ"), known on the Bulletin Board under the symbol "FWLD". Because the
Company had not complied with the requirements of the NASD, the Company's shares
were "delisted" from the OTC Bulletin Board system on August 2, 1999. The
Company intends to apply for listing on the OTC Bulletin Board system once it
clears any comments the Staff may have to this Form 10-SB.
The following table sets forth the range of high and low bid prices for
the Company's Common Stock for each quarterly period indicated as reported by
the Research Department of the NASDAQ Stock Market, Inc. The Research Department
of the NASDAQ Stock Market, Inc. has indicated that high/low bid information is
unavailable for certain periods :
Common Stock
--------------------------------------------------------------
Quarter Ended High Bid Low Bid
--------------------------------------------------------------
September 30, 1999 $ 5.00 $ 1.125
June 30, 1999 $ 0.18 $ 0.0313
March 31, 1999 $ 0.125 $ 0.0313
December 31, 1998 $ 0.65625 $ 0.03125
September 30, 1998 $ 1.00 $ 0.375
June 30, 1998 $ 0.875 $ 0.1875
March 31, 1998 $Unavailable $Unavailable
December 31, 1997 $Unavailable $Unavailable
September 30, 1997 $Unavailable $Unavailable
June 30, 1997 $Unavailable $Unavailable
March 31, 1997 $Unavailable $Unavailable
Holders:
There were approximately 176 holders of record of the Company's common
stock as of September 30, 1999.
-14-
<PAGE>
Dividends:
The Company has never paid cash dividends on its stock and does not
intend to do so in the foreseeable future. The Company currently intends to
retain its earnings for the operation and expansion of its business. The
Company's continued need to retain earnings for operations and expansion are
likely to limit the Company's ability to pay dividends in the future.
- --------------------------------------------------------------------------------
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
- --------------------------------------------------------------------------------
On August 14, 1996, the Company issued a total of 500,000 shares of its
common stock pursuant to Rule 504 of Regulation Dfor $250,000 in cash. Of this
amount, 166,667 of shares were issued to Vestcom, Ltd. for a consideration of
$83,333 and 333,333 shares were issued to Information Technology, Ltd. for a
consideration of $166,667.
On September 26, 1996, the Company issued a total of 560,000 additional
shares of its common stock pursuant to the same Rule 504 of Regulation D
offering referred to in the preceding paragraph. Of this amount, 360,000 of
shares were issued to Vestcom, Ltd. for a consideration of $180,000 and 200,000
shares were issued to Information Technology, Ltd. for a consideration of
$100,000.
On July 19, 1999, the Company issued a total of 7,013,392 shares of its
common stock to the following in the following amounts:
Daly Consultants, Inc. 2,922,247
Belfair International, Inc. 2,922,247
Mark Tolner 1,168,898
The shares issued to Daly Consultants, Inc. and Belfair International,
Inc. were issued in consideration for $50,000 in cash and the intellectual
property purchased by the Company pursuant to the Exchange Agreement dated July
19, 1999. Such property had a value of at least $525,000. It is carried on the
Company's financial statement at predecessor cost due to the relationship
between directors and these shareholders. The shares issued to Mr. Tolner were
issued in consideration for his services to the Company. All such shares were
issued in reliance on the exemption from registration contained in Section 4(2)
of the Securities Act of 1933, as amended, and the certificates representing
such shares bear a restrictive legend reflecting the limitations on future
transfer of those shares.
-15-
<PAGE>
- --------------------------------------------------------------------------------
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
- --------------------------------------------------------------------------------
The Company is registering all of its issued and outstanding shares of
its capital stock with a par value of One Mill ($0.001) per share. On September
30, 1999, there were 7,792,658 shares of stock issued and outstanding.
Capital Stock
Each of the holders of record of stock is entitled to one (1) vote per
share thereof at all shareholder meetings for all purposes, including the
election of the Company's directors and all other matters submitted to such
holders for a vote of stockholders; to share ratably in all dividends, when, as,
and if declared by the Company's Board of Directors from funds legally available
therefor; and to share ratably in all assets available for distribution to
holders of record of capital stock upon liquidation or dissolution after the
payment of ll debts and other liabilities. Shares of common stock are not
redeemable and the holders have no conversion rights, pre-emptive or other
rights to subscribe to or purchase additional shares in the event of a
subsequent offering. The common stock does not carry cumulative voting rights.
All issued and outstanding shares of common stock are fully-paid and
non-assessable.
There are no limitations or restrictions upon the rights of the Board
of Directors to declare dividends out of any funds legally available therefor.
The Company has not paid dividends to date and it is not anticipated that any
dividends will be paid in the foreseeable future. The Board of Directors
initially may follow a policy of retaining earnings, if any, to finance the
future growth of the Company. Accordingly, future dividends, if any, will depend
upon, among other considerations, the Company's need for working capital and its
financial condition at the time.
The Company may, if approved at the general meeting of shareholders,
resolve to authorize the Board of Directors to declare and pay dividends to the
Company's shareholders in the form of bonus shares. The shareholders would
receive bonus shares in lieu of cash dividends, if any, declared and paid by the
Company.
"Anti-Takeover" Provisions. Although the Board of Directors is not
presently aware of any takeover attempts, the Company's Certificate of
Incorporation and By-laws contain certain provisions which may be deemed to be
"anti-takeover" in nature in that such provisions may deter, discourage, or make
more difficult the assumption of control of the Company by another corporation
or person through a tender offer, merger, proxy contest or similar transaction
or series of transactions. These provisions were adopted unanimously by the
Board of Directors and approved by the stockholders of the Company.
-16-
<PAGE>
Authorized but Unissued Shares. The Company has authorized 110,000,000
shares divided into 100,000,000 shares of Common Stock and 10,000,000 shares of
Preferred Stock, par value $0.001 per share. These shares were authorized for
the purpose of providing the Board of Directors of the Company with as much
flexibility as possible to issue additional shares for proper corporate purposes
including equity financing, acquisitions, mergers, stock dividends, stock
splits, stock options and other purposes. The Company has no agreements,
commitments or plans at this time for the sale or use of its shares of common
stock except as described herein. Through September 30, 1999, the Company had
issued 7,792,658 shares of stock.
No Cumulative Voting. The Company's Certificate of Incorporation and
Bylaws do not contain any provisions for cumulative voting. Cumulative voting
entitles stockholders to as many votes as equal the number of shares owned by
such holder multiplied by the number of directors to be elected. A stockholder
may cast all these votes for one candidate or distribute them among any two or
more candidates. Thus, cumulative voting for the election of directors allows a
stockholder or group of stockholders who hold less than fifty percent (50%) of
the outstanding shares voting to elect one or more members of a Board of
Directors. Without cumulative voting for the election of directors, the vote of
holders of a plurality of the shares voting is required to elect any member of a
Board of Directors and would be sufficient to elect all the members of the Board
of Directors being elected.
General Effect of Anti-Takeover Provisions. The overall effect of these
provisions may be to deter a future tender offer or other takeover attempt that
some stockholders might view to be in their best interest as the offer might
include a premium over the market price of the Company's capital stock at that
time. In addition, these provisions may have the effect of assisting the
Company's current management in retaining its position and place it in a better
position to resist changes which some stockholders may want to make if
dissatisfied with the conduct of the Company's business.
Voting Rights. Except as set forth below, every holder of shares
present in person or by proxy or by representative, attorney or proxy appointed
under the Company's By-laws at a meeting of shareholders has one vote on a vote
taken by a show of hands, and on a poll every holder of shares who is present in
person or by proxy or representative has one vote for every fully paid share
held by him, registered in each shareholder's name on the Company's stockholder
list. Unless a poll is demanded, every question submitted to a meeting of
holders of shares shall be decided by a show of hands of the shareholders
present and entitled to vote. In the case of an equality of votes, in either a
poll or a show of hands, the chairman shall have a second or casting vote.
Notwithstanding the above, restrictions are imposed on voting rights in the
following circumstances: (a) if two or more persons are registered as the holder
of the share, the only one of the holders entitled to vote is the senior who
-17-
<PAGE>
tenders a vote, seniority being determined by the order of names in the
company's list of stockholders; (b) if the terms upon which the shares was
issued restrict the voting rights attaching to that share, the holder is
entitled to vote only in accordance with the terms upon which that share was
issued (neither any shares currently outstanding nor the common shares have
restricted voting rights).
Article II Section 5 of the Company's By-laws allows that the holders
of a majority of the issued and outstanding shares of the common stock of the
Company entitled to vote thereat, present in person or represented by proxy,
shall constitute a quorum for the transaction of business at all meetings of the
stockholders. All resolutions (e.g. resolutions for the election of directors,
the approval of increase in authorized capital, approval of financial
statements, amending the Articles of Incorporation and By-laws; authorizing
liquidation or a going private transaction) require the affirmative vote of the
holders of a majority of the issued and outstanding shares of the common stock
of the Company entitled to vote.
