form10qsb123107.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form
10-QSB
Mark
One)
[x] QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES
|
EXCHANGE
ACT OF 1934
For
the quarterly period ended: December 31, 2007
[
] 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: 21,370,138
as of December 31, 2007
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 [ ] No [X]
PART
I |
|
|
|
STEREO
VISION ENTERTAINMENT, INC.
|
|
(A
Development Stage Company)
|
|
BALANCE
SHEETS
|
|
|
|
|
|
|
|
|
Item
1. Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
ASSETS:
|
|
December
31,
|
|
|
June
30,
|
|
|
|
2007
|
|
|
2007
|
|
Current
Assets:
|
|
|
|
|
|
|
Cash
|
|
$ |
25,278 |
|
|
$ |
139,202 |
|
Total
Current Assets
|
|
|
25,278 |
|
|
|
139,202 |
|
|
|
|
|
|
|
|
|
|
Fixed
Assets:
|
|
|
|
|
|
|
|
|
Office
Equipment
|
|
|
16,745 |
|
|
|
13,745 |
|
Less
Accumulated Depreciation
|
|
|
(13,745 |
) |
|
|
(13,745 |
) |
Net
Fixed Assets
|
|
|
3,000 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Intangible
and Other Non- Current Assets:
|
|
|
|
|
|
|
|
|
Films,
Manuscripts, Recordings and Similar Property
|
|
|
274,000 |
|
|
|
24,000 |
|
Investment
in Mad Dogs&Oakies
|
|
|
11,893 |
|
|
|
11,893 |
|
Total
Intangible and Other Non-Current Assets:
|
|
|
285,893 |
|
|
|
35,893 |
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
$ |
314,171 |
|
|
$ |
175,095 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Accounts
Payable
|
|
$ |
123,420 |
|
|
$ |
132,920 |
|
Accrued
Expenses
|
|
|
414,579 |
|
|
|
285,072 |
|
Lawsuit
Payable
|
|
|
32,411 |
|
|
|
32,411 |
|
Loans
from Shareholders
|
|
|
591,471 |
|
|
|
206,549 |
|
Total
Current Liabilities
|
|
|
1,161,881 |
|
|
|
656,952 |
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
|
|
|
|
|
Common
Stock, $.001 Par value
|
|
|
|
|
|
|
|
|
Authorized
100,000,000 shares,
|
|
|
|
|
|
|
|
|
Issued
21,370,138 at December 31, 2007
|
|
|
|
|
|
|
|
|
and
20,305,509 at June 30, 2007
|
|
|
21,370 |
|
|
|
20,306 |
|
Common
Stock to be Issued, 56,000 shares at
|
|
|
|
|
|
|
|
|
December
31, 2007 and June 30, 2007
|
|
|
56 |
|
|
|
56 |
|
Additional
Paid in Capital
|
|
|
15,017,755 |
|
|
|
14,719,319 |
|
Deficit
Accumulated During the Development Stage
|
|
|
(15,886,891 |
) |
|
|
(15,221,538 |
) |
Total
Stockholders' Equity
|
|
|
(847,710 |
) |
|
|
(481,857 |
) |
|
|
|
|
|
|
|
|
|
Total
Liabilities and Stockholders' Equity
|
|
$ |
314,171 |
|
|
$ |
175,095 |
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these financial
statements. |
|
STEREO
VISION ENTERTAINMENT, INC.
|
|
(A
Development Stage Company)
|
|
STATEMENTS
OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Since
May 5,
|
|
|
|
(Unaudited)
|
|
|
(Unaudited) |
|
|
1999
|
|
|
|
For
the Three Months Ended
|
|
|
For
the Six Months Ended |
|
|
Inception
of
|
|
|
|
December
31,
|
|
|
December
31, |
|
|
Development
|
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
Stage
|
|
Revenues
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research
& Development
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
293,000 |
|
General
& Administrative
|
|
|
182,578 |
|
|
|
30,010 |
|
|
|
408,274 |
|
|
|
51,078 |
|
|
|
9,009,912 |
|
Salaries
& Consulting
|
|
|
90,510 |
|
|
|
50,000 |
|
|
|
200,710 |
|
|
|
101,875 |
|
|
|
5,587,574 |
|
Advertising
& Promotion
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
418,423 |
|
Loss
on Investment
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
558,191 |
|
Lawsuit
Settlement
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
104,911 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Loss
|
|
|
(273,088 |
) |
|
|
(80,010 |
) |
|
|
(608,984 |
) |
|
|
(152,953 |
) |
|
|
(15,972,011 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
767 |
|
|
|
- |
|
|
|
2,060 |
|
|
|
- |
|
|
|
2,060 |
|
Interest
expense
|
|
|
(15,020 |
) |
|
|
(1,181 |
) |
|
|
(58,429 |
) |
|
|
(3,736 |
) |
|
|
(505,716 |
) |
Investment
Fee
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(75,000 |
) |
Loss
on Sale of Assets
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(15,883 |
) |
Write
off of Note Receivable
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(191,701 |
) |
Gain
on Forgiveness of Debt
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
71,707 |
|
|
|
462,638 |
|
Gain
(Loss) on Available for Sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
412,772 |
|
Total
Other Income (expense)
|
|
|
(14,253 |
) |
|
|
(1,181 |
) |
|
|
(56,369 |
) |
|
|
67,971 |
|
|
|
89,170 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss Before Taxes
|
|
|
(287,341 |
) |
|
|
(81,191 |
) |
|
|
(665,353 |
) |
|
|
(84,982 |
) |
|
|
(15,882,841 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
Tax Expense
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(4,050 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
$ |
(287,341 |
) |
|
$ |
(81,191 |
) |
|
$ |
(665,353 |
) |
|
$ |
(84,982 |
) |
|
$ |
(15,886,891 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
& Diluted loss Per Share
|
|
$ |
(0.01 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.01 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
Average
|
|
|
21,310,356 |
|
|
|
15,998,819 |
|
|
|
20,525,618 |
|
|
|
15,713,516 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these financial
statements.
