STEREO VISION ENTERTAINMENT,
INC.
(A Development Stage
Company)
NOTES TO FINANCIAL
STATEMENTS
NOTE 1 - ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This
summary of accounting policies for Stereo Vision Entertainment, Inc. is
presented to assist in understanding the Company's financial
statements. The accounting policies conform to generally accepted
accounting principles and have been consistently applied in the preparation of
the financial statements.
The
unaudited financial statements as of September 30, 2008 and for the three months
then ended reflect, in the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary to fairly state the financial
position and results of operations for the three months. Operating
results for interim periods are not necessarily indicative of the results which
can be expected for full years.
Nature of Operations and
Going Concern
The
accompanying financial statements have been prepared on the basis of accounting
principles applicable to a “going concern”, which assumes that the Company will
continue in operation for at least one year and will be able to realize its
assets and discharge its liabilities in the normal course of
operations.
Several
conditions and events cast doubt about the Company’s ability to continue as a
“going concern”. The Company has incurred net losses of approximately
$16,590,000 for the period from May 5, 1999 (inception) to September 30, 2008,
has a liquidity problem, and requires additional financing in order to finance
its business activities on an ongoing basis. The Company is actively
pursuing alternative financing and has had discussions with various third
parties, although no firm commitments have been obtained. In the
interim, shareholders of the Company have continued to meeting its minimal
operating expenses as they have done in the past.
The
Company’s future capital requirements will depend on numerous factors including,
but not limited to, continued progress developing its products and market
penetration and profitable operations.
These
financial statements do not reflect adjustments that would be necessary if the
Company were unable to continue as a “going concern”. While
management believes that the actions already taken or planned, will mitigate the
adverse conditions and events which raise doubt about the validity of the “going
concern” assumption used in preparing these financial statements, there can be
no assurance that these actions will be successful.
If the
Company were unable to continue as a “going concern”, then substantial
adjustments would be necessary to the carrying values of assets, the reported
amounts of its liabilities, the reported expenses, and the balance sheet
classifications used.
STEREO VISION ENTERTAINMENT,
INC.
(A Development Stage
Company)
NOTES TO FINANCIAL
STATEMENTS
(Continued)
NOTE 1 - ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Organization and Basis of
Presentation
The
Company was incorporated under the laws of the State of Nevada on May 5,
1999. As of June 30, 2008, the Company is in the development stage,
and has not commenced planned principal operations.
Nature of
Business
The
Company intends to position itself to evolve into a vertically integrated,
diversified media entertainment company. The Company anticipates
generating revenues from several sources, including production of new feature
films in both 3-D and 2-D format for theatrical and direct to DVD release, as
well as expanding into other areas of the entertainment industry including the
licensing of its film rights to the video gaming industry.
Cash and Cash
Equivalents
For
purposes of the statement of cash flows, the Company considers all highly liquid
debt instruments purchased with a maturity of three months or less to be cash
equivalents to the extent the funds are not being held for investment
purposes.
Pervasiveness of
Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles required 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.
Fair Value of Financial
Instruments
The
carrying value of the Company's financial instruments, including accounts
payable and accrued liabilities at September 30, 2008 and June 30, 2008
approximates their fair values due to the short-term nature of these financial
instruments.
STEREO VISION ENTERTAINMENT,
INC.
(A Development Stage
Company)
NOTES TO FINANCIAL
STATEMENTS
(Continued)
NOTE 1 - ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Property and
Equipment
Property
and equipment are stated at cost. Depreciation is provided for in
amounts sufficient to relate the cost of depreciable assets to operations over
their estimated service lives, principally on a straight-line basis from 3 to 5
years.
Upon sale
or other disposition of property and equipment, the cost and related accumulated
depreciation or amortization are removed from the accounts and any gain or loss
is included in the determination of income or loss.
Expenditures
for maintenance and repairs are charged to expense as incurred. Major
overhauls and betterments are capitalized and depreciated over their useful
lives.
The
Company identifies and records impairment losses on long-lived assets such as
property and equipment when events and circumstances indicate that such assets
might be impaired. The Company considers factors such as significant
changes in the regulatory or business climate and projected future cash flows
from the respective asset. Impairment losses are measured as the
amount by which the carrying amount of intangible asset exceeds its fair
value.
Advertising
Costs
Advertising
costs are expensed as incurred. For the quarters ended September 30,
2008 and 2007, advertising expense was $0 and $0, respectively.
Concentration of Credit
Risk
The
Company has no significant off-balance-sheet concentrations of credit risk such
as foreign exchange contracts, options contracts or other foreign hedging
arrangements. The Company maintains the majority of its cash balances
with one financial institution, in the form of demand deposits.
STEREO VISION ENTERTAINMENT,
INC.
(A Development Stage
Company)
NOTES TO FINANCIAL
STATEMENTS
(Continued)
NOTE 1 - ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Loss per
Share
Basic
loss per share has been computed by dividing the loss for the year applicable to
the common stockholders by the weighted average number of common shares
outstanding during the year. The effect of outstanding common stock
equivalents would be anti-dilutive for September 30, 2008 and 2007 and are thus
not considered. At September 30, 2008 and 2007, there were no outstanding common
stock equivalents.
Reclassification
Certain
reclassifications have been made in the 2008 financial statements to conform
with the 2009 presentation.
Intangible
Assets
Intangible assets consist of movie and
music licensing rights and production costs and are valued at cost. As of
September 30, 2008 and 2007, the Company had $430,078 and $406,750 in
film costs that are in the development stage or pre-production
stage.
The Company identifies and records
impairment losses on intangible assets when events and circumstances indicate
that such assets might be impaired or when the property is not set for
production within three years of acquisition. The Company considers
factors such as significant changes in the regulatory or business climate and
projected future cash flows from the respective asset. Impairment
losses are measured as the amount by which the carrying amount of intangible
asset exceeds its fair value.
