THE MOVIE STUDIO, INC.
|
(FORMERLY DESTINATION TELEVISION, INC.)
|
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 31,
|
|
October 31,
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
$ 19
|
|
$ 19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
19
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
5,935
|
|
6,574
|
|
|
Acquired amortizable intangible assets
|
|
805
|
|
880
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
$ 6,759
|
|
$ 7,473
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders' deficiency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilites
|
$ -
|
|
$ -
|
|
|
|
Payroll taxes payable
|
|
$ 345,503
|
|
$ 336,386
|
|
|
|
Loans payable - related party
|
|
1,981,575
|
|
1,947,325
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
2,327,078
|
|
2,283,711
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, net of current portion
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
2,327,078
|
|
2,283,711
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' deficiency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, Series B convertible, $.0001 par value;
|
|
|
|
|
|
|
5,750,000 authorized, issued and outstaning at January 31, 2012
|
|
|
|
|
|
|
and October 31, 2011, respectively
|
|
206,000
|
|
206,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, $.0001 par value; 200,000,000 shares
|
|
|
|
|
|
|
authorized, 102,355,260 and 102,355,260 shares issued and outstanding
|
|
|
|
|
|
|
at January 31,2012 and October 31, 2011, respectively
|
10,236
|
|
10,236
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Paid in Capital
|
|
|
6,616,641
|
|
6,616,641
|
|
|
Accumulated deficit
|
|
|
|
(9,153,196)
|
|
(9,109,115)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders' deficiency
|
(2,320,319)
|
|
(2,276,238)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' deficiency
|
$ 6,759
|
|
$ 7,473
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying footnotes are an integral part of these financial statements.
|
4
|
|
THE MOVIE STUDIO, INC.
|
(FORMERLY DESTINATION TELEVISION, INC.)
|
Consolidated Statements of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended January 31,
|
|
|
|
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
|
$ -
|
|
$ -
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
33,964
|
|
47,464
|
|
|
|
Interest expense
|
|
9,116
|
|
20,191
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
43,080
|
|
67,655
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss before income taxes
|
|
(43,080)
|
|
(67,655)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$ (43,080)
|
|
$ (67,655)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share:
|
|
$ -
|
|
$ -
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common
|
|
|
|
|
|
|
|
shares outstanding, basic and fully diluted
|
|
102,355,260
|
|
102,355,260
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying footnotes are an integral part of these financial statements.
|
|
|
|
|
|
|
|
|
|
5
THE MOVIE STUDIO, INC.
|
(FORMERLY DESTINATION TELEVISION, INC.)
|
Consolidated Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net loss
|
$ (43,080)
|
|
$ (67,655)
|
|
|
|
|
|
|
|
|
|
|
Adjustment to reconcile net
loss to net
|
|
|
|
|
|
|
net cash used by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
714
|
|
714
|
|
|
|
Grant of stock options at
fair value
|
-
|
|
-
|
|
|
|
Stock issued for services
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Changes in operating assets
and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in payables and
accrued expenses
|
-
|
|
13,500
|
|
|
|
Increase in accrued
interest - related party
|
-
|
|
11,075
|
|
|
|
Increase in payroll taxes
payable
|
9,116
|
|
9,116
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in
operating activities
|
(33,250)
|
|
(33,250)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from related party
loan to the company
|
33,250
|
|
33,250
|
|
|
|
|
Net cash provided by
investing activities
|
33,250
|
|
33,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net incresase(decrease)
in cash
|
-
|
|
-
|
|
|
|
Cash, beginning of period
|
19
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
Cash, end of period
|
$ 19
|
|
$ 19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying footnotes are an integral part of
these financial statements.
|
(FORMERLY DESTINATION TELEVISION, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 201
2
Note 1 – Description of
Business
The Movie Studio, Inc. (the
"Company") was incorporated in the State of Delaware 1961 under the
name Magic Fingers, Inc. The company is a vertically integrated motion picture
production company that develops, manufactures and distributes independent
motion picture content for worldwide consumption on a multitude of devices.
The Company has operated under various
names since incorporation, most recently Destination Television, Inc. from
February 2007 to November 2012, when the name was changed to The Movie Studio,
Inc.
From October 31, 2001, the Company’s focus
was on the developing a private television network, in high traffic locations
such as bars and nightclubs. During this development period, the Company
received incidental revenue from the sale of advertising and the production of
commercials. In 2010, the Company began implementation of its current business
model, using the technology previously developed for the private television
network.