Not less than ten days' notice of any general shareholders meeting,
specifying the place, day and hour of the meeting, specifying the general nature
of the business, shall be given to the shareholders.
Article III Section 4 of the Company's By-laws allows that any director
or the entire Board of Directors may be removed, at any time, with or without
cause, by the holders of a majority of the shares then entitled to vote with or
without a stockholders meeting.
Certain Voting Requirements. The affirmative vote of the holders of a
majority of the shares present at a shareholders meeting and entitled to vote
generally constitutes shareholder approval or authorization of matters for which
such approval or authorization is required. A sale or transfer of substantially
all of the Company's assets, liquidation, merger, consolidation, reorganization
or similar extraordinary corporate action generally requires the affirmative
vote of a majority of the shares outstanding and entitled to vote thereon.
Restricted Shares. Restricted shares may not be sold unless they are
registered or are sold pursuant to an applicable exemption from registration,
including pursuant to Rule 144.
Reports to Shareholders. The Company intends to furnish its
shareholders with annual reports containing financial statements for each fiscal
year containing unaudited summary financial information and such other periodic
reports as it may deem appropriate or as required by law.
-18-
<PAGE>
- --------------------------------------------------------------------------------
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
- --------------------------------------------------------------------------------
Section 78.751 of the Nevada General Corporation Law allows the Company
to indemnify any person who was or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding by reason of the
fact that he or she is or was a director, officer, employee or agent of the
Company or is or was serving at the request of the Company as a director,
officer, employee or agent of any corporation, partnership, joint venture, trust
or other enterprise. The Company may advance expenses in connection with
defending any such proceeding, provided the indemnitee undertakes to pay any
such amounts if it is later determined that such person was not entitled to be
indemnified by the Company.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
- --------------------------------------------------------------------------------
ITEM 13. Financial Statements
- --------------------------------------------------------------------------------
FILMWORLD, INC.
A DEVELOPMENT STAGE ENTERPRISE
(Formerly American Pacific Financial Services)
FINANCIAL STATEMENTS
FOR THE EIGHT MONTHS ENDING AUGUST 31, 1999 AND
FOR THE YEARS ENDING DECEMBER 31, 1998 AND 1997
<PAGE>
FILMWORLD, INC.
A DEVELOPMENT STAGE ENTEPRISE
TABLE OF CONTENTS
Page
No.
------------
ACCOUNTANT'S AUDIT REPORT 1
FINANCIAL STATEMENTS
Balance Sheets 2-3
Statements of Operation 4
Statements of Changes in Stockholder's Equity 5
Statements of Cash Flows 6
NOTES TO FINANCIAL STATEMENTS 7-11
<PAGE>
DALE McGHIE Town & Country Plaza
CERTIFIED PUBLIC ACCOUNTANT 1539 Vassar St. Reno, Nevada 89502
Tel: 702-323-7744
Fax: 702-323-8288
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
FilmWorld, Inc.(formerly American Pacific Financial Services)
I have audited the accompanying balance sheets of FilmWorld, Inc., a development
stage enterprise (formerly American Pacific Financial Services) as of August 31,
1999, December 31, 1998 and 1997, the related statements of operations, changes
in stockholders' equity and cash flows for the eight months ending August 31,
1999, and the years ending December 31, 1998, and 1997. 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.
Those standards require that I 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.
I believe that my audit provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the Company's financial position as of August 31, 1999,
December 31, 1998 and 1997, and the results of their operations, changes in
stockholders' equity, and their cash flows for the eight months ending August
31, 1999, and the years ending December 31, 1998 and 1997, in conformity with
generally accepted accounting principals.
The accompanying financial statements have been presented assuming that the
Company will continue as a going concern. As discussed in Notes 1 and 10 to the
financial statements, the Company recently reorganized and its ability to
continue as a going concern is dependent on attaining future profitable
operations. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Reno, Nevada /s/Dale McGhie
September 30, 1999 --------------
Dale McGhie
1
<PAGE>
FILMWORLD, INC. -- A DEVELOPMENT STAGE ENTERPRISE
(Formerly American Pacific Financial Services)
BALANCE SHEETS
AUGUST 31, 1999, AND DECEMBER 31, 1998 AND 1997
ASSETS
31-Aug-99 1998 1997
--------- -------- --------
CURRENT ASSETS
Cash $ 20,020 $ -- $ 457
Prepaid Expenses -- -- 1,658
-------- -------- --------
Total Current Assets 20,020 -- 2,115
-------- -------- --------
PROPERTY, PLANT & EQUIPMENT
Vehicles -- -- 15,480
Machines and Equipment 3,096 -- --
Furniture and Fixtures -- -- 11,036
-------- -------- --------
3,096 26,516
Less Accumulated Depreciation 100 -- 11,024
-------- -------- --------
Total Property, Plant & Equipment 2,996 -- 15,492
-------- -------- --------
OTHER ASSETS
Film inventory, story rights and scenarios 531,400 -- --
Deposits 400 -- 1,658
-------- -------- --------
Total Other Assets 531,800 -- 1,658
-------- -------- --------
TOTAL ASSETS $554,816 $ -- $ 19,265
======== ======== ========
The accompany notes are an integral part of these financial statements
2
<PAGE>
<TABLE>
FILMWORLD, INC. -- A DEVELOPMENT STAGE ENTERPRISE
(Formerly American Pacific Financial Services)
BALANCE SHEETS
AUGUST 31, 1999, AND DECEMBER 31, 1998 AND 1997
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
31-Aug-99 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
CURRENT LIABILITIES
Account Payable Trade $ 584 $ 9,594 $ 18,133
Bank Overdraft -- 3,844 --
Current Portion of Long Term Debt (Notes 3, 4 and 8) 150,000 -- 3,855
----------- ----------- -----------
Total Current Liabilities 150,584 13,438 21,988
----------- ----------- -----------
LONG TERM LIABILITIES
Notes and contracts, Net of Current
Portion (Note 3) -- -- 6,505
Notes Payable, Shareholder (Note 4) -- -- 194,864
----------- ----------- -----------
Total Long-Term Liabilities -- -- 201,369
----------- ----------- -----------
Deferred Income Taxes - Note 6 -- -- --
----------- ----------- -----------
STOCKHOLDERS' EQUITY
Preferred stock: 10,000,000 shares
authorized ($.001 par value), none issued
Common Stock: 100,000,000 shares
authorized ($.001 par value), issued and -- -- --
outstanding 7,792,657 shares on August 31, 1999,
and 779,266 shares on December 31 1998 and 1997,
(See Note 2) 7,793 779 779
Additional Paid in Capital 568,386 1,146,648 1,141,812
Accumulated Deficit (prior to quasi reorganization) -- (1,160,865) (1,346,683)
Deficit accumulated during divelopment
stage (July 16, 1999, in connection with quasi reorganization) (171,947) -- --
----------- ----------- -----------
Total Stockholder's Equity 404,232 (13,438) (204,092)
----------- ----------- -----------
$ 554,816 $ -- $ 19,265
=========== =========== ===========
</TABLE>
The accompany notes are an integral part of these financial statements
-3-
<PAGE>
<TABLE>
FILMWORLD, INC. -- A DEVELOPMENT STAGE ENTERPRISE
(Formerly American Pacific Financial Services)
STATEMENTS OF OPERATION
FOR THE EIGHT MONTHS ENDING AUGUST 31, 1999
AND THE YEARS ENDING DECEMBER 31, 1998 AND 1997
<CAPTION>
From inception
of development
stage 31-Aug-99 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
REVENUE
Transportation Disposal $ -- $ -- $ -- $ 128,324
Sales and Rental Income -- -- -- 65,266
Gaming Income (Note 1) -- -- -- 25,217
Transaction Fee Income (Note 1) -- -- 289,230 --
--------- --------- --------- ---------
Total Revenue -- -- 289,230 218,807
--------- --------- --------- ---------
DIRECT COSTS
Labor Costs -- -- -- 154,657
Facility Costs -- -- 15,292 32,271
Vehicle Expenses -- -- -- 47,760
Depreciation -- -- 4,914 19,577
Cost of Sales -- -- -- 35,516
Gaming Payout (Note 1) -- -- -- 19,729
--------- --------- --------- ---------
Total Direct Costs -- -- 20,206 309,510
--------- --------- --------- ---------
Revenue Less Direct Costs -- -- 269,024 (90,703)
--------- --------- --------- ---------
OPERATING EXPENSES
Outside Services 8,025 8,025
Labor Costs -- -- 92,862 138,661
Travel (post 1998) 8,310 8,310
General and Administrative Expenses 5,612 7,812 33,377 186,484
--------- --------- --------- ---------
Total Operating Expenses 21,947 24,147 126,239 325,145
--------- --------- --------- ---------
Operating Income (Loss) (21,947) (24,147) 142,785 (415,848)
OTHER INCOME / (EXPENSE)
Organizational Costs (Note 2) (150,000) (150,000) -- --
Forgiveness of Debt -- -- 308,466 --
(Bad Debt) -- -- (264,930) --
Gain on sale of Assets -- -- (503) --
--------- --------- --------- ---------
NET GAIN (LOSS) BEFORE INCOME
TAXES AND EXTRAORDINARY ITEM (171,947) (174,147) 185,818 (415,848)
Provision for Income Taxes (Note 6) -- -- -- --
--------- --------- --------- ---------
NET (LOSS) BEFORE
EXTRAORDINARY ITEM (171,947) (174,147) 185,818 (415,848)
Extraordinary Item (Notes 1 and 9) -- -- -- 105,178
--------- --------- --------- ---------
NET INCOME (LOSS) $(171,947) $(174,147) $ 185,818 $(310,670)
========= ========= ========= =========
Earnings (Loss ) Per Common Share (Note 2) $ (0.083) $ 0.238 $ (0.399)
========= ========= =========
Fully diluted earnings (loss) per comon share
(Note 2) $ 0.227
=========
</TABLE>
The accompany notes are in integral part of these financial statements
-4-
<PAGE>
<TABLE>
FILMWORLD, INC. -- A DEVELOPMENT STAGE ENTERPRISE
(Formerly American Pacific Financial Services)
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE EIGHT MONTHS ENDING AUGUST 31, 1999
AND THE YEARS ENDING DECEMBER 31, 1998, AND 1997
<CAPTION>
Capital Deficit
Stock Accum.
