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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________
FORM 10-KSB
(Mark One)
[ ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2000
[ ] 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 33-2150-LA
____________
PHANTOMFILM.COM
(Exact name of registrant as specified in its charter)
Nevada Not Applicable
(State of incorporation) (I.R.S. Employer Identification No.)
Suite 400
1111 West Georgia Street
Vancouver, BC Canada V6E 4M3
(address of principal executive office) (zip code)
(604)689-5377
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12 (b) of the Act: None
Title of each class Name of each exchange on which registered
Common Shares, $0.001 par value
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 ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of regulation S-K is not contained herein, and will not 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-K or any amendment to
this Form 10-K. ___
The aggregate market value of the voting stock held by non-affiliates of the
registrant was approximately $795,415 as of March 31, 2000
The number of shares of common stock outstanding as of March 31, 2000 was
7,081,302.
ITEM 1. DESCRIPTION OF BUSINESS
INTRODUCTION
PhantomFilm.com (hereinafter referred to as the "Company") is intending to
become a leading provider of branded products that enable the creation and
real-time delivery of streaming media on the Web. The Company intends to
establish a Business Services Division which will provide cost-effective
streaming video and audio services to businesses and other organizations.
These business services will include the turnkey production of press
conferences, investor conferences, trade shows, stockholder meetings, training
sessions, media events, rock concerts, late breaking news, movie trailers, new
product introductions, and numerous other media events. The Company intends to
derive revenues from licensing the streaming video technology to other
companies and from the sale of advertising on its own Web sites, including
gateway ads with guaranteed click-thrus, channel and event sponsorships, and
traditional banner ads. Phantomfilm.com believes that streaming media
technology is essential to the evolution of the World Wide Web as a mass
communication medium since is provides a more compelling user experience.
Although the company is not one of the early entrants into the Internet video
market, it believes that the market will readily accept the browser-based, no
downloading streaming video.
INDUSTRY BACKGROUND
The Internet has grown rapidly in recent years, spurred by developments such
as easy-to-use Web browsers, the availability of inexpensive multimedia PCs
and Internet access, the adoption of more robust network architectures, and
the emergence of compelling Web-based content and commerce applications. The
broad acceptance of the Internet Protocol ("IP") standard has also led to the
emergence of intranets and the development of a wide range of non-PC devices
that enable users to easily access the Internet and intranets. As an
interactive, searchable, user-controlled medium, the Web provides for a highly
engaging experience and allows users to access an almost unlimited variety and
supply of content at their convenience. The Web also enables content providers
and advertisers to establish personalized experiences for and communications
with consumers. Streaming media technology has enhanced the graphical
capabilities of the Internet and intranets.
Much of the Internet's rapid evolution towards becoming a mass medium can be
attributed to the accelerated pace of technological innovation, which has
expanded the Web's capabilities and improved users' experiences. Most notably,
the Internet has evolved from a mass of static, text-oriented Web pages and
email services to a much richer environment, capable of delivering graphical,
interactive and multimedia content. Prior to the development of streaming
media technologies, users could not play back audio and video clips until the
content was downloaded in its entirety. As a result, live Internet broadcasts
were not possible and archived clips were cumbersome to download and use. The
development of streaming media products by companies like PhantomFilm enables
the simultaneous transmission and playback (i.e., the Internet broadcast) of
continuous "streams" of audio and video content over the Internet and
intranets. These technologies have evolved to deliver audio and video over
widely used 28.8 kilobits per second ("kbps") narrow bandwidth modems, yet can
scale in quality to take advantage of higher speed access that is expected to
be provided by xDSL, cable modems and other emerging broadband technologies.
Thousands of content providers are now providing media over the Internet, and
millions of new streaming media users are now accessing streaming media. As
the audience for streaming media has grown substantially, many new business
models have emerged. Companies are generating revenue by aggregating
streaming media, developing streaming media authoring tools, offering turnkey
services, and offering media hosting services. Businesses are generating
revenue from incorporating streaming media into their Web sites and
advertising in new and interesting ways.
Streaming audio and video content on the Internet offers certain
opportunities that are not generally available from traditional media.
Currently available analog technology and government regulations limit the
ability of radio and television stations to broadcast beyond certain
geographic areas. Radios and televisions are not widely used in office
buildings and other workplaces, where Internet access has become commonplace.
Traditional business communication tools such as audio conferencing and
videoconferencing can be costly, non-targeted and inconvenient. In addition,
traditional videocasts are limited in their ability to measure or identify in
real time the listeners or viewers of a program. By using the Internet,
streaming media content can be targeted to a geographically dispersed audience
of customers, suppliers, employees and stockholders at relatively low costs
and with television-like quality. Internet users can interact with the
streaming content by responding to online surveys, voting in polls or
obtaining additional information. In addition, Internet videos provide highly
specific information about an audience to content providers, advertisers and
users of Internet business services. The convergence of the Internet's
capabilities and attributes has accelerated its acceptance as a business tool,
leading to rapidly growing economic opportunities in Web-based advertising and
business service offerings.
THE PHANTOMFILM.COM SOLUTION
PhantomFilms' streaming video will enable the transmission of real-time
streaming media content over the Internet and intranets. The company believes
it will be able to establish a significant brand for its streaming video
technology due to its high quality and ease of use. PhantomFilms' streaming
video is designed to address the technological and market development
challenges that confront streaming media content providers and users.
BROWSER BASED STREAMING MEDIA TECHNOLOGY
PhantomFilm.com intends to be a major player in the development of mainstream
usage of browser based streaming media technology. PhantomFilm's streaming
video uses advanced compression, decompression, transmission and error-
correction technologies to permit better delivery of streamed content even in
low bandwidth constrained environments. Because PhantomFilm's streaming video
requires no downloads or software purchases, it is easier for users to take
advantage of its superb display characteristics. It is the company's belief
that many web sites can now offer a large and comprehensive selection of live
and on-demand audio and video presentations on the Internet, including
sporting events, talk shows, music events, television shows, business events,
full-length or movie trailers, CD's clips, full coverage news, commentary and
author read audio-books.
The Company intends to provide access to the streaming video to individual
users for no cost as part of its strategy to build brand loyalty and increase
consumer demand for its products. Widespread use of Phantom video is
guaranteed once consumers get used to the simplicity and ease of use of the
"instant-on" video. The company believes that Phantom video will grow to be
the preferred method of listening to and viewing content over the Internet.
The company intends on extensive promotional efforts to ensure Phantom's
streaming video will be one of the most widely recognized and used brand on
the Internet.
The Company intends to implement a business services model that will enable
customers to conduct cost-effective Internet or intranet videocasts of live
and on-demand business and educational programming, including press
conferences, conference calls, trade shows, stockholder meetings, new product
introductions, training sessions, distance learning seminars, customized
corporate TV programs, and media events, each custom tailored to meet the
needs of our customer's. The Company believes that these extra services will
differentiate its content and broaden its revenue base.
The functionality of Phantom's streaming video will permit the Company to
provide streaming media programming to virtually any computer regardless of
the underlying bandwidth. The Company believes streaming media usage will
surge once the process has been simplified enough so the end user experience
is enhanced.
The Company believes it can establish itself as a leading brand for streaming
media content through development of Web sites. The Company will drive
traffic to the sites and enhance brand awareness through strategic
relationships with key Internet companies.
PhantomFilm.com intends to offer exclusive and comprehensive audio and video
programming that can be targeted to specific audiences and demographics.
Additionally, unlike Web sites that offer only text-based banner ads, the
Company intends to offer multimedia packages incorporating custom audio and
video applications such as gateway ads with guaranteed click-thrus, channel
and event sponsorships.
PhantomFilm's objective is to be a leading streaming media company, providing
streaming browser based applications and services that enable the creation,
delivery and playback of, and easy access to, multimedia content over the
Internet, intranets and through hardware devices, thereby facilitating the
Internet's evolution into the broadest and most powerful mass communication
and commerce medium. To achieve this objective, PhantomFilm's strategy
includes the following key elements:
CREATE TECHNOLOGY LEADERSHIP. PhantomFilm intends to establish a reputation
in streaming media technology and intends to offer new applications and
services on a continual basis. Streaming video is designed to allow users to
view rich multimedia presentations on the Web and to more reliably deliver the
best user multimedia experience across a host of different bandwidths.
MAXIMIZE MARKET PENETRATION AND DEVELOP STRONG BRAND NAME RECOGNITION.
PhantomFilm believes that it can become a recognized leader in streaming media
technology. PhantomFilm will seek to achieve rapid and broad adoption of its
revolutionary technologies which will create strong brand recognition. This
strategy will be achieved through various means such as offering its basic
streaming video free of charge over the Internet, initially to gain market
share, and bundle the products with those of other major vendors and
distributing the products through multiple distribution channels.
DEVELOP MARKET POSITION. PhantomFilm believes that it can leverage its
product to create a strong market position and brand name loyalty to create
its market share which will diversify its revenue base. It plans to utilize
these strategies to accomplish that goal.
GROW STREAMING MEDIA BUSINESS. PhantomFilm intends to capitalize on the
increasing demand for streaming media by developing, marketing and supporting
industry-leading products and services. It also plans to strengthen its
marketing, sales and customer support efforts as the size of the market and
customer base increases.
TARGET LARGE CUSTOMER BASE. PhantomFilm plans to develop its
electronic commerce activities and revenue potential by marketing the
steaming media products and services to a varied customer base.
DEVELOP ELECTRONIC COMMERCE BUSINESS. PhantomFilm plans to build Web
sites that will provide product information and resources and will
promote the sale of PhantomFilm's products. PhantomFilm plans to
expand its own and other companies' product and service offerings
through these Web sites by marketing to an increasing base of users.
CONNECT CONSUMERS TO STREAMING MEDIA CONTENT. PhantomFilm plans to build a
network of Web sites that will link to third-party streaming media
programming, making it easy for consumers to quickly find and link to
streaming media that interests them. PhantomFilm plans to build Web site
traffic through innovative aggregation strategies, to increase Web-site
advertising revenues, strengthen its electronic commerce platform and promote
streaming media content on the Internet and intranets.
DEVELOP AND MARKET STREAMING MEDIA SOLUTIONS FOR A VARIETY OF PLATFORMS AND
BANDWIDTHS. PhantomFilm's streaming video will run on a broad range of
operating systems and hardware platforms, enabling content providers to reach
a broad audience and businesses to deliver intranet content in heterogeneous
computing environments. PhantomFilm's future growth can be attributed in part
to the already wide acceptance of streaming media currently available.
Currently, PC's in low-bandwidth environments have difficulty accessing any
streaming video content. Significant efforts continue, however, to make
access to the Internet available on a wider range of platforms, including non-
PC Internet appliances and set-top boxes, and over higher-speed connections,
including ISDN, ASDL and cable modems, which high speed connections
PhantomFilm believes will eventually be more widely available in homes. As a
result, PhantomFilm is designing its streaming video applications to operate
better in a range of bandwidth environments and to be flexible enough to
easily port to new platforms. PhantomFilm attributes the simplicity and
functionality of its streaming video product to advances in improving its
infrastructure technologies, such as caching and splitting, to enable content
providers to access greater bandwidth more cost effectively. Accordingly,
PhantomFilm believes it is well positioned to capitalize on possible
significant platform and bandwidth changes.
CREATE AND DEVELOP STRATEGIC RELATIONSHIPS. PhantomFilm intends to
establish strategic relationships with a variety of companies,
including software and hardware vendors, entertainment companies,
content publishers and broadcast media companies. PhantomFilm
intends to strongly pursue these relationships to ensure rapid
adoption of its streaming video technologies; to speed development of
compelling streaming media content to accommodate enhanced consumer
demand; to expand the range of commercial activities based on its
streaming video; and foster the development of industry standard
protocols.