NOTE 2 - INCOME
TAXES
As of
June 30, 2008, the Company had a net operating loss carry forward for income tax
reporting purposes of approximately $16,555,000 that may be offset against
future taxable income through 2028. Current tax laws limit the amount
of loss available to be offset against future taxable income when a substantial
change in ownership occurs. Therefore, the amount available to offset
future taxable income may be limited. No tax benefit has been
reported in the financial statements, because the Company believes there is a
50% or greater chance the carry-forwards will expire
unused. Accordingly, the potential tax benefits of the loss
carry-forwards are offset by a valuation allowance of the same
amount.
|
|
2008
|
|
|
2007
|
|
Net
Operating Losses
|
|
$ |
2,483,250 |
|
|
$ |
2,283,150 |
|
Valuation
Allowance
|
|
|
(2,483,250 |
) |
|
|
(2,283,150 |
) |
|
|
$ |
- |
|
|
$ |
- |
|
The
provision for income taxes differs from the amount computed using the federal US
statutory income tax rate as follows:
|
|
2008
|
|
|
2007
|
|
Provision
(Benefit) at US Statutory Rate
|
|
$ |
200,100 |
|
|
$ |
6,600 |
|
Increase
(Decrease) in Valuation Allowance
|
|
|
(200,100 |
) |
|
|
(6,600 |
) |
|
|
$ |
- |
|
|
$ |
- |
|
STEREO VISION ENTERTAINMENT,
INC.
(A Development Stage
Company)
NOTES TO FINANCIAL
STATEMENTS
(Continued)
NOTE 2 - INCOME TAXES
(continued)
The
Company evaluates its valuation allowance requirements based on projected future
operations. When circumstances change and causes a change in
management's judgment about the recoverability of deferred tax assets, the
impact of the change on the valuation is reflected in current
income.
NOTE 3 - DEVELOPMENT STAGE
COMPANY/ GOING CONCERN
The
Company has not begun principal operations and as is common with a development
stage company, the Company has had recurring losses during its development
stage. Continuation of the Company as a going concern is dependent
upon obtaining the additional working capital necessary to be successful in its
planned activity. The management of the Company has developed a
strategy, which it believes will accomplish this objective through additional
equity funding and long term financing, which will enable the Company to operate
for the coming year.
NOTE 4 - RENT
EXPENSE
The
Company’s principal executive offices are located at 15452 Cabrito Road, Suite
204, Van Nuys, CA 91406 and consist of approximately 2,500 square feet of
furnished executive suite offices and reception and conference room
arrangements. The lease expired in June 2005. Since the lease expired, the
Company is on a month to month lease. The monthly rent for the
property is $2,500. For the three months ended September 30, 2008 and
2007, rent expense was $7,500 and $7,500, respectively.
In March,
2008, the Board approved a new benefits package for its CEO, Mr. Jack Honour
which includes payment for housing at the rate of $4,500 per month plus
utilities as well as the use of a car. The annual cost of these benefits is
estimated to be $85,000 p.a.
NOTE 5 - LOANS FROM
SHAREHOLDERS AND OTHER RELATED PARTY TRANSACTIONS
As of
September 30, 2008 and June 30, 2008, the company owed $822,383 and $795,079
respectively to various shareholders and officers/directors. The
loans are unsecured with interest at rates of between 4.00% to 12% and have no
fixed terms of repayment.
On June 27, July 31 and August 27,
2007, the Company borrowed $125,000, $150,000 and $225,000 respectively from a
shareholder at an interest rate of 12% per annum. Interest of $5,000
per month was due and payable monthly beginning in September 2007 and continuing
through the payment due date on February 21, 2009. On February 19,
the Company borrowed an additional $200,000 under the same terms. This loan was
collateralized with 1,000,000 shares of Mr. John Honour’s shares. Interest of
$7,000 per month is due and payable monthly. At June 30, 2008 the
total amount due on this loan was $706,667. This amount is included
in the total amount of loans shown above. For the four month period of
March-June, 2008, the lender accepted 100,000 shares of restricted stock valued
at $.28 per share as payment for the interest for those four
months. At September 30, 2008, the company owed $727,667 on this
loan. The $700,000 note is convertible at the option of the
lender on the due date at a per share price equal to 75% of the closing price on
the day of conversion.
STEREO VISION ENTERTAINMENT,
INC.
(A Development Stage
Company)
NOTES TO FINANCIAL
STATEMENTS
(Continued)
NOTE 6 - COMMON STOCK
TRANSACTIONS
The
Company was initially authorized to issue 100,000,000 common shares with a par
value of $0.001.
At
inception, the company issued 61,200 (1,530,000 pre-split) shares of common
stock to its officers and directors for services performed and payments made on
the Company's behalf during its formation. This transaction was valued at
approximately $0.003 per share or an aggregate approximate value of $5,000.
These shares were issued under Rule 4(2).
On
December 2, 1999, the Company issued 58,800 (1,470,000 pre split) shares of
common stock in exchange for $350,000 investment in 3-D projects, $255,000
licensing and distribution rights, $3,306,900 3-D film production and exhibition
equipment, and $100,000 patent pending. On September 25, 2001 the
asset acquisition was rescinded and the assets acquired were returned and the
common stock was returned to treasury.
In
addition to the asset acquisition, on December 3, 1999, the company entered into
an acquisition agreement and plan of reverse merger with Kestrel Equity
Corporation whereby the company acquired $332 cash, $153,001 trading
investments, $100,686 reduction in accounts payable, and 4366,084 in notes
payable in exchange for 48,000 (1,200,000 pre-split) shares of common stock. by
virtue of the merger and the asset acquisition, the Company issued 106,800
(2,670,000 pre-split) shares of common stock of the surviving corporation and
acquired assets valued at $4,013,100 or approximately $1.50 per
share.
