UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From ________ to ________
Commission File Number 2-96624-D
MAGICWORKS ENTERTAINMENT INCORPORATED
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 87-0425513
------------------------ ---------------------------------
(State of incorporation) (IRS Employer Identification No.)
930 WASHINGTON AVENUE
MIAMI BEACH, FLORIDA 33139
---------------------------------------- ----------
(Address of principal executive offices) (zip code)
(305) 532-1566
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 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.
Yes X No ___
Common stock, par value $.001 per share: 21,800,300
outstanding as of July 31, 1996
<PAGE>
MAGICWORKS ENTERTAINMENT INCORPORATED
INDEX
PAGE
----
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Balance Sheets as of June 30, 1996
and December 31, 1995 3
Statements of Operations for the
Three Months and Six Months Ended
June 30, 1996 and 1995 and from inception
through June 30, 1996 4
Statements of Stockholders' Equity
from inception through June 30, 1996 5
Statements of Cash Flows for the
Three Months and Six Months Ended June 30, 1996
and 1995 and from inception through June 30, 1996 6-7
Notes to Financial Statements 8
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. 9
PART I. OTHER INFORMATION
ITEM 1. Legal Proceedings 10
ITEM 2. Changes in Securities 10
ITEM 3. Defaults upon Senior Securities 10
ITEM 4. Submission of Matters to a Vote of Security Holders 10
ITEM 5. Other Information 11
ITEM 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
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<PAGE>
PART 1. FINANCIAL INFORMATION
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ITEM 1. FINANCIAL STATEMENTS
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MAGICWORKS ENTERTAINMENT INCORPORATED
(Formerly Shadow Wood Corporation)
Balance Sheets
(Unaudited)
ASSETS
JUNE 30, DECEMBER 31,
1996 1995
--------- ------------
CURRENT ASSETS
Cash $ -- $ 415
--------- ---------
Total Current Assets -- 415
--------- ---------
TOTAL ASSETS $ -- $ 415
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 21,047 $ 10,588
--------- ---------
Total Current Liabilities 21,047 10,588
--------- ---------
STOCKHOLDER'S EQUITY (DEFICIT)
Common Stock, $.0001 par value,
250,000,000 shares authorized; 3,889,750
and 3,889,750 shares issued and
outstanding, respectively 389 389
Additional paid-in-capital 117,637 116,637
Deficit accumulated during the
development stage (139,073) (127,199)
--------- ---------
Total Stockholders' Equity (Deficit) (21,047) (10,173)
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT) $ -- $ 415
========= =========
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<PAGE>
<TABLE>
<CAPTION>
MAGICWORKS ENTERTAINMENT INCORPORATED
(Formerly Shadow Wood Corporation)
Statements of Operations
(Unaudited)
FROM INCEPTION
ON
FEBRUARY 19,
FOR THE THREE FOR THE SIX 1985
MONTHS MONTHS THROUGH
ENDED ENDED JUNE 30,
JUNE 30, JUNE 30, 1996
-------------------------- -------------------------- -------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues $ -- $ -- $ -- $ -- $ --
Expenses -- -- -- -- --
Loss from discontinued
operations (865) (3,296) (11,874) (3,296) (139,073)
----------- ----------- ----------- ----------- ---------
Net (loss) $ (865) $ (3,296) $ (11,874) $ (3,296) $(139,073)
----------- ----------- ----------- ----------- ---------
Net income (loss) per share $ (0.00) $ (0.00) $ (0.00) $ (0.00) $ (0.00)
=========== =========== =========== =========== =========
Weighted average common
shares and common
share equivalents outstanding 3,889,750 3,889,750 3,889,750 3,889,750
=========== =========== =========== ===========
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
MAGICWORKS ENTERTAINMENT INCORPORATED
(Formerly Shadow Wood Corporation)
Statements of Stockholders' Equity (Deficit)
(Unaudited)
DEFICIT
ACCUMULATED
COMMON STOCK ADDITIONAL DURING THE
---------------- PAID-IN DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE
-------- ------ ---------- -----------
<S> <C> <C> <C> <C>
Balance at inception
on February 19, 1985 -- $-- $ -- $ --
Issuance of shares to the
officers for cash on April 1,
1985 for $0.07 per share 127,500 13 8,987 --
Issuance of shares of common