------- Paid-in Retained During Dev.
Number Amount Capital Earnings Stage
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance December 31,1996 7,792,658 $ 7,793 $ 1,134,798 $(1,036,013) $ --
Impact from 10-1 reverse split
occurring on 7/23/99 (7,013,392) (7,014) 7,014 -- --
----------- ----------- ----------- ----------- -----------
Restated Balance
December 31, 1996 779,266 779 1,141,812 (1,036,013) --
Net loss for the year ending
December 31, 1997 -- -- -- (310,670) --
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1997 779,266 779 1,141,812 (1,346,683) --
Stockholder's contribution to --
paid in capital -- -- 4,836 -- --
Net profit for the year ending --
December 31, 1998 -- -- -- 185,818 --
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1998 779,266 779 1,146,648 (1,160,865) --
Stockholder's Contribution to
paid in capital 12,883
Stock issued for cash 615,034 615 52,150 -- --
Stock issued for services at par 1,168,898 1,169 -- -- --
Stock issued for film inventory
(at cost) 5,229,460 5,230 519,770 -- --
Quasi Reorganization (1,163,065) 1,163,065
Net (loss) for the seven months
ending August 31, 1999 -- -- -- (2,200) (171,947)
----------- ----------- ----------- ----------- -----------
Balance, August 31, 1999 7,792,658 $ 7,793 $ 568,386 $ -- $ (171,947)
=========== =========== =========== =========== ===========
</TABLE>
The accompany notes are in integral part of these financial statements
-5-
<PAGE>
<TABLE>
FILMWORLD, INC. -- A DEVELOPMENT STAGE ENTERPRISE
(Formerly American Pacific Financial Services)
STATEMENTS OF CASH FLOWS
FOR THE EIGHT MONTHS ENDING AUGUST 31, 1999
AND THE YEARS ENDING DECEMBER 31, 1998, AND 1997
<CAPTION>
From inception
of development
stage 31-Aug-99 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Cash Flows Operating Activities:
Net Income (Loss) $(171,947) $(174,147) $ 185,818 $(310,670)
Adjustments to Reconcile Net Income
to Net Cash provided by operating activities
Depreciation and Amortization 100 100 4,914 19,577
Book Value of Equipment Sold -- -- 10,578 216,569
Forgiveness of Debt -- -- (308,466) --
(Increase) Decrease in:
Change in Accounts Receivable -- -- -- 100,760
Change on Other Assets (400) (400) 3,316 17,686
Increase (Decrease) in:
Change in Accounts Payable (2,171) (9,010) (8,540) 13,557
Change in Other Current Liability -- -- -- (16,622)
--------- --------- --------- ---------
Net Cash Provided (Used) by
Operating Activities (174,418) (183,457) (112,380) 40,857
--------- --------- --------- ---------
Cash Flows Investment Activities:
Investments in film rights (531,400) (531,400)
Investments in plant and equipment (3,096) (3,096) -- --
Gain on Liquidation of Subsidiary -- -- (102,485)
--------- --------- --------- ---------
Net Cash (Used) by
Investment Activities (534,496) (534,496) -- (102,485)
--------- --------- --------- ---------
Cash Flows Financing Activities:
Stockholder Loan -- -- 113,602 194,864
Repayment of long term debt -- -- (10,359) (139,325)
Contributions to Capital 578,934 591,817 4,836 --
Increase in long term debt 150,000 150,000 -- --
--------- --------- --------- ---------
Net Cash Provided (Used)
by Financing Activities 728,934 741,817 108,079 55,539
--------- --------- --------- ---------
Increase (Decrease) in Cash and Cash
Equivalents 20,020 23,864 (4,301) (6,089)
Cash at Beginning of Year -- (3,844) 457 6,546
--------- --------- --------- ---------
Cash at End of Year $ 20,020 $ 20,020 $ (3,844) $ 457
========= ========= ========= =========
</TABLE>
The accompany notes are an integral part of these financial statements
-6-
<PAGE>
FILMWORLD, INC. - A DEVELOPMENT STAGE ENTERPRISE
(Formerly American Pacific Financial Services)
NOTES TO THE FINANCIAL STATEMENTS
AUGUST
AUGUST 31, 1999, AND DECEMBER 31, 1998 AND 1997
Note 1 - ORGANIZATION AND NATURE OF BUSINESS
FilmWorld, Inc. ("the Company") is a Development Stage Enterprise as defined by
FASB statement No. 7, "Accounting and Reporting by Development Stage
Enterprises."
The Company was originally organized under the laws of the State of Nevada on
December 23, 1986, under the name Hair Life Inc. The Company became inactive
during 1987 and remained inactive until September 1, 1994. On September 1, 1994,
the shareholders of the Hair Life, Inc. and the "The Patterson Group" (a
California S Corporation) approved a reverse acquisition agreement whereby The
Patterson Group became a wholly owned subsidiary of Hair Life, Inc., in exchange
for 4,500,000 shares of common stock (after giving effect to a reverse stock
split) of Hair Life. Hair Life, Inc. then changed its name to The Patterson
Group. The Patterson Group changed its capitalization by a reverse split of the
then outstanding common stock of one new share for each forty old shares. The
Patterson Group conducted operations via 2 subsidiaries until approximately June
1998, at which time one subsidiary sought relief under Chapter 7 of the
bankruptcy laws in the United States Bankruptcy Court for the Central District
of California. The effects of the bankruptcy were reflected in the 1997 audit of
the Patterson Group. Another subsidiary, APF Holdings (fka Blue Parrot Holdings)
also discontinued operations in 1998, after which time the Patterson Group
transferred all interest in it to the majority shareholder of The Patterson
Group. By December 31, 1998, the Patterson Group had discontinued all operations
and remained dormant until May 1999.
In May of 1999, the majority shareholder of the Patterson Group sold his common
stock in the Patterson Group (equaling approximately 90% of the outstanding
common stock). On or about July 18, 1999, the new shareholders funded the
Company with $50,000 and film rights with a cost basis of $525,000 (which is
also the current fair market value) after giving effect to a ten for one reverse
split and changing the corporate name to FilmWorld, Inc. The Company authorized
a capitalization of 100,000,000 shares of common stock and 10,000,000 shares of
preferred stock, with a par value of $0.001 per share. All references in the
accompanying financial statements to the number of common shares and the
per-share amounts for 1997 and 1998 have been restated to reflect the reverse
split and authorized capitalization.
On July 19, 1999, the stockholders of the Company approved a plan of informal
quasi reorganization. This plan eliminated its then retained deficit of
$1,163,065 and lowered additional paid in capital by the same amount.
The Company is currently in the motion picture production and distribution
business.
-7-
<PAGE>
FILMWORLD, INC. - A DEVELOPMENT STAGE ENTERPRISE
(Formerly American Pacific Financial Services)
NOTES TO THE FINANCIAL STATEMENTS
AUGUST
AUGUST 31, 1999, AND DECEMBER 31, 1998 AND 1997
Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPALS OF CONSOLIDATION:
These financial statements were consolidated during 1997 and 1998 to include the
accounts of The Patterson Group and its wholly-owned subsidiaries. All
significant inter-company accounts and transactions were eliminated in the
consolidated statements.
