UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
MARK ONE)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: SEPTEMBER 30, 2005
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from To
Commission file number 000-28553
STEREO VISION ENTERTAINMENT, INC.
---------------------------------
(Exact name of small business issuer as specified in its charter)
NEVADA 95-4786792
------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
15452 Cabrito Rd., Suite 204, Van Nuys, CA 91406
-------------------------------------------------
(Address of principal executive offices)
(310) 205-7998
(Issuer's telephone number)
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practical date: 10,821,855 as of September
30, 2005
Transitional Small Business Disclosure Format (check one).
Yes [ ]; No [X]
Indicate by check mark whether the registrant is a shell company (as
defined by Rule 12b-2 of the Exchange Act). Yes [ X ] No [ ]
Explanatory Note
We are filing this Amendment to our Quarterly Report on Form 10-QSB for the
period ended September 30, 2005 to respond to certain comments received by us
from the Staff of the Securities and Exchange Commission ("SEC") in connection
with its review of our Form 10QSB. Our financial position and results of
operations for the periods presented have not been restated from the financial
position and results of operations originally reported.
For convenience and ease of reference we are filing this Quarterly Report in its
entirety with the applicable changes. Unless otherwise stated, all information
contained in this amendment is as of November 21, 2005, the filing date of our
Quarterly Report on Form 10-QSB for the period ended September 30, 2005.
Accordingly, this Amendment to the Quarterly Report on Form 10-QSB should be
read in conjunction with our subsequent filings with the SEC.
2
PART I
ITEM 1. FINANCIAL STATEMENTS
STEREO VISION ENTERTAINMENT, INC.
(A Development Stage Company)
BALANCE SHEETS
(Unaudited)
ASSETS: September 30, June 30,
-------
2005 2005
------------------ ------------------
Current Assets:
Cash $ - $ 1,669
Prepaid Expenses - 10,000
------------------ ------------------
Total Current Assets - 11,669
------------------ ------------------
Fixed Assets:
Office Equipment 13,745 13,745
Less Accumulated Depreciation (13,745) (13,745)
------------------ ------------------
Net Fixed Assets - -
------------------ ------------------
Intangible and Other Non- Current Assets:
Investment in JamOakie 11,893 11,893
------------------ ------------------
Total Assets $ 11,893 $ 23,562
================== ==================
3
STEREO VISION ENTERTAINMENT, INC.
(A Development Stage Company)
BALANCE SHEETS
(Continued)
(Unaudited)
September 30, June 30,
2005 2005
------------------ ------------------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Liabilities:
Accounts Payable $ 289,294 $ 281,976
Accrued Expenses 652,799 502,799
Bank Overdraft 859 -
Payable to SAG for Route 66 71,493 71,493
Lawsuit Payable 32,411 32,411
Loans from Shareholders 486,405 463,766
------------------ ------------------
Total Current Liabilities 1,533,261 1,352,445
------------------ ------------------
Stockholders' Equity:
Common Stock, $.001 Par value
Authorized 100,000,000 shares,
Issued 10,821,855 at September 30, 2005
and June 30, 2005 10,822 10,822
Common Stock to be Issued, 539,666 shares at
September 30, 2005 and June 30, 2005 540 540
Additional Paid in Capital 13,349,736 13,349,736
Deficit Accumulated During the Development Stage (14,882,466) (14,689,981)
------------------ ------------------
Total Stockholders' Equity (1,521,368) (1,328,883)
------------------ ------------------
Total Liabilities and Stockholders' Equity $ 11,893 $ 23,562
================== ==================
The accompanying notes are an integral part of these financial statements.