stock to the public for $0.40
per share 261,250 26 104,474 --
Deferred offering costs offset
against additional paid-in capital -- -- (12,958) --
Shares issued to officers and
others for an average price
of $0.002 per share 3,501,000 350 7,035 --
Net loss from inception on
February 19, 1985 through
December 31, 1991 -- -- -- (117,993)
---------- ---- --------- ---------
Balance, December 31, 1991 3,889,750 389 107,538 (117,993)
Net loss for the year ended
December 31, 1992 -- -- -- --
---------- ---- --------- ---------
Balance, December 31, 1992 3,889,750 389 107,538 (117,993)
Net loss for the year ended
December 31, 1993 -- -- -- (1,777)
---------- ---- --------- ---------
Balance, December 31, 1993 3,889,750 389 107,538 (119,770)
Contribution of cash by officers
to the Company (Note 3) -- -- 500 --
Net loss for the year ended
December 31, 1994 -- -- -- (1,400)
---------- ---- --------- ---------
Balance, December 31, 1994 $3,889,750 $389 $ 108,038 $(121,170)
---------- ---- --------- ---------
Balance, December 31, 1994 $3,889,750 $389 $ 108,038 $(121,170)
Contribution of cash by officers
to the Company (Note 3) -- -- 8,599 --
Net loss for the year
ended December 31, 1995 -- -- -- (6,029)
---------- ---- --------- ---------
Balance, December 31, 1995 3,889,750 389 116,637 (127,199)
Expenses paid in the Company's
behalf by shareholders -- -- 1,000 --
Net loss for the six
months ended
June 30, 1996 -- -- -- (11,874)
---------- ---- --------- ---------
Balance, June 30, 1996 $3,889,750 $389 $ 117,637 $(139,073)
========== ==== ========= =========
</TABLE>
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<PAGE>
MAGICWORKS ENTERTAINMENT INCORPORATED
(Formerly Shadow Wood Corporation)
Statements of Cash Flows
(Unaudited)
FOR THE THREE MONTHS ENDED
JUNE 30,
--------------------------
1996 1995
---- -------
CASH FLOWS FROM
OPERATING ACTIVITIES
Net income (loss) from
discontinued operations (865) $(3,296)
Adjustment to reconcile loss to net
cash used by operating activities:
Increase in account payable 865 (1,261)
---- -------
Net Cash Used by Operating Activities -- (4,557)
---- -------
CASH FLOWS FROM
INVESTING ACTIVITIES -- --
---- -------
CASH FLOWS FROM
FINANCING ACTIVITIES
Contributions of cash by officers
to additional paid-in capital -- 8,599
Issuance of Common stock -- --
---- -------
Net Cash Provided by
Financing Activities -- 8,599
---- -------
INCREASE IN CASH -- 4,042
-------
CASH AT BEGINNING OF PERIOD -- 500
==== =======
CASH AT END OF PERIOD -- $ 4,542
==== =======
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<PAGE>
MAGICWORKS ENTERTAINMENT INCORPORATED
((Formerly Shadow Wood Corporation)
Statements of Cash Flows
(Unaudited)
FOR THE SIX FROM INCEPTION ON
MONTHS ENDED FEBRUARY 19, 1985
JUNE 30 THROUGH JUNE 30,
-------------------- -----------------
1996 1995 1996
---- ---- ----
CASH FLOWS FROM
OPERATING ACTIVITIES
Net income (loss) from
discontinued operations $(11,874) $(3,296) $(139,073)
Adjustment to reconcile loss
to net cash used by operating
activities:
Increase in accounts payable 10,459 (1,261) 21,047
-------- ------- ---------
Net Cash Used by
Operating Activities (1,415) (4,557) (118,026)
-------- ------- ---------
CASH FLOWS FROM
INVESTING ACTIVITIES
Contributions of cash by Officers
to additional paid-in-capital 1,000 8,599 10,099
Issuance of common stock -- -- 107,927
-------- ------- ---------
Net Cash Provided by
Financing Activities 1,000 8,599 118,026
-------- ------- ---------
INCREASE IN CASH (415) 4,042 --
CASH AT BEGINNING OF PERIOD 415 500 --
-------- ------- ---------
CASH AT END OF PERIOD $ -- $ 4,542 $ --
======== ======= =========
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<PAGE>
MAGICWORKS ENTERTAINMENT INCORPORATED
(Formerly Shadow Wood Corporation)
Notes to the Financial Statements
June 30, 1996 and 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
The financial statements presented are those of Magicworks
Entertainment Incorporated (formerly known as Shadow Wood
Corporation) (the "Company"). The Company was incorporated under
the laws of the state of Utah on February 19, 1985. The Company
was incorporated for the purpose of providing a vehicle which
could be used to raise capital and seek business opportunities
believed to hold a potential for profit. See Note 4 below.