CASH EQUIVALENTS:
The Company records as cash equivalents all highly liquid short-term investments
with original maturates of three months or less.
INVENTORIES:
Inventories are stated at the lower of cost or market. Film costs are segregated
between current and noncurrent assets. Unamortized cost of films released,
completed films not released and television films in production under contract
of sale are current assets.
All other capitalized film costs are classified as noncurrent assets.
REVENUE RECOGNITION:
Revenues on motion pictures are recognized on show dates under both percentage
of receipts and flat fee arrangements. Nonrefundable 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.
PRODUCTION COSTS:
Production costs of motion pictures are capitalized as inventory and amortized
using the individual-film-forecast method.
PROPERTY, PLANT, AND EQUIPMENT:
Equipment is recorded at cost and depreciated over its useful life generally on
a straight-line basis.
INCOME TAXES:
The Company adopted Financial Accounting Statement No. 109, "Accounting for
Income Taxes," which requires recognition of deferred tax liabilities and assets
for the expected future tax consequences of events that have been included in
the financial statements or tax returns. The Company made the required
calculation based upon the difference between financial statements and tax bases
of assets and liabilities using tax rates in effect for the year in which the
differences were expected to reverse. See also Note 6.
EARNINGS PER SHARE and OPTIONS:
Except as discussed immediately below, the earnings per share calculation is
based on the weighted average number of shares of common stock and common stock
equivalents
-8-
<PAGE>
FILMWORLD, INC. - A DEVELOPMENT STAGE ENTERPRISE
(Formerly American Pacific Financial Services)
NOTES TO THE FINANCIAL STATEMENTS
AUGUST
AUGUST 31, 1999, AND DECEMBER 31, 1998 AND 1997
Note 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
EARNINGS PER SHARE and OPTIONS (Continued):
outstanding during the period: 2,094,277 for August 31, 1999, and 779,266 for
December 31, 1998 and 1997.
Currently outstanding is an option to purchase 37,000 shares at $5 per share.
Except for 1998, the options were not included in the earnings per common share
calculation, as the options are anti-dilutive. Fully diluted shares outstanding
on December 31, 1998 was 816,266.
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 amounts and disclosures. Accordingly, actual results
could differ from management's estimates.
ORGANIZATIONAL COSTS:
The Company has adopted Statement of Position ("SOP") 98-5, "Reporting on the
Costs of Start-up Activities" issued in April 1998 by the Accounting Standards
Executive Committee of the American Institute of Certified Public Accountants.
Pursuant to SOP 98-5, organizational costs are expensed as incurred instead of
being capitalized and amortized.
Note 3 - AMOUNTS DUE ON AGREEMENT AND NOTE
Amounts due under contract consisted of the following as of August 31, 1999, and
December 31, 1998 and 1997:
<TABLE>
<CAPTION>
Balance Due
Aug--99 1998 1997
-------- ------- --------
<S> <C> <C> <C>
Amount due on contract dated 7/23/99 to
Hidden Splendor Resources, payable on
demand with no interest $150,000 $ -- $ --
A note dated 7/9/96, secured by an automobile,
payable at $356 per month including interest at
4.9% per annum -- -- 10,359
-------- ------- --------
Total Notes Payable 150,000 -- 10,359
Less Current Portion 150,000 -- 3,855
-------- ------- --------
Long Term Debt $ -- $ -- $ 6,504
======== ======= ========
</TABLE>
-9-
<PAGE>
FILMWORLD, INC. - A DEVELOPMENT STAGE ENTERPRISE
(Formerly American Pacific Financial Services)
NOTES TO THE FINANCIAL STATEMENTS
AUGUST
AUGUST 31, 1999, AND DECEMBER 31, 1998 AND 1997
Note 4 - AGREEMENT AND NOTE PAYABLE TO SHAREHOLDERS
Notes Payable to Shareholder consisted of the following as of August 1999, and
December 31, 1998 and 1997:
<TABLE>
<CAPTION>
Balance Due
Aug--99 1998 1997
<S> <C> <C> <C>
Agreement dated 7/19/99, payable on demand $150,000 -- --
Note Payable, unsecured, dated 12/31/97, with
interest accruing at 6% per annum beginning 7/1/98
This note was forgiven in 1998 -- -- $197,864*
</TABLE>
See also Notes 3 and 8.
*During 1998, the Shareholder loaned additional amounts to the Company for a
total note payable of $308,466. The Shareholder forgave the entire note in 1998.
Note 5 - LEASE COMMITMENTS
All leases were surrendered during 1997. See also Note 3.
Note 6 - INCOME TAXES
The Company has net operating loss carry forwards of approximately $170,000
which can be carried forward to offset future taxable earnings until the year
2024. Prior losses will be of nominal value because of the change in ownership.
See also Note 2.
Note 7 - DIVIDEND POLICY
The Company has paid no dividends since inception.
Note 8 - RELATED PARTY TRANSACTIONS
The Company is indebted to Hidden Splendor Resources, Ltd., a Company
shareholder. Hidden Splendor Resources is beneficially owned by an officer and
director of the Company. See also Notes 3 and 4.
-10-
<PAGE>
FILMWORLD, INC. - A DEVELOPMENT STAGE ENTERPRISE
(Formerly American Pacific Financial Services)
NOTES TO THE FINANCIAL STATEMENTS
AUGUST
AUGUST 31, 1999, AND DECEMBER 31, 1998 AND 1997
Note 9 - EXTRAORDINARY ITEM
In June of 1998, the Company liquidated a wholly-owned subsidiary via a filing
under Chapter 7 of the bankruptcy laws in the United States Bankruptcy Court for
the Central District of California. The effects of the liquidation were
reflected in the 1997 financial statements. See also Note 1.
Note 10- UNCERTAINTY REGARDING GOING CONCERN
The Company's financial statements have been prepared assuming that the Company
will continue as a going concern. The Company's ability to continue as a going
concern is dependent on attaining future profitable operations. If operations do
not become profitable, then substantial doubt exists about the Company's ability
to continue as a going concern. The financial statements do not include any
adjustment that might result from the outcome of this uncertainty.
-11-
<PAGE>
- --------------------------------------------------------------------------------
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
- --------------------------------------------------------------------------------
There have been no disagreements with the Company's independent
accountants over any item involving the Company's financial statements. The
Company's independent accountants are W. Dale McGhie, Certified Public
Accountant, Town & Country Plaza, 1539 Vassar Street, Reno, Nevada 89502.
- --------------------------------------------------------------------------------
ITEM 15. Financial Statements and Exhibits
- --------------------------------------------------------------------------------
The following exhibits are filed with this Form 10-SB:
Assigned Number Description
(2) Plan of acquisition, reorganization, arrangement, liquidation,
or succession: None
(3)(ii) By-laws of the Company: Included
(4) Instruments defining the rights of holders including
indentures: None
(9) Voting Trust Agreement: None
(10) Material Contracts: July 19, 1999 Exchange Agreement
(11) Statement regarding computation of per share
earnings: Computations can be determined from
financial statements.
(16) Letter on change in certifying accountant: None
(21) Subsidiaries of the registrant: None
(24) Power of Attorney: None
(27) Financial Data Schedule: Included
(99) Additional Exhibits: None
<PAGE>
- --------------------------------------------------------------------------------
SIGNATURES
- --------------------------------------------------------------------------------
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
Dated: October 4, 1999.
FILMWORLD, INC.
By:/s/John Daly
------------
John Daly
President
BY-LAWS FOR THE REGULATION
EXCEPT AS OTHERWISE PROVIDED BY STATUTE
OR ITS ARTICLES OF INCORPORATION OF
THE PATTERSON GROUP, INC.
* * * * * * *
ARTICLE I.
Offices
Section 1. PRINCIPAL OFFICE. The principal office for the transaction
of the business of the corporation is hereby fixed and located at 50 West
Liberty Street, Suite 880, Reno, Nevada 89501, being the offices of Nevada
Agency and Trust Company. The Board of Directors is hereby granted full power
and authority to change said principal office from one location to another in
the State of Nevada.
Section 2. OTHER OFFICES. Branch or subordinate offices may at any time
be established by the Board of Directors at any place or places where the
corporation is qualified to do business.
ARTICLE II.
Meetings of Shareholders
Section 1. MEETING PLACE. All annual meetings of shareholders and all
other meetings of shareholders shall be held either at the principal office or
at any other place within or without the State of Nevada which may be designated
either by the Board of Directors, pursuant to authority hereinafter granted to
said Board, or by the written consent of all shareholders entitled to vote
thereat, given either before or after the meeting and filed with the Secretary
of the corporation.