RESEARCH AND DEVELOPMENT
PhantomFilm intends to devote a portion of its resources to developing new
products and product features, expanding and improving its fundamental
streaming technology, and strengthening its technological expertise.
PhantomFilm must hire skilled software engineers to further its research and
development efforts. PhantomFilm' business, financial condition and results
of operations could be adversely affected if it is not able to hire, train and
retain enough qualified engineers.
SALES, MARKETING AND DISTRIBUTION
PhantomFilm believes that any individual or company that desires to send or
receive streaming media content over the Internet or intranets is a potential
customer. To reach as many of these potential customers as possible,
PhantomFilm intends to market its streaming video products and services
through several direct and indirect distribution channels including over the
Internet, through a direct sales force and distributors.
ELECTRONIC COMMERCE. PhantomFilm intends to begin with streaming video
technology on its web site which will provide the company with a low-cost,
globally accessible, 24-hour sales tool.
DIRECT SALES FORCE. PhantomFilm' intends to begin to build a direct sales
force to market its products and services immediately, primarily to capture
market share of corporate customers for development of commercial Internet Web
sites or intranets.
SALES THROUGH CONTENT AGGREGATORS AND HOSTING PARTNERS. PhantomFilm intends
to sell its streaming applications and services to content aggregators, ISPs
and other hosting providers who redistribute or provide end users access to
PhantomFilm's streaming technology from their Web sites and systems.
ADVERTISING SALES. PhantomFilm's sales force when established, will market
and sell advertising on PhantomFilm's Web sites and within media streams that
PhantomFilm hosts on behalf of its corporate customers.
INTERNATIONAL SALES. PhantomFilm intends to establish subsidiaries throughout
the world that will market and sell PhantomFilm's products outside the
continental United States and Canada. PhantomFilm intends to develop a multi-
lingual sales force and distribution arrangements to assist in international
sales.
MARKETING PROGRAMS. PhantomFilm intends to participate in trade shows,
conferences and seminars, product information platforms, and generally promote
and co-promote special events that will emphasize PhantomFilm's streaming
video technologies.
CUSTOMERS
PhantomFilm's customers will consist primarily of businesses and individuals
located throughout the world. Sales to customers outside the U.S. will be
minimal initially, as the focus will be in the Continental United States.
COMPETITION
As streaming media evolves into a central and necessary component of the
Internet experience, more companies are entering the market for, and expending
ever increasing resources to develop, streaming media software and services,
and competition for the standard streaming video is intensifying. PhantomFilm
believes there is limited competition in the browser based streaming video
sector however, major competitors in the development and distribution of
downloadable streaming media solutions include Microsoft Corporation, Apple
Computer, Inc. and RealNetworks. Competitive factors include the quality and
reliability of software; features for creating, editing and adapting content,
ease of use and interactive user features; scalability and cost per user;
pricing and licensing terms; and compatibility with the user's existing
network components and software systems.
While PhantomFilm believes that it could achieve the lead position for
conventional PC-based Internet streaming systems, no clear standards have
emerged with respect to non-PC, wireless, cable-based systems. Likewise, no
one company has gained a dominant position in the mobile device market because
such devices are not yet well architected to handle media. Another company or
standard may emerge in any of these areas to surpass PhantomFilm in the short
term. In addition, there is competition to a lesser degree from non-streaming
audio and video delivery technologies such as AVI, QuickTime, and MP3. MP3, a
current phenomenon in IP-based media delivery that PhantomFilm is not now
participating in, is emerging as a popular distribution mechanism for "fast
download" of audio content that does not require streaming. Other fast
download, or non-streaming IP-based content distribution methods, are likely
to emerge.
The Company's objective is to be one of the leading streaming media companies
on the Internet. By aggregating comprehensive audio and video programming on
a private label basis and in some cases on an exclusive basis and by providing
services enabling the delivery of a broad range of streaming media content
over the Internet, Phantomfilm believes that it could become recognized in
this field.
Key elements of the Company's strategy include the following:
ENTERTAIN AND DEVELOP EXCLUSIVE CONTENT OFFERINGS
PhantomFilm.com will seek to provide the most comprehensive audio and video
programming on the Internet. To this end, the Company's objective is to
acquire exclusive, long-term Internet rights to streaming media content.
PENETRATE THE BUSINESS SERVICES MARKET
The Company's streaming video services will enable businesses, consumers and
other organizations to improve communication with, and dissemination of
information to, customers, suppliers, employees and the investment community.
The Company believes that the combination of its unique streaming video and
the local and global reach of the Internet will provide corporate businesses
with a state-of-the-art method of multimedia presentation.
EXPAND INTERNET BUSINESS-TO-BUSINESS SALES FORCE
PhantomFilm.com intends to build a dedicated, experienced Internet sales
force in order to increase marketing exposure.
CAPTURE AND DEVELOP EMERGING REVENUE OPPORTUNITIES
PhantomFilm.com intends to capture strategic opportunities as
user demand increases and the Company's products become more widely adopted.
Such opportunities are expected to include pay-per-listen/view applications,
fee-based sharing of the Company's exclusive content on other Web sites,
insertion of commercials within programming and electronic commerce
opportunities.
BUSINESS SERVICES
The Company's Business Services Division will provide cost-effective Internet
and intranet streaming video services to businesses and other organizations.
These business services will include turnkey production of press conferences,
conference calls, investor conferences, tradeshows, stockholder meetings,
product introductions, training sessions, distance learning seminars,
customized corporate TV channels and media events.
The Company's streaming video services enable these businesses and other
organizations to improve communication with customers, suppliers, employees
and the investment community by:
COST-EFFECTIVELY REACHING THE IN-OFFICE USER
The proliferation of multimedia enabled networked personal computers and
other Internet-attached devices in the workplace has created the opportunity
for businesses to use the Internet and intranet to cost-effectively broadcast
streaming media communications to both large and small targeted audiences.
The Company will be able to broadcast events to users who can view and listen
to such broadcasts uninterrupted while continuing to perform other tasks on
their computers.
INNOVATIVELY ENHANCING THE MULTIMEDIA EXPERIENCE
In order to provide business service clients a turnkey, complete end-to-end
multimedia solution that reaches far beyond the delivery of the media stream,
the company is focused on application development. To create compelling
content and engage the user, user profiles are created, which will provide the
basis for the Company's application modules.
BUSINESS SERVICES
Initially, the Company intends to focus its business services marketing
efforts on larger companies in varied industries. Based on the success of
these direct sales efforts, PhantomFilm believes it can successfully market
its services to medium-sized and smaller businesses as well. The Company
also intends to utilize reseller arrangements, whereby partners will have the
right to sell PhantomFilm's business services packages to their established
customer bases.
ADVERTISING
The Company's wide flexibility offers the ability to sell advertising
packages targeted to specific audiences and demographics. Additionally, unlike
Web sites that can offer only text-based banner advertisements, the Company
intends to offer a multimedia package that incorporates the latest in custom
audio and video applications such as gateway ads with guaranteed click-thrus,
and channel and event sponsorships, as well as icon advertising and viewer
choice advertising.
Gateway Ads with Guaranteed Click-Thrus. PhantomFilm intends to provide
advertisers with the opportunity to incorporate gateway ads directly into
their Internet advertising packages. Gateway ads are audio or video clips that
are inserted at the lead of selected programming, lasting from 15 to 30
seconds, that play prior to the audio or video content that has been selected
by the user. A guaranteed click-thru is a pop-down browser window that
automatically launches at the beginning of the gateway ad displaying an
advertiser's Web site or other targeted information. Gateway ads are also
available without guaranteed click-thrus. The industry standard is to sell
these advertisments at a higher CPM than traditional banner ads because of
their unique nature.
Channel and Event Sponsorships. The Company intends to offer advertisers the
ability to sponsor special events enabling advertisers to brand entire
events. An event sponsorship would involve the rotating and permanent
placement of buttons, logos and Web site links. Event sponsorships are common
with such companies as Pepsi, Intel and Microsoft.
In-Stream Ads and In-Player Banner Ads. As streaming media technology
advances, the Company believes it will be able to capitalize on new
opportunities to differentiate its advertising solutions.
MARKETING
The Company's intends to aim its marketing efforts at promoting the
PhantomFilm.com brand and the Company's audio and video programming and
business services. The Company intends to utilize both traditional and
innovative media vehicles for marketing and promotional purposes, including
radio, television and print advertisements, as well as creating marketing
arrangements with other leading Web sites, gateway ads with guaranteed click-
thru's and in-player banner ads on the Company's Web sites and email
newsletters.
Online Marketing. The Company intends to exchange video and banner ads with
other high traffic and targeted Web sites. The Company will use these
opportunities to highlight its video presentations of high profile live events
and drive traffic to revenue generating websites. The video ads will also be
used to promote business services customers' events in order to attract larger
audiences.
STRATEGIC RELATIONSHIPS
PhantomFilm.com intends to enter into strategic relationships with content
providers and other key companies in order to enhance the Company's
competitive advantages. The Company believes that licensing content from third
parties is preferable to creating content because such licensed content has
existing demand and is self-replenishing.
PhantomFilm.com will seek to leverage its content aggregation and Internet
broadcast network through strategic relationships with key companies to
increase traffic and brand awareness. The Company believes that PhantomFilm's
streaming products will become the number one choice for viewing streaming
video content.
Competition among Web sites that provide compelling content, including
streaming media content, is intense and is expected to increase significantly
in the future. The Company will be competing against a variety of businesses
that provide content through one or more mediums, such as print, radio,
television, cable television and the Internet. Traditional media companies
have not established a significant streaming media presence on the Internet
and may expend resources to establish a more significant presence in the
future. These companies have significantly greater brand recognition and
financial, technical, marketing and other resources than the Company. The
Company will be competing generally with other content providers for the time
and attention of users and for advertising revenues. To compete successfully,
the Company must license and then provide sufficiently compelling and popular
content to generate users, support advertising intended to reach such users
and attract business and other organizations seeking Internet streaming video
distribution. The Company will be competing with other Internet streaming
video companies and Web sites to acquire Internet broadcasting rights to
compelling content. The Company believes that the principal competitive
factors in attracting Internet users include the quality of service and the
relevance, timeliness, depth and breadth of content and services offered. The
Company also competes for the time and attention of Internet users with
thousands of Web sites operated by businesses and other organizations,
individuals, governmental agencies and educational institutions. For example,
certain Web sites provide a collection of links to other Web sites with
streaming media content. The Company expects competition to intensify and the
number of competitors to increase significantly in the future. In addition, as
the Company expands the scope of its content and services, it will compete
directly with a greater number of Web sites and other media companies. Because
the operations and strategic plans of existing and future competitors are
undergoing rapid change, it is extremely difficult for the Company to
anticipate which companies are likely to offer competitive services in the
future.
The Company also competes with online services, other Web site operators and
advertising networks, as well as traditional media such as television, radio
and print for a share of advertisers' total advertising budgets. The Company
believes that the principal competitive factors for attracting advertisers
include the number of users accessing the Company's Web sites, the
demographics of the Company's users, the Company's ability to deliver focused
advertising and interactivity through its Web sites and the overall cost-
effectiveness and value of advertising offered by the Company. There is
intense competition for the sale of advertising on high-traffic Web sites,
which has resulted in a wide range of rates quoted by different vendors for a
variety of advertising services, making it difficult to project levels of
Internet advertising that will be realized generally or by any specific
company. Any competition for advertisers among present and future Web sites,
as well as competition with other traditional media for advertising
placements, could result in significant price competition. The Company
believes that the number of companies selling Web-based advertising and the
available inventory of advertising space have recently increased
substantially. Accordingly, the Company may face increased pricing pressure
for the sale of advertisements.