On
December 31, 1999, the Company issued 14,000 (350,000 pre-split) shares to
several employees (Rick Ducommun and Rocco Urbisci) and a consultant for project
related services rendered and to be rendered, valued at $2.00 per share. These
shares were issued in reliance upon the Rule 4(2) exemptive provisions, and no
advertising nor solicitation occurred.
On
February 14, 2000, the Company issued 4,000 (100,000 pre-split) shares of common
stock as payment for services rendered by Mr. Herky Williams valued at $1.00 per
share. The services rendered were for the development of the company's music
division. The shares were issued under Rule 4(2) to an officer of the
Company.
On April
17, 2000, the Company issued 4,000 (100,000 pre-split) shares of common stock to
Shauna Gilibarti as payment for marketing related services valued at
$100,000. They were cancelled on May 25, 2001 for failure to
perform.
STEREO VISION ENTERTAINMENT,
INC.
(A Development Stage
Company)
NOTES TO FINANCIAL
STATEMENTS
(Continued)
NOTE 6 - COMMON STOCK
TRANSACTIONS (continued)
On May 4,
2000, the Company issued 2,200 (55,000 pre-split) shares of common stock for
cash of $55,000.
On June
2, 2000, the Company issued 4,000 (100,000 pre-split) shares of common stock to
Profit Earth as payment for market development services valued at $100,000. They
were cancelled for non performance on September 25, 2001.
On June
30, 2000, the Company issued 1,420 (35,500 pre-split) shares of common stock for
cash of $35,500.
On
September 13, 2000, the Company issued 5,000 (125,000 pre-split) shares of
common stock for conversion of notes payable totaling $141,250. The
value of these shares was $1.13 per share, according to the terms of the
original loan agreement.
On
September 27, 2000, the company entered into a contract with Ron Whiten to make
strategic introductions on behalf of the Company to the investment community in
exchange for 4,000 (100,000 pre-split) common shares. On September 29, 2000, the
shares were issued at a value of $95,000, which was the quoted market price on
the date of issue. The contract is for a period of time covering 3 quarterly
financial statements. To the best knowledge and belief of the company, no
services were performed by Mr.Whiten pursuant to this agreement. On May 25,
2001, the 4,000 shares of stock issued to Mr. Whiten were cancelled for
non-performance of services.
On
October 27, 2000, the Company issued 500 (12,500 pre-split) shares of common
stock valued at $1.00 per share to National Financial Group for financial
services previously rendered. These shares were issued under Rule
4(2).
On
November 15, 2000, the Company issued 32,000 (800,000 pre-split) shares of
common stock for conversion of notes payable totaling $407,138. The
value of these shares was $0.51 per share, according to the terms of the
original loan agreement.
On
November 22, 2000, the Company issued 2,000 (50,000 pre-split) shares of common
stock for conversion of notes payable totaling $25,000. The value of
these shares was $0.50 per share according to the terms of the original
agreement.
On
November 22, 2000, the Company issued 4,080 (102,000 pre-split) shares of common
stock to Daniel Symmes as payment for 3-D consulting services valued at
$102,000.
On
December 4, 2000, the Company issued 400 (10,000 pre-split) shares of common
stock as payment for services valued at $10,200.
On
December 14, 2000, the Company issued 4,000 (100,000 pre-split) shares of common
stock to Rod Whiton as payment for advertising services valued at
$106,000. These shares were cancelled for non-performance on May 25,
2001.
STEREO VISION ENTERTAINMENT,
INC.
(A Development Stage
Company)
NOTES TO FINANCIAL
STATEMENTS
(Continued)
NOTE 6 - COMMON STOCK
TRANSACTIONS (continued)
On
January 23, 2001, the Company issued 600 (15,000 pre-split) shares of common
stock for cash $15,000.
On
January 30, 2001, the Company issued 4,724 (118,100 pre-split) shares of common
stock to six individuals as payment for services valued at $64,950. These
services included advising on the film “On Route 66” as well as website
design. On May 25, 2001, 2,000 of these shares were cancelled for
non-performance.
On March
10, 2001, the Company issued 8,000 (200,000 pre-split) shares of common stock to
Herky Williams (100,000) and Jerry Crutchfield (100,000) valued at $154,000 as
payment for services regarding the production of a record album.
On April
9, 2001, the Company issued 3,600 (90,000 pre-split) shares of common stock to
Charles Marshall as payment for advertising expense valued at
$49,500.
Pursuant
to an agreement made with an affiliate company of Mr. Williams (the
Secretary-Treasurer and a Director of the Company) called Wilfield
Entertainment, the Company issued 16,000 (400,000 pre-split) shares of common
stock at a market price of $.55 per share on April 18, 2001 for its
participation in the joint venture. The joint venture with Wilfield is for the
production of thirteen
musical
albums. The company will supply the necessary funding for the production of
these albums and after capital repayment has occurred, the Company will receive
51% of the profits from the projects. The estimated production costs per album
are projected to be $80,000.
On May
25, 2001, 14,000 (350,000 pre split) shares that were issued during the years
ended June 30, 2001 and 2000 to various people for services were
cancelled. These shares were cancelled for non-performance of
services. The expenses related to these shares were recorded when the
shares were issued. The expenses related to the issuance of these
shares were reversed upon the cancellation of the shares.
STEREO VISION ENTERTAINMENT,
INC.