1
<PAGE>
Section 2. ANNUAL MEETINGS. The annual meetings of shareholders shall
be held on the fourth Wednesday of May each year, at the hour of 2:00 o'clock
p.m. of said day, commencing with the year 1995, provided, however, that should
said day fall upon a legal holiday, then any such annual meeting of shareholders
shall be held at the same time and place on the next day thereafter ensuing
which is not a legal holiday.
Written notice of each annual meeting signed by the President or a Vice
President, or the Secretary, or an Assistant Secretary, or by such other person
or persons as the directors shall designate, shall be given to each shareholder
entitled to vote thereat, either personally or by mail or other means of written
communication, charges prepaid, addressed to such shareholder at his address
appearing on the books of the corporation or given by him to the corporation for
the purpose of notice. If a shareholder gives no address, notice shall be deemed
to have been given to him, if sent by mail or other means of written
communication addressed to the place where the principal office of the
corporation is situated, or if published at least once in some newspaper of
general circulation in the county in which said office is located. All such
notices shall be sent to each shareholder entitled thereto not less than ten
(10) nor more than sixty (60) days before each annual meeting, and shall specify
the place, the day and the hour of such meeting, and shall also state the
purpose or purposes for which the meeting is called.
2
<PAGE>
Section 3. SPECIAL MEETINGS. Special meetings of the shareholders, for
any purpose or purposes whatsoever, may be called at any time by the President
or by the Board of Directors, or by one or more shareholders holding not less
than 10% of the voting power of the corporation. Except in special cases where
other express provision is made by statute, notice of such special meetings
shall be given in the same manner as for annual meetings of shareholders.
Notices of any special meeting shall specify in addition to the place, day and
hour of such meeting, the purpose or purposes for which the meeting is called.
Section 4. ADJOURNED MEETINGS AND NOTICE THEREOF. Any shareholders'
meeting, annual or special, whether or not a quorum is present, may be adjourned
from time to time by the vote of a majority of the shares, the holders of which
are either present in person or represented by proxy thereat, but in the absence
of a quorum, no other business may be transacted at any such meeting.
When any shareholders' meeting, either annual or special, is adjourned
for thirty (30) days or more, notice of the adjourned meeting shall be given as
in the case of an original meeting. Save as aforesaid, it shall not be necessary
to give any notice of an adjournment or of the business to be transacted at an
adjourned meeting, other than by announcement at the meeting at which such
adjournment is taken.
3
<PAGE>
Section 5. ENTRY OF NOTICE. Whenever any shareholder entitled to vote
has been absent from any meeting of shareholders, whether annual or special, an
entry in the minutes to the effect that notice has been duly given shall be
conclusive and incontrovertible evidence that due notice of such meeting was
given to such shareholders, as required by law and the By-laws of the
corporation.
Section 6. VOTING. At all annual and special meetings of stockholders
entitled to vote thereat, every holder of stock issued to a bona fide purchaser
of the same, represented by the holders thereof, either in person or by proxy in
writing, shall have one (1) vote for each share of stock so held and represented
at such meetings, unless the Articles of Incorporation of the corporation shall
otherwise provide, in which event the voting rights, powers and privileges
prescribed in the said Articles of Incorporation shall prevail. Voting for
directors and, upon demand of any stockholder, upon any question at any meeting
shall be by ballot.
Section 7. QUORUM. The presence in person or by proxy of the holders of
a majority of the shares entitled to vote at any meeting shall constitute a
quorum for the transaction of business. The shareholders present at a duly
called or held meeting at which a quorum is present may continue to do business
until adjournment, notwithstanding the withdrawal of enough shareholders to
leave less than a quorum.
4
<PAGE>
Section 8. CONSENT OF ABSENTEES. The transactions of any meeting of
shareholders, either annual or special, however called and noticed, shall be as
valid as though a meeting had been duly held after regular call and notice, if a
quorum be present, either in person or by proxy, and if, either before or after
the meeting, each of the shareholders entitled to vote, not present in person or
by proxy, sign a written Waiver of Notice, or a consent to the holding of such
meeting, or an approval of the minutes thereof. All such waivers, consents or
approvals shall be filed with the corporate records or made a part of the
minutes of this meeting.
Section 9. PROXIES. Every person entitled to vote or execute consents
shall have the right to do so either in person or by an agent or agents
authorized by a written proxy executed by such person or his duly authorized
agent and filed with the Secretary of the corporation; provided that no such
proxy shall be valid after the expiration of eleven (11) months from the date of
its execution, unless the shareholder executing it specifies therein the length
of time for which such proxy is to continue in force, which in no case shall
exceed seven (7) years from the date of its execution.
ARTICLE III.
Directors and Directors' Meetings
Section 1. POWERS. Subject to the limitations of the Articles of
Incorporation or the By-laws, and the provisions of the Nevada Revised Statutes
as to action to be authorized or approved by the shareholders, and subject to
the duties of directors as prescribed by the By-laws, all corporate powers shall
be exercised by or under the authority of, and the business and affairs of the
corporation shall be controlled by the Board of Directors. Without prejudice to
such general powers, but subject to the same limitations, it is hereby expressly
declared that the Directors shall have the following powers, to wit:
5
<PAGE>
First - To select and remove all the other officers, agents and
employees of the corporation, prescribe such powers and duties for them as may
not be inconsistent with law, with the Articles of Incorporation or the By-laws,
fix their compensation and require from them security for faithful service.
Second - To conduct, manage and control the affairs and business of the
corporation, and to make such rules and regulations therefor not inconsistent
with law, with the Articles of Incorporation or the By-laws, as they may deem
best.
Third - To change the principal office for the transaction of the
business of the corporation from one location to another within the same county
as provided in Article I, Section 1 hereof; to fix and locate from time to time
one or more subsidiary offices of the corporation within or without the State of
Nevada, as provided in Article I, Section 2 hereof; to designate any place
within or without the State of Nevada for the holding of any shareholders'
meeting or meetings; and to adopt, make and use a corporate seal, and to
prescribe the forms of certificates of stock, and to alter the form of such seal
and of such certificates from time to time, as in their judgment they may deem
best, provided such seal and such certificates shall at all times comply with
the provisions of law.
6
<PAGE>
Fourth - To authorize the issuance of shares of stock of the
corporation from time to time, upon such terms as may be lawful, in
consideration of money paid, labor done or services actually rendered, debts or
securities cancelled, or tangible or intangible property actually received, or
in the case of shares issued as a dividend, against amounts transferred from
surplus to stated capital.
Fifth - To borrow money and incur indebtedness for the purposes of the
corporation, and to cause to be executed and delivered therefor, in the
corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages,
pledges, hypothecations or other evidences of debt and securities therefor.
Sixth - To appoint an executive committee and other committees and to
delegate to the executive committee any of the powers and authority of the Board
in management of the business and affairs of the corporation, except the power
to declare dividends and to adopt, amend or repeal By-laws. The executive
committee shall be composed of one or more Directors.
7
<PAGE>
Section 2. NUMBER AND QUALIFICATION OF DIRECTORS. The authorized number
of directors of the corporation shall be not less than Three (3) .
Section 3. ELECTION AND TERM OF OFFICE. The Directors shall be elected
at each annual meeting of shareholders, but if any such annual meeting is not
held or the Directors are not elected thereat, the Directors may be elected at
any special meeting of shareholders. All Directors shall hold office until their
respective successors are elected.
Section 4. VACANCIES. Vacancies in the Board of Directors may be filled
by a majority of the remaining Directors, though less than a quorum, or by a
sole remaining Director, and each Director so elected shall hold office until
his successor is elected at an annual or a special meeting of the shareholders.
A vacancy or vacancies in the Board of Directors shall be deemed to
exist in case of the death, resignation or removal of any Director, or if the
authorized number of Directors be increased, or if the shareholders fail at any
annual or special meeting of shareholders, at which any Director of Directors
are elected, to elect the full authorized number of Directors to be voted for at
that meeting.
8
<PAGE>
The shareholders may elect a Director or Directors at any time to fill
any vacancy or vacancies not filled by the Directors. If the Board of Directors
accepts the resignation of a Director tendered to take effect at a future time,
the Board, or the shareholders, shall have the power to elect a successor to
take office when the resignation is to become effective.
No reduction of the authorized number of Directors shall have the
effect of removing any Director prior to the expiration of his term of office.
Section 5. PLACE OF MEETING. Regular meetings of the Board of Directors
shall be held at any place within or without the state which has been designated
from time to time by resolution of the Board or by written consent of all
members of the Board. In the absence of such designation, regular meetings shall
be held at the principal office of the corporation. Special meetings of the
Board may be held either at a place so designated, or at the principal office.