GOVERNMENTAL REGULATION
Although there are currently few laws and regulations directly applicable to
the Internet, it is likely that new laws and regulations will be adopted in
the United States and elsewhere covering issues such as privacy, pricing,
sales taxes and characteristics and quality of Internet services. It is
possible that governments will enact legislation that may be applicable to the
Company in areas such as content, network security, encryption and the use of
key escrow, data and privacy protection, electronic authentication or
"digital" signatures, illegal and harmful content, access charges and
retransmission activities. Moreover, the applicability to the Internet of
existing laws governing issues such as property ownership, content, taxation,
defamation and personal privacy is uncertain. The majority of such laws were
adopted before the widespread use and commercialization of the Internet and,
as a result, do not contemplate or address the unique issues of the Internet
and related technologies. Any such export or import restrictions, new
legislation or regulation or governmental enforcement of existing regulations
may limit the growth of the Internet, increase the Company's cost of doing
business or increase the Company's legal exposure, which could have a material
adverse effect on the Company's business, financial condition and results of
operations.
On October 28, 1998, the "Digital Millennium Copyright Act" ("DMCA")
affecting the performance of sound recordings by certain subscription and
nonsubscription transmission services was enacted. The DMCA permits statutory
licenses for the performance of sound recordings and for the making of
ephemeral recordings to facilitate transmissions. Under these statutory
licenses, the Company will be required to pay licensing fees for the
performance of sound recordings by the Company in original and archived
programming and through retransmissions of radio broadcasts. The DMCA does not
specify the rate and terms of the statutory licenses, which will be determined
either through voluntary inter-industry negotiations or arbitration. By
distributing content over the Internet, the Company also faces potential
liability for claims based on the nature and content of the materials that it
distributes, including claims for defamation, negligence or copyright, patent
or trademark infringement, which claims have been brought, and sometimes
successfully litigated, against Internet companies. While the current law
generally states that entities like the Company, which provide interactive
computer services, shall not be treated as the publisher or speaker with
respect to third party content they distribute, the scope of the law's
definition and limitations on liability have not been widely tested in court.
Accordingly, the Company may be subject to such claims. To protect itself
from such claims, the Company maintains media liability insurance as well as
general liability insurance. Additionally, in the Company's agreements with
content providers, such content providers generally represent that they have
the rights to distribute and transmit their programming on the Internet and,
in most cases, indemnify the Company for liability based on a breach of such
representations and warranties. The indemnification arrangements and the
Company's media and general liability insurance may not cover all potential
claims of this type or may not be adequate to indemnify the Company for any
liability that may be imposed. Any liability not covered by indemnification or
insurance or in excess of indemnification or insurance coverage could
adversely affect the Company's business.
INTELLECTUAL PROPERTY
The Company regards its intellectual property as important to its success, and
the Company relies on a combination of confidentiality and non-disclosure
agreements and contractual provisions with its employees and with third
parties to establish and protect its proprietary rights. There can be no
assurance that these steps will be adequate.
The Company may also be subject to litigation to defend against claims of
infringement of the rights of others or to determine the scope and validity of
the intellectual property rights of others. If third parties hold trademark,
copyright or patent rights that conflict with the business of the Company,
then the Company may be forced to litigate infringement claims that could
result in substantial costs to the Company. In addition, if the Company was
unsuccessful in defending such a claim, it could adversely affect the
Company's business. If third parties prepare and file applications in the
United States that claim trademarks used or registered by the Company, the
Company may oppose those applications and be required to participate in
proceedings before the United States Patent and Trademark Office to determine
priority of rights to the trademark, which could result in substantial costs
to the Company. An adverse outcome in litigation or privity proceedings could
require the Company to license disputed rights from third parties or to cease
using such rights. Any litigation regarding the Company's proprietary rights
could be costly and divert management's attention, result in the loss of
certain of the Company's proprietary rights, require the Company to seek
licenses from third parties and prevent the Company from selling its services.
In addition, inasmuch as the Company plans to license a substantial portion of
its content from third parties, its exposure to copyright infringement actions
may increase because the Company must rely upon such third parties for
information as to the origin and ownership of such licensed content. The
Company will generally obtain representations as to the origins and ownership
of such licensed content and will generally seek indemnification to cover any
breach of any such representations; however, there can be no assurance that
such representations will be accurate or given, or that such indemnification
will adequately protect the Company.
As part of its confidentiality procedures, the Company generally enters into
agreements with its employees and consultants and limits access to and
distribution of its documentation and other proprietary information.
There can be no assurance that the steps taken by the Company will prevent
misappropriation of its proprietary information or that agreements entered
into for that purpose would be enforceable. Notwithstanding the precautions
taken by the Company, it might be possible for a third party to copy or
otherwise obtain and use the Company's proprietary information without
authorization. The laws of some countries may afford the Company little or no
effective protection of its intellectual property.
EMPLOYEES
As of March 31, 2000, the Company has 3 full-time employees. None of
the Company's employees are subject to a collective bargaining agreement and
the Company believes that its relations with its employees are good.
COMPANY RISK FACTORS
LIMITED OPERATING HISTORY
The Company has not yet finished development of the streaming video products.
We have a limited operating history on which to base an evaluation of the
business and prospects. Our prospects must be considered in light of the
risks, difficulties and uncertainties frequently encountered by companies in
an early stage of development, particularly companies in new and rapidly
evolving markets such as the market for Internet content, business services
and advertising. These risks include our ability to:
provide compelling and unique content to Internet users;
successfully market and sell our business services;
effectively develop new relationships with advertisers, content
providers, business customers and advertising agencies;
continue to develop and upgrade our technology and network
infrastructure;
respond to competitive developments;
attract, retain and motivate qualified personnel.
Our operating results will be dependent on factors outside of our control,
such as the availability of compelling content and the development of
broadband networks that support multimedia streaming. There can be no
assurance that we will be successful in addressing these risks, and failure to
do so could have adversely affect our business.
POSSIBILITY OF CONTINUING LOSSES
We fully expect to continue to incur operating losses for the foreseeable
future.
We cannot state with certainty when the Company will commence receiving
revenue or that we will achieve sufficient revenues for profitability. Even
if we do achieve profitability, there can be no assurances that the company
can sustain or increase profitability on a quarterly or annual basis in the
future. If revenues grow slower than anticipated, or if operating expenses
exceed expectations or cannot be adjusted accordingly, the business will be
materially and adversely affected.
QUARTERLY OPERATING RESULTS ARE SUBJECT TO SIGNIFICANT FLUCTUATIONS
Quarterly operating results may fluctuate significantly in the future as
a result of a variety of factors, many of which are outside our control.
Factors that may affect our quarterly operating results include:
- the cost of acquiring and the availability of content;
- the demand for our business services;
- demand for Internet advertising;
- seasonal trends in Internet advertising placements;
- the advertising cycles for, or the addition or loss of, individual
advertisers;
- the level of traffic on our Web sites;
- the amount and timing of capital expenditures and other costs relating
to the expansion of operations;
- price competition or pricing changes in Internet streaming video
services net advertising;
- the seasonality of the content of our broadcasts, such as sporting and
other events;
- the level of and seasonal trends in the use of the Internet;
- technical difficulties or system downtime;
- the introduction of new products or services by us or our competitors,
- our ability to successfully integrate operations and technologies from
acquisitions; and
- general economic conditions and economic conditions specific to the
Internet, such as electronic commerce and online media.
Any one of these factors could cause our revenues and operating results to
vary significantly in the future. In addition, as a strategic response to
changes in the competitive environment, we may from time to time make certain
pricing, service or marketing decisions or acquisitions that could cause
significant declines in our quarterly operating results.
DEPENDENCE ON THIRD PARTY CONTENT PROVIDERS
Our future success depends upon our ability to aggregate and deliver
compelling content over the Internet. We can create our own content, however,
we will rely heavily on third party content providers, such as television
stations and cable networks, businesses and other organizations, universities,
film producers and distributors, and record labels for compelling and
entertaining content. Our ability to maintain and build relationships with
content providers is critical to our future success. Although many agreements
with third party content providers may be for initial terms of more than two
years, such agreements may not be renewed or may be terminated prior to the
expiration of their terms if we do not fulfill our contractual obligations.
Our inability to secure licenses from content providers or performance rights
societies or the termination of a significant number of content provider
agreements would decrease the availability of content that we can offer users.
Such inability or termination may result in decreased traffic on our Web sites
and, as a result, decreased advertising revenue, which could adversely affect
our business.
Many agreements with content providers will be nonexclusive, and
many of our competitors offer, or could offer, content that is similar to or
the same as that obtained by us from such nonexclusive content providers. Such
direct competition could adversely affect our business.
LICENSE FEES PAYABLE TO CONTENT PROVIDERS MAY INCREASE
License fees payable to content providers and performance rights societies
and other licensing agencies may increase as competition for such content
increases. There can be no assurance that content providers, performance
rights societies or other licensing agencies will enter into prospective
agreements with PhantomFilm on the same or similar terms as those currently in
effect with competitors. If we are required to pay increased licensing fees,
such increased payments could adversely affect our business.
We will be operating at a very early stage of development while our
competitors have been rapidly evolving. Demand and market acceptance for
recently introduced services are subject to a high level of uncertainty and
risk. Sales of our business services may require an extended sales effort in
certain cases. In addition, potential customers must accept streaming video
services as a viable alternative to face-to-face meetings, television or
radio, audio teleconferences and video conferencing. Because the market for
our specialized business services is new and evolving, it is difficult to
predict the size of this market and its growth rate, if any. If the market
fails to develop, develops more slowly than expected or becomes saturated with
competitors, or if our Web sites do not achieve or sustain market acceptance,
our business could be adversely affected.
WE ARE DEPENDENT ON THE ACCEPTANCE OF STREAMING MEDIA TECHNOLOGY
Our success depends on the market acceptance of streaming media technology
provided by companies such as PhantomFilm, RealNetworks, GMV Network,
Broadcast.com and Microsoft. Early streaming media technology suffered from
poor audio quality, and video streaming at 28.8 kbps(thousands of bits per
second) currently is of lower quality than television or radio broadcasts. In
addition, congestion over the Internet and packet loss may interrupt audio and
video streams, resulting in unsatisfying user experiences. In order to receive
streamed media adequately, users generally must have multimedia PCs with
certain microprocessor requirements and at least 28.8 kbps Internet access and
streaming media software. Typically users have had to electronically download
such software and install it on their PCs. Such installation may require
technical expertise that some users do not possess. Furthermore, in order for
users to receive most streaming media over corporate intranets, information
systems managers may need to reconfigure such intranets. Because of bandwidth
constraints on corporate intranets, some information systems managers may
block reception of streamed media.
DEPENDENCE ON THE CONTINUED ACCEPTANCE OF THE INTERNET AS AN ADVERTISING
MEDIUM
A substantial amount of our future revenues from advertising for the
foreseeable future, and demand and market acceptance for Internet advertising
solutions is uncertain.
There are currently no set standards for the measurement of the effectiveness
of Internet advertising, and the industry may need to develop standard
measurements to support and promote Internet advertising as a significant
advertising medium. If such standards do not develop, existing advertisers may
not continue their levels of Internet advertising. Furthermore, advertisers
that have traditionally relied upon other advertising media may be reluctant
to advertise on the Internet. Our business would be adversely affected if the
market for Internet advertising fails to develop or develops more slowly than
expected.
