UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES ACT OF 1934
For the period ended December 31, 1999
Commission file number 0-27599
FILMWORLD, INC.
---------------------------------------
(Name of Small Business Issuer in its Charter)
Nevada 88-0224017
- --------------------------- -------------
(State or 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 registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock Not Applicable
------------ ---------------------------
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $0.001 Per Share
----------------------------------------
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filings requirements for the past 90 days.
Yes X No
--- ---
<PAGE>
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-
KSB or any amendment to the Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year: The Issuer has
not had any revenue for the year ended December 31, 1999.
State the aggregate market value of the voting and non-voting common
equity held by non- affiliates computed by reference to the price at which the
common equity was sold, or the average bid and asked price of such common
equity, as of a specified date within the past 60 days. There was no market for
ther stock of the Issuer in the last 60 days.
PART I
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ITEM 1. DESCRIPTION OF BUSINESS
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(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.
-2-
<PAGE>
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 December 31, 1999, 7,848,517 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.
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 December 31, 1999.
(b) BUSINESS OF THE ISSUER
(1) Principal Products and Services and Their Markets
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 $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.
-3-
<PAGE>
(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
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.
-4-
<PAGE>
(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 $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
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.
-5-
<PAGE>
(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 December 31, 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
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.
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).
-6-
<PAGE>
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ITEM 2. DESCRIPTION OF PROPERTY
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(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.
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ITEM 3. 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.
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ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
- --------------------------------------------------------------------------------
To management's knowledge, the company has not submitted any
matter to a vote of the shareholders in over five years. Shareholder action has
been taken via consent of a majority of shareholders pursuant to applicable
state law.
-7-
<PAGE>
PART II
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ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
- --------------------------------------------------------------------------------
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 its filing on 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
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Quarter Ended High Bid Low Bid
--------------------------------------------------------------------
March 31, 2000 Unavailable Unavailable
December 31, 1999 Unavailable Unavailable
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 December 31, 1999.
On August 14, 1996, the Company issued a total of 500,000 shares of its
common stock pursuant to Rule 504 of Regulation D for $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.
-8-
<PAGE>
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.
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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS 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.
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
-9-
<PAGE>
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.
-10-
<PAGE>
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ITEM 7. FINANCIAL STATEMENTS
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FILMWORLD, INC.
A DEVELOPMENT STAGE ENTERPRISE
(Formerly American Pacific Financial Services)
FINANCIAL STATEMENTS
FOR THE YEARS ENDING DECEMBER 31, 1999, 1998 AND 1997
<PAGE>
<TABLE>
<CAPTION>
FILMWORLD, INC.
A DEVELOPMENT STAGE ENTEPRISE
TABLE OF CONTENTS
-----------------
Page
No.
------------
<S> <C>
ACCOUNTANT'S AUDIT REPORT F-1
FINANCIAL STATEMENTS
Balance Sheets F-2 - F-3
Statements of Operation F-4
Statements of Changes in Stockholder's Equity F-5
Statements of Cash Flows F-6
NOTES TO FINANCIAL STATEMENTS F-7 - F-11
</TABLE>
<PAGE>
W. 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 December
31, 1999, 1998 and 1997, the related statements of operations, changes in
stockholders' equity and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
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 December 31, 1999,
1998 and 1997, and the results of their operations, changes in stockholders'
equity, and their cash flows for the years then ended, 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.