|
|
STEREO
VISION ENTERTAINMENT, INC.
|
|
(A
Development Stage Company)
|
|
STATEMENTS
OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative
|
|
|
|
|
|
|
|
|
|
Since
May 5,
|
|
|
|
(Unaudited)
|
|
|
1999
|
|
|
|
For
the Six Months Ended
|
|
|
Inception
of
|
|
|
|
December
31,
|
|
|
Development
|
|
|
|
2007
|
|
|
2006
|
|
|
Stage
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
$ |
(665,353 |
) |
|
$ |
(84,982 |
) |
|
$ |
(15,886,891 |
) |
Adjustments
to reconcile net loss to net
|
|
|
|
|
|
|
|
|
|
|
|
|
cash
used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and Amortization
|
|
|
- |
|
|
|
- |
|
|
|
3,536,428 |
|
Issuance
of Common Stock for Expenses
|
|
|
287,000 |
|
|
|
5,000 |
|
|
|
6,645,585 |
|
Stock
Issued for Payment of Accounts Payable
|
|
|
- |
|
|
|
5,500 |
|
|
|
50,500 |
|
Stock
Issued for accrued expenses
|
|
|
- |
|
|
|
- |
|
|
|
481,666 |
|
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
|
|
|
- |
|
|
|
(71,707 |
) |
|
|
(462,638 |
) |
Cash
acquired in merger
|
|
|
- |
|
|
|
- |
|
|
|
332 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid
Expense
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Accounts
Payable
|
|
|
(9,500 |
) |
|
|
(9,581 |
) |
|
|
277,656 |
|
Accrued
Expenses
|
|
|
137,916 |
|
|
|
103,736 |
|
|
|
972,387 |
|
Lawsuit
Payable
|
|
|
- |
|
|
|
- |
|
|
|
32,411 |
|
Payable
to SAG for Route 66
|
|
|
- |
|
|
|
- |
|
|
|
71,493 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash Used in operating activities
|
|
|
(249,937 |
) |
|
|
(52,034 |
) |
|
|
(3,633,453 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
in films, manuscripts, recordings
|
|
|
|
|
|
|
|
|
|
|
|
|
and
similar property
|
|
|
(250,000 |
) |
|
|
- |
|
|
|
(546,008 |
) |
Purchase
of investment
|
|
|
- |
|
|
|
- |
|
|
|
(5,892 |
) |
Purchase
of equipment
|
|
|
(3,000 |
) |
|
|
- |
|
|
|
(16,745 |
) |
Proceeds
from sale of assets
|
|
|
- |
|
|
|
- |
|
|
|
51,117 |
|
Proceeds
from sale of investments
|
|
|
- |
|
|
|
- |
|
|
|
565,773 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided (used) in investing activities
|
|
$ |
(253,000 |
) |
|
$ |
- |
|
|
$ |
48,245 |
|
STEREO
VISION ENTERTAINMENT, INC.
|
|
(A
Development Stage Company)
|
|
STATEMENTS
OF CASH FLOWS
|
|
(continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative
|
|
|
|
|
|
|
|
|
|
Since
May 5,
|
|
|
|
(Unaudited)
|
|
|
1999
|
|
|
|
For
the Six Months Ended
|
|
|
Inception
of
|
|
|
|
December
31,
|
|
|
Development
|
|
|
|
2007
|
|
|
2006
|
|
|
Stage
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
proceeds from loans from shareholders
|
|
$ |
389,013 |
|
|
$ |
22,832 |
|
|
$ |
2,460,275 |
|
Proceeds
from issuance of common stock
|
|
|
- |
|
|
|
31,725 |
|
|
|
1,086,211 |
|
Proceeds
from issuance of short-term notes
|
|
|
- |
|
|
|
- |
|
|
|
64,000 |
|
Bank
overdraft
|
|
|
- |
|
|
|
(1,815 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash Provided by Financing Activities
|
|
|
389,013 |
|
|
|
52,742 |
|
|
|
3,610,486 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(Decrease) Increase in Cash
|
|
|
(113,924 |
) |
|
|
708 |
|
|
|
25,278 |
|
Cash
at Beginning of Period
|
|
|
139,202 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
at End of Period
|
|
$ |
25,278 |
|
|
$ |
708 |
|
|
$ |
25,278 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
|
Cash
paid during the year for:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$ |
10,000 |
|
|
$ |
- |
|
|
$ |
58,799 |
|
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
|
|
$ |
- |
|
|
$ |
49,900 |
|
|
$ |
1,710,608 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these financial
statements.
|
|
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.