Note 2 – Summary of significant
Accounting Policies
Basis of Presentation
The accompanying unaudited
consolidated quarterly financial statements have been prepared on a basis
consistent with generally accepted accounting principles in the United States
(“GAAP”) for interim financial information and pursuant to the rules of the
Securities and Exchange Commission (“SEC”). In the opinion of management, the
accompanying unaudited financial statements reflect all adjustments, consisting
of only normal and recurring adjustments, necessary for a fair presentation of
the results of operations, financial position and cash flows for the periods
presented. The results of operations for the periods are not necessarily
indicative of the results expected for the full year or any future period. These
statements should be read in conjunction with the Entity’s Annual Report on
Form 10-K for the year ended October 31, 2011 as filed with the SEC on July 8,
2013 (the “2011 Annual Report”).
The consolidated financial statements
include the accounts of The Movie Studio, Inc. (
f
ormerly Destination Television, Inc.), a Delaware corporation, and
its wholly owned subsidiary Destination Television, Inc., a Florida
corporation. All significant inter-company account balances and transactions
between the Company and its subsidiary have been eliminated in consolidation.
Long-Lived Assets
In
accordance with Financial Accounting Standard Board (“FASB”) Accounting
Standards Codification (“ASC”) Topic 360 “Property, Plant, and Equipment,” the
Company records impairment losses on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets’ carrying amounts.
There were no impairment charges during the
quarter
ended January 31, 201
1
and
the year ended
October 31, 20
10
.
7
THE MOVIE
STUDIO, INC.
(FORMERLY DESTINATION TELEVISION, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 201
2
Note 2 – Summary of significant
Accounting Policies (continued)
Fair Value of Financial Instruments
The fair values of the Company’s assets and liabilities
that qualify as financial instruments under FASB ASC Topic 825, “Financial
Instruments,” approximate their carrying amounts presented in the accompanying
consolidated statements of financial condition at
January 31, 201
2
and October 31, 20
11
.
Revenue recognition
In accordance with the FASB
ASC Topic 605,
Revenue Recognition,
the Company recognizes
revenue when persuasive evidence of an arrangement exists, delivery has
occurred, the sales price is fixed or determinable, and collectability is
reasonably assured.
Income Taxes
The Company accounts for
income taxes in accordance with FASB ASC Topic 740
Income Taxes
, which
requires accounting for deferred income taxes under the asset and liability
method.
Deferred income tax asset and
liabilities are computed for differences between the financial statement and
tax bases of assets and liabilities that will result in taxable or deductible
amounts in the future based on the enacted tax laws and rates applicable to the
periods in which the differences are expected to affect taxable income.
Valuation allowances are established, when necessary, to reduce the deferred
income tax assets to the amount expected to be realized.
In accordance with GAAP, the
Company is required to determine whether a tax position of the Company is more
likely than not to be sustained upon examination by the applicable taxing
authority, including resolution of any related appeals or litigation processes,
based on the technical merits of the position. The Company files an income tax
return in the U.S. federal jurisdiction, and may file income tax returns in various
U.S. state and local jurisdictions. Generally the Company is no longer
subject to income tax examinations by major taxing authorities for years before
2009. The tax benefit to be recognized is measured as the largest amount of
benefit that is greater than fifty percent likely of being realized upon
ultimate settlement. De-recognition of a tax benefit previously recognized
could result in the Company recording a tax liability that would reduce net
assets. This policy also provides guidance on thresholds, measurement,
de-recognition, classification, interest and penalties, accounting in interim
periods, disclosure, and transition that is intended to provide better
financial statement comparability among different entities. It must be applied
to all existing tax positions upon initial adoption and the cumulative effect,
if any, is to be reported as an adjustment to stockholder’s equity as of
January 1, 2009. Based on its analysis, the Company has determined that the
adoption of this policy did not have a material impact on the Company’s
financial statements upon adoption. However, management’s conclusions regarding
this policy may be subject to review and adjustment at a later date based on
factors including, but not limited to, on-going analyses of and changes to tax
laws, regulations and interpretations thereof.
Comprehensive Income
The Company complies with
FASB ASC Topic 220,
Comprehensive Income,
which establishes rules for
the reporting and display of comprehensive income (loss) and its components.
FASB ASC Topic 220 requires the Company’s change in foreign currency
translation adjustments to be included in other comprehensive loss, and is
reflected as a separate component of stockholders’ equity.
8
THE MOVIE
STUDIO, INC.