(A Development Stage
Company)
NOTES TO FINANCIAL
STATEMENTS
(Continued)
NOTE 6 - COMMON STOCK
TRANSACTIONS (continued)
On June
1, 2001, the Company issued 840 (21,000 pre-split) shares of common stock for
conversion of notes payable totaling $7,513, according to the terms of the
original agreement.
On June
15, 2001, the Company issued 1,000 (25,000 pre-split) shares of common stock as
payment for services valued at $15,000.
On June
28, 2001, the Company issued 10,000 (250,000 pre-split) shares of common stock
to Vision Publishing (100,000) and Jim and Cynthia Pitochelli (150,000) as
payment for services and advertising expenses valued at $150,000.
On June
29, 2001, the Company issued 34,000 (850,000 pre-split) shares of common stock
for conversion of notes payable totaling $225,000, according to the terms of the
original loan agreement.
On August
29, 2001, the Company issued 13,400 (335,000 pre-split) shares of common stock
for conversion of notes payable totaling $100,500, according to the terms of the
original loan agreement.
During
the quarter ended September 30, 2001, 4,000 (100,000 pre-split) shares were
issued for conversion of notes payable totaling $25,600. The value of these
shares was $0.26 per share, as agreed in the original loan documents. These
shares were issued under Rule 4(2).
On
September 25, 2001, 4,000 (100,000 pre-split) shares that were issued during the
year ended June 30, 2000 for services were cancelled. These shares
were cancelled for non-performance of services. The expenses related
to these shares were recorded when the shares were issued. The
expenses related to the issuance of these shares were reversed upon the
cancellation of the shares. Also on September 25, 2001, the asset
acquisition agreement with 3-D was rescinded and the assets acquired by the
Company were returned to 3-D. The stock issued by the Company in the
acquisition was not returned. There was a net increase in total
stockholders’ equity of $70,532.
During
the quarter ended September 30, 2001, the company issued 112,200 (2,805,000
pre-split) shares to the Company's officers and directors for services rendered
in their various capacities (J. Honour (1,500,000), H. Williams (600,000), J.
Bodziak, R. Urbisci and T. Noonan (100,000 each)) at the market value of the
stock on the date of agreed (not actual) issuance of $0.30 to $0.45 per
share.
During
the quarter ended September 30, 2001, 3,600 (90,000 pre-split) restricted common
shares were issued to individuals for cash at $0.50 per share trading value. All
shares were issued under Rule 4(2).
STEREO VISION ENTERTAINMENT,
INC.
(A Development Stage
Company)
NOTES TO FINANCIAL
STATEMENTS
(Continued)
NOTE 6 - COMMON STOCK
TRANSACTIONS (continued)
During
the quarter ended December 31, 2001, the Company issued 25,912 (647,795
pre-split) shares of stock for conversion of notes payable totaling $135,596,
for accrued interest on the notes payable of $12,275, and for consulting
services of $20,779. The value of the shares was between $0.14 and $0.35 per
share. The share values were always determined based upon the trading price of
the stock on the date of the agreement, not on the date of issuance of the
shares. All shares were issued in reliance on the exemption provided by Rule
4(2).
During
the quarter ended December 31, 2001, the Company issued 94,825 (2,370,631
pre-slit) shares to twelve different individuals for services at the market
value on the date of the agreements, between $0.21 and $0.54 per
share. Such services included financial and market advisory as well
as project advisory.
On
January 15, 2002, 12,000 (300,000 pre-split) shares of common stock were issued
for cash at $0.33 per share.
During
the quarter ended March 30, 2002, 119,185 (2,979,625 pre split) shares were
issued in connection with previous debt cancellation, pursuant to the terms of
the convertible instrument. These shares were issued under Rule 4(2), and the
recipient was an accredited investor.
On April
10, 2002, the Company issued 9,920 (248,000 pre-split) shares of common stock
for conversion of notes payable totaling $32,627 according to the terms of the
original agreement.
On April
29, 2002, 8,000 (200,000 pre-split) common shares were issued for the purchase
of "In the Garden of Eden"
album. The value of the shares was $0.06 on the date of contractual
agreement, and the shares were issued under Rule 4(2), but later rescinded for
failure of the owner to deliver the rights. These shares were
cancelled on June 3, 2003.
On May
30, 2002, 4,000 (100,000 pre-split) common shares were issued to various people
for services, which included writing, arranging, composing and product
placement, all connected with the project "Mad Dogs and Oakies." The
value of the shares was $.03 per share on the date of contract. These shares
were issued to non-affiliates under Rule 4(2).
During
the quarter ended June 30, 2002, the Company issued 12,000 (300,000 pre-split)
shares of common stock for cash. Shares were issued for $.025 to $.075 per
share.
During
the quarter ended June 30, 2002, 10,000 (250,000 pre-split) shares were issued
for consulting and rent expense. The value of the shares was between $.03 (April
15) and $.08 (May 24) per share.
STEREO VISION ENTERTAINMENT,
INC.
(A Development Stage
Company)
NOTES TO FINANCIAL
STATEMENTS
(Continued)
NOTE 6 - COMMON STOCK
TRANSACTIONS (continued)
On July
1, 2002, 34,000 (850,000 pre-split) common shares were issued for cash of
$9,500, based upon a conversion contract entered into earlier.
On July
8, 2002, 85,334 (2,133,334 pre-split) shares were issued in connection with a
previous debt cancellation, based upon the terms of the note and conversion
price therein committed. These shares were issued to an accredited investor
under Rule 506 of Regulation D.
On
December 20, 2002, 20,000 (500,000 pre-split) shares were returned to the
treasury and cancelled.
On
December 23, 2002, 104,000 (2,600,000 pre split) common shares were cancelled
from various shareholders for non-performance of services. 750,000
shares were initially issued December 20, 2001, 1,500,000 shares were initially
issued September 27, 2001, and 450,000 shares were initially issued October 2,
2001. The shares were recorded as a prepaid asset at the time of
issuance. The entry recording the issuance of the shares was reversed
upon cancellation.