/s/W. Dale McGhie
- -----------------
W. Dale McGhie
Reno, Nevada
March 22, 2000
F-1
<PAGE>
FILMWORLD, INC. -- A DEVELOPMENT STAGE ENTERPRISE
(Formerly American Pacific Financial Services)
BALANCE SHEETS
DECEMBER 31, 1999, 1998 AND 1997
ASSETS
1999 1998 1997
-------- ----- --------
CURRENT ASSETS
Cash $ 73 $-- $ 457
Prepaid Expenses -- -- 1,658
-------- ----- --------
Total Current Assets 73 -- 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 310 -- 11,024
-------- ----- --------
Total Property, Plant & Equipment 2,786 -- 15,492
-------- ----- --------
OTHER ASSETS
Film inventory, story rights and scenarios 536,400 -- --
Deposits 400 -- 1,658
-------- ----- --------
Total Other Assets 536,800 -- 1,658
-------- ----- --------
TOTAL ASSETS $539,659 $-- $ 19,265
======== ===== ========
The accompany notes are an integral part of these financial statements
F-2
<PAGE>
<TABLE>
<CAPTION>
FILMWORLD, INC. -- A DEVELOPMENT STAGE ENTERPRISE
(Formerly American Pacific Financial Services)
BALANCE SHEETS
DECEMBER 31, 1999, 1998 AND 1997
LIABILITIES AND STOCKHOLDERS' EQUITY
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
CURRENT LIABILITIES
Account Payable Trade $ 3,600 $ 9,594 $ 18,133
Accrued Interest $ 300 -- --
Bank Overdraft -- 3,844 --
Current Portion of Long Term Debt 159,335 -- 3,855
----------- ----------- -----------
Total Current Liabilities 163,235 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 -- -- --
and outstanding 7,848,517 shares on December 31, 1999,
and 779,266 shares on December 31 1998 and 1997,
(See Note 2) 7,849 779 779
Additional Paid in Capital 563,386 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) (194,811) -- --
----------- ----------- -----------
Total Stockholder's Equity 376,424 (13,438) (204,092)
----------- ----------- -----------
$ 539,659 $ -- $ 19,265
=========== =========== ===========
</TABLE>
The accompany notes are an integral part of these financial statements
F-3
<PAGE>
<TABLE>
FILMWORLD, INC. -- A DEVELOPMENT STAGE ENTERPRISE
(Formerly American Pacific Financial Services)
STATEMENTS OF OPERATION
FOR THE YEARS ENDING DECEMBER 31, 1999, 1998 AND 1997
<CAPTION>
From inception
of development
stage 1999 1998 1997
--------- --------- --------- ---------
REVENUE
<S> <C> <C> <C> <C>
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 22,435 22,435
Labor Costs -- -- 92,862 138,661
Travel (post 1998) 16,644 16,644
General and Administrative Expenses 5,432 7,632 33,377 186,484
--------- --------- --------- ---------
Total Operating Expenses 44,511 46,711 126,239 325,145
--------- --------- --------- ---------
Operating Income (Loss) (44,511) (46,711) 142,785 (415,848)
OTHER INCOME / (EXPENSE)
Organizational Costs (Note 2) (150,000) (150,000) -- --
Interest Expense (300) (300)
Forgiveness of Debt -- -- 308,466 --
(Bad Debt) -- -- (264,930) --
Gain on sale of Assets -- -- (503) --
--------- --------- --------- ---------
NET GAIN (LOSS) BEFORE INCOME
TAXES AND EXTRAORDINARY ITEM (194,811) (197,011) 185,818 (415,848)
Provision for Income Taxes (Note 6) -- -- -- --
--------- --------- --------- ---------
NET (LOSS) BEFORE
EXTRAORDINARY ITEM (194,811) (197,011) 185,818 (415,848)
Extraordinary Item (Notes 1 and 9) -- -- -- 105,178
--------- --------- --------- ---------
NET INCOME (LOSS) $(194,811) $(197,011) $ 185,818 $(310,670)
========= ========= ========= =========
Earnings (Loss ) Per Common Share (Note 2) -- $ (0.010) $ 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
F-4
<PAGE>
<TABLE>
FILMWORLD, INC. -- A DEVELOPMENT STAGE ENTERPRISE
(Formerly American Pacific Financial Services)
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE YEARS ENDING DECEMBER 31, 1999, 1998, AND 1997
<CAPTION>
Deficit
Capital Accum.