Different pricing models are used to sell advertising on the Internet. It is
difficult to predict which, if any, will emerge as the industry standard. This
makes it difficult to project future advertising rates and revenues. Our
advertising revenues could be adversely affected if we are unable to adapt to
new forms of Internet advertising. Moreover, software programs that limit or
prevent advertising from being delivered to an Internet user's computer are
available. Widespread adoption of this software could adversely affect the
commercial viability of any Internet advertising.
GROWTH MAY BE A DETERENT TO SUCCESS
Our anticipated future growth could place a significant strain on our
resources. As part of this growth, we will have to implement new operational
and financial systems, procedures and controls.
Services based on sophisticated software and computer systems often
encounter development delays and the underlying software may contain
undetected errors that could cause system failures when introduced. Any system
error or failure that causes interruption in availability of content or an
increase in response time could result in a loss of potential or existing
business services customers, users, advertisers or content providers and, if
sustained or repeated, could reduce the attractiveness of our Web sites to
such entities or individuals. In addition, because our Web advertising
revenues will be directly related to the number of advertisements delivered by
users, system interruptions that result in the unavailability of our Web sites
or slower response times for users would reduce the number of advertisements
delivered and reduce revenues.
A sudden and significant increase in traffic on our Web sites could strain
the capacity of the hardware and telecommunications systems deployed
or utilized by us, which could lead to slower response times or system
failures. Our operations also are dependent upon receipt of timely feeds from
our content providers, and any failure or delay in the transmission or receipt
of such feeds could disrupt our operations.
We will be dependent upon Web browsers, Internet Service Providers ("ISPs")
and online service providers ("OSPs") to provide Internet users access to our
Web sites. Many of these providers have experienced significant outages in the
past, and could experience outages, delays and other difficulties due to
system failures unrelated to our systems.
NETWORK IS SUBJECT TO SECURITY RISKS
Our networks may be vulnerable to unauthorized access, computer viruses and
other disruptive problems. A party who is able to circumvent security measures
could misappropriate proprietary information or cause interruptions in our
Internet operations. ISPs and OSPs have in the past experienced, and may in
the future experience, interruptions in service as a result of the accidental
or intentional actions of Internet users, current and former employees or
others. We may be required to expend significant capital or other resources
to protect against the threat of security breaches or to alleviate problems
caused by such breaches.
DEPENDENCE ON SHORT-TERM ADVERTISING CONTRACTS
A substantial portion of our future Web advertising revenues will be derived
from short-term contracts. There can be no assurance that advertisers will
purchase advertisements or that we will be able to secure advertising
contracts at attractive rates or at all.
INTENSE COMPETITION FOR INTERNET STREAMING MEDIA CONTENT
The number of Web sites competing for the attention and spending of members,
users and advertisers has increased and we expect it to continue to increase.
We compete for members, users and advertisers with the following types of
companies:
- other Web sites, Internet portals and Internet broadcasters to acquire
and provide content to attract users;
- videoconferencing companies, audio conferencing companies and Internet
business services broadcasters;
- online services, other Web site operators and advertising networks, as
well as traditional media such as television, radio and print, for a
share of advertisers' total advertising budgets; and
- local radio and television stations and national radio and television
networks for sales of advertising spots.
Increased competition could result in price reductions, reduced margins or
loss of market share, any of which could adversely affect our business.
DEPENDENCE ON CONTINUED GROWTH IN THE USE OF THE INTERNET AND STREAMING MEDIA
CONTENT
Our market is new and rapidly evolving. Our business would be adversely
affected if Internet usage does not continue to grow, particularly usage for
multimedia information and entertainment and as a vehicle for commerce in
goods and services. The Internet may not be accepted as a viable commercial
medium for "no-download required" streaming multimedia content, if at all, for
a number of reasons, including:
- potentially inadequate development of the necessary infrastructure,
- inadequate development of enabling technologies,
- lack of acceptance of the Internet as a medium for distributing
streaming media content; and
- inadequate commercial support for Web-based advertising.
If Internet usage grows, the Internet infrastructure may not be able to
support the demands placed on it by this growth, specifically the demands of
delivering high quality video content and its performance and reliability may
decline. In addition, many Web sites have experienced interruptions in their
service as a result of outages and other delays occurring throughout the
Internet network infrastructure. If these outages or delays frequently occur
in the future, Internet usage, as well as the usage of our Web sites, could
grow more slowly or decline.
RAPID TECHNOLOGICAL CHANGE IN OUR INDUSTRY
Our market is characterized by rapid technological developments, frequent
new product introductions and evolving industry standards. A failure by us to
rapidly respond to technological developments could adversely affect our
business. The emerging character of these products and services and their
rapid evolution will require us to:
- effectively use leading technologies;
- continue to develop our technological expertise; and
- enhance our current services and continue to improve the performance,
features and reliability of our network infrastructure.
Changes in network infrastructure, transmission and content delivery methods
and underlying software platforms and the emergence of new broadband
technologies, such as xDSL and cable modems, could dramatically change the
structure and competitive dynamic of the market for streaming media solutions.
In particular, technological developments or strategic partnerships that
accelerate the adoption of broadband access technologies or advancements in
streaming and compression technologies may require us to expend resources to
address these developments. In addition, the widespread adoption of new
Internet technologies or standards could require substantial expenditures to
modify or adapt our Web sites and services.
OUR BUSINESS IS DEPENDENT ON OUR KEY PERSONNEL
Our future success depends to a significant extent on the continued services
of our technical people and other key personnel. The loss of the services of
these people or certain other key employees, would likely have a significantly
detrimental effect on our business.
We do not maintain "key person" life insurance for any of our personnel. Our
future success also depends on our continuing to attract, retain and motivate
highly skilled employees.
COMPETITION FOR PERSONNEL IN OUR INDUSTRY IS INTENSE
We may be unable to retain key employees or attract, assimilate or
retain other highly qualified employees in the future. We have from time to
time in the past experienced, and we expect to continue to experience in the
future, difficulty in hiring and retaining highly skilled employees with
appropriate qualifications. If we do not succeed in attracting new personnel
or retaining and motivating our current personnel, our business will be
adversely affected.
OUR STOCK PRICE MAY CONTINUE TO BE SUBJECT TO SIGNIFICANT VOLATILITY
The trading price of our Common Stock has been and may continue to be
subject to wide fluctuations. Trading prices of the Common Stock may fluctuate
in response to a number of factors, many of which are beyond our control. In
addition, the stock market in general, and the market for Internet-related and
technology companies in particular, has experienced extreme price and volume
fluctuations that have often been unrelated or disproportionate to the
operating performance of such companies. These broad market and industry
factors may adversely affect the market price of the Common Stock, regardless
of our operating performance.
SHARES ELIGIBLE FOR PUBLIC SALE COULD ADVERSELY AFFECT OUR STOCK PRICE
As of March 31, 2000, there were outstanding 7,083,142 shares of our Common
Stock. As of March 31, 2000, 4,525,940 of these shares were held by existing
stockholders as "restricted securities" and will become eligible for sale only
if registered or if they qualify for an exemption from registration under
Rules 144 or 701 under the Securities Act. Sales of a large number of shares
could have an adverse effect on the market price of our common stock.
The stockholders have no restrictions on selling any of our securities held
by them, other than as provided under applicable securities laws. In addition,
certain stockholders can require us to register our securities they own for
public sale. Any sales by these stockholders could adversely affect the
trading price of our common stock.
ITEM 2. DESCRIPTION OF PROPERTY
The Company's executive offices are located in Vancouver, B.C., Canada in a
4,000 square foot facility that we sub-lease. We do not own any real estate.
ITEM 3. LEGAL PROCEEDINGS
The Company, PhantomFilm.com, currently is neither a party to nor does it have
any property which is subject to any material pending legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On June 11th, 1999, the Company held an Annual Meeting of Shareholders at its
head office in Vancouver, British Columbia, Canada to approve (1) a reverse
split of the issued and outstanding shares of the Company's common stock in
the ratio of one share for 10, with fractional shares rounded up to the
nearest whole share and with appropriate adjustments in the stated capital and
additional paid-in capital accounts of the Company; (2) To amend the
Company's Articles of Incorporation to change the Company's name from "Panther
Resources Ltd." to "PhantomFilm.com" and (3) To amend the Company's Articles
of Incorporation to decrease the par value of its preferred shares from one
dime ($0.10) per share to one mill ($0.001) per share.
Each of the foregoing proposals were approved by the shareholders at the
Annual Meeting with a majority percentage in excess of ninety-eight percent
(98%) of the shares voted at the meeting.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS.
Shareholders
At March 31, 2000 there were 1141 shareholders of record of the Company's
common stock.
Market Information
Currently, the Company's common stock is traded over-the-counter and quoted
on the OTC Bulletin Board of the NASD (the "Bulletin Board") under the
symbol "PHLM". The high and low bid prices for the Common Stock as
reported by the Bulletin Board since April 1, 1997 are listed below. The
prices in the table reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not represent actual transactions.
The reported bid prices reflect the 1 for 10 stock split that occurred on
March 1, 1997, the 1 for 20 reverse stock split that occurred on March 22,
1997 and the 1 for 10 reverse stock split that occurred in June, 1999.
Calendar Year Quarter High Low
1997 April June 3.28 0.25
July Sept. 2.05 0.15
Oct. Dec. 1.75 0.40625
1998 Jan. March 0.01 0.001
April June 0.22
July Sept. 0.27 0.06
Oct. Dec. 0.26 0.05
1999 Jan. March 1.015 0.23
April June 0.1094 0.0625
July Sept. 0.875 0.2656
Oct. Dec. 0.2188 0.0938
2000 Jan. March 0.875 0.0938
Dividends
The Company has never declared any cash dividends and does not anticipate
paying such dividends in the near future. The Company anticipates all
earnings, if any, over the next twelve (12) to twenty (20) months will be
retained for future investments in business. Any future determination to
pay cash dividends will be at the discretion of the Board of Directors and
will be dependent upon the Company's results of operations, financial
conditions, contractual restrictions, and other factors deemed relevant by
the Board of Directors. The Company is under no contractual restrictions
in declaring or paying dividends to its shareholders.
The future sale of presently outstanding "unregistered" and "restricted"
common stock of the Company by present members of management and persons
who own more than five percent of the outstanding voting securities of the
Company may have an adverse effect on any market that may develop in the
shares of the common stock of the Company.
Recent Sales of "Unregistered" Securities
The following unregistered securities have been issued since April 1st,
1999 and are previously disclosed in the appropriate 10-QSB's or 8-K
filings indexed at the end of this document unless otherwise noted:
Offering
Date No. of Shares Title Price Rule Reason
May 17/98 76,300 Common $0.25 144 Debt Settlement
May 11/99 500,000 Common $0.46 144 Staff Compensation
May 31/99 712,842 Common $0.50 144 Private Placement
May 31/99 437,500 Common $0.40 144 Staff Compensation
June 29/99 250,000 Common $0.25 144 License Agreement
July 1/99 300,000 Common $0.50 144 Private Placement
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following Management's Discussion and Analysis contains
forward-looking statements within the meaning of Federal securities law.