During
the quarter ended March 31, 2003, a total of 559,800 (13,995,000 pre-split)
common shares were issued to individuals for services. This total included
issuances to officers and directors, at $0.029 per share (restricted) of
13,450,000 shares (J. Honour (10,000,000), H. Williams (1,500,000), T. Noonan
(500,000), J. Bodziak (250,000) and R. Urbisci (100,000)) and outside
consultants providing media solicitation services (Ron Kelley, 1,100,000
shares).
On March
26, 2003, 160,000 (4,000,000 pre-split) common shares were issued for conversion
of notes payable of $274,932. These shares were issued to an accredited
investor, in conversion of pre-existing rights, under Rule 506.
On May 9,
2003, 101,600 (2,540,000 pre-split) shares were issued to 7 individuals
providing various consulting services, all as described in the Form S8
registration statement, filed April 29, 2003. The value of the registered shares
was effectively $0.01 per share. The private placement shares were issued under
the exemption available through Rule 4(2).
On June
2, 2003, 88,000 common shares were issued for conversion of debt totaling
$20,000 according to the terms of the original agreement.
On June
3, 2003, 12,000 shares were cancelled for non-performance of
services. These shares were originally issued during the year ended
June 30, 2002. 8,000 shares were initially issued April 29, 2002 and
recorded as other assets. 4,000 shares were initially issued
September 27, 2001 and recorded as a prepaid asset. The journal
entries recording the issuance of these shares was reversed upon
cancellation.
STEREO VISION ENTERTAINMENT,
INC.
(A Development Stage
Company)
NOTES TO FINANCIAL
STATEMENTS
(Continued)
NOTE 6 - COMMON STOCK
TRANSACTIONS (continued)
On June
25, 2003, 40,000 shares were issued for conversion of debt totaling $15,491,
issued to Freddi Sidi, an accredited investor, under Rule 506.
During
the quarter ended June 30, 2003, 2,156,000 shares were issued to various people
for services which included 2,000,000 shares issued to Jack Honour, the Company
President, in exchange for $600,000 of past and current services ($.30 per share
or a 50% discount to market), and 156,000 shares issued to nine additional
issuees for services whose shares were valued from $.60 per share to $1.13 per
share (market value on the date of issuance) as their contract dates differed
from Honour’s. These shares were issued under Rule 4(2).
On July
8, 2003, 30,000 shares of common stock were issued for conversion of debt
totaling $8,905, according to the terms of the original agreement.
During
the quarter ended September 30, 2003, 1,198,000 shares were issued to various
people for services. A registration statement on Form S8 was filed covering
710,000 of these shares to the 5 individuals listed therein, at 100% of market
on the date of issuance and registration ($0.57). The value of the unregistered
shares, when originally issued, was between $0.47 and $0.52 per share on the
various agreement dates. These recipients (Buss, McLane,Tribe, Duke Films, Doug
Schwartz, Lawrence Kallet, Edby and Eric Honour) provided consulting services in
locating and securing new media projects. These shares were issued under Rule
4(2).
On
November 17, 2003, 100,000 shares were cancelled for non-performance of
services. These shares were originally issued in July 2003 to Rod
McLane and the expense associated with these shares was recorded when
the shares were issued. The expense related to the issuance of these
shares was reversed upon the cancellation of the shares.
During
the quarter ended December 31, 2003, 523,072 shares were issued for $68,000 in
services at approximately $0.13 per share (50% discount to market on October 1,
2003). During the quarter, 20,000 shares were issued to Chicago Investment Group
and Greg Myers for financial consulting services at $0.26 per share, the market
value on the date of issuance (October 1, 2003). In addition,
700,000 shares total were issued to Herky Williams (500,000), John Bodziak
(100,000) and Tom Noonan (100,000) for employment and consulting services as
officers and directors of the company, at approximately $0.20 per share (50%
discount to market on November 23, 2003). Also, the Company issued 200,000
shares to pay an accounts payable of $55,500 due to Adams Technical Solutions at
a price of approximately $0.26 per share, (market value on date of issuance on
October 1, 2003). All shares were issued under the Rule 4 (2)
exemption.
On
January 12, 2004, 90,000 shares were issued to Focus Partners West, for
financial services valued at $54,000.
STEREO VISION ENTERTAINMENT,
INC.
(A Development Stage
Company)
NOTES TO FINANCIAL
STATEMENTS
(Continued)
NOTE 6 - COMMON STOCK
TRANSACTIONS (continued)
On
January 20, 2004, the Company converted debt of $35,046 to 200,000 shares of
common stock, pursuant to terms of pre-existing contracts.
On
February 9, 2004, 20,000 shares were cancelled for non-performance of
services. These shares were originally issued to Chicago investment
Group and Greg Myers in October 2003, and the expense associated with these
shares was recorded when the shares were issued. The expense related
to the issuance of these shares was reversed upon the cancellation of the
shares.
On March
9, 2004, 156,000 shares were cancelled for non-performance of
services. These shares were originally issued to Tribe Communications
for provision of advertising services in September 2003, and the expense
associated with these shares was recorded when the shares were
issued. The expense related to the issuance of these shares was
reversed upon the cancellation of the shares.
On March
9, 2004, 100,000 shares were issued to pay rent valued at $25,000, according to
the terms of a previous agreement.
On March
11, 2004, 345,000 shares were issued to employees and consultants at $2.00,
which was the market price on the date of issuance, and these shares, issued to
7 named individuals, were the subject of a registration statement on Form S8,
filed March 5, 2004.