b. Accounting Method
The Company's financial statements are prepared using the accrual
method of accounting. The Company has elected a calendar year
end.
c. Cash and Cash Equivalents
Cash equivalents include short-term, highly liquid investments
with maturities of three months or less at the time of
acquisition.
d. Loss Per Share
The computations of loss per share of common stock are based on
the weighted average number of shares outstanding at the date of
the financial statements.
e. Provision for Taxes
At June 30, 1996, the Company had net operating loss
carryforwards totaling approximately $140,000 that may be offset
against future taxable income through 2011. No tax benefit has
been reported in the financial statements, because the Company
believes there is a 50% or greater chance the carryforward will
expire unused. Accordingly, the potential tax benefits of the
loss carryforward are offset by a valuation allowance of the same
amount.
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<PAGE>
f. Basis of Presentation
The accompanying financial statements are not presented on a
consolidated basis. The Company's former subsidiary ceased
operation in 1989 and the losses have been recorded as
discontinued operations.
NOTE 2 - ADJUSTMENTS
In the opinion of the Company, the accompanying unaudited
financial statements contain all adjustments, consisting of only
normal recurring adjustments, necessary to present fairly the
financial position of the Company for the six months ended June
30, 1996, and the results of its operations and changes in its
financial position for the six months ended June 30, 1996, and
June 30, 1995, respectively, and from inception on February 19,
1985 through June 30, 1996. The results of its operations for
such interim periods are not necessarily indicative of the
results to be expected for the entire year.
NOTE 3 - RELATED PARTY TRANSACTIONS
During 1996 and 1995, officers of the Company contributed $1,000
and $8,599, respectively, to the Company to meet minimal Company
expenses.
NOTE 4 - SUBSEQUENT EVENT
On July 30, 1996, the Company merged with Magicworks
Entertainment Incorporated, a privately held Florida corporation.
See "Part II. Item 5 - Other Information."
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ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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MATERIAL CHANGES IN FINANCIAL CONDITION
As of June 30, 1996, the Company's financial condition had not
changed materially. On July 30, 1996, the Company merged with Magicworks
Entertainment Incorporated, a privately held Florida Corporation. See "Part II.
Item 5 - Other Information".
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<PAGE>
MATERIAL CHANGES IN RESULTS OF OPERATIONS
The Company had losses from discontinued operations of $11,874
for the six months ended June 30, 1996, as compared to losses from discontinued
operations of $3,296 for the six months ended June 30, 1995.
PART 2. OTHER INFORMATION
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ITEM 1. LEGAL PROCEEDINGS
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None.
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ITEM 2. CHANGES IN SECURITIES
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None.
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ITEM 3. DEFAULTS UPON SENIOR SECURITIES
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Not applicable.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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During the quarter ended June 30, 1996, a majority of shares of
each class of capital stock of the Company entitled to vote approved the Merger
(as defined below in Item 5 below) and all of the transactions contemplated
thereby as described in Item 5 below.
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<PAGE>
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ITEM 5. OTHER INFORMATION
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On July 30, 1996, the Company merged (the "Merger") with
Magicworks Entertainment Incorporated, a privately-held Florida corporation (the
"Acquiree"). The Company was the survivor of the Merger. The Merger was
consummated pursuant to the terms of an Agreement and Plan of Merger, dated as
of July 24, 1996 (the "Merger Agreement"), by and among the Company, the
Acquiree, and Robert L. Wright and Mark Archibald. Pursuant to the Merger, the
Company issued one share of its common stock, $.001 par value per share ("Common
Stock"), in exchange for each share of common stock of the Acquiree outstanding
immediately prior to the Merger (the "Exchange Ratio"). In connection with the
Merger, the directors of the Acquiree were appointed to serve as members of the
Board of Directors of the Company in place of its former directors, Robert L.
