1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) of the
-------------------------------------------------
SECURITIES ACT OF 1934
For the Quarterly period ended June 30, 2000
Commission File Number 0-27599
FILMWORLD, INC.
---------------
(Exact Name of Registrant as Specified in Its Charter)
Nevada 88-0224017
------ ----------
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
50 West Liberty Street, Suite 880, Reno, NV 89501
-------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (775) 324-6655
Common Stock, Par Value $0.001 Per Share
(Title of Class)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
[X] Yes [ ] No
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.
7,848,517
NUMBER OF COMMON STOCK SHARES OUTSTANDING
-----------------------------------------
On August 18, 2000
---------------
Traditional Small Business Disclosure Format (Check One):
[X] Yes [ ] No
<PAGE>
ITEM 1. Financial Statements
FILMWORLD, INC.--A DEVELOPMENT STAGE ENTERPRISE
Financial Information
For the Quarter ending
June 30, 2000
Balance Sheet - Assets
Balance Sheet - Liabilities and Stockholders' Equity
Statement of Operations
Statement of Stockholder's Equity
Statement of Cash Flows
Notes to the Financial Statements
<PAGE>
FILMWORLD, INC.--A DEVELOPMENT STAGE ENTERPRISE
(Formerly American Pacific Financial Services)
BALANCE SHEETS
ASSETS
June 30, December 31,
2000 1999
(Unaudited) (Audited)
-------- --------
Current Assets:
Cash and cash equivalents $ 881 $ 73
-------- --------
Total Current Assets 881 73
-------- --------
Property, Plant, & Equipment:
Machines and Equipment 3,096 3,096
-------- --------
Less: Accumulated Depreciation 310 310
-------- --------
Total Property, Plant & Equipment 2,786 2,786
-------- --------
Other Assets
Film Inventory, story rights and scenarios 536,400 536,400
Deposits 400 400
-------- --------
Total Other Assets 536,800 536,800
-------- --------
TOTAL OTHER ASSETS $540.466 $539,659
======== ========
The accompanying Notes are an integral part of these financial statements
2
<PAGE>
FILMWORLD, INC.--A DEVELOPMENT STAGE ENTERPRISE
BALANCE SHEET (CONTINUED)
LIABLITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
(Unaudited) (Audited)
------------- -------------
<S> <C> <C>
Current Liabilities:
Accounts Payable $ 0 $ 3,600
Accrued Interest 300 300
Current Portion of Long Term Debt 150,000 159,335
------------- -------------
Total Current Liabilities 150,300 163,235
------------- -------------
Long Term Liabilities:
Loan from Whyteburg 9,334 --
Due Entertech Media Group 5,000 --
------------- -------------
Total Long Term Liabilities 14,334 --
------------- -------------
Stockholders' Equity:
Common Stock, $.001 par value; 100,000,000
shares authorized; 7,848,517 and 7,848,517
shares issued and outstanding at June 30, 2000
and December 31, 1999, respectively (Note 2) 7,849 7,849
Preferred Stock, $.001 par value,10,000,000 shares
Authorized, none issued 0 0
Additional paid-in capital 563,386 563,386
Deficit accumulated during the development stage (195,403) (194,811)
------------- -------------
Total Stockholders' Equity $ (375,832) $ (539,659)
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 540,466 $ 1,910
============= =============
</TABLE>
The accompanying Notes are an integral part of these financial statements
3
<PAGE>
FILMWORLD, INC.--A DEVELOPMENT STAGE ENTERPRISE
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended Inception
June 30, June 30, June 30, June 30, To
2000 1999 2000 1999 06/30/00
(Unaudited) (Audited) (Unaudited) (Audited) (Unaudited)
--------- -------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Net Sales $ -- $ -- $ -- $ -- --
--------- -------- --------- ----------- ---------
Cost of Sales -- -- -- -- --
--------- -------- --------- ----------- ---------
Gross Profit -- -- -- -- --
--------- -------- --------- ----------- ---------
Operating Expenses:
General and administrative expenses 27 -- 592 -- 45,103
Research and development -- -- -- -- --
Depreciation and amortization -- -- -- -- --
--------- -------- --------- ----------- ---------
Total Operating Expenses 27 -- 592 -- 45,103
--------- -------- --------- ----------- ---------
Loss from Operations (27) -- (592) -- (45,103)
--------- -------- --------- ----------- ---------
Other Income (Expense):
Other Income -- -- -- -- --
Forgiveness of debt -- -- -- -- --
Organizational Costs -- -- -- -- (150,000)
Interest Income -- -- -- --
Dividend Income -- -- -- -- --
Interest Expense -- -- -- -- (300)
Loss on disposition of Fixed Assets or
Securities -- -- -- -- --
--------- -------- --------- ----------- ---------
Total Other Income and Expense -- -- -- -- (150,300)
--------- -------- --------- ----------- ---------
Net Loss $ (27) -- $ (592) $ -- $(195,403)
========= ======== ========= =========== =========
Loss per Common Share $ -- -- $ -- $ (0) $ .02
========= ======== ========= =========== =========
</TABLE>
The accompanying Notes are an integral part of these financial statements.