Stock 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 5,230 514,770 -- --
Stock issued for services at par 55,859 56 -- -- --
Quasi Reorganization (1,163,065) 1,163,065
Net (loss) for the year
ending December 31, 1999 -- -- -- (2,200) (194,811)
----------- ----------- ----------- ----------- -----------
Balance, August 31, 1999 7,848,517 $ 7,849 $ 563,386 $ -- $ (194,811)
=========== =========== =========== =========== ===========
</TABLE>
The accompany notes are in integral part of these financial statements
F-5
<PAGE>
<TABLE>
<CAPTION>
FILMWORLD, INC. -- A DEVELOPMENT STAGE ENTERPRISE
(Formerly American Pacific Financial Services)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDING DECEMBER 31, 1999, 1998, AND 1997
From inception
of development
stage 1999 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Cash Flows Operating Activities:
Net Income (Loss) $(194,811) $(197,011) $ 185,818 $(310,670)
Adjustments to Reconcile Net Income
to Net Cash provided by operating activities
Depreciation and Amortization 310 310 4,914 19,577
Book Value of Equipment Sold -- -- 10,578 216,569
Stock for services 56 56
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 845 (5,994) (8,540) 13,557
Change in Other Current Liability 300 300 -- (16,622)
--------- --------- --------- ---------
Net Cash Provided (Used) by
Operating Activities (193,700) (202,739) (112,380) 40,857
--------- --------- --------- ---------
Cash Flows Investment Activities:
Investments in film rights (536,400) (536,400) -- --
Investments in plant and equipment (3,096) (3,096) -- --
Gain on Liquidation of Subsidiary -- -- (102,485)
--------- --------- --------- ---------
Net Cash (Used) by
Investment Activities (539,496) (539,496) -- (102,485)
--------- --------- --------- ---------
Cash Flows Financing Activities:
Stockholder Loan 9,335 9,335 113,602 194,864
Repayment of long term debt -- -- (10,359) (139,325)
Contributions to Capital 573,934 586,817 4,836 --
Increase in long term debt 150,000 150,000 -- --
--------- --------- --------- ---------
Net Cash Provided (Used)
by Financing Activities 733,269 746,152 108,079 55,539
--------- --------- --------- ---------
Increase (Decrease) in Cash and Cash
Equivalents 73 3,917 (4,301) (6,089)
Cash at Beginning of Year -- (3,844) 457 6,546
--------- --------- --------- ---------
Cash at End of Year $ 73 $ 73 $ (3,844) $ 457
========= ========= ========= =========
</TABLE>
The accompany notes are an integral part of these financial statements
F-6
<PAGE>
FILMWORLD, INC. - A DEVELOPMENT STAGE ENTERPRISE
(Formerly American Pacific Financial Services)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999, 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.
F-7
<PAGE>
FILMWORLD, INC. - A DEVELOPMENT STAGE ENTERPRISE
(Formerly American Pacific Financial Services)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999, 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 non-current 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
non-current assets.
NATURE OF BUSINESS:
Filmworld is a producer, seller of motion pictures. They currently have rights
to several screenplays, which they will produce movies of in the near future.
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.
F-8
<PAGE>
FILMWORLD, INC. - A DEVELOPMENT STAGE ENTERPRISE
(Formerly American Pacific Financial Services)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
Note 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued 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 outstanding during the period: 4,286,000 for December, 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 were 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 NOTE AND CONTRACT
Amounts due under contract consisted of the following as of December 31, 1999,
1998 and 1997:
Balance Due
1999 1998 1997
Amount due on contract dated 7/23/99 to
Hidden Splendor Resources, payable on
demand with no interest $150,000 $ -- $ --
Note payable to Whyteburg Limited Unsecured
payable on demand with interest a 12% per annum 9,334 -- --
F-9
<PAGE>
FILMWORLD, INC. - A DEVELOPMENT STAGE ENTERPRISE
(Formerly American Pacific Financial Services)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
<S> <C> <C> <C>
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 159,334 -- 10,359
Less Current Portion 159,334 -- 3,855
---------- ---------- ----------
Long Term Debt $ -- $ -- $ 6,504
========== ========== ==========
</TABLE>
Note 4 - NOTE PAYABLE SHAREHOLDER
Notes Payable to Shareholder consisted of the following as of December
31, 1999, 1998 1997:
<TABLE>
<CAPTION>
Balance Due
1999 1998 1997
Note Payable, unsecured, dated 12/31/97, with interest accruing at 6% per
annum beginning 7/1/98.
<S> <C> <C> <C>
This note was forgiven in 1998 -- -- $ 197,864
</TABLE>
During 1998, the Shareholder loaned additional amounts to the Company for a
total payable of $308,466. The shareholder forgave the entire debt 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 carry 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 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.
F-10
<PAGE>
FILMWORLD, INC. - A DEVELOPMENT STAGE ENTERPRISE
(Formerly American Pacific Financial Services)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
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.
F-11
<PAGE>
- --------------------------------------------------------------------------------
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
- --------------------------------------------------------------------------------
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.