Wright and Mark Archibald, each of whom resigned upon consummation of the
Merger. In addition, Messrs. Wright and Archibald resigned as the officers of
the Company and the officers of the Acquiree were appointed officers of the
Company. As a result of the foregoing, the Board of Directors and officers of
the Company now consist of the following persons:
NAME POSITION
---- --------
Brad Krassner Co-Chairman of the Board of Directors and Chief
Executive Officer
Joe Marsh Co-Chairman of the Board of Directors
Lee Marshall President, Chief Operating Officer and Director
Steven Chaby Chief Financial Officer and Treasurer
Larry Turk Secretary
H. Yale Gutnick Director
The Merger resulted in a change in control of the Company. The
21,489,120 shares of Common Stock issued to the shareholders of the Acquiree at
the time of the Merger represent approximately 87% of the Common Stock
outstanding subsequent to the Merger. Immediately prior to and in anticipation
of the Merger, the Company effectuated a 12.5 to 1 reverse stock split of its
then outstanding Common Stock thereby reducing the outstanding number of shares
of Common Stock to 311,180 (the "Reverse Stock Split").
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<PAGE>
Those persons who currently own five percent or more of the
outstanding shares of Common Stock are as follows:
% OF OUTSTANDING
NAME NO. OF SHARES POSITION SHARES(1)
---- ------------- -------- ---------
Brad Krassner 3,080,879 Co-Chairman of the Board of 14.1%
Directors and Chief Executive
Officer
Joe Marsh 8,384,653 Co-Chairman of the Board of 38.5%
Directors
Lee Marshall 3,403,070 President, Chief Operating 15.6%
Officer, Director
Glen Bechdel 3,196,941 None 14.7%
- -------------
(1) Based on a total of 21,800,300 shares of Common Stock outstanding.
As a result of the Merger, the Company, as the survivor of the Merger,
acquired all of the assets (consisting mainly of cash and contract rights) and
liabilities of the Acquiree.
The Exchange Ratio, and the other conditions precedent to the
Merger, including the effectuation of the Reverse Stock Split, were determined
in arm's-length negotiations between the Company and the Acquiree. None of the
Acquiree's officers, directors or shareholders were affiliates of the Company
prior to the Merger. The principal basis used to determine the number of shares
of Common Stock to be issued by the Company to the shareholders of the Acquiree
in the Merger was the percentage of the Company's outstanding Common Stock to be
owned by the former shareholders of the Acquiree subsequent to the Merger,
rather than any traditional valuation formula.
In accordance with a Plan and Articles of Merger pursuant to
which the Merger was effectuated, the Company amended its Certificate of
Incorporation to: (i) change its corporate name to Magicworks Entertainment
Incorporated, (ii) increase the number of authorized shares of Common Stock to
50,000,000, and (iii) authorize 5,000,000 shares of preferred stock, $.001 par
value, to be issued in such series and with such rights, preferences and
designations as determined by the Company's Board of Directors.
-12-
<PAGE>
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- --------------------------------------------------------------------------------
(a) EXHIBITS.
None.
(b) REPORTS ON FORM 8-K. During the quarter ended June 30, 1996, no
reports on Form 8-K were filed by the Company.
-13-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Company has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
MAGICWORKS ENTERTAINMENT
INCORPORATED
(FORMERLY SHADOW WOOD CORPORATION)
Date: August 20, 1996 By /s/ BRAD KRASSNER
---------------------------------
Brad Krassner, Co-Chairman of the Board of
Directors and Chief Executive Officer
Date: August 20, 1996 By /s/ STEVEN CHABY
---------------------------------
Steven Chaby, Chief Financial
Officer and Treasurer
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 21,047
<BONDS> 0
0
0
<COMMON> 389
<OTHER-SE> 117,367
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> (11,874)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (11,874)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