You can identify these statements because they use forward-looking
terminology such as "may," "will," "expect," "anticipate," "estimate,"
"continue," "believe," "intend," or other similar words. These words,
however, are not the exclusive means by which you can identify these
statements. You can also identify forward-looking statements because they
discuss future expectations, contain projections of results of operations or
of financial conditions, characterize future events or circumstances or state
other forward-looking information. We have based all forward-looking
statements included in Management's Discussion and Analysis on information
currently available to us, and we assume no obligation to update any such
forward-looking statements. Although we believe that the expectations
reflected in such forward-looking statements are based on reasonable
assumptions, actual results could differ materially from those projected in
the forward-looking statements. Factors that might cause or contribute to such
differences include, among others:
- our limited operating history;
- our dependence on third party providers of content;
- our dependence on the acceptance of streaming media technology;
- our dependence on the continuing acceptance of the Internet as an
advertising medium;
- our potential inability to manage our growth; and
- intense competition for Internet broadcasting and services;
In evaluating our business, investors should carefully consider the
information set forth above in "Item 1A. Company Risk Factors." We caution
investors that our business and financial performance are subject to
substantial risks and uncertainties. The following Management's Discussion
and Analysis should be read in conjunction with the Consolidated Financial
Statements.
INTRODUCTION
In Management's Discussion and Analysis, we explain the general financial
condition and the results of operations for PhantomFilm.com and its
subsidiaries including:
what factors affect our business;
how all of the above affects our overall financial condition; and
where cash will come from to provide working capital and to pay for
future capital expenditures.
OVERVIEW
From our inception through March 31, 2000, we have had no revenues and our
operating activities consisted primarily of investing in mineral
properties.
During the past year, the Company faced a number of obstacles including
lack of funding, difficulty in finding qualified personnel and a downtrend
in the technology markets. To maintain its operations the Company requires
minimal funding which has been provided by the Directors.
The Company is seeking new business ventures and marketing alliances that are
complimentary to our video business model. The likelihood of the company
completing on future financings, if it has a viable growing business is good.
Future sales of business services related to streaming media content and
advertising are projected to be the main sources of our revenues.
We have incurred significant losses since inception and, as of March 31,
2000, had a loss from operations of approximately $796,123. We believe
that our success will depend largely on our ability to compete as a source
for streaming media programming and business services on the Web.
Accordingly, we intend to:
- develop our sales and marketing;
- acquire media content and hosting services; and
- continue the development of our streaming video.
We expect to continue to incur operating losses for the foreseeable future.
1. NATURE OF BUSINESS
PhantomFilm.com is developing streaming video technology that is 100%
browser based. We intend to be able to deliver movies and live interactive
video through the browser without plugins or download, required by most of
the competitor's technologies. There will be no lengthy wait for
PhantomFilm's technology to initialize and start, as there is "no-plugins"
used by competitors like Geo's Emblaze. Phantom-Film's web video will use
a larger screen (frame) and a greater frame rate than the competitions'.
PhantomFilm's technology works by adjusting its bandwidth requirements
intelligently and dynamically and its codec (compression- decompression
code) avoids the pixelization that plagues other web video products.
PhantomFilm intends to be the first web video product to coordinate and
control actions within the rest (the non-video portion) of the browser
with the frame number of the video stream, a multimedia slide show in
synch with the video.
In short PhantomFilm's web video could become the "best of breed."
PhantomFilm's revenue model is to license the technology to web TV and
radio stations and other sites which might have an interest. Also to
sell infomercial space using the technology on PhantomFilm's home page
and to produce video content.
Revenue Model
==============
Rate of $1 per stream per month.
License to existing Web Radio and Broadcast/News sites
Turnkey sites for radio and tv stations not already broadcasting
License to companies wanting to put streaming infomercials up
License to advertising agencies
License self contained video adds capability to portals
License to auction sites for live auctions
Produce infomercials and music videos for people
Technology Details
==================
PhantomFilm's technology consists of a compression and stream server
sitting at the licensee's site, and a lightweight display applet which
executes on the client browser.
PhantomFilm is still in the development stage. Initially we expected to
deploy a marketable product by June, 2000, however we do not yet have a
marketable product that works with all computer configurations.
PhantomFilm's development plan is scheduled to be completed in two
stages. The goals of stage one are to clean up and improve its
existing alpha applet/server code. Particularly PhantomFilm desires
in Stage 1 to achieve instant download of the applet and good quality
at a 320x240 pexel frame size and 10 fps (frames per second). The in-
stant downloads are working. A little more cleanup on the code
and some optimization are all that is necessary to enhance the quality of
the video. No plugins and no wait. However the quality of the video at
56k still needs major work.
Another problem with the quality is the high CPU/video card load --
although the video applet does not come close to maxing out the cpu on a
high end machine, on an old non mmx 200mhz machine it runs very slowly,
pegging the cpu at 100% and hogging all the cycles. On machines with old
cheap video cards it does not run at all. The solution to this is to first
attack the applet with profilers (JProbe and OptimizeIt) to determine what
method calls are pegging the CPU. Then to work around these bottlenecks in
the code, redesigning to keep CPU utilization to a minimum. The code is
over-reliant on the mmx integer graphics extensions and also making
graphics calls at too high a level. Then to move some of the frame
composition and triple buffering into the applet and not rely on the cpu
and the graphics card to do it automatically.
Another problem with the current pre-release applet/server is
dynamically variable client-side bandwidth -- PhantomFilm's current
applet assumes that on a 56k line the client can get a steady 40k of
bandwidth. This turns out not to be the case. Client bandwidth varies
all over the map during a session. Bandwidth can and does drop below
5kbps for tens of seconds at a time. When this happens the buffer is
emptied and the video pauses or becomes slow and jerky. Right now
PhantomFilm caches at least the first 8 seconds of video to start off
and also starts all videos with easily compressible shots so that the
cache can fill with more that eight seconds of video in less than eight
seconds. Right now a second buffer is being added so that every video can
be started out with a pre-cached 30 second PhantomFilm (or one of its
clients) advertisement. That way while that is playing the first thirty
seconds of the video can be buffered instead of only eight. This will help
enormously but for a long video (say a movie or live sports event) will
not be enough. What has to be done in that case is to monitor the
bandwidth and optimally reduce the frame rate when the buffer gets low.
This requires the server, based on information about the buffer and its
rate of depletion collected on the client, to reduce the number of
frames being sent (and to change the frame rate hints telling the
client how fast to play it) in times of low bandwidth. This is not as
easy on the server side as it sounds. First only the pixels that have
changed since the last frame are sent in a frame. That constrains
(without vastly more complex hinting) frame merging to integer
multiples (so our 10fps can go only to 5,3.3,2.5,2...). Also frame
merging leaves less than a proportional reduction -- going from 10
to 5 fps cuts about 35% not 50% on the bandwidth required. Also the
cost of the frame-rate reduction is different in different parts of
the video. During times of lots of motion it hurts us more to reduce
the frame rate than at times of little movement. Fortunately this cost
can be modeled mathematically. PhantomFilm will set up our server-side
component to mathematically optimally feed frames to the client so that
there is no bandwidth induced pauses or slowness/choppiness.
A final problem to be addressed in Stage 1 of the development plan are
Voice/video sync problems in the current applet. This is entirely due
to PhantomFilm separating the audio and video buffers. In the long run
this separation is for the best as it allows PhantomFilm to market a net
radio product and also to apply an audio optimal codec to the audio
instead of just using the video codec. All that is needed to solve this
problem is to add frame number markers to the audio stream to keep it in
sync.
In stage 2 of the development process, we will rewrite codec and perform
other tricks to increase the size to full screen and 30 frames per
second. Work on rewriting the codec is already far advanced but not
complete. PhantomFilm will replace the current cyclic
compression/decompression algorythm with an ad hoc collection of fractal,
wavelet, pct and vector quantization methods. This, along with adding
buffers and separating each video into z-index layers (using the optimal
codec on each layer), should take the PhantomFilm applet to full screen,
hi res 10fps.
Additionally as part of Stage 2, we will add code in the applet to
interpolate between frames using a compact distortion metric to achieve
the 30fps. This is a fairly easy way to achieve high frame rates.
To advance the completion of the video department we are actively seeking
programmers. In addition we are seeking new business ventures and
marketing alliances that are complimentary to our video business model.
Holding Company Structure Risks
The Company currently conducts, and will continue to conduct, all of its
operations through subsidiaries. The Company's ability to obtain
dividends or other distributions from its subsidiaries may be subject to,
among other things, restrictions on dividends under applicable local law
and foreign currency exchange regulations in the jurisdictions in which
the subsidiaries operate. The subsidiaries' ability to pay dividends or
make other distributions to the Company may also be subject to their
having sufficient funds from their operations legally available for the
payment thereof which are not needed to fund their operations, obligations
or other business plans. In the event of a subsidiary's liquidation, there
may not be assets sufficient for the Company to recoup its investment
therein.
Dependence on Key Personnel
The Company is dependent on the services of certain key executives
including the Chief Executive Officer and the President. The loss of
these persons, other key executives or personnel, or the inability to
attract and retain the additional highly skilled employees required for
the expansion of the Company's activities, may have a material adverse
effect on the Company's business or future operations. The Company does
not intend to maintain "Key-man" life insurance on any of its executive
officers or other personnel at this time.
ITEM 7. FINANCIAL STATEMENTS
Financial Statements for the year ended March 31, 2000
Independent Auditors Report
Consolidated Balance Sheet - March 31, 2000
Consolidated Statement of Operations for the period ended March 31, 2000
Consolidated Statements of Stockholders Equity to March 31, 2000
Consolidated Statements of Cash Flows to March 31, 2000
Notes to Consolidated Financial Statements
<PAGE>
PHANTOMFILM.COM
(Formerly Panther Resources Ltd.)
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2000 and 1999
<PAGE>
C O N T E N T S
Independent Auditors' Report 3
Consolidated Balance Sheet 4
Consolidated Statements of Operations 6
Consolidated Statements of Stockholders' Equity (Deficit) 7
Consolidated Statements of Cash Flows 11
Notes to the Consolidated Financial Statements 13
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
PhantomFilm.com
(Formerly Panther Resources Ltd.)
(A Development Stage Company)
Vancouver, B.C. Canada
We have audited the accompanying consolidated balance sheet of PhantomFilm.com
(formerly Panther Resources Ltd.) (a development stage company) as of March
31, 2000 and the related consolidated statements of operations, stockholders'
equity (deficit) and cash flows for the years ended March 31, 2000 and 1999
and from inception on November 10, 1995 through March 31, 2000. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall consolidated financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of PhantomFilm.com (formerly Panther Resources Ltd.) (a development stage
company) as of March 31, 2000 and the consolidated results of their operations
and their cash flows for the years ended March 31, 2000 and 1999 and from
inception on November 10, 1995 through March 31, 2000 in conformity with
generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 3 to
the consolidated financial statements, the Company is a development stage
company with no significant operating results to date which raises substantial
doubt about its ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 3. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
HJ & Associates, LLC
Salt Lake City, Utah
June 22, 2000
<PAGE>
<TABLE>
PHANTOMFILM.COM
(Formerly Panther Resources Ltd.)
(A Development Stage Company)
Consolidated Balance Sheet
<CAPTION>
ASSETS
March 31,
2000
<S> <C>
CURRENT ASSETS
Cash $ 2,499
Prepaid expenses 10,677
Total Current Assets 13,176
FURNITURE AND EQUIPMENT, NET (Note 4) -
OTHER ASSETS
Mineral properties (Note 5) -
Total Other Assets -
TOTAL ASSETS $ 13,176
</TABLE>
<PAGE>
<TABLE>
PHANTOMFILM.COM
(Formerly Panther Resources Ltd.)
(A Development Stage Company)
Consolidated Balance Sheet (Continued)
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
March 31,
2000
<S> <C>
CURRENT LIABILITIES
Accounts payable $ 27,967
Reserve for discontinued operations (Note 6) 205,676
Total Current Liabilities 233,643
COMMITMENTS AND CONTINGENCIES (Note 7)
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock: 10,000,000 shares authorized of $0.001 par value,
2,000,000 shares issued and outstanding 2,000
Common stock: 100,000,000 shares authorized of $0.001 par value,
7,083,142 shares issued and outstanding 7,083
Additional paid-in capital 11,476,303
Deficit accumulated during the development stage (11,705,853)
Total Stockholders' Equity (Deficit) (220,467)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 13,176
</TABLE>
<PAGE>
<TABLE>
PHANTOMFILM.COM
(Formerly Panther Resources Ltd.)
(A Development Stage Company)
Consolidated Statements of Operations
<CAPTION>
From
Inception on
November 10,
For the Years Ended 1995 Through
March 31, March 31,
2000 1999 2000
<S> <C> <C> <C>
REVENUES $ - $ - $ -
EXPENSES
Depreciation and amortization 170,538 - 170,538
General and administrative 625,585 - 625,585
Total Expenses 796,123 - 796,123
LOSS FROM OPERATIONS (796,123) - (796,123)
LOSS FROM DISCONTINUED
OPERATIONS (Note 6) - (6,031,215) (10,909,730)
NET LOSS (796,123) (6,031,215) (11,705,853)
OTHER COMPREHENSIVE (LOSS)
Foreign currency translation - (268,031) -
Total Other Comprehensive (Loss) - (268,031) -
NET COMPREHENSIVE LOSS $ (796,123) $ (6,299,246)$ (11,705,853)
BASIC LOSS PER SHARE OF
COMMON STOCK $ (0.06) $ (0.16)
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 13,588,316 3,764,014
</TABLE>
<PAGE>
<TABLE>
PHANTOMFILM.COM
(Formerly Panther Resources, Ltd.)
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit)
<CAPTION>
Additional
Preferred Stock Common Stock Paid-In
Shares Amount Shares Amount Capital
<S> <C> <C> <C> <C> <C>
Balance at November 10, 1995
(Inception) - $ - - $ - $ -
Common stock issued for cash at
approximately $0.00 per share - - - - -
Currency translation adjustment - - - - -
Net loss for the year ended
March 31, 1996 - - - - -
Balance, March 31, 1996 - - - - -
Common stock issued for cash at
approximately $3.80 per share - - 288,500 288 1,089,199
Common stock issued for services
at approximately $7.60 per share - - 11,500 12 87,544
Currency translation adjustment - - - - -
Net loss for the year ended
March 31, 1997 - - - - -
Balance, March 31, 1997 - $ - 300,000 $ 300 $1,176,743
</TABLE>
<CONTINUED>
<TABLE>
Deficit
Accumulated
Stock Other During the
Subscription Comprehensive Development
Receivable Income (Loss) Stage
<C> <S> <S> <S>
Balance at November 10, 1995
(Inception) - - -
Common stock issued for cash at
approximately $0.00 per share - - -
Currency translation adjustment - (1,230) -
Net loss for the year ended
March 31, 1996 - - (157,549)
Balance, March 31, 1996 - (1,230) (157,549)
Common stock issued for cash at
approximately $3.80 per share - - -
Common stock issued for services
at approximately $7.60 per share - - -
Currency translation adjustment - 8,542 -
Net loss for the year ended
March 31, 1997 - - (1,388,389)
Balance, March 31, 1997 - 7,312 (1,545,938)
</TABLE>
<PAGE>
PHANTOMFILM.COM
(Formerly Panther Resources, Ltd.)
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
<TABLE>
<CAPTION>
Preferred Stock Common Stock
Shares Amount Shares Amount
<C> <S> <S> <S> <S>
Balance, March 31, 1997 - $ - 300,000 300
Recapitalization (Note 1) - - 1,230,899 1,231
Common stock issued for cash at
approximately $3.60 per share - - 610,761 611
Common stock issued for services
at approximately $3.60 per share - - 336,650 336
Issuance of warrants - - - -
Common stock issued for debt at
approximately $2.60 per share - - 382,800 383
Common stock issued for mineral
properties at $10.00 per share - - 55,000 55
Preferred stock issued for
services at $1.80 per share 2,000,000 200,000 - -
Currency translation adjustment - - - -
Net loss for the year ended
March 31, 1998 - - - -
Balance, March 31, 1998 2,000,000 200,000 2,916,110 2,916
<CONTINUED>
Deficit
Accumulated
Additional Stock Other During the
Paid-In Subscription Comprehensive Developmental
Capital Receivable Income (Loss) Stage
<C> <S> <S> <S> <S>
Balance, March 31, 1997 1,176,743 $ - 7,312$ (1,545,938)
Recapitalization (Note 1) 392,831 - - -
Common stock issued for cash at
approximately $3.60 per share 2,821,516 (100,000) - -
Common stock issued for services
at approximately $3.60 per share 1,179,290 (154,281) - -
Issuance of warrants 17,220 - - -
Common stock issued for debt at
approximately $2.60 per share 995,336 - - -
Common stock issued for mineral
properties at $10.00 per share 549,945 - - -
Preferred stock issued for
services at $1.80 per share 160,000 - - -
Currency translation adjustment - - 260,719 -
Net loss for the year ended
March 31, 1998 - - - 3,332,577
Balance, March 31, 1998 7,292,881 (254,281) 268,031 (4,878,515)
</TABLE>
<PAGE>
PHANTOMFILM.COM
(Formerly Panther Resources, Ltd.)
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
<TABLE>
<CAPTION>
Preferred Stock Common Stock
Shares Amount Shares Amount
<C> <S> <S> <S> <S>
Balance, March 31, 1998 2,000,000 $ 200,000 2,916,110 $ 2,916
Common stock issued for cash at
approximately $1.40 per share - - 856,333 856
Common stock issued for services
at approximately $1.50 per
share - - 1,022,717 1,023
Receipt of subscription
receivable - - - -
Common stock issued for debt at
approximately $2.00 per share - - 12,000 12
Currency translation adjustment - - - -
Net loss for the year ended
March 31, 1999 - - - -
Balance, March 31, 1999 2,000,000 $ 200,000 4,807,160 $ 4,807
<CONTINUED>
<S> <S> <S> <S>
Deficit
Accumulated
Additional Stock Other During the
Paid-in Subscription Comprehensive Development
Capitol Receivable Income (Loss) Stage
Balance, March 31, 1998 $7,292,881 $(254,281) $ 268,031 $(4,878,515)
Common stock issued for cash at
approximately $1.40 per share 1,223,424 - - -
Common stock issued for
services at approximately
$1.50 per share 1,494,199 - - -
Receipt of subscription
receivable - 254,281 - -
Common stock issued for debt at
approximately $2.00 per share 23,988 - - -
Currency translation adjustment - - (268,031) -
Net loss for the year ended
March 31, 1999 - - - (6,031,215)
Balance, March 31, 1999 $10,034,492 - - (10,909,730)
</TABLE>
<PAGE>
PHANTOMFILM.COM
(Formerly Panther Resources, Ltd.)
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
<TABLE>
<CAPTION>
Preferred Stock Common Stock
Shares Amount Shares Amount
<C> <S> <S> <S> <S>
Balance, March 31, 1999 2,000,000 $ 200,000 4,807,160 $ 4,807
Common stock issued for debt
at $2.50 per share - - 736,196 736
Common stock issued for cash
at $0.50 per share - - 100,000 100
Common stock issued for services
at approximately $0.46 per share - - 1,192,286 1,192
Common stock issued for License
at $0.50 per share (unaudited) - - 250,000 250
Cancellation of common stock - - (2,500) (2)
Change in preferred stock at par
value - (198,000) - -
Net loss for the year
ended March 31, 2000 - - - -
Balance, March 31, 2000 2,000,000 $ 200,000 7,083,142 $ 7,083
<CONTINUED>
Deficit
Accumulated
Additional Stock Other During the
Paid-in Subscription Comprehensive Development
<C> <S> <S> <S> <S>
Balance, March 31, 1999 $10,034,492 $ - $ - $(10,909,730)
Common stock issued for debt
at $2.50 per share 520,210 - - -
Common stock issued for cash
at $0.50 per share 49,900 - - -
Common stock isued for services
at approximately $0.46 per share 552,699 - - -
Common stock issued for
License at $0.50 per share 124,750 - - -
Cancellation of common stock (3,748) - - -
Change in preferred stock at
par value 198,000 - - -
Net loss for the year
ended March 31, 2000 - - - (796,123)
Balance, March 31, 2000 $11,476,303 $ - $ - $(11,705,853)
</TABLE>
<PAGE.
<TABLE>
PHANTOMFILM.COM
(Formerly Panther Resources Ltd.)
(A Development Stage Company)
Consolidated Statements of Cash Flows
<CAPTION>
From
Inception on
November 10,
For the Years Ended 1995 Through
March 31, March 31,
2000 1999 2000
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (796,123) $(6,031,215) $ (11,705,853)
Adjustments to reconcile net
loss to net cash used
by operating activities:
Depreciation and amortization
expense 170,538 14,554 194,021
Stock issued for services 550,150 1,495,222 3,518,273
Bad debt expense - - 224,941
Write-off mineral property - 3,465,386 3,914,434
Issuance of warrants - - 17,220
Currency translation adjustment - (168,626) (168,626)
Changes in operating assets and liabilities:
(Increase) decrease in accounts
receivable - - (213,312)
(Increase) decrease in deposits
and prepaid expenses 36,502 (3,521) (96,042)
Increase (decrease) in cash
overdraft - (22,245) -
Increase (decrease) in accounts
payable (8,650) (56,759) 158,240
Increase (decrease) in management
fee payable - (26,371) -
Increase in reserve for
discontinued operations - 258,161 258,161
Net Cash (Used) by Operating
Activities (47,583) (1,075,414) (3,898,543)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets - - (149,014)
Purchase of mineral property and deferred
exploration costs - (526,313) (2,762,539)
Net Cash (Used) by Investing
Activities - (526,313) (2,911,553)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from common stock 50,000 1,478,561 5,340,175
Proceeds on notes payable - 123,248 1,472,420
Net Cash Provided by Financing
Activities 50,000 1,601,809 6,812,595
NET INCREASE IN CASH 2,417 82 2,499
CASH AT BEGINNING OF PERIOD 82 - -
CASH AT END OF PERIOD $ 2,499 $ 82 $ 2,499
</TABLE>
<PAGE>
<TABLE>
PHANTOMFILM.COM
(Formerly Panther Resources Ltd.)
(A Development Stage Company)
Consolidated Statements of Cash Flows (Continued)
<CAPTION>
From
Inception on
November 10,
For the Years Ended 1995 Through
March 31, March 31,
2000 1999 2000
<S> <C> <C> <C>
CASH PAID FOR:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
NON-CASH FINANCING ACTIVITIES
Common stock issued for
acquisition $ - $ - $ 394,062
Common stock issued for debt
conversion $ 191,000 $ 24,000 $1,210,719
Common stock issued for
mineral properties $ 550,000 $ - $ 550,000
Common stock issued for
services $ 550,150 $1,495,222 $3,518,273
Common stock issued for
license $ 125,000 $ - $ 125,000
</TABLE>
<PAGE>
PHANTOMFILM.COM
(Formerly Panther Resources Ltd.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 2000 and 1999
NOTE 1 - ORGANIZATION AND HISTORY
The consolidated financial statements presented are those of Panther Resources
Ltd. (the Company). The Company was originally incorporated as Thermacor
Technology, Inc. on September 21, 1984 under the laws of the State of Nevada.
On March 26, 1997, the Company changed its name to Golden Panther Resources,
Ltd. and on March 10, 1998, the Company changed its name to Panther Resources
Ltd. On June 11, 2000, the Company changed its name to PhantomFilm.com.
Golden Panther Resources Ltd. (premerger) (GPR) was incorporated under the
Company Act of British Columbia on November 10, 1995 as 508556 B.C. Ltd. and
changed its name to Golden Panther Resources Ltd. on March 28, 1996.
On April 2, 1997, Panther Resources Ltd. and Golden Panther Resources, Ltd.
completed an Agreement and Plan of Reorganization whereby the Company
issued 300,000 shares of its common stock in exchange for all of the
outstanding common stock of GPR. Immediately prior to the Agreement and
Plan or Reorganization, the Company had 1,230,890 shares of common stock
issued and outstanding.
The acquisition was accounted for as a recapitalization of GPR because the
shareholders of GPR controlled the Company after the acquisition. Therefore,
GPR is treated as the acquiring entity. There was no adjustment to the
carrying value of the assets or liabilities of GPR in the exchange. The
Company is the acquiring entity for legal purposes and GPR is the surviving
entity for accounting purposes. On March 1, 1997, the Company completed a
reverse stock split of 1-for-10 shares. On March 22, 1997, the shareholders
of the Company authorized a reverse stock split of 1-for-20 shares. On June
11, 2000, the shareholders of the Company authorized a reverse stock split of
1-for-10 shares. All references to common stock have been retroactively
restated.
NOTE 2- SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Company's financial statements are prepared using the accrual method of
accounting. The Company has elected a March 31 year end.
b. Cash and Cash Equivalents
Cash equivalents include short term, highly liquid investments with maturities
of three months or less at the time of acquisition.
<PAGE>
PHANTOMFILM.COM
(Formerly Panther Resources Ltd.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 2000 and 1999
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
c. Basic Loss Per Share
For the Year Ended
March 31, 2000
Loss Shares Per Share
(Numerator) (Denominator) Amount
$ (796,123) 13,588,316 $ (0.06)
For the Year Ended
March 31, 1999
Loss Shares Per Share
(Numerator) (Denominator) Amount
$ (6,299,246) 3,764,014 $ (0.16)
The computations of basic loss per share of common stock are based on
the weighted average number of shares outstanding at the date of the
financial statements.
d. Provision for Taxes
At March 31, 2000, the Company had net operating loss carryforwards of
approximately $4,200,000 that may be offset against future taxable
income through 2019. No tax benefit has been reported in the
consolidated 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 account of the same amount.
e. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
f. Preferred Stock
The Company has authorized 10,000,000 shares of preferred stock, par
value $0.001 per share. 2,000,000 shares of the preferred stock have
been issued as a Class A issuance. Each share is convertible into 5
shares of common stock at $0.10 per share.
<PAGE>
PHANTOMFILM.COM
(Formerly Panther Resources Ltd.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 2000 and 1999
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
g. Mineral Properties
The costs associated with acquiring and exploring mineral properties are
capitalized on an individual property basis. When a property is
developed to the stage of commercial production, the related costs will
be amortized over the estimated reserve life of the property. If a
property is abandoned or if it is determined that its net recoverable
value is less than book value, the related costs will be charged against
operations in the year of abandonment or impairment in value.
The recorded amounts represent cost to date and do not necessarily
reflect present or future value.
Mineral property option payments received by the Company upon sale of an
interest in a mining property are considered a recovery of costs and are
recorded as a reduction of the mineral property costs.
The Company has set up an allowance for the full amount of the mineral
properties due to the doubtfulness of the recoverability of the costs
(Note 5).
h. Title to Mineral Properties
Although it is the Company's policy to confirm the validity of its
rights to title to, or contract rights with respect to, each mineral
property in which it has a material interest, there is no guarantee that
title to its properties will not be challenged or impugned. Title
insurance generally is not available, and the Company's ability to
ensure that it has obtained secure claim to individual mineral
properties or mining concessions may be severely constrained. The
Company has conducted surveys of all of the claims in which it holds
direct or indirect interests and, therefore, the precise area and
location of such claims is not in doubt. All mineral properties have a
full allowance because of the doubtful nature of future cash flows.
<PAGE>
PHANTOMFILM.COM
(Formerly Panther Resources Ltd.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 2000 and 1999
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
i. Concentrations of Risk - Foreign Operations
The Company has conducted exploration activities in countries with
developing economies, including Mexico and Indonesia. Both of these
countries have experienced recently, or are experiencing currently,
economic or political instability. Hyperinflation, volatile exchange
rates and rapid political and legal change, often accompanied by
military insurrection, have been common in these and certain other
emerging markets in which the Company may conduct operations. The
Company may be materially adversely affected by possible political or
economic instability in any one or more of those countries. The risks
include, but are not limited to terrorism, military repression,
expropriation, changing fiscal regimes, extreme fluctuations in currency
exchange rates, high rates of inflation and the absence of industrial
and economic infrastructure. Changes in mining or investment policies
or shifts in the prevailing political climate in any of the countries in
which the Company conducts exploration and development activities could
adversely affect the Company's business. Operations may be affected in
varying degrees by government regulations with respect to production
restrictions, price controls, export controls, income and other taxes,
expropriation of property, maintenance of claims, environmental
legislation, labor, welfare benefit policies, land use, land claims of
local residents, water use and mine safety. The effect of these factors
cannot be accurately predicted. Currently, the Company is not
conducting operations in Mexico or Indonesia.
j. Capital Assets and Amortization
Capital assets are recorded at cost and amortization is provided over
the estimated economic life on a straight line basis at the following
rates:
Office furniture and equipment 20% per year
Computer equipment 30% per year
Drilling equipment 20% per year
k. Foreign Currency Translation
Monetary assets and liabilities denominated in foreign currencies are
translated into United States dollars at the period and exchange rate.
Non-monetary assets are translated at the historical exchange rate and
all income and expenses are translated at the exchange rates prevailing
during the period. Foreign exchange currency translation adjustments are
included in the stockholders' equity section.
l. Fair Value of Financial Instruments
As at March 31, 2000, the fair value of cash, accounts receivable and
accounts and advances payable including amounts due to and from related
parties, approximate carrying values because of the short-term maturity
of these instruments.
<PAGE>
PHANTOMFILM.COM
(Formerly Panther Resources Ltd.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 2000 and 1999
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
m. Principles of Consolidation
The consolidated financial statements include the accounts of
PhantomFilm.com, Golden Panther Resources, Incorporated, Golden Panther
Investments, Ltd. and Panther Group, Ltd. All significant intercompany
accounts have been eliminated.
n. Change in Accounting Principles
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" which requires companies to record
derivatives as assets or liabilities, measured at fair market value. Gains
or losses resulting from changes in the values of those derivatives would
be accounted for depending on the use of the derivative and whether it
qualifies for hedge accounting. The key criterion for hedge accounting is
that the hedging relationship must be highly effective in achieving
offsetting changes in fair value or cash flows. SFAS No. 133 is effective
for all fiscal quarters of fiscal years beginning after June 15, 1999. The
adoption of this statement had no material impact on the Company's
consolidated financial statements.
NOTE 3 - GOING CONCERN
The Company's consolidated financial statements are prepared using
generally accepted accounting principles applicable to a going concern
which contemplates the realization of assets and liquidation of liabilities
in the normal course of business. However, the Company does not have
significant cash or other current assets, nor does it have an established
source of revenues sufficient to cover its operating costs and to allow it
to continue as a going concern. The Company intends to develop business on
the internet. In the interim, management is committed to meeting the
operational cash flow needs of the Company.
NOTE 4 - FURNITURE AND EQUIPMENT
2000
Accumulated Net Book
Cost Depreciation Value
Office furniture and equipment $ 71,260 $ 71,260 $ -
$ 71,260 $ 71,260 $ -
During the years ended March 31, 1999 and 1998, the Company expensed
$45,538 and $14,554 in depreciation, respectively. These amounts are
included in loss from discontinued operations.
<PAGE>
PHANTOMFILM.COM
(Formerly Panther Resources Ltd.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 2000 and 1999
NOTE 5 - MINERAL PROPERTIES AND DEFERRED EXPENDITURES
La Verde, Mexico property $ 820,208
Exploration costs - La Verde property 1,161,485
Kutai property - East Kaumantan, Indonesia 1,250,000
Exploration and development costs - Kutai property 233,693
Allowance for loss on mineral properties (3,465,386)
$ -
Kutai Property, Indonesia
Panther acquired in 1996 a property known as Kutai. It is 123,548 acres
(50,000 hectares) in size and is located in the province of Eastern
Kalimantan on the Island of Borneo. Panther has a joint venture agreement
on the property with an Indonesian partner, P.T. Pertiwi Kencana Abadi
(PKA), a company incorporated in Indonesia. Panther has 80% of the
concession while PKA has 20%. Panther can acquire an additional 10% of the
property for a $5,000,000 lump sum payment to PKA.
La Verde Property, Sinaloa, Mexico
The La Verde properties are located near Cosala in the State of Sinaloa,
about 99 miles north of Mazatlan, Mexico, and 97 miles southeast of
Culiacan, the capital of Sinaloa.
Allowance for Loss on Mineral Properties
The Company has set up an allowance for 100% of the mineral properties
because of the change in the Company's business plan. This amount is
recorded in the loss from discontinued operations.
<PAGE>
PHANTOMFILM.COM
(Formerly Panther Resources Ltd.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 2000 and 1999
NOTE 6 - LOSS FROM DISCONTINUED OPERATIONS
On March 31, 1999, the Board of Directors of the Company decided to
discontinue the mining operations due to a lack of funding and low precious
metal prices. The following is a summary of the loss from discontinued
operations.
From
For Inception on
The Year November 10,
Ended 1995 Through
March 31, March 31,
1999 1999
REVENUES $ - $ -
EXPENSES
General and administrative 2,720,444 6,923,450
Depreciation 14,554 23,483
Total Expenses 2,734,998 6,946,933
LOSS FROM OPERATIONS (2,734,998) (6,946,933)
OTHER INCOME (EXPENSE)
Currency translation income 168,626 168,626
Write-off of mineral property (3,465,386) (3,914,434)
Bad debt expense - (224,941)
Interest income 543 7,952
Total Other Income (Expense) (3,296,217) (3,962,797)
NET LOSS $(6,031,215) $(10,909,730)
BASIC LOSS PER SHARE OF
COMMON STOCK $ (0.16)
FULLY DILUTED LOSS PER SHARE
OF COMMON STOCK $ (0.16)
The Company had liabilities of $205,676 which are associated with the
discontinued operations. No income tax benefit has been attributed to the
loss from discontinued operations.
<PAGE>
PHANTOMFILM.COM
(Formerly Panther Resources Ltd.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 2000 and 1999
NOTE 7 - COMMITMENTS AND CONTINGENCIES
Lease
The Company has a month-to-month office lease agreement which calls for
payments of $6,292 per month.
Licensing Agreement
The Company has signed a non-exclusive Licensing Agreement with
Alphatrade.com which will require the following issuances of the Company's
common stock:
Date Amount
June 29, 2000 90,000
June 29, 2001 80,000
June 29, 2002 70,000
June 29, 2003 60,000
June 29, 2004 50,000
June 29, 2005 and ever year thereafter 50,000
The share issuances are contingent on receiving a commercial product from
Alphatrade.com.
NOTE 8 - OPTIONS AND WARRANTS
The Company has authorized a 1997 and 1998 Stock Option Plan:
Exercise Number Number Number Number
Price Authorized Exercised Canceled Outstanding
1997 Plan $ 0.20 2,222,000 2,222,000 - -
1997 Plan $ 0.50 1,328,000 1,328,000 - -
1998 Plan $ 0.08 800,000 800,000 - -
1998 Plan $ 0.08 1,100,000 1,100,000 - -
1998 Plan $ 0.30 1,260,000 1,201,500 58,500 -
1998 Plan $ 0.50 200,000 - 200,000 -
1998 Plan $ 0.70 240,000 - 240,000 -
1998 Plan $ 0.75 200,000 - 200,000 -
<PAGE>
PHANTOMFILM.COM
(Formerly Panther Resources Ltd.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 2000 and 1999
NOTE 8 - OPTIONS AND WARRANTS (Continued)
The Company has the following outstanding warrants:
Number of Exercise Number Number Expiration
Warrants Price Exercised Outstanding Date
7,500 $ 0.50 - 7,500 July 26, 2002
7,500 $ 0.50 - 7,500 Dec. 11, 2002
186,400 $ 0.50 - 186,400 Apr. 13, 2005
187,500 $ 0.50 - 187,500 July 17, 2005
5,000 $ 0.50 - 5,000 July 17, 2002
100,000 $ 10.00 - 100,000 October 3, 2000
100,000 $ 0.50 - 100,000 October 3, 2003
500,000 $ 0.50 - 500,000 February 15, 2005
712,842 $ 0.50 - 712,842 May 31, 2005
100,000 $ 0.50 - 100,000 July 1, 2005
200,000 $ 0.50 - 200,000 July 1, 2005
The warrants were repriced on June 24, 1999. The exercise price exceeded
the trading price of the stock. Accordingly, no compensation expense was
recorded.
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding the
executive officers and directors of the Company:
Name Age Position
Gordon Muir 46 Founder, Chairman of the Board, Director
Penny Perfect* 46 Founder, Director
Victor Cardenas* 49 President, Director
Katharine Johnston* 46 Vice-President, Director
* Member of the audit committee
VICTOR D. CARDENAS has served as a Director since September 29, 1998 and
served as President from March 5, 2000 to date. For over thirty years Mr.
Cardenas has been a Senior Level Manager with IBM and as such has been
involved in marketing, sales and computer software systems development. He
is currently a Utilities Industry Executive. Mr. Cardenas holds a
Bachelors Degree in Electrical Engineering from IPN in Mexico City, Mexico
and has attended a one year accelerated Business Management program in New
York. He has also taken business education courses at Harvard University
and Cambridge University, UK.
GORDON MUIR is a founding Director and serves as the Chief Executive
Officer and Chairman. Mr. Muir is an independent investor and business
consultant. He was the founder of Navmaster Technologies, a company
credited with developing the first GPS charting systems for the Marine
Industry that relied on optical imaging instead of expensive and
cumbersome computers. He has over fifteen years experience in senior level
management in a variety of business mainly in the automotive and
industrial industries.
PENNY PERFECT is a founding Director and served as President until March
5, 2000. Previously Ms. Perfect was the President of her own firm which
was involved in providing Public Relations and Investment Banking services
for early stage development companies. Prior to establishing her own firm,
Ms. Perfect was a stockbroker for over five years with a firm specializing
in venture capital and capital pool financings. She was also involved in
many aspects of tax advantaged investment products from structuring to
actually raising the capital for the project. These projects involved
restaurants, hotel operations, franchises, apartment blocks, mining
companies, wineries, medical companies and many others. Ms. Perfect has a
Bachelor of Education from the University of Alberta, Canada. She has ten
years of study in the field of Neuro-Linquistic Programming.
KATHARINE JOHNSTON is a founding Director and is the Vice-President.
Previously Mrs. Johnston was the President and owner of her own company
specializing in the administration and compliance with reporting
requirements of public companies.
Family Relationships
Gordon Muir and Penny Perfect are married. There are no other family
relationships between any other Directors or executive Officers of the
Company either by blood or marriage.
Involvement in Certain Legal Proceedings
To the knowledge of management, during the past five years, no present or
former director or an executive officer of the Company:
1) Filed a petition under the federal bankruptcy laws or any state
insolvency law, nor had a receiver, fiscal agent or similar officer
appointed by a court for the business or property of such person, or
any partnership in which he was a general partner at or within two
years before the time of such filing, or any corporation or business
association of which he was an executive officer at or within two years
before the time of such filing;
2) Was convicted in a criminal proceeding or named subject of a pending
criminal proceeding (excluding traffic violations and other minor offences);
3) Was the subject of any order, judgement or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining him or her from or otherwise
limiting his involvement in any type of business, securities or banking
activities (except as previously noted);
4) Was found by a court of competent jurisdiction in a civil action by the
Securities and Exchange Commission or the Commodity Futures Trading
Commission to have violated any federal or state securities law, and
the judgement in such civil action or finding by the Securities and
Exchange Commission has not been subsequently reversed, suspended, or
vacated.
ITEM 10. EXECUTIVE COMPENSATION
The following table summarizes certain information concerning executive
compensation paid or accrued for each of the Company's last three fiscal
years to the Company's Chief Executive Officer, President and Executive
Vice-President (as determined at March 31, 2000).
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Secur-
ities All
Name and Year or Other Rest- Under- LTIP Other
Principal Period Salary Bonus Annual rictedlying Pay- Comp-
Position Ended ($) ($) Compen-Stock Optionsouts ensat'n
-----------------------------------------------------------------
[S] [C] [C] [C] [C] [C] [C] [C] [C]
Gordon Muir 2000 $138,600 0 0 0 0 0 0
CEO
Gordon Muir 1999 $537,500 $ 85,000 0 300,000 400,000 0 250,000 shares*
CEO
Gordon Muir 1998 $262,500 $100,000 0 200,000 400,000 0 0
CEO
Penny Perfect 2000 $138,600 0 0 0 0 0 0
President
Penny Perfect 1999 $537,500 $ 85,000 0 300,000 400,000 0 250,000 shares*
President
Penny Perfect 1998 $262,500 $100,000 0 200,000 400,000 0 0
President
K. Johnston 2000 $ 35,000 0 0 0 0 0 0
Vice-President
K. Johnston 1999 $ 52,500 0 0 150,000 300,000 0 0
Vice-President
K. Johnston 1998 $ 51,000 $ 25,000 0 100,000 100,000 0 0
Vice-President
* shares issued to Mr. Muir and Ms. Perfect on a post-split basis to
Release management contacts.
Employment Contracts were all voluntarily cancelled by Mr. Muir on behalf
of Micro-American, Inc., Ms. Perfect on behalf of Jupiter Consultants,
Inc. and Mrs. Johnston on behalf of Mandarin Enterprises Inc. on April 1,
1999.
Bonuses and Deferred Compensation
None
Compensation Pursuant to Plans - None
Pension Table - None not applicable
Other Compensation
None of the Directors receive a fee for serving as Directors of the
Company. Directors are reimbursed for direct out-of-pocket expenses for
attendance at meetings of the Board of Directors and for expenses incurred
for and on behalf of the Company.
Compliance with Section 16 of the Exchange Act.
The following table sets forth the names of each person who, at any time
during the fiscal year ended March 31, 2000, was a director, executive
officer, or beneficial owner of more than ten percent of the Common Stock
("Reporting Person"), and failed to file on a timely basis reports required
by Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act"), during such fiscal year or prior fiscal years:
Known failure
Number of Number of Transactions Not to file a
Name Late Reports Reported on a Timely Basis Required Report
None
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the stock
ownership as of March 31, 2000, of: (i) each person who is known to the
Company to be the beneficial owner of more than 5 percent of the Company's
common stock; and (ii) directly or indirectly by each director, by each
person who was an executive officer during the fiscal year ending March
31, 2000 and by directors and executive officers of the Company as a
group:
(i) Larger than 5% shareholders
Number Percentage
Title of Class Beneficial Owner of Shares Of Class
Common Penny Perfect Director 1,949,820 27.5%
Common Gordon Muir CEO/Director 1,949,820 27.5%
(ii) Shareholdings of Directors and Executive Officers
Number Percentage
Title of Class Beneficial Owner of Shares Of Class
Common Penny Perfect Director 1,949,820 27.5%
Common Gordon Muir CEO/Director 1,949,820 27.5%
Common Victor Cardenas Pres/Director 25,000 .003%
Common Katharine Johnston VP/Director 87,500 .01%
Common All executive officers and
directors As a group
(four persons) 4,012,140 57%
Class A Preferred Penny Perfect 875,000 43.75%
Class A Preferred Gordon Muir 875,000 43.75%
Class A Preferred Katharine Johnston 100,000 5%
Class A Preferred All executive officers
and directors
As a group
(three persons) 1,850,000 92.5%
STOCK INCENTIVE PLANS
There has not been a stock option plan adopted for either 1999 or 2000.
PREFERRED SHARES
The Company has authorized 10,000,000 shares of preferred stock with a par
value of $0.001 per share. 2,000,000 shares of the preferred stock have
been issued as a Class "A" issuance. Each share is convertible into 5
shares of common stock at $0.10 per share.
The Class "A" Preferred Shares were issued as an anti-takeover provision
so that management had an effective tool to stop hostile takeovers. The
shares were issued as follows:
Shareholder No. of Preferred Shares
Jupiter Consultants Inc. 875,000
Micro-America, Inc. 875,000
533056 B.C. Ltd. 100,000
Mandarin Enterprises Inc. 100,000
F. Bryson Farrill 25,000
J. Michael Pinkney 25,000
Total 2,000,000
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transaction with Management and Others
During the past two years, there have been no material transactions,
series of similar transactions or currently proposed transactions, to
which the Company or any of its subsidiaries was or is to be a party, in
which the amount involved exceeds $60,000 and in which any director or
executive officer, or any security holder who is known to the Company to
own of record or beneficially more than five percent of the Company's
common stock, or any member of the immediate family of any of the
foregoing persons, had a material interest.
Certain Business Relationships
During the past two years, there have been no material transactions,
series of similar transactions, currently proposed transactions, or series
of similar transactions, currently proposed transactions, or series of
similar transactions, to which the Company or any of its subsidiaries was
or is to be a party, in which the amount involved exceeds $60,000 an in
which any promoter or founder, or any member of the immediate family of
any of the foregoing persons, had a material interest.
Indebtedness of Management
During the past two years, there have been no material transactions,
series of similar transactions or currently proposed transactions, to
which the Company or any of its subsidiaries was or is to be a party, in
which the amount involved exceeds $60,000 and in which any director or
executive officer, or any security holder who is known to the Company to
own of record or beneficially more than five percent of the Company's
common stock, or any member of the immediate family of any of the
foregoing persons, had a material interest.
Parents of the Issuer
Except and to the extent that Gordon Muir and Penny Perfect may be deemed
to be a parent of the company by virtue of their substantial stock
ownership, the Company has no parents.
Transactions with Promoters
During the past two years, there have been no material transactions,
series of similar transactions, currently proposed transactions, or series
of similar transactions, currently proposed transactions, or series of
similar transactions, to which the Company or any of its subsidiaries was
or is to be a party, in which the amount involved exceeds $60,000 an in
which any promoter or founder, or any member of the immediate family of
any of the foregoing persons, had a material interest.
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K
Exhibit
Number Description of Exhibits
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
PhantomFilm.com
Dated June 28, 2000 By:/s/Victor D. Cardenas
Victor D. Cardenas
President/Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed by the following persons on behalf of the
Registrant, in the capacities, and on the dates, indicated.
Signature Title Date
/s/Gordon J. Muir Director June 28, 2000
Gordon J. Muir
/s/Penny Perfect Director June 28, 2000
Penny Perfect
/s/Katharine Johnston Director June 28, 2000
Katharine Johnston
/s/Victor Cardenas Director June 28, 2000
Victor Cardenas