4
STEREO VISION ENTERTAINMENT, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
Cumulative
Since May 5,
(Unaudited) 1999
For the Three Months Ended Inception of
September 30, Development
------------------------------------
2005 2004 Stage
------------------ ----------------- -----------------
Revenues $ - $ - $ -
------------------ ----------------- -----------------
Expenses
Research & Development - - 293,000
General & Administrative 33,057 30,101 8,235,304
Salaries & Consulting 153,686 661,137 5,026,099
Advertising & Promotion - 106,600 418,423
Loss on Investment - - 558,191
Lawsuit Settlement - - 104,911
------------------ ----------------- -----------------
Operating Loss (186,743) (797,838) (14,635,928)
------------------ ----------------- -----------------
Other income (expense):
Interest (5,742) (5,374) (422,792)
Investment Fee - - (75,000)
Loss on Sale of Assets - - (15,883)
Write off of Note Receivable - - (191,701)
Gain on Forgiveness of Debt - - 48,516
Gain (Loss) on Available for
Sale Securities - - 412,772
------------------ ----------------- -----------------
Total Other Income (expense) (5,742) (5,374) (244,088)
------------------ ----------------- -----------------
Net Loss Before Taxes (192,485) (803,212) (14,880,016)
Income Tax Expense - - (2,450)
------------------ ----------------- -----------------
Net Loss $ (192,485)$ (803,212) $ (14,882,466)
================== ================= =================
Basic & Diluted loss Per Share $ (0.02) $ (0.09)
================== =================
Weighted Average 10,821,855 9,236,443
================== =================
The accompanying notes are an integral part of these financial statements.
5
STEREO VISION ENTERTAINMENT, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
Cumulative
Since May 5,
(Unaudited) 1999
For the Three Months Ended Inception of
September 30, Development
------------------------------------
2005 2004 Stage
---------------- ------------------ ------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (192,485) $ (803,212) $ (14,882,466)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and Amortization - - 3,536,428
Issuance of Common Stock for Expenses - 461,233 6,279,129
Stock Issued for Payment of Accounts Payable - - 45,000
Stock to be Issued for Accrued Expenses - - 266,666
Compensation Expense from Stock Options - - 487,500
Realized gain on trading investments - - (412,773)
Loss on sale of assets - - 15,883
Loss on Investment Written Off - - 557,008
Gain on Forgiveness of Debt - - (48,516)
Cash acquired in merger - - 332
Change in operating assets and liabilities:
Investment in films, manuscripts, recordings
and similar property - - (272,008)
Prepaid Expense & Other Receivable 10,000 (56,279) -
Accounts Payable 7,318 17,898 271,864
Accrued Expenses 155,742 112,553 658,541
Lawsuit Payable - - 32,411
Payable to SAG for Route 66 - - 71,493
---------------- ------------------ ------------------
Net Cash Used in operating activities (19,425) (267,807) (3,393,508)
---------------- ------------------ ------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investment - - (5,892)
Purchase of equipment - - (13,745)
Proceeds from sale of assets - - 51,117
Proceeds from sale of investments - - 565,773
---------------- ------------------ ------------------
Net cash provided (used) in investing activities - - 597,253
---------------- ------------------ ------------------
6
STEREO VISION ENTERTAINMENT, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
(Continued)
Cumulative
Since May 5,
(Unaudited) 1999
For the Three Months Ended Inception of
September 30, Development
------------------------------------
2005 2004 Stage
---------------- ------------------ ------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from loans from shareholders $ 16,897 $ 170,965 $ 1,848,410
Proceeds from issuance of common stock - 99,970 882,986
Proceeds from issuance of short-term notes - - 64,000
Bank Overdraft 859 (401) 859
---------------- ------------------ ------------------
Net Cash Provided by Financing Activities 17,756 270,534 2,796,255
---------------- ------------------ ------------------
Net (Decrease) Increase in Cash (1,669) 2,727 -
Cash at Beginning of Period 1,669 - -
---------------- ------------------ ------------------
Cash at End of Period $ - $ 2,727 $ -
================ ================== ==================
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Cash paid during the year for:
Interest $ - $ - $ 43,799
---------------- ------------------ ------------------
Income taxes $ - $ - $ -
---------------- ------------------ ------------------
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES:
Common Stock Issued for Investment in
Wilfield Entertainment $ - $ - $ 220,000
Common Stock Issued for Investment in
Mad Dogs & Oakies Project - - 3,000
Common Stock Issued for Investment in
In the Garden of Evil Project - - 12,000
Notes Payable Converted to Stock - - 1,253,936
The accompanying notes are an integral part of these financial statements.