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
$15,886,891 for the period from May 5, 1999 (inception) to December 31, 2007,
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. In the past, shareholders of the Company have met
the Company’s 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.
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 December 31, 2007,
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 and existing 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 films
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
December 31, 2007 and June 30, 2007 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 years ended December 31, 2007 and 2006, 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 December 31, 2007 and 2006 and are thus not considered. At
December 31, 2007 and 2006, there were no outstanding common stock
equivalents.
Reclassification
Certain reclassifications have been
made in the 2006 financial statements to conform with the 2007
presentation.
NOTE 2 - INCOME
TAXES
As of June 30, 2007, the Company had a
net operating loss carry forward for income tax reporting purposes of
approximately $15,221,000 that may be offset against future taxable income
through 2027. 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.
|
|
2007
|
|
|
2006
|
|
Net
Operating Losses
|
|
$ |
2,283,150 |
|
|
$ |
2,276,550 |
|
Valuation
Allowance
|
|
|
(2,283,150 |
) |
|
|
(2,276,550 |
) |
|
|
$ |
- |
|
|
$ |
- |
|
The provision for income taxes differs
from the amount computed using the federal US statutory income tax rate as
follows:
|
|
2007
|
|
|
2006
|
|
Provision
(Benefit) at US Statutory Rate
|
|
$ |
6,600 |
|
|
$ |
73,050 |
|
Increase
(Decrease) in Valuation Allowance
|
|
|
(6,600 |
) |
|
|
(73,050 |
) |
|
|
$ |
- |
|
|
$ |
- |
|
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, 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’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 six months ended December 31, 2007 and 2006, rent expense was $15,000 and
$15,000, respectively.
On March 7, 2007, the Company signed a
ten month residential lease on behalf of its Chairman and CEO, John Honour. The
monthly rent is $6,000 per month. The first five months rent was paid for by the
issuance of 300,000 shares of restricted stock at a value of $.10 per share
which was issued in the third quarter. The issuance of these shares was offset
against existing shareholder loans by Mr. Honour to the Company.
NOTE 5 - LOANS FROM
SHAREHOLDERS AND OTHER RELATED PARTY TRANSACTIONS
As of December 31, 2007 and June 30,
2007, the company owed $591,471 and $206,549 to various shareholders and
officers/directors. The loans are unsecured with interest at rates of
between 4.00% to 10% 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 10% per annum. Interest shall be
due and payable monthly beginning in September 2007 and continuing through the
payment due date on February 21, 2009. At December 31, 2007 the total
amount due on this loan was $506,667. This amount is included in the
total amount of loans shown above. The 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;
37,859 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 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 December 31, 2007 and 2006, 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
December 31, 2007 and June 30, 2007, the total amount due was
$32,411.
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 production costs and are valued at cost.
As of December 31, 2007 and June 30, 2007, the Company had $274,000 and $24,000
in film costs that are in the development stage or pre-production
stage.
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
three product segments of the entertainment industry:
Feature length 3-D and 2-D films for
theatrical release
Direct to DVD 2-D and 3-D
films
Licensing of video game
rights
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 to five new scripts for
theatrical release in 3D and 2D and direct to DVD movies (initially
in 2D only) each year and will concentrate on the most popular genres including
horror, action/adventure, sci-fi CGI effect movies, comedies and family
films.
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.
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 December 31, 2007 and
2006. SVEI has sustained a net loss of approximately $287,341 for the three
months ended December 31, 2007. 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 $1,500,000 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 $5-$15 million 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
December 31, 2007, the Company did not raise any funds from outside sources.
There can be no assurances that loans will be forthcoming from officers,
directors, and shareholders in the future.
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.
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.
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. These same officers concluded that the Company’s controls and procedures
were effective in ensuring that the information required by it in the reports it
files under the Act is managed and communicated to its principal officers in a
manner which allows timely decision making regarding required
disclosure.
(b) Changes in Internal
Controls
Based on this evaluation as of December
31, 2007, there were no changes in the Company's internal
controls over financial reporting for the quarter ended December
31, 2007, 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 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
December 31, 2007, the total amount due was $32,411.
Item
2. Changes in Securities
During the quarter ended December 31,
2007, the Company issued 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 restricted common shares to replace a
lost certificate.
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.
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.
STEREOVISION
VISION ENTERTAINMENT, INC.
Dated:
February 11, 2008
|
By /S/ John
Honour
|
|
C.E.O.,
President, Director
|
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 Officer)
/S/ Theodore
Botts
Theodore
Botts
Chief
Financial Officer
(Principal
Financial Officer)
27