Section 6. ORGANIZATIONAL MEETING. Immediately following each annual
meeting of shareholders, the Board of Directors shall hold a regular meeting for
the purpose of organization, election of officers and the transaction of other
business. Notice of such meeting is hereby dispensed with.
Section 7. OTHER REGULAR MEETINGS. Other regular meetings of the Board
of Directors shall be held without call on the fourth Wednesday of each month at
the hour of 3:00 o'clock p.m.
of said day; provided, however, should said day fall upon a legal holiday, then
said meeting shall be held at the same time on the next day thereafter ensuing
which is not a legal holiday. Notice of all such regular meetings of the Board
of Directors is hereby dispensed with.
9
<PAGE>
Section 8. SPECIAL MEETINGS. Special meetings of the Board of Directors
for any purpose or purposes shall be called at any time by the President, or, if
absent or unable or refuses to act, by any Vice President or by any two (2)
Directors.
Written notice of the time and place of special meetings shall be
delivered personally to the Directors or sent to each Director by mail, or other
form of written communication, charges prepaid, addressed to him at his address
as it is shown upon the records of the corporation, or if it is not shown on
such records or is not readily ascertainable, at the place in which meetings of
the Directors are regularly held. In case such notice is mailed or telegraphed,
it shall be deposited in the United States mail or other appropriate mail or
facsimile facility, or delivered to the telegraph company in the place in which
the principal office of the corporation is located at least forty-eight (48)
hours prior to the time of the holding of the meeting. In case such notice is
delivered as above provided, it shall be so delivered at least twenty-four (24)
hours prior to the time of the holding of the meeting. Such mailing, faxing,
telegraphing or delivery as above provided shall be due, legal and personal
notice to such Director.
10
<PAGE>
Section 9. NOTICE OF ADJOURNMENT. Notice of the time and place of
holding an adjourned meeting need not be given to absent Directors, if the time
and place be fixed at the meeting adjourned.
Section 10. ENTRY OF NOTICE. Whenever any Director has been absent from
any special meeting of the Board of Directors, an entry in the minutes to the
effect that notice has bene duly given shall be conclusive and incontrovertible
evidence that due notice of such special meeting was given to such Director, as
required by law and the By-laws of the corporation.
Section 11. WAIVER OF NOTICE. The transactions of any meeting of the
Board of Directors, however called and noticed or wherever held, shall be as
valid as though a meeting had been duly held after regular call and notice, if a
quorum be present, and if, either before or after the meeting, each of the
Directors not present sign a written Waiver of Notice or a Consent to holding
such meeting, or an approval of the minutes thereof. All such waivers, consents
or approvals shall be filed with the corporate records or made a part of the
minutes of the meeting.
Section 12. QUORUM. A majority of the authorized number of Directors
shall be necessary to constitute a quorum for the transaction of business,
except to adjourn as hereinafter provided. Every act or decision done or made by
a majority of the Directors present at a meeting duly held at which a quorum is
present, shall be regarded as the act of the Board of Directors, unless a
greater number be required by law or by the Articles of Incorporation.
11
<PAGE>
Section 13. ADJOURNMENT. A quorum of the Directors may adjourn any
Directors' meeting to meet again at a stated day and hour; provided, however,
that in the absence of a quorum, a majority of the Directors present at any
Directors' meeting, either regular or special, may adjourn from time to time
until the time fixed for the next regular meeting of the Board.
Section 14. FEES AND COMPENSATION. Directors shall not receive any
stated salary for their services as Directors, but by resolution of the Board, a
fixed fee, with or without expenses of attendance, may be allowed for attendance
at each meeting. Nothing herein contained shall be construed to preclude any
Director from serving the corporation in any other capacity as an officer,
agent, employee or otherwise, and receiving compensation therefor.
ARTICLE IV
Officers
Section 1. OFFICERS. The officers of the corporation shall be a
President, a Vice-President, a Secretary and a Treasurer. The corporation may
also have, at the discretion of the Board of Directors, a Chairman of the Board,
one or more Vice Presidents, one or more Assistant Secretaries, one or more
Assistant Treasurers, and such other officers as may be appointed in accordance
with the provisions of Section 3 of this Article. Officers, other than President
and Chairman of the Board, need not be Directors. Any person may hold two (2) or
more offices.
12
<PAGE>
Section 2. ELECTION. The officers of the corporation, except such
officers as may be appointed in accordance with the provisions of Section 3 or
Section 5 of this Article, shall be chosen annually by the Board of Directors,
and each shall hold his office until he shall resign or shall be removed or
otherwise disqualified to serve, or his successor shall be qualified and
elected.
Section 3. SUBORDINATE OFFICERS, ETC. The Board of Directors may
appoint such other officers as the business of the corporation may require, each
of whom shall hold office for such period, have such authority and perform such
duties as are provided in the By-laws or as the Board of Directors may from time
to time determine.
Section 4. REMOVAL AND RESIGNATION. Any officer may be removed, either
with or without cause, by a majority of the Directors at the time in office, at
any regular or special meeting of the Board.
Any officer may resign at any time by giving written notice to the
Board of Directors or to the President, or to the Secretary of the corporation.
Any such resignation shall take effect at the date of the receipt of such notice
or at any later time specified therein; and, unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it effective.
13
<PAGE>
Section 5. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in the By-laws for regular appointments to such office.
Section 6. CHAIRMAN OF THE BOARD. The Chairman of the Board, if there
shall be such an officer, shall, if present, preside at all meetings of the
Board of Directors, and exercise and perform such other powers and duties as may
be from time to time assigned to him by the Board of Directors or prescribed by
the Bylaws.
Section 7. PRESIDENT. Subject to such supervisory powers, if any, as
may be given by the Board of Directors to the Chairman of the Board, the
President shall be the Chief Executive Officer of the corporation and shall,
subject to the control of the Board of Directors, have general supervision,
direction and control of the business and officers of the corporation. He shall
preside at all meetings of the shareholders and in the absence of the Chairman
of the Board, at all meetings of the Board of Directors. He shall be ex-officio
a member of all the standing committees, including the executive committee, if
any, and shall have the general powers and duties of management usually vested
in the office of President of a corporation, and shall have such other powers
and duties as may be prescribed by the Board of Directors or the By-laws.
14
<PAGE>
Section 8. VICE PRESIDENT. In the absence or disability of the
President, the Vice Presidents, in order of their rank as fixed by the Board of
Directors, or if not ranked, the Vice President designated by the Board of
Directors, shall perform all the duties of the President and when so acting
shall have all the powers of, and be subject to, all the restrictions upon the
President. The Vice Presidents shall have such other powers and perform such
other duties as from time to time may be prescribed for them respectively by the
Board of Directors or the By-laws.
Section 9. SECRETARY. The Secretary shall keep, or cause to be kept, a
book of minutes at the principal office or such other place as the Board of
Directors may order, of all meetings of Directors and shareholders, with the
time and place of holding, whether regular or special, and if special, how
authorized, the notice thereof given, the names of those present at Directors'
meetings, the number of shares present or represented at shareholders' meetings
and the proceedings thereof.
The Secretary shall keep or cause to be kept, at the principal office,
a share register, or a duplicate share register, showing the names of the
shareholders and their addresses; the number and classes of shares held by each;
the number and date of certificates issued for the same, and the number and date
of cancellation of every certificate surrendered for cancellation.
The Secretary shall give, or cause to be given, notice of all the
meetings of the shareholders and of the Board of Directors required by the
By-laws or by law to be given, and shall keep the seal of the corporation in
safe custody, and shall have such other powers and perform such other duties as
may be prescribed by the Board of Directors or the By-laws.
15
<PAGE>
Section 10. TREASURER. The Treasurer shall keep and maintain, or cause
to be kept and maintained, adequate and correct accounts of the properties and
business transactions of the corporation, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital, surplus and
shares. Any surplus, including earned surplus, paid-in surplus and surplus
arising from a reduction of stated capital, shall be classified according to
source and shown in a separate account. The books of account shall at all times
be open to inspection by any Director.
The Treasurer shall deposit all monies and other valuables in the name
and to the credit of the corporation with such depositaries as may be designated
by the Board of Directors. He shall disburse the funds of the corporation as may
be ordered by the Board of Directors, shall render to the President and
Directors, whenever they request it, an account of all transactions as Treasurer
and of the financial condition of the corporation, and shall have such other
powers and perform such other duties as may be prescribed by the Board of
Directors or the By-laws.
16
<PAGE>
ARTICLE V.