(FORMERLY DESTINATION TELEVISION, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 201
2
Note 2 – Summary of significant
Accounting Policies (continued)
Stock-Based Compensation
The Company complies with
FASB ASC Topic 718
Compensation – Stock Compensation
, which establishes
standards for the accounting for transactions in which an entity exchanges its
equity instruments for goods or services. It also addresses transactions in
which an entity incurs liabilities in exchange for goods or services that are
based on the fair value of the entity’s equity instruments or that may be
settled by the issuance of those equity instruments. FASB ASC Topic 718 focuses
primarily on accounting for transactions in which an entity obtains employee
services in share-based payment transactions. FASB ASC Topic 718 requires an
entity to measure the cost of employee services received in exchange for an
award of equity instruments based on the grant-date fair value of the award
(with limited exceptions). That cost will be recognized over the period during
which an employee is required to provide service in exchange for the award
(usually the vesting period). No compensation costs are recognized for equity
instruments for which
employees do not render the
requisite service. The grant-date fair value of employee share options and
similar instruments will be estimated using option-pricing models adjusted for
the unique characteristics of those instruments (unless observable market
prices for the same or similar instruments are available). If an equity award
is modified after the grant date, incremental compensation cost will be
recognized in an amount equal to the excess of the fair value of the modified
award over the fair value of the original award immediately before the
modification. No employee stock options or stock awards vested during during
the quarter ended January 31, 2012 under FASB ASC 718.
Nonemployee awards
The fair value of equity
instruments issued to a nonemployee is measured by using the stock price and
other measurement assumptions as of the date of either: (i) a commitment for
performance by the nonemployee has been reached; or (ii) the counterparty’s
performance is complete. Expenses related to nonemployee awards are generally
recognized in the same period as the Company incurs the related liability for
goods and services received. The Company recorded stock compensation of
approximately $-0- and $-0- during the three month periods ended January 31,
2012 and January 31, 2011, respectively, related to consulting services.
Recently Adopted
Accounting Pronouncements
The Company has adopted the Financial Accounting Standards Board
(“FASB”) Accounting Standards Codification (“ASC”) 105-10,
Generally
Accepted Accounting Principles – Overall
(“ASC 105-10”), which was formerly
known as SFAS 168. ASC 105-10 establishes the FASB Accounting Standards
Codification (the “Codification”) as the source of authoritative accounting
principles recognized by the FASB to be applied by nongovernmental entities in
the preparation of financial statements in conformity with U.S. GAAP. Rules and
interpretive releases of the Securities and Exchange Commission (the
"SEC") under authority of federal securities laws are also sources of
authoritative U.S. GAAP for SEC registrants. All guidance contained
in the Codification carries an equal level of authority. The
Codification superseded all existing non-SEC accounting and reporting standards
and all other non-grandfathered, non-SEC accounting literature not included in
the Positions or Emerging Issues Task Force Abstracts. Instead, it
will issue Accounting Standards Updates (“ASUs”). The FASB will not consider
ASUs as authoritative in their own right. ASUs will serve only to
update the Codification, provide background information about the guidance and
provide the basis of conclusions on the change(s) in the Codification.
References made to FASB guidance throughout this document have been updated for
the Codification.
9
THE MOVIE
STUDIO, INC.
(FORMERLY DESTINATION TELEVISION, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 201
2
Note 2 – Summary of significant
Accounting Policies (continued)
Recently
Adopted Accounting Pronouncements (continued)
In May 2011, the
Financial Accounting Standards Board (FASB) issued authoritative guidance
regarding
Fair Value Measurement: Amendments to Achieve Common Fair Value
Measurement and Disclosure Requirements in U.S. GAAP and IFRSs,
which
resulted in common requirements for measuring fair value and for disclosing
information about fair value measurement under both U.S. GAAP and International
Financial Reporting Standards (IFRS), including a consistent definition of the
term "fair value." The amendments were effective beginning in the
first quarter of 2012, and did not have a material effect on our consolidated
financial statements.
In June 2011, the
FASB issued Accounting Standards Update 2011-05,
Presentation of
Comprehensive Income
. This update amended the provisions of FASB ASC 220-10
by eliminating the option of reporting other comprehensive income in the
statement of changes in stockholders’ equity. Companies will have the option of
presenting net income and other comprehensive income in a single, continuous
statement of comprehensive income or presenting two separate but consecutive
statements of net income and comprehensive income. The new presentation
requirements are effective for interim and annual periods beginning after
December 15, 2011. The adoption of this standard is not anticipated to have a
material impact on our financial statements.
In September
2011, the FASB issued Accounting Standards Update 2011-08,
Testing Goodwill
for Impairment
. This update amended the provisions of FASB ASC 350-20-35 by
allowing an entity the option to make a qualitative evaluation about the
likelihood of goodwill impairment to determine whether it should calculate the
fair value of a reporting unit. The amendments are effective for annual and
interim goodwill impairment tests performed for fiscal years beginning after
December 15, 2011. Early adoption is permitted, including for annual and
interim goodwill impairment tests performed as of a date before September 15,
2011, if an entity’s financial statements for the most recent annual or interim
period have not yet been issued. The adoption of this standard is not
anticipated to have a material impact on our financial statements.