During
the quarter ended March 31, 2004, the Company issued 400,000 shares for cash
(cancellation of indebtedness of $100,000) at $.25 per share, the price pre-set
in the conversion agreements. The Company also issued 25,000 shares for cash
(cancellation of indebtedness of $12,500) at $.50 per share, the price pre-set
in the conversion agreements.
On April
7, 2004, the Company issued 60,000 shares of common stock to Messrs. Goldman and
Botts, at $2.04 per share (the then market price), for the provision of
financial advisory services.
On April
7, 2004 the Company issued 375,000 shares of common stock for cash of $215,000,
valued at $0.57 per share, in accordance with previously agreed conversion
rights. In addition, approximately $14,200 in loans were converted into 30,000
shares of common stock, at a conversion price of $0.47 per share, the pre-agreed
conversion price. All shares were issued under the exemption provided by Rule
4(2).
On April
14, 2004, the Company issued 100,000 shares of common stock for cash at $0.25
per share, resulting from an option exercise.
On May 6,
2004, the Company issued 10,000 shares of common stock for cash at $0.50 per
share.
STEREO VISION ENTERTAINMENT,
INC.
(A Development Stage
Company)
NOTES TO FINANCIAL
STATEMENTS
(Continued)
NOTE 6 - COMMON STOCK
TRANSACTIONS (continued)
On May
25, 2004, the Company issued 50,000 shares of common stock to Var Growth valued
at $0.81 per share for marketing services.
On June
8, 2004, the Company issued 100,000 shares of common stock for cash at $0.75 per
share, to acquire distribution rights in Baywatch 3 DD, a planned
movie. These shares were issued to an accredited investor under Rule
506.
On June
16, 2004, 240,000 shares were issued to Jack Fennie for an $80,000 debt of the
company which he paid, at $0.33 per share, representing 50% of the market price
on the date of delivery of the executed contract.
During
the quarter ended September 30, 2004, the Company issued 1,234,333 shares of
common stock to nine individuals for services rendered, including financial
advisory, marketing, PR and strategic advice. Consulting expense of
$461,233 was recognized in connection with these issuances. Also
during the quarter 400,000 shares were issued for cash at $0.25 per share equal
to 50% of the bid price.
During
the quarter ended December 31, 2004, the Company issued 189,300 shares of common
stock as follows: 86,000 shares to five individuals for services including
secretarial, marketing and public relations. This included issuance of 56,000
S-8 shares valued at the closing price of the stock on the day prior to issuance
and 30,000 restricted shares valued at fifty per cent of the price of the stock
on the day prior to issuance. Consulting expense of $39,850 was recognized in
connection with these issuances. Also during the quarter, $39,000 in loans was
converted into 103,300 shares of common stock.
During
the quarter ended March 31, 2005, the Company issued 160,000 shares of common
stock for cash of $35,000. These shares were valued at $.25 per
share, which was equal to a discount of 50% of the prevailing market price due
for restricted securities.
During
the quarter ended March 31, 2005, the Company issued 100,000 shares of common
stock for $25,000 of accounts payable. These shares were valued at
$.25 per share, which was equal to a discount of 50% of the prevailing market
price due for restricted securities.
During
the quarter ended March 31, 2005, the Company issued 370,000 shares of common
stock to various people for services valued at $167,850. The shares
were valued at the market price on the date of the signing of the agreements,
which ranged from $.25 to $.70 per share.
During
the quarter ended March 31, 2005, the officers of the Company agreed to convert
accrued payroll of $281,666 for the period from September 1, 2004 to March 31,
2005 to 281,666 shares of common stock, at a price of $1 per share, versus the
then market price of $.40 per share. On August 24, 2005, these shares
were issued.
STEREO VISION ENTERTAINMENT,
INC.
(A Development Stage
Company)
NOTES TO FINANCIAL
STATEMENTS
(Continued)
NOTE 6 - COMMON STOCK
TRANSACTIONS (continued)
On April
4, 2005, the Company issued 20,000 shares of common stock for consulting and
legal services at $.35 per share, the closing price on the day prior to
issuance, resulting in expense of $7,000 being recognized.
During
the quarter ended June 30, 2005, the Company entered into an agreement to issue
20,000 shares of common stock valued at $.30 per share in exchange for a 10%
interest in JamOakie Productions, Inc. On February 15, 2006, these
shares were issued.
During
the quarter ended June 30, 2005, the Company entered into an agreement to
issue 100,000 shares of common stock for payment of $35,000 in
accounts payable. As of June 30, 2006, these shares had not been
issued.
During
the quarter ended June 30, 2005, the Company entered into three separate
agreements to issue a total of 153,000 shares of common stock for conversion of
notes payable of $32,000. As of June 30, 2005, these shares had not
been issued. On February 15, 2006, the Company issued 137,000 of the
above shares. As of June 30, 2006, 16,000 shares had yet to be
issued.
During
the quarter ended December 31, 2005, the Company entered into an agreement to
borrow $10,000 from an individual not associated with the company in exchange
for 40,000 restricted common shares as well as full repayment of the loan in two
equal monthly installments commencing January 20, 2006. These shares were issued
on October 28, 2005.
Also
during the quarter ended December 31, 2005, a shareholder advanced $11,000 to
the company in return for 110,000 restricted common shares, equivalent to the
offer price at the time the advance was made (November 14,
2005). These shares were issued on February 7, 2006.
During
the quarter ended March 31, 2006, the Company issued a total of 1,266,583
restricted common shares to nine individuals and two entities for both expenses
and loans made to the Company during the March 31, 2006 quarter, as well as for
services, loans and a small acquisition made/received in previous
quarters. Of the total shares issued, 500,000 were issued at $.10 per
share for conversion of loans of $50,000 made during the current quarter;
469,083 shares were issued from $.10 to $.15 per share for loans of $62,875
received by the Company in prior periods; 277,500 shares were issued from $.0775
to $.10 per shares to pay fees and expenses valued at $23,356 which were
incurred during the quarter; and 20,000 shares were issued for an acquisition of
10% of Jamoakie Productions agreed in May, 2005.