4
<PAGE>
FILMWORLD, INC.--A DEVELOPMENT STAGE ENTERPRISE
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31,1996, 1997, 1998 AND 1999 AND THREE MONTHS ENDED
JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
Accum.
Additional Deficit
COMMON STOCK Paid-in Retained Development
Shares 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 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 year ending Dec.31, 1997 -- -- -- (310,670) --
----------- ----------- ----------- ----------- -----------
Balance December 31, 1997 779,266 779 $ 1,141,812 (1,346,683) --
----------- ----------- ----------- ----------- -----------
Stockholders' contribution to paid in
capital -- -- 4,836 -- --
----------- ----------- ----------- ----------- -----------
Net profit for the year ending
December 31, 1998 -- -- -- 185,818 --
----------- ----------- ----------- ----------- -----------
Balance December 31, 1998 779,236 779 1,146,648 (1,160,865) --
----------- ----------- ----------- ----------- -----------
Stockholder's contribution to paid-in
capital -- -- 12,883 -- --
----------- ----------- ----------- ----------- -----------
Issuance of shares for cash,
Net of offering costs 615,034 615 52,150 -- --
----------- ----------- ----------- ----------- -----------
Stock issued for services at
part 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 -- -- --
----------- ----------- ----------- ----------- -----------
</TABLE>
The accompanying Notes are an integral part of these financial statements.
5
<PAGE>
FILMWORLD, INC.--A DEVELOPMENT STAGE ENTERPRISE
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1997, 1998 AND 1999 AND
THE THREE MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Retained
Shares Amount Capital Earnings Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Quasi Reorganization -- -- (1,163,065) 1,163,065 --
Net (loss) for the year ending -- -- -- (2,200) (194,811)
December 31, 1999
Balance December 31, 1999 7,848,517 $ 7,849 $ 563, 386 $ (2,200) $ (194,811)
Net (loss) for the three months ending
March 31, 2000 -- -- -- (565) --
----------- ----------- ----------- ----------- -----------
Balance March 31, 2000 7,848,517 $ 7,849 $ 563,386 $ (2,765) $ (194,811)
Net (loss) for the three months ending
June 30, 2000 (27)
Balance June 30, 2000 7,848,517 $ 7,849 $ 563,386 $ (2,792) $ (194,811)
</TABLE>
The accompanying Notes are an integral part of these financial statements.
6
<PAGE>
FILMWORLD, INC.--A DEVELOPMENT STAGE ENTERPRISE
STATEMENTS OF CASH FLOWS
1/13/87
Six Months Ended (Inception)
June June to June
30, 2000 30, 1999 30,2000
(Unaudited) (Unaudited) (Unaudited)
--------- --------- ---------
Reconciliation of Net Loss to Net Cash
Operating Activities:
Net Loss $ (592) 0 $(197,603)
--------- --------- ---------
Adjustments to Reconcile Net Loss to
Net Cash Provided by (Used in)
Operating Activities:
Depreciation -- -- 310
Stock for services -- -- 56
(Increase) Decrease in:
Utility Deposits -- -- (400)
Increase (Decrease) in:
Accounts Payable (3,600) -- (2,755)
Other Current Liabilities -- -- 300
--------- --------- ---------
Net Cash Provided (Used) by
Operating Activities (4,192) -- (193,727)
--------- --------- ---------
Investment Activities:
Investment in film rights -- -- (536,400)
Investment in plant and equipment
-- -- (3,096)
--------- --------- ---------
Net Cash Provided by (Used in)
Investment Activities 0 -- (539,496)
--------- --------- ---------
Financing Activities:
Advance from Entertech Media Group 5,000 -- --
Stockholder Loan -- -- 9,335
Contributions to Capital -- -- 573,934
Increase in long term debt -- -- 150,000
--------- --------- ---------
Net Cash Provided (Used) in
Investing Activities 5,000 -- 733,269
--------- --------- ---------
Increase (Decrease) in Cash and Cash
Equivalents 808 -- 881
Cash at Beginning of Period 73 -- 0
--------- --------- ---------
Cash at End of Period 881 -- 881
========= ========= =========
The accompanying Notes are an integral part of these financial statements.
7
<PAGE>
FILMWORLD, INC. - A DEVELOPMENT STAGE ENTERPRISE
(Formerly American Pacific Financial Services)
NOTES TO THE FINANCIALS STATEMENTS
JUNE 30, 2000, DECEMBER 31, 1999, 1998 AND 1997
NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS:
FilmWorld, Inc. ("the Company") is a Development State Enterprise as defined by
FASB statement No. 7, "Accounting and Reporting by Development State
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 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 operation 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 given 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 additionally paid in capital by the same amount.