Miscellaneous
Section 1. RECORD DATE AND CLOSING OF STOCK BOOKS. The Board of
Directors may fix a time, in the future, not exceeding fifteen (15) days
preceding the date of any meeting of shareholders, and not exceeding thirty (30)
days preceding the date fixed for the payment of any dividend or distribution,
or for the allotment of rights, or when any change or conversion or exchange of
shares shall go into effect, as a record date for the determination of the
shareholders entitled to notice of and to vote at any such meeting, or entitled
to receive any such dividend or distribution, or any such allotment of rights,
or to exercise the rights in respect to any such change, conversion or exchange
of shares, and in such case, only shareholders of record on the date so fixed
shall be entitled to notice of and to vote at such meetings, or to receive such
dividend, distribution or allotment of rights, or to exercise such rights, as
the case may be, notwithstanding any transfer of any shares on the books of the
corporation after any record date fixed as aforesaid. The Board of Directors may
close the books of the corporation against transfers of shares during the whole,
or any part of any such period.
Section 2. INSPECTION OF CORPORATE RECORDS. The share register or
duplicate share register, the books of account and minutes of proceedings of the
shareholders and Directors shall be open to inspection upon the written demand
of any shareholder or the holder of a voting trust certificate, at any
reasonable time, and for the purpose reasonably related to his interests as a
shareholder, or as the holder of a voting trust certificate, and shall be
exhibited at any time when required by the demand of ten percent (10%) of the
shares represented at any shareholders' meeting. Such inspection may be made in
person or by an agent or attorney, and shall include the right to make extracts.
Demand of inspection other than at a shareholders' meeting shall be made in
writing upon the President, Secretary or Assistant Secretary of the corporation.
17
<PAGE>
Section 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for
payment of money, notes or other evidences of indebtedness, issued in the name
of or payable to the corporation, shall be signed or endorsed by such person or
persons and in such manner as, from time to time, shall be determined by
resolution of the Board of Directors.
Section 4. ANNUAL REPORT. The Board of Directors of the corporation
shall cause to be sent to the shareholders not later than one hundred twenty
(120) days after the close of the fiscal or calendar year an annual report.
Section 5. CONTRACTS, ETC., HOW EXECUTED. The Board of Directors,
except as in the By-laws otherwise provided, may authorize any officer or
officers, agent or agents, to enter into any contract, deed or lease or execute
any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances; and unless so
authorized by the Board of Directors, no officer, agent or employee shall have
any power or authority to bind the corporation by any contract or engagement or
to pledge its credit to render it liable for any purpose or to any amount.
18
<PAGE>
Section 6. CERTIFICATES OF STOCK. A certificate or certificates for
shares of the capital stock of the corporation shall be issued to each
shareholder when any such shares are fully paid up. All such certificates shall
be signed by the President or a Vice President and the Secretary or an Assistant
Secretary, or be authenticated by facsimiles of the signature of the President
and Secretary or by a facsimile of the signature of the President and the
written signature of the Secretary or an Assistant Secretary. Every certificate
authenticated by a facsimile of a signature must be countersigned by a transfer
agent or transfer clerk.
Certificates for shares may be issued prior to full payment under such
restrictions and for such purposes as the Board of Directors or the By-laws may
provide; provided, however, that any such certificate so issued prior to full
payment shall state the amount remaining unpaid and the terms of payment
thereof.
Section 7. REPRESENTATIONS OF SHARES OF OTHER CORPORATIONS. The
President or any Vice President and the Secretary or Assistant Secretary of this
corporation are authorized to vote, represent and exercise on behalf of this
corporation all rights incident to any and all shares of any other corporation
or corporations standing in the name of this corporation. The authority herein
granted to said officers to vote or represent on behalf of this corporation or
corporations may be exercised either by such officers in person or by any person
authorized so to do by proxy or power of attorney duly executed by said
officers.
19
<PAGE>
Section 8. INSPECTION OF BY-LAWS. The corporation shall keep in its
principal office for the transaction of business the original or a copy of the
By-laws, as amended or otherwise altered to date, certified by the Secretary,
which shall be open to inspection by the shareholders at all reasonable times
during office hours.
ARTICLE VI.
Amendments
Section 1. POWER OF SHAREHOLDERS. New By-laws may be adopted or these
By-laws may be amended or repealed by the vote of shareholders entitled to
exercise a majority of the voting power of the corporation or by the written
assent of such shareholders.
Section 2. POWER OF DIRECTORS. Subject to the right of the shareholders
as provided in Section 1 of this Article VI to adopt, amend or repeal By-laws,
By-laws other than a By-law or amendment thereof changing the authorized number
of Directors may be adopted, amended or repealed by the Board of Directors.
Section 3. ACTION BY DIRECTORS THROUGH CONSENT IN LIEU OF MEETING. Any
action required or permitted to be taken at a meeting of the Board of Directors
or of any committee thereof, may be taken without a meeting, if a written
consent thereto is signed by all the members of the Board or of such committee.
Such written consent shall be filed with the minutes of proceedings of the Board
or committee.
/s/ Kathleen A. Patterson
--------------------------------
Secretary
20
EXCHANGE AGREEMENT
------------------
THIS EXCHANGE AGREEMENT made and entered into this 19th day of July,
1999, by and between AMERICAN PACIFIC FINANCIAL SERVICES, a Nevada corporation,
(hereinafter referred to as "AMPA") and DALY CONSULTANTS INC., a California
corporation, (hereinafter referred to as "DCI"), and BELFAIR INTERNATIONAL INC.,
a corporation organized pursuant to the laws of the Isle of Jersey (hereinafter
referred to as "BII").
WITNESSETH:
WHEREAS, the balance sheet and financial statements of AMPA for the
periods ended December 31, 1997 and 1998 and the stub period ended April 30,
1999 are attached hereto as Exhibit "A" and incorporated herein by this
reference; and
WHEREAS, the authorized capital stock of AMPA consists of 100,000,000
shares of common stock, par value $0.001 per share, of which 7,792,658 shares
are issued and outstanding; and
WHEREAS, AMPA, DCI and BII agree that it would be to their mutual
benefit for AMPA to acquire certain assets of DCI and BII in exchange for
7,013,392 shares of common stock of AMPA after giving effect to a ten (10) for
one (1) reverse split as hereinafter described; and WHEREAS, the parties have
entered into an Agreement in Principle dated July 19, 1999 and wish to set forth
the terms of their agreement in greater detail,
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto hereby agree as follows:
1
<PAGE>
1. [REPRESENTATIONS OF AMPA] AMPA hereby represents to DCI and BII that
to the best of its knowledge:
(a) AMPA owns on the date hereof, and on the Closing Date hereinafter
provided, will own free and clear of all liens, charges and encumbrances, all of
the assets set forth on Exhibit "A".
(b) AMPA has heretofore furnished to DCI and BII copies of the
financial statements of AMPA which are attached hereto and marked Exhibit "A".
Said financial statements accurately set forth the financial condition of AMPA
as of the dates thereof, prepared in conformity with generally accepted
accounting principles consistently applied.
(c) AMPA has good and marketable title to all of their property and
assets (except property and assets disposed of since such date in the usual and
ordinary course of business), subject to no mortgage, pledge, lien or other
encumbrance except as disclosed in such financial statements.
(d) AMPA has no obligations, liabilities or commitments, contingent or
otherwise, of a material nature which were not provided for, except as set forth
in Exhibit "A".
(e) AMPA is not a party to any employment contract, or to any lease,
agreement or other commitment not in the usual and ordinary course of business,
nor to any pension, insurance, profit-sharing or bonus plan, except as disclosed
in Exhibit "A".
(f) AMPA is not a defendant, nor a plaintiff against whom a
counterclaim has been asserted, in any litigation, pending or threatened, nor
has any material claim been made or asserted against AMPA, nor are there any
2
<PAGE>
proceedings threatened or pending before any federal, state or municipal
government, or any department, board, body or agency thereof, involving AMPA
except as disclosed in Exhibit "A".
(g) AMPA is not in default under any agreement to which it is a party
nor in the payment of any of its obligations.
(h) Between the date of the financial statements referred to in
subparagraph "d" hereof and the Closing, AMPA will not have (i) mortgaged or
pledged or subjected to any lien, charge or other encumbrance any of their
assets, tangible or intangible, except in the usual and ordinary course of
business or (ii) sold, leased, or transferred or contracted to sell, lease or
transfer any assets, tangible or intangible, or entered into any other
transactions, except in the usual and ordinary course of business, or (iii) made
any material change in any existing employment agreement or increased the
compensation payable or made any arrangement for the payment of any bonus to any
officer, director, employee or agent, except as set forth in Exhibit "A" hereof.
(i) This Exchange Agreement has been duly executed by AMPA and the
execution and performance of this Exchange Agreement will not violate, or result
in a breach of, or constitute a default in any agreement, instrument, judgment,
order or decree to which AMPA is a party or to which AMPA is subject nor will
such execution and performance constitute a violation of or conflict with any
fiduciary duty to which AMPA is subject, to the best of AMPA's knowledge.