STEREO VISION ENTERTAINMENT,
INC.
(A Development Stage
Company)
NOTES TO FINANCIAL
STATEMENTS
(Continued)
NOTE 6 - COMMON STOCK
TRANSACTIONS (continued)
During
the quarter ended June 30, 2006, the Company issued a total of 3,024,972
restricted common shares as follows: 2,500,000 shares to one shareholder and
160,000 shares to a second shareholder for conversion of accrued
expenses at $ .10 per share; 79,972 shares for conversion of an outstanding debt
of $7,972, 50,000 shares and 10,000 shares for conversion of a $5,000 and a
$1,000 loan received by the company during the quarter from two individuals,
25,000 shares for a previous loan of $2,000 as well as a new advance of $500
from the same individual, and 200,000 shares to a consultant for IR services to
be provided. During the quarter, a net total of 150,000 shares were returned to
the treasury and cancelled.
During
the quarter ended September 30, 2006, the Company sold 291,583 restricted common
shares to four individuals for a total of $23,325 at a price of $.08 per
share. The Company issued 225,000 of those shares during the
quarter.
During
the quarter ended December 31, 2006 the Company issued 881,100 new unregistered
shares of its common stock as follows: 575,000 shares in payment for $82,500 of
accrued rent for the period February 1, 2004 to October 31, 2006; 119,850 shares
for loans of $ 8,400 to the Company during the quarter at an
average price of $.07 per share; 70,000 shares for accrued expenses
of $7,000 at a price of $.10 per share; 66,250 shares for past loans to the
Company in the amount of $5,300 at a price of $.08 per share; and 50,000 shares
for legal services valued at $5,000 at a price of $.10 per share.
During
the quarter ended March 31, 2007, the Company issued a total of 3,000,000 new
unregistered shares of its common stock as follows: 1,250,000 shares to John
Honour which represented a conversion of $125,000 of his accrued salary at $.10
per share; 750,000 shares to Theodore Botts which represented a conversion of $
75,000 of John Honour’s accrued salary at $.10 per share; 500,000 shares which
represented exercise of options issued during the quarter to purcahse the shares
at $.05 per share; 325,000 shares to three individuals which represented
conversion of $32,500 of John Honour’s loans to the Company at $.10 per share;
100,000 shares to an individual for film consulting services valued at $10,000;
75,000 shares to an individual for conversion of accrued expenses at $.0866 per
share.
During
the quarter ended June 30, 2007, the Company issued 954,333 restricted common
shares as follows: 500,000 shares were issued to an individual for $100,000 in
cash at a price of $.20 per share; 125,000 shares were issued to six individuals
for conversion of loans to the Company of $9,190 made in the previous
quarter at a price of $.07 per share; 123,333 shares were issued to an
individual for $40,000 in cash at a price of $.32 per share; 6,000 shares were
issued for bookkeeping services at $.10 per share; and 200,000 shares were
issued for consulting services at $.10 per share.
During
the quarter ended September 30, 2007, the Company issued 564,629 restricted
common shares as follows: 220,000 shares to The Investor Relations
Group (under the names of two individuals) for commencement of IR/PR work,
valued at $.35 per share for total expenses of $77,000; 200,000 shares to the
Lichtman Group for agency services valued at $.325 per share for expense of
$65,000; 100,000 shares as a loan origination fee valued at $.35 per share for
expense of $35,000; 37,879 shares to cover accrued rent of $12,500 at $.325 per
share; and 6,750 shares to cover a shortfall from a previous
issuance.
During
the quarter ended December 31, 2007, the Company issued a total of 800,000
shares as follows: 100,000 restricted common shares at a per share price of $.22
to each of its five Board members for serving on the Board; 300,000 shares to
replace a lost certificate.
STEREO VISION ENTERTAINMENT,
INC.
(A Development Stage
Company)
NOTES TO FINANCIAL
STATEMENTS
(Continued)
NOTE 6 - COMMON STOCK
TRANSACTIONS (continued)
During
the quarter ended March 31, 2008, the Company issued a total of 850,000 shares
as follows: 400,000 shares at prices ranging between $.16 and $.18 to four
individuals for services in connection with two film projects; 250,000 shares
valued at $.18 per share to an individual for IR services; 100,000
shares at $.18 per share as a loan origination fee; and 100,000 shares valued at
$.20 per share to an individual who paid a supplier of a service on the
Company’s behalf.
During
the quarter ended June 30, 2008, the Company issued 500,000 restricted
shares as
follows: 200,000 shares to a shareholder for cash at a price of $.25 per share;
100,000 shares to a shareholder at a value of $.28 per share as payment of four
months interest on his $700,000 loan to the Company; 100,000 shares at a value
of $.35 per share to a newly elected Board member; and 100,000 shares at a value
of $.35 per share to the newly appointed President of the Company’s Puerto Rico
subsidiary.
During
the quarter ended September 30, 2008, the Company issued a net
new number of shares totaling 1,740,000 as follows: 500,000 shares
for cash at a price of $.20 per share; 100,000 shares for cash at a price of
$.105 per share; 140,000 shares to two individuals who agreed to participate in
two of the Company’s feature films valued at $.20 per share;1,000,000 shares to
its CEO, Jack Honour as conversion of $250,000 of accrued salary valued at $.25
per share; 500,000 shares to its CFO, Theodore Botts as conversion of $125,000
of accrued salary. This share issuance was subsequently canceled upon the
resignation of Mr. Botts on September 17, 2008 who agreed to waive all of his
accrued salary since becoming CFO on August 1, 2008. Lastly, the Company issued
2,500,000 shares to its newly appointed CEO, Mr. Lawrence Biggs, on August 1,
2008. Mr. Biggs resigned on September 16, 2008 and returned the shares for
cancellation.