The Company has reviewed all other recently issued, but not yet
adopted, accounting standards in order to determine their effects, if any, on
its results of operation, financial position or cash flows. Based on
that review, the Company believes that none of these pronouncements will have a
significant effect on its consolidated financial statements.
Loss Per Common Share
The Company
complies with the accounting and disclosure requirements of FASB ASC 260,
Earnings
Per Share.
Basic loss per common share is computed by dividing net loss
available to common stockholders by the weighted average number of common
shares outstanding during the period. Diluted loss per common share
incorporates the dilutive effect of common stock equivalents on an average
basis during the period.
10
THE MOVIE
STUDIO, INC.
(FORMERLY DESTINATION TELEVISION, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 201
2
Note 3 – Going Concern
The accompany financial
statements have been prepared on the basis of accounting principles applicable
to a going concern, which assume that Destination Television, Inc. will
continue in operation for a least one year and realize its assets and discharge
its liabilities in the normal course of operations. Several conditions cast
doubt about the Company’s ability to continue as a going concern. The Company
has an accumulated deficit of approximately $8.9 million as of January 31, 2011,
has no cash available for payment of operating expenses, no source of revenue,
and requires additional financing in order to finance its business activities
on ongoing basis. The Company’s future capital requirements will depend on
numerous factors, including but not limited to continued progress in the
pursuit of business opportunities. The Company is actively pursuing
alternative financing and has discussions with various third parties, although
no firm commitments have been obtained. In the interim, the principal shareholder
has committed to meeting any operating expenses incurred by the Company. The
Company believes that actions it is presently taking to revise its operating
and financial requirements provide it with the opportunity to continue as a
going concern.
The accompanying financial
statements have been prepared in conformity with generally accepted accounting
principles, which contemplate continuation of the Company as a going concern.
While we believe that the actions already taken or planned, will mitigate the
adverse conditions and events which raise doubt about the validity of 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 the reported liabilities.
Note 4 - Acquired Amortizable
Intangible Assets
As of October 31, 2006, the Company
invested $3,280 in establishing trademarks associated with its Bar TV concept.
The Company amortizes the costs of these intangibles over their estimated
useful lives unless such lives are deemed indefinite. Amortizable intangible
assets are also tested for impairment based on undiscounted cash flows and, if
impaired, written down to fair value based on either discounted cash flows or
appraised values. Intangible assets with indefinite lives are tested for
impairment, at least annually, and written down to fair value as required.
Expected annual amortization expense
related to amortizable intangible assets is as follows:
11
THE MOVIE
STUDIO, INC.
(FORMERLY DESTINATION TELEVISION, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 201
2
Note 5 - Income Taxes
The Company has approximately $
9.1
million in net operating loss carryovers
available to reduce future income taxes. These carryovers expire at various
dates through the year 20
30
. The Company has adopted
FASB ASC Topic 740,
Income Taxes,
which provides for the
recognition of a deferred tax asset based upon the value the loss
carry-forwards will have to reduce future income taxes and management's
estimate of the probability of the realization of these tax benefits. The
Company's management determined that it was more likely than not that the
Company's net operating loss carry-forwards would not be utilized; therefore, a
valuation allowance against the related deferred tax asset has been
established.
A summary of the deferred tax
asset presented on the accompanying balance sheets is as follows:
|
|
|
January 31,
|
|
|
October 31,
|
|
|
|
2012
|
|
|
2011
|
Deferred tax
asset:
|
|
|
|
|
|
Net operating
loss carryforwards
|
$
|
4,641,208
|
|
$
|
4,598,128
|
Deferred tax
asset
|
|
4,641,208
|
|
|
4,598,128
|
Less: Valuation
allowance
|
|
(4,641,208)
|
|
|
(4,598,128)
|
Net deferred
tax asset
|
$
|
0
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
2011
|
Statutory
federal income tax expense
|
(34)
|
%
|
(34)
|
%
|
State and local
income tax
|
(5)
|
|
|
(5)
|
|
(net of
federal benefits)
|
|
|
|
|
|
Other temporary
differences
|
-
|
|
|
-
|
|
Valuation
allowance
|
39
|
|
|
39
|
|
|
|
|
|
|
|
|
|
|
-
|
%
|
|
-
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 6 - Commitments
Facilities
The Company leases from a stockholder, Dr.
H. K. Terry, pursuant to an oral agreement on a month-to-month basis, an 8,500
square foot building in Fort Lauderdale, Florida, which serves as its
administrative offices and computer operations center. The rent is $4,500 per
month and the Company is responsible for
utilities.
Rent expense was $13,500 and $
13,500
for each of the
three month
periods ended January 31, 201
2
and 20
11, respectively.
12
THE MOVIE
STUDIO, INC.
(FORMERLY DESTINