SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 1998
Commission File Number: 0-17462
FILMAGIC ENTERTAINMENT CORPORATION
IMMEDIATE PREDECESSOR NAME: "ROEDEINGER MEDICAL SYSTEMS, INC."
PREDECESSOR NAME: "COTTON TREE, INC."
(Exact name of registrant as specified in its charter)
UTAH 87-0404991
(State or other jurisdiction of (IRS Employer
Incorporation or organization) Identification No.)
1152 N. Mountain Suite 210, Upland, CA 91786
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (909) 946-1708
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.0001 par value
(Title of Class)
Indicate by check mark whether the registrant (a) has filed all reports
required to be filed by Section 13 pr 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 (the average bid and asked prices) of the
voting stock held by non-affiliates of the registrant on December 31, 1998, was
approximately $_______. The number of shares of Common Stock, $0.0001 par value,
outstanding on December 31, 1998, was 7,323,006 shares, held by 221
shareholders.
<PAGE>
Item 1. BUSINESS
Filmagic was incorporated in the State of Utah on December 7, 1983 as
Cotton Tree, Inc. In August of 1985 it acquired, in stock-for-stock acquisition,
MEDX, Inc. and changed its name to Roedeinger Medical Systems, Inc. In May of
1988, Roedeinger Medical System sold its line of medical products to a third
party company, and in September of 1988 it acquired, on a stock-for-stock basis,
Filmagic, Inc. and changed its name to Filmagic Entertainment Corporation.
It will be the business of the Company to do the following:
Filmagic owns a library of television programming consisting of
943 one half hour
Programs in a variety of formats.This "library" is being used as
follows:
1. Develop a dot-com type of business involving the present library
for use in the new emerging internet marketing to fill the growing
demand for viewing films on-line.
2. Distribute this programming to existing television stations in the
United States and Canada through direct solicitation in both
conventional and digital means
3. License this programming for use by Low Power Television stations,
Cable, and or Pay-For-Viewing television services through direct
solicitation and on-line.
4. Acquire additional programming, both serial and theatrical, for
distribution as provided for in paragraphs 1,2& 3 above.
In addition, Filmagic has been discussing the possibility of
acquiring other libraries that can be converted to both digital
and on-line formats in an attempt to get the company back to an
active income stream. In its capacity as "distributor," it owns
all of the "rights," worldwide, to the movies in perpetuity. Most
of its distribution efforts in the past were done through
"sub-distributors" on a commission basis and for the past several
years, with prior management had not move the company past the
development stages. The new management has begun actively
accessing the changing market and will focus developing the
company's existing library for use in both internet and the
increased demand for friendly films.
It is the company's intention to continue this type of
distribution business, and already has several other similar
transactions in various stages of completion. The company will
additionally seek other opportunities for acquisitions and mergers
that can benefit the shareholders.
Item 2. Financial Information
The activities of the Company in 1985, 1986, and 1987 (Roedeinger
Medical Systems, Inc.) were devoted primarily to the refinement of the VIDA
Heart Monitor and the development of a viable marketing program. There were no
products sold as such and Company could be deemed to be a development Stage
Company.
<PAGE>
The acquisition of Filmagic Incorporated in August of 1988 placed the
Company in the entertainment business. The continuation of the Company as a
viable entity is dependent on the successful marketing of the acquired library
of television programming, and it entered into a tentative licensing agreement
with a distributor in Australia. Shortly after this period the company went
through various changes in both management, board and other controlling factors
which thrust the company into a continued development stage. Additionally, the
company went delinquent on its required filings, thus putting the company into a
non-trading status until the current management came on board this year to bring
all filings into a current status. Because the company does not currently have
an active income stream, management feels that there may have to issue stock to
pay any operational costs that may occur. Management feels that with several of
the opportunities currently on the table, the company can begin generating an
income stream by year end 1999.
Item 3. Properties
The Company owns, in fee, 943 one half-hour television programs. These
programs are in the form of "Tape Masters" used for duplication. All of the
programs are registered with the Library of Congress.
The principal industry using the Company's properties are the
Television, Low Power Television, Pay-for-View television, and Cable television
industry in the United States and Canada. A more limited market exists in
certain foreign television markets.
Item 4. Security Ownership of Certain Beneficial Owners and Management
The following "Table" represents the Ownership of Certain Beneficial Owners and
Management as of December 31, 1997:
--------------------------------------------------------------------------------
(1) Title of (2) Name and Address of (3) Amount and Nature of (4) Percent of
Class beneficial owner beneficial ownership Class**
--------------------------------------------------------------------------------
Common Stock
Par value $.0001
Drones Financial Ltd. 500,000 0.068%
Union Bank Plaza Suite 2600
445 South Figueroa Street
Los Angeles, CA 90071-1630
*Denotes Offices or Directors
** Based on 7,323,000 shares issued and outstanding, one class
<PAGE>
Item 5. Directors and Executive Officers
Mr. R. Bruce Harris: Age 48, CEO, and Director. Mr. Harris has been
involved in International Business for many years. Mr. Harris has
experience in international mergers and acquisitions, management, and
development
Mr. David L. Shade: Age 51, Director, Corporate Counsel, Mr. Shade has
been involved in all phases of corporate law, investment banking, real
estate development and entertainment acquisitions.
Ms. Aubrye Harris: Age 23, Director. Ms. Harris was an International
Management BS and has many years experience in finance. She has worked
with corporate accounts, financial planning and account analysis.
Item 6. Executive Compensation- See Note 7 Financials
Item 7. Legal Proceedings
The Company is not involved in any legal proceedings as of the date of
this filing.
Item 8. Market Price of and Dividends on the Registrant's Common Equity
and Related Stockholder Matters
The free-trading shares of the Company's stock had been traded in the
Over the Counter Market (OTC), "pink sheets" and had been subject to sporadic
trading and pricing during a period over four years ago. The stock has not
actively traded on neither of the above two markets in the past several years.
During this past year there has been zero trading on either market. The last
time the stock traded actively, it was traded for as low as $.03-$.08 (bid) and
$.05-$.12 (ask). The shares of common stock have not been traded on any
"exchange." The company does however, once all filing are brought current,
intend on filing the necessary documentation to get this company trading
actively.
The Company has not paid any dividends to date.
Item 9 Recent Sales of Unregistered Securities
None
Item 10 Description of Registrants Securities to be registered
The Company is authorized to issue 20,000,000 shares of Common Stock,
all one class, with a par value of $.001. As of the date of this filing there
were 7,323,000 shares issued and outstanding.
Item 11 Indemnification of Directors and Officers
Not Applicable
<PAGE>
Item 12 Financial Statements and Supplementary Data
Not Applicable. See item 15.
Item 13 Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure
None
Item 14 Financial Statements and Exhibits
Registrants, Filmagic Entertainment Corporation, includes the
following information with this filing:
a. Balance Sheets: 1997, 1998
b. Income Statements: 1996, 1997, and 1998
c. Statement of Stockholders Equity: Inception to Present
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Act of
1934, the registrant has duly caused this regulation statement to be signed on
its behalf by the undersigned, hereunto duly authorized.
FILMAGIC ENTERTAINMENT CORPORATION
----------------------------------
REGISTRANT
By:_____________________________
<PAGE>
Filmagic Entertainment Corporation
Balance Sheet 1997
ASSETS:
DEC. 31, 1997 DEC. 31,1998
------------------------------------
CASH $0.00 $0.00
INTEREST RECEIVABLE (NOTE 3) $0.00 $0.00
NOTES RECEIVABLE $0.00 $0.00
------------------------------------
TOTAL CURRENT ASSETS $0.00 $0.00
PATENT RIGHTS- NET $0.00 $0.00
FILM LIBRARY (NOTE 4) $140,000.00 $10,000.00
OTHER ASSETS- PROMOTIONAL MATERIAL $0.00 $0.00
ORGANIZATION EXPENSES $0.00 $0.00
------------------------------------
TOTAL ASSETS $140,000.00 $10,000.00
====================================
LIABILITIES & EQUITY
ACCOUNTS PAYABLE $0.00 $0.00
INTEREST PAYABLE $0.00 $0.00
------------------------------------
TOTAL CURRENT LIABILITIES $0.00 $0.00
NOTES PAYABLE- INVESTMENT ADVISOR (NOTE 5) $0.00 $0.00
NOTE PAYABLE- SHAREHOLDER (NOTE 3) $0.00 $0.00
------------------------------------
TOTAL LIABILITIES $0.00 $0.00
COMMON STOCK $7,323.00 $7,323.00
PAID IN CAPITAL $1,900,708.00 $1,900,708.00
RETAINED EARNINGS ($1,768,031.00) ($1,898,031.00)
------------------------------------
TOTAL EQUITY $140,000.00 $10,000.00
------------------------------------
TOTAL LIABILITIES & EQUITY $140,000.00 $10,000.00
====================================
<PAGE>
The Accompanying Notes Are an Integral Part of These Financial Statements
Filmagic Entertainment Corporation
INCOME STATEMENT
INCOME YEAR ENDING YEAR ENDING YEAR ENDING
12/31/96 12/31/97 12/31/98
DEBT REDUCTION $ $ $
CANCELLATION OF DEBT-SHAREHOLDER $ $ $
INTEREST INCOME $ $ $
--------------------------------------------
TOTAL INCOME $ $ $
--------------------------------------------
EXPENSE
WRITE DOWN OF VIDA INVENTORY $ $ $ 130,000
INVESTMENT ADVISOR FEES $ $ $
PATENT AMORTIZATION $ $ $
PROFESSIONAL FEES $ $ $
FILM STORAGE CHARGES $ $ $
TRAVEL $ $ $ -
DEPRECIATION $ $ $
OFFICE EXPENSE $ $ -$ -
PUBLIC RELATIONS $ $ $
INTEREST- Amortization $ 70,000 $ 70,000 $
INVESTMENT WRITE-OFF-PATENT $ $ $
TAXES $ $ $
CONTRACTED FEES $ $ $
ORGANIZATION EXPENSE-AMORTIZATION $ $ $
--------------------------------------------
TOTAL EXPENSE $ 70,000 $ 70,000 $ 130,000
--------------------------------------------
NET LOSS $ (70,000) $ (70,000) $ (130,000)
============================================
<PAGE>
The Accompanying Notes Are an Integral Part of These Financial Statements
Filmagic Entertainment Corporation
Notes To Financial Statements
Note 1-Summary of Significant Accounting Policies
Organization
Filmagic Entertainment Corporation ( the "Company") was incorporated in Utah on
December 7, 1982 as Cotton Tree, Inc. On July 29, 1985, the Company acquired all
of the issued and outstanding shares of MEDX, Inc. (an Arizona Corporation)
through a tax free exchange of stock with all of the MEDX shareholders, and
changed its name to Roedinger Medical Systems, Inc. The premary business of MEDX
was the development and marketing of patented medical products under the names
of VIDA and PREVENT.