7
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, 2005 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 $14,882,000 for the period from May 5, 1999 (inception) to
September 30, 2005, 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 committed to meeting its minimal operating
expenses.
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.
8
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. The Company as of September 30, 2005 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 and
existing feature films in both 2-D and 3-D format for theatrical and direct to
DVD release, as well as expanding into other areas of the entertainment industry
including the production of composition music albums
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.
9
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.
Stock Compensation for Non-Employees
The Company accounts for the fair value of its stock compensation
grants for non-employees in accordance with FASB Statement 123. The fair value
of each grant is equal to the market price of the Company's stock on the date of
grant if an active market exists or at a value determined in an arms length
negotiation between the Company and the non-employee.
Advertising Costs
Advertising costs are expensed as incurred. There was $0 and $106,600
advertising expense for the three months ended September 30, 2005 and 2004,
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.
10
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 years. The effect of outstanding common
stock equivalents would be anti-dilutive for September 30, 2005 and 2004 and are
thus not considered. At September 30, 2005 and 2004, the total number of
potentially dilutive common stock equivalents was 1,120,000 and 2,500,000,
respectively.
Reclassification
Certain reclassifications have been made in the 2004 financial
statements to conform with the 2005 presentation.
NOTE 2 - INCOME TAXES
As of June 30, 2005, the Company had a net operating loss carryforward
for income tax reporting purposes of approximately $16,801,000 that may be
offset against future taxable income through 2025. 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. Accordingly, the potential tax
benefits of the loss carryforwards are offset by a valuation allowance of the
same amount.
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, and 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 has entered into lease agreements for various office,
storage and warehouse facilities on a month to month basis. For the three months
ended September 30, 2005 and 2004, rent expense was $13,230 and $6,984.
11
STEREO VISION ENTERTAINMENT, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 5 - LOANS FROM SHAREHOLDERS AND OTHER RELATED PARTY
TRANSACTIONS
As of September 30, 2005 and June 30, 2005, the company owes $486,405
and $463,766 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 April 30, 2004, the company signed a Development Production
Agreement with Baywatch 3 Double D LLC which is 50 % owned by Douglas Schwartz,
Chairman of the Board of Stereo Vision Entertainment. Under the terms of the
agreement, the company will receive certain rights in a film to be produced in
return for providing a development production advance. Originally the company
had 30 days in which to secure the advance. On June 8, 2004, the company
received an extension on this agreement, for which the Company granted Baywatch
LLC 100,000 unregistered shares of common stock valued at $0.75 per share, and
is free to continue to pursue the funding on a non-exclusive basis of the
production advance for the movie, "Baywatch 3 Double D". The $75,000 investment
fee has been recorded as other expense in the financial statements. The
agreement has since expired.
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.
12
STEREO VISION ENTERTAINMENT, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 6 - COMMON STOCK TRANSACTIONS (continued)
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.
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 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).
13
STEREO VISION ENTERTAINMENT, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 6 - COMMON STOCK TRANSACTIONS (continued)
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.
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 Crutchfiels (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
14
STEREO VISION ENTERTAINMENT, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 6 - COMMON STOCK TRANSACTIONS (continued)
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.
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.
15
STEREO VISION ENTERTAINMENT, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 6 - COMMON STOCK TRANSACTIONS (continued)
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).
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).
16
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, 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.
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).
17
STEREO VISION ENTERTAINMENT, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 6 - COMMON STOCK TRANSACTIONS (continued)
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.
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.
18
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, 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.
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.
19
STEREO VISION ENTERTAINMENT, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 6 - COMMON STOCK TRANSACTIONS (continued)
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.
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.
20
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, 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 $266,666 for the period from September 1,
2004 to March 31, 2005 to 266,666 shares of common stock, at a price of $1 per
share, versus the then market price of $.40 per share. As of June 30, 2005,
these shares had not been issued.
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. As of June 30, 2005,
the shares had not been 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, 2005, 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.
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
are 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.
21
STEREO VISION ENTERTAINMENT, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
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.
In addition, the Company has committed to grant various providers of
services to the Company a total of 450,000 of its unregistered common stock.
On March 30, 2005, the Company entered into a two-year agreement with
Mr. Herky Williams, an officer, director and shareholder of the Company, whereby
the Company will pay Mr. Williams $5,000 per month ($60,000 per year) in
exchange for part-time services related to the music product development of the
Company. The annual pay will be increased to $120,000 if and when Mr. Williams
services are deemed to be full-time. The annual salary is retroactive to January
1, 2005.
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.
22
STEREO VISION ENTERTAINMENT, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 9 - STOCK OPTIONS (continued)
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.
On July 12, 2004, the Board of Directors granted an option to its
former President and CEO, Mr. Lance Robbins, to purchase 2,500,000 unregistered
common shares at an exercise price of $0.40 per share that vest one year from
the grant date. These options have been cancelled for non- performance.
The following table sets forth the options and warrants outstanding as
of September 30, 2005 and 2004:
September 30, June 30,
2005 2005
--------------------- ------------------
Options Outstanding, Beginning of year 1,120,000 20,000
Granted - 2,500,000
Expired - (1,400,000)
Exercised - -
--------------------- ------------------
Options Outstanding, End of year 1,120,000* 1,120,000*
===================== ==================
Exercise price for options outstanding, end of period $0.40 - $1.00 $0.40 - $1.00
===================== ==================
* Cancelled for non-performance on November 9, 2005.
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 were made, but the final $10,000 was not paid.
According to the stipulated judgement 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 owes $37,411, which has been accrued as a liability in the September
30, 2005 and June 30, 2005 financial statements, for a total lawsuit resolution
of $104,911.
23
STEREO VISION ENTERTAINMENT, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 10 - LEGAL PROCEEDINGS (continued)
The Company has informed counsel for its former President and CEO,
Lance Robbins, who resigned on December 5, 2004 and was unanimously fired by the
Board of Directors for cause on December 9, 2004, that it intends to seek
recision of any and all agreements with him as well as return of all sums paid
to him, a return of all shares of stock that were issued to him and cancellation
of any stock options currently outstanding. As of September 30, 2005, this issue
had not been resolved. No adjustments have been made to the September 30, 2005
financial statements with regards to this issue.
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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
PLAN OF OPERATIONS - The following discussion should be read in conjunction with
the Company's audited financial statements.
SVEI intends to pursue opportunities in four product segments of the
entertainment industry:
Direct to DVD 2-D and 3-D films
Feature length 2-D and 3-D films for theatrical release
Pilots for television series Music production
StereoVision intends to be the only company in Hollywood focused on
developing a library of films using 3-D technology. The company intends to
develop four new scripts for theatrical release and direct to DVD movies each
year and will concentrate on the most popular genres including horror, visual
thrillers, sci-fi CGI effect movies, comedies and family films. The company also
plans to develop its own record label out of Nashville, Tennessee and will focus
its initial efforts on the production and distribution of composition albums.
As a development stage company, SVEI has minimal historical operations,
no revenues and negative cash flows. In order to satisfy cash requirements for
SVEI'sproduction and revenue goals, management must obtain working capital
through either debt or equity financing.
24
The entertainment industry is an intensely competitive one, where
price, service, location, and quality are critical factors. The Company has many
established competitors, ranging from similar local single unit operations to
large multi-national operations. The entertainment industry may be affected by
changes in customer tastes, economic, and demographic trends. Factors such as
inflation, increased supplies costs and the availability of suitable employees
may adversely affect the entertainment industry in general and the Company in
particular. In view of the Company's limited financial resources and management
availability, the Company will continue to be at a significant competitive
disadvantage vis-a-vis the Company's competitors.
RESULTS OF OPERATIONS - There were no revenues from sales for the three
months ended September 30, 2005 and 2004. SVEI has sustained a net loss of
approximately $192,000 for the three months ended September 30, 2005, which was
largely attributable to salary expense for its officers. From May 5, 1999 the
Company was a development stage company and had not begun principal operations.
Accordingly, comparisons with prior periods are not meaningful.
LIQUIDITY AND CAPITAL RESOURCES
The Company has developed a detailed plan of operations to exploit the
opportunities it sees in the entertainment industry and to take advantage of the
skills and experience of its management team. On a preliminary basis, the
Company estimates that it will require approximately $1,000,000 over a period of
12 months to fund initial development of existing projects as well as operate
the company. In order to fund the actual production of a feature film, the
Company estimates it will require approximately an additional $3,000,000 which
it will obtain from a variety of sources including partner distributors, tax
rebates for on site production in certain jurisdictions as well as debt and
equity sources. The Company may attempt to arrange joint ventures with studios
to facilitate the development of new movies.
The aforementioned estimates of capital required are still preliminary
in nature and are subject to substantial and continuing revisions. Although the
Company has not yet commenced any formal capital raising efforts, the Company
expects that any capital that it raises will be in the form of one or more debt
or equity financings. However, there can be no assurances that the Company will
be successful in raising any required capital on a timely basis and/or under
acceptable terms and conditions. To the extent that the Company does not raise
sufficient capital to implement its plan of operations on a timely basis, it
will have to curtail, revise and/or delay its business plans. The Company has
financed its operations to date from the sale of stock and loans from related
parties. During the three months ended September 30, 2005, the Company received
approximately $21,000 from related party loans. However, there can be no
assurances that additional loans will be forthcoming from officers, directors,
and shareholders.
GOVERNMENT REGULATIONS - The Company is subject to all pertinent Federal, State,
and Local laws governing its business. The Company is subject to licensing and
regulation by a number of authorities in its State or municipality. These may
include health, safety, and fire regulations. The Company's operations are also
subject to Federal and State minimum wage laws governing such matters as working
conditions and overtime.
25
ITEM 3. CONTROLS AND PROCEDURES
The Company's Chief Executive Officer and Chief Financial Officer are
responsible for establishing and maintaining disclosure controls and procedures
for the Company.
(a) Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, the Company carried
out an evaluation, under the supervision and with the participation of the
Company's management, including the Company's President, of the effectiveness of
the design and operation of the Company's disclosure controls and procedures
pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). Based upon the evaluation, the Company's President
concluded that, as of the end of the period, the Company's disclosure controls
and procedures were effective in timely alerting him to material information
relating to the Company required to be included in the reports that the Company
files and submits pursuant to the Exchange Act.
(b) Changes in Internal Controls
Based on his evaluation as of September 30, 2005, there were no
significant changes in the Company's internal controls over financial reporting
for the quarter ended September 30, 2005, or in any other areas that could
significantly affect the Company's internal controls subsequent to the date of
his most recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
PART II - OTHER INFORMATION
ITEM 1. 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 were made, but the final $10,000 was not paid.
According to the stipulated judgement 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 owes $37,411, which has been accrued as a liability on the September
30, 2005 and June 30, 2005 financial statements, for a total lawsuit resolution
of $104,911.
The Company has informed counsel for its former President and CEO,
Lance Robbins, who resigned on December 5, 2004 and was unanimously fired by the
Board of Directors for cause on December 9, 2004, that it intends to seek
recision of any and all agreements with him as well as
26
return of all sums paid to him, a return of all shares of stock that were issued
to him and cancellation of any stock options currently outstanding. As of
September 30, 2005, this issue had not been resolved. No adjustments have been
made to the September 30, 2005 financial statements with regards to this issue.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are included as part of this report:
Exhibit
Number Exhibit
3.1 Articles of Incorporation (1)
3.2 Amended Articles of Incorporation (1)
3.3 Bylaws (1)
31 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
32 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
(1) Incorporated by reference to the Registrant's registration statement on
Form 10-SB filed on August 9, 2000.
(b) Reports on Form 8-K filed.
None.
27
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereto duly
authorized.
STEREO VISION ENTERTAINMENT, INC.
(Registrant)
Dated: December 21, 2005 By /S/ John Honour
------------------------
John Honour
C.E.O., President, Director
(Principal Executive and Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities indicated.
Signatures & Title
/S/ John Honour
John Honour
C.E.O., President, Director
(Principal Executive and Financial Officer)
28