The Company is currently in the motion picture production and distribution
business.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPALS OF CONSOLIDATION:
These financial statements were consolidated during 1997 and 1998 to include the
account 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 maturities of three months of 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 assts. All other capitalized film costs are classified as
non-current assets.
8
<PAGE>
FILMWORLD, INC. - A DEVELOPMENT STAGE ENTERPRISE
(Formerly American Pacific Financial Services)
NOTES TO THE FINANCIALS STATEMENTS
JUNE 30, 2000, DECEMBER 31, 1999, 1998 AND 1997
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
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: 7.848,517 for the three months ended
March 31, 2000, 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, actually 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 uncured instead of
being capitalized and amortized.
9
<PAGE>
FILMWORLD, INC. - A DEVELOPMENT STAGE ENTERPRISE
(Formerly American Pacific Financial Services)
NOTES TO THE FINANCIALS STATEMENTS
JUNE 30, 2000, DECEMBER 31, 1999, 1998 AND 1997
NOTE 3 - AMOUNTS DUE ON NOTE AND CONTRACT:
Amounts due under contract consisted of the following as of December 31, 1999,
1998 and 1997:
<TABLE>
<CAPTION>
Balance Due
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C> <C> <C>
Amount due on contract dated 7/23/99 to Hidden Splendor Resources, $150,000 $ 0 $ 0
Ltd. payable on demand with no interest
Note payable to Whyteburg Limited, unsecured, payable on demand 9,335 0 0
with interest at 12% per annum
A note dated 7/9/96, secured by an automobile, payable at $356 per 0 0 10,359
-------- -------- --------
month, including interest at 4.9% per annum
-
Total Notes Payable 159,335 0
Less Current Portion -159,335 0 -3,855
-------- -------- --------
Long Term Debt $ -- $ -- $ --
-------- -------- --------
</TABLE>
NOTE 4 - NOTE PAYABLE SHAREHOLDER:
Notes Payable to Shareholder consisted in the following as of December 31, 1999,
1998, and 1997:
1999 1998 1997
-------- -------- --------
- - $197,864
Note Payable, unsecured, dated 13/31/97, with interest accruing at 6% per annum
beginning 7/1/98. This note was forgiven in 1998.
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 $195,000,
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 8 - 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 9 - 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
adjustments that might result from the outcome of this uncertainty.
10
<PAGE>
ITEM 2: Management's Discussion and Analysis or Plan of Operation
Plan of Operation
Statements contained herein that are not historical facts are
forward-looking statements as that term is defined by the Private Securities
Litigation Reform Act of 1995. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, the
forward-looking statements are subject to risks and uncertainties that could
cause actual results to differ from those projected. The Company cautions
investors that any forward-looking statements made by the Company are not
guarantees of future performance and that actual results may differ materially
from those in the forward-looking statements. Such risks and uncertainties
include, without limitation: well established competitors who have substantially
greater financial resources and longer operating histories, regulatory delays or
denials, the Company's ability to compete as a start-up company in a highly
competitive market, and access to sources of capital.
The second quarter was a very quiet quarter for the Company which has
been awaiting relisting on the OTC Bulletin Board. The Company did not incur any
direct costs nor did it expend any funds.
The management and shareholders of the Company continued to investigate
possible film projects for the Company to develop and maintained their efforts
to dsvelop funding for two of the screenplays owned by the Company.
It is anticipated that the activities of the Company will expand upon
the relisting of its shares.
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
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 its
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.
11
<PAGE>
PART II
Other Information
ITEM 1: Legal Proceedings
The Company is not party to, and none of the Company's property is
subject to, any pending or threatened legal, governmental, administrative or
judicial proceedings that will have a materially adverse effect upon the
Company's financial condition or operation.
ITEM 2: Changes in Securities and Use of Proceeds
None.
ITEM 3: Defaults Upon Senior Securities
None.
ITEM 4: Submission of Matters to a Vote of Security Holders
No matters have been submitted to a vote of the security holders during
the period covered by this report through the solicitation of proxies or
otherwise.
ITEM 5: Other Information
None.
ITEM 6: Exhibits and Reports on Form 8-K
A. Exhibits
(2) Plan of acquisition, reorganization, liquidation or succession:
NONE.
(3) (i) Articles of Incorporation *
(ii) By-laws *
* Incorporated by reference from the Registrant's Form 10-SB.
B. Reports on Form 8-K.
The Registrant did not file reports on Form 8-K during the quarter
covered by this report.
Signatures
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Dated: August 18, 2000
FILMWORLD, INC.
By /s/ Mark Tolner
------------------
Mark Tolner
Chief Executive Officer