(j) AMPA has timely filed or obtained the necessary extensions with the
appropriate governmental authorities, all tax and other returns required to be
filed by it. Such returns are true and complete and all taxes shown thereon to
3
<PAGE>
be due have been paid. All material, federal, state, local, county, franchise,
sales, use, excise and other taxes assessed or due have been duly paid or
reserves for unpaid taxes have been set up as required on the basis of the facts
and in accordance with generally accepted accounting principles.
(k) AMPA is not in default with respect to any order, writ, injunction
, or decree of any court or federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, and there are
no actions, suits, claims, proceedings or investigations pending or, to the
knowledge of AMPA threatened against or affecting AMPA, at law or in equity, or
before or by any federal, state, municipal or other governmental court,
department commission, board, bureau, agency or instrumentality, domestic or
foreign. AMPA has complied in all material respects with all laws, regulations
and orders applicable to its business.
(l) No representation in this section, nor statement in any document,
certificate or schedule furnished or to be furnished pursuant to this Exchange
Agreement by AMPA, or in connection with the transactions contemplated hereby,
contains or contained any untrue statement of material fact, nor does or will
omit to state a material fact necessary to make any statement of fact contained
herein or therein not misleading.
2. [REPRESENTATIONS OF DCI AND BII] DCI and BII represent to AMPA that:
(a) DCI is a corporation duly organized and validly existing and in
good standing under the laws of the State of California; is qualified to
transact business in California and no other state;
4
<PAGE>
(b) BII is a corporation duly organized and validly existing and in
good standing under the laws of the Isle of Jersey.
(c) DCI and BII have delivered to AMPA a schedule of assets attached
hereto and marked Exhibit "B", which assets consist of $50,000 in cash and at
least $525,000 in intellectual property valued at cost or predecessor cost
prepared in conformity with generally accepted accounting principles
consistently applied.
(d) DCI and BII have good and marketable title to all of its property
and assets appearing on Exhibit "B" attached hereto.
(e) DCI and BII warrant with regard to the assets described in Exhibit
"B" that there are no obligations, liabilities or commitments, contingent or
otherwise, of a material nature with regard thereto.
(f) DCI and BII are not in default under any agreement to which either
may be a party nor in the payment of any of their obligations which would affect
their title to the assets described in Exhibit "B".
(g) This Exchange Agreement has been duly executed by DCI and BII and
the execution and performance of this Exchange Agreement will not violate, or
result in a breach of, or constitute a default in any agreement, instrument,
judgment, order or decree to which it is a party or to which it is subject nor
will such execution and performance constitute a violation of or conflict with
any fiduciary duty to which it is subject.
(h) No representation in this section, nor statement in any document,
certificate or schedule furnished or to be furnished pursuant to this Exchange
5
<PAGE>
Agreement by DCI and BII, or in connection with the transactions contemplated
hereby, contains or contained any untrue statement of a material fact, nor does
or will omit to state a material fact necessary to make any statement of fact
contained herein or therein not misleading.
3. [DATE AND TIME OF CLOSING] The closing shall be held on July 19,
1999, at 10:00 a.m., local time, at Suite 880, 50 West Liberty Street, Reno,
Nevada 89501, or at such other time and place as may be mutually agreed upon
between the parties in writing (hereinafter "the Closing").
4. [BOARD OF DIRECTORS MEETING OF AMPA] AMPA will call a special
meeting of the Board of Directors on Monday, July 19, 1999 at 8:00 o'clock a.m.,
local time, at Suite 880, 50 West Liberty Street, Reno, Nevada 89501 to take the
following action:
(a) To ratify, approve and carry out the terms of this
Exchange Agreement
(b) To call and convene a special stockholders meeting to be
held at 9:00 a.m., local time, at Suite 880, 50 West
Liberty Street, Reno, Nevada for the following purposes:
(1) To approve an Amendment to the Articles of Incorporation
to provide as follows:
(aa) To provide for a reverse split of the present common
stock on a ten (10) for one (1) basis;
(bb) To change the corporate name to FilmWorld, Inc.
6
<PAGE>
(cc) To amend the Articles of Incorporation to authorize a
capitalization of 100,000,000 shares of common stock and
10,000,000 shares of preferred stock.
5. [STOCKHOLDERS MEETING OF AMPA] AMPA will call and convene a special
stockholders meeting at 9:00 a.m., local time, at Suite 880, 50 West Liberty
Street, Reno, Nevada 89501 for the following purposes:
(a) To approve an Amendment to the Articles of Incorporation
to provide as follows:
(1) For a reverse split of the present common stock on a ten
(10) for one (1) basis;
(2) To change Article I to provide that the name shall be:
FILMWORLD, INC.
(3) To change Article IV to provide for a capitalization of
100,000,000 shares of common stock and 10,000,000 shares
of preferred stock with all other provisions of this
Article IV to remain as written.
6. [BOARD OF DIRECTORS MEETING OF AMPA] AMPA will call and convene a
special meeting of the Board to be held at 10:00 o'clock a.m., local time, at
Suite 880, 50 West Liberty Street, Reno, Nevada for the following purposes:
(a) To deliver 7,013,392 shares of common stock to the
following:
7
<PAGE>
Name No. Shares
--------------------------- -----------
Daly Consultants, Inc. 2,922,247
Belfair International, Inc. 2,922,247
Mark Tolner 1,168,898
It is understood that all such shares shall be restricted securities, as that
term is known and used in the securities industry, and the resale of such shares
shall be limited by a restrictive legend placed on certificates representing
such shares. Further, each of the recipients listed above shall be required to
execute an investment letter agreement in the form attached hereto as Exhibit
"C".
(b) To elect the following persons to constitute the Board
of Directors and to elect such persons to the office set
forth after their name:
Menahem Golan, Chairman of the Board
John Daly, President
Alexander H. Walker, Jr., Secretary
Mark Tolner, Treasurer
(c) To approve and sign a transfer agent agreement
appointing Nevada Agency and Trust Company as the
corporation's transfer agent and registrar, as well as
resident agent in the State of Nevada.
7. [FINDER'S FEE] AMPA, DCI and BII represent to each other that they
have not employed any broker or agent or entered into any other agreement for
the payment of any finder's fees or compensation to any other person, firm or
corporation in connection with this transaction, except Hidden Splendor
Resources shall be paid $150,000 in cash as a finder's fee and for all expenses,
including, but not limited to, filing fees, accountants' audit charges, legal
expenses and all other expenditures pertaining to this corporate reorganization
8
<PAGE>
and the company's submission of a Form 10-SB with the Securities and Exchange
Commission. Such expenses shall be limited to those selected and/or authorized
by Hidden Splendor Resources..
8. [NOTICES] Any notice under this Agreement shall be deemed to have
been sufficiently given if sent by Federal Express, registered or certified
mail, postage prepaid, addressed as follows:
If to American Pacific Financial Services:
Alexander H. Walker, Jr.
50 West Liberty Street, Suite 880
Reno, Nevada 89501
If to Daly Consultants, Inc.:
John Daly
9100 Wilshire, Suite 437 West Tower
Beverly Hills, CA 90212
If to Belfair International, Inc.:
Menahem Golan
600 S. Curson Avenue, #347
Los Angeles, CA 90036
or to any other address which may hereafter be designated by either party by
notice given in such manner. All notices shall be deemed to have been given as
of the date of receipt.
9. [COUNTERPARTS] This Exchange Agreement may be executed in any number
of counterparts, each of which when executed and delivered shall be an original,
but all such counterparts shall constitute one and the same instrument.
10. [MERGER CLAUSE] This Exchange Agreement supersedes all prior
agreements and understandings between the parties and may not be changed or
terminated orally, and no attempted change, termination or waiver of any of the
provisions hereof shall be binding unless in writing and signed by the parties
hereto.
9
<PAGE>
11. [GOVERNING LAW] This Agreement shall be governed by and construed
according to the laws of the State of Nevada, being the corporate domicile of
AMPA.
IN WITNESS WHEREOF, the parties hereto have caused this Exchange
Agreement to be executed the day and year first above written.
AMERICAN PACIFIC FINANCIAL SERVICES
A Nevada Corporation
By /s/ Alexander H. Walker, Jr.
-------------------------------------------
Alexander H. Walker, Jr.
Its Secretary
(Hereunto duly authorized)
DALY CONSULTANTS, INC.
A California Corporation
By /s/ John Daly
-------------------------------------------
John Daly
(Hereunto duly authorized)
BELFAIR INTERNATIONAL, INC.
An Isle of Jersey corporation
By /s/ Menahem Golan
-------------------------------------------
Menahem Golan
(Hereunto duly authorized)
10