NOTE 7 - STOCK
SPLIT
On May
30, 2003, the Board of Directors approved a proposal to effectuate a 25 to 1
reverse stock split of the Company’s outstanding common shares with no effect on
the par value or on the number of authorized shares. As a result of
this action, the total number of outstanding shares of common stock is reduced
from 37,903,485 to 1,516,150 shares. All references to common stock in the
financial statements have been changed to reflect the stock split.
NOTE 8 -
COMMITMENTS
On April
25, 2000, the Board of Directors approved a stock option plan whereby 2,675,000
common shares have been set aside for employees and consultants to be
distributed at the discretion of the Board of Directors. The option
shares will be exercisable on a cashless basis at a 15% discount to market
value. No formal plan has been adopted as of the date of this
report.
NOTE 9 - STOCK
OPTIONS
Pursuant
to a year 2000 Stock Option and Compensation Plan, grants of shares can be made
to employees, officers, directors, consultants and independent contractors of
non-qualified stock options as well as for the grant of stock options to
employees that qualify as incentive stock options under Section 422 of the
Internal Revenue Code of 1986 or as non-qualified stock options. The
Plan is administered by the Board of Directors (“Board”), which has, subject to
specified limitations, the full authority to grant options and establish the
terms and conditions for vesting and exercise thereof.
In order
to exercise an option granted under the Plan, the optionee must pay the full
exercise price of the shares being purchased. Payment may be made either: (i) in
cash; or (ii) at the discretion of the Board, by delivering shares of common
stock already owned by the optionee that have a fair market value equal to the
applicable exercise price; or (iii) with the approval of the Board, with monies
borrowed from the Company.
Subject
to the foregoing, the Board has broad discretion to decide the terms and
conditions applicable to options granted under the Plan. The Board may at any
time discontinue granting options under the Plan or otherwise suspend, amend or
terminate the Plan and may, with the consent of an optionee, make such
modification of the terms and conditions of such optionee's option as the Board
shall deem advisable.
On March
11, 2004, the Company granted its attorney an option to purchase 20,000 shares
of its common stock at an exercise price of $1.00 for an exercise period of two
years. As a result of the grant, $20,000 was recorded as compensation
expense. The options expired unexercised.
STEREO VISION ENTERTAINMENT,
INC.
(A Development Stage
Company)
NOTES TO FINANCIAL
STATEMENTS
(Continued)
NOTE 9 - STOCK OPTIONS
(continued)
At
September 30, 2008 and 2007, there were no stock options
outstanding.
NOTE 10 - LEGAL
PROCEEDINGS
In
September of 2001 the company entered into a promissory note with Duncan
MacPhearson to be payable within the year. A dispute arose and the note was not
timely paid, which led to a court action styled R. Duncan MacPhearson vs. Stereo
Vision Entertainment, et. al., Case No. LC 0611749, in Los Angeles,
California. Subsequently, the parties, on January 26, 2004, entered into a
Settlement Agreement, including default provisions if scheduled payments did not
occur as agreed. 25,000 shares of restricted stock, valued at $25,000, were
delivered and $42,500 of payments was made, but the final $10,000 was not paid.
According to the stipulated judgment agreement, this resulted in the plaintiff's
entry of a judgment, according to notice received by the company, of $37,411,
which was then appealed by the Company as incorrect. The appellate court
disagreed and allowed the entry of judgment as filed, stating that the 25,000
shares had "no value" and allowing $37,411 to be imposed against the Company.
Therefore, the company has paid $42,500 in cash, $25,000 in restricted stock,
and owed $37,411, which had been accrued as a liability in the financial
statements, for a total lawsuit resolution of $104,911. At September
30, 2008 and 2007, the total amount due was $32,411.
The
Company has been served with a judgment in the amount of $6,600 by an individual
in Pennsylvania. As of September 30, 2008 and June 30, 2008, this
amount has been recorded as a liability in the accompanying financial
statements.
The
Company has received notice that it is in breach of its former contract with the
Investor Relations Group which claims it is owed $17,676.25 as well as 40,000
shares of restricted stock. As of September 30, 2008 and June 30,
2008, this amount has been recorded as a liability in the accompanying financial
statements. The issuance of the common stock has also been recorded and valued
at $10,100. As of September 30, 2008, the stock has not been
issued.
The
Company has brought a defamation action against Ed Meyer and Adirondack
Pictures. A cross complaint has been filed by Adirondack against the Company
alleging claims for breach of contract, intentional misrepresentation and
declaratory relief. The Company has answered the cross-complaint, denying all of
the material allegations and intends to vigorously defend the claims
made.
NOTE 11 - INVESTMENT IN
JAMOAKIE PRODUCTIONS
On May 2,
2005, the Company signed an agreement with Mr. Jamie Oldaker to acquire a 10%
interest in JamOakie Productions which entitles the company to 10% of the
profits from the album, “Mad Dogs and Oakies” which has subsequently been
released. The Company has the right but not the obligation to finance future
JamOakie projects. The price paid was 20,000 unregistered common shares of the
Company which were worth $6,000 at the time, and $5,893 in cash.
NOTE 12 - FILM AND MUSIC
COSTS
The
Company has intangible assets which consist of movie licensing rights and
development costs which are valued at cost. As of September 30, 2008 and 2007,
the Company had $430,078 and $406,750 invested in film projects that are in the
development or pre-production stage.