On September 11,1988, the company acquired all of the outstanding shares of
Filmagic Incorporated (a Delaware Corporation) through tax-free exchange of
stock, and changed its name to Filmagic Entertainment Corporation (FEC). All
shares required for this acquisition (10,000,000 restricted shares) were donated
back to the Company by the principal shareholder.
Filmagic Incorporated was organized October 5, 1987. Its principal asset is a
library of 947 tape masters of one half-hour television programming. The
company's intent was to license these tapes for television and home video
viewing in the U.S. and overseas, where such programming is applicable. No such
transactions have been made to date.
The Company has conducted minimal operations since inception, and is now
inactive.
Cash and cash equivalents
Cash and cash equivalents include cash on hand and on deposit and highly liquid
debt instruments with original maturities of three months or less.
Inventory
Inventories are stated at the lower of cost (first-in, first-out method) or
market.
Property and equipment
Property and equipment are recorded at cost at the time of acquisition.
Depreciation is computed using the straight-line method over a five year period.
Other assets
The film library consist of story rights, production, print, distribution and
advertising costs (which benefit future periods), and is stated at the lower of
Un-amortized cost or net realizable value.
<PAGE>
Income taxes
The company accounts for income taxes in accordance with Financial Accounting
Standards Board Statement 109, "Accounting for Income Taxes." Income taxes are
provided for the tax effects of transactions reported in the financial
statements and consist of taxes currently due plus deferred tasex. Deferred
taxes are recognized for temporary differences between the basis of assets and
liabilities for financial statement and income tax purposes. The deferred tax
liabilities represent the future tax return consequences of those differences,
which will either be taxable or decutible when the assets and liabilities are
recovered or settled.
Use of estimates
The preparation of the Company's financial statements in conformity with
generally accepted accounting principles necessarily 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 financials statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from these estimates.
Earnings per share
Basic earnings per share is calculated based upon the weighted average number of
common shares outstanding for the year. The Company had no options or warrants
at December 31, 1998 which would have diluted the earnings per share.
Note 2- Basis of Presentation
The Company has no current assets and no revenue generating activities that
raises substantial doubt about its ability to continue as a going concern.
Management is presently engaged in activities related to a proposed business
combination and other options which would bring about an infusion of capital.
The ability of the Company to continue as a going concern is dependent upon its
securing sufficient additional financing and commencing significant operations.
The financial statements do not reflect the effect of the uncertainty of
discontinuing operations.
Note 3-Related Party Transactions
Officers of the Company have provided certain services and incurred some costs
on behalf of the Company in the years ended 1998 and 1997. However, such
services and costs were nominal in amount and such were not valued.
Note 4- Commitments and Contingencies
Charisma, the company storing the film library, is holding the tapes as
collateral against storage charges. Management believes the storage agreement
was terminated, but due to the lack of capital to pursue the matter, the matter
has not been resolved. The asset value of the tapes has been reduced to a
nominal amount.
Michael Redinger, a former principal shareholder, has asseted that the Company
owes him approximately $75,000 for funds advanced the Company between 1984 and
1987. Management contends that the liability was resolved by exchanging
property, equipment and cash.
Management and counsel believer neither claim will adversely affect the Company.
<PAGE>
Note 5- Income Taxes
The Company has a net operating loss carry-forward that may be offset against
future taxable income. However, a tax benefit has not been reported in the
accompanying financial statements because of the uncertainty of the utilization
of the carry-forward. Accordingly, the approximate tax benefit of the loss
carry-forward has been offset by a valuation allowance.
The Company has not filed income tax returns since 1996.
1998 1997 1996
----------------------------------
Net operating loss Carry-Forward $750,000 $750,000 $750,000
Valuation allowance (750,000) (750,000) (750,000)
----------------------------------
Income tax benefit $ --- $ ---- $ ----
==================================
The net operating loss carry-forwards expire through 2010 if not used.
The notes included are an integral part of these financial statements