PART III
- --------------------------------------------------------------------------------
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
ACT
- --------------------------------------------------------------------------------
(a) Directors and Executive Officers
As of December 31, 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:
<TABLE>
<CAPTION>
Period Served As
Name Age Position Officer/Director*
- ---- --- -------- -----------------
<S> <C> <C>
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
</TABLE>
-11-
<PAGE>
*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.
(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 entertainment and promotion and with a partner formed
Hemdale which became one of the leading packagers, financiers and producers of
motion pictures. The company won many Oscar nominations and other prestigious
awards from around the World. Mr Daly has been responsible for over 100
productions including 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"
as well as "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 is an International entrepreneur and senior-level executive
with demonstrated ability to adapt very rapidly to new concepts and technologies
with an extensive background in business, financial and investment management.
Mr Tolner has a proven track record of success in top level corporate leadership
both internationally and in the U.S. in start-up and turnaround situations as
well as in joint ventures and acquisitions. During the last eight years his
achievements include conceptualizing, negotiating, funding and managing the
joint venture vehicle used in the expansion of the well-known, largest chain of
specialist sandwich retailers in London, England, Pret a Manger and subsequently
orchestrating a $250 million, fully funded, cash bid for the business by U.S.
interests backed by Apax Ventures of London. Negotiating and funding the
acquisition from a Danish Venture Capital company of a controlling interest in
an innovative company with joint ventures in television data broadcasting with
CNN and Reuters, and performing a substantial debt restructuring for the
Brazilian State owned shipping line Lloyd Brasiliero cn.
-12-
<PAGE>
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.
Mr. Walker also is a director of Talk Visual Corp. whose shares are
traded under the symbol TVCP on the OTC Bulletin Board market, as well as an
officer and director of Harvard Scientific Corp. whose shares are traded under
the symbol "VGEN" on the Over-the-Counter NASDAQ Bulletin Board.
(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;
-13-
<PAGE>
(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.
The officers and directors who are identified above are significant
employees of the Company.
(g) Section 16a Beneficial Ownership Compliance
Together with the filing of this Form 10-KSB, the officers, directors
and beneficial owners of more than 10% of the Company's common stock are filing
their initial statements of ownership on Form 3. To management's knowledge, such
filings are the only filings made on Forms 3, 4 or 5 in connection with the
Company's stock since the Company's charter was reinstated.
- --------------------------------------------------------------------------------
ITEM 10. 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.
-14-
<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term Compensation
Annual Compensation Awards Payouts
--------------------- ------------ ---------
(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 $ ($) ($) ($) SARs(#) ($) ($)
- -------- ------ ------ ----- ------ ----- -------- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mehahem Golan
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>
The Company has not compensated its management in the last three years
due to the fact that the Company has not been engaged in business since 1990.
However, the following table sets forth information about compensation paid or
accrued during the years ended December 31, 1999, 1998 and 1997 to the Company's
officers and directors. None of the Company's Executive Officers earned more
than $100,000 during the years ended December 31, 1999, 1998 and 1997.
-15-
<PAGE>
- --------------------------------------------------------------------------------
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
- --------------------------------------------------------------------------------
(a) 5% Shareholders:
<TABLE>
<CAPTION>
The following information sets forth certain information as of December
31, 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:
(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>
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
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
--------
</TABLE>
1 Such 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.
2 Such 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.
3 Such 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.
-16-
<PAGE>
(b) Security Ownership of Management:
(2)
<TABLE>
<CAPTION>
(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 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%
</TABLE>
Officers as a Group
(c) Changes in Control:
There is no arrangement which may result in a change in control.
---------
4 Such 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.
5 Such 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.
6 Such 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 is the owner of record of all 459,450 shares.
-17-
<PAGE>
- --------------------------------------------------------------------------------
ITEM 12. 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.
-18-
<PAGE>
- -------------------------------------------------------------------------------
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
- -------------------------------------------------------------------------------
To management's knowledge, the company has not filed any reports on
Form 8-K during the last year or during the last five years.
<TABLE>
<CAPTION>
Assigned Number Description
- --------------- -----------
<S> <C>
(2) Plan of acquisition, reorganization, arrangement, liquidation, or
succession: Included
(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: None
(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
</TABLE>
-19-
<PAGE>
- --------------------------------------------------------------------------------
SIGNATURES
- --------------------------------------------------------------------------------
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Dated: April 7, 2000.
FILMWORLD, INC.
By: /s/ Mark Tolner
---------------
Mark Tolner
Chief Executive Officer
-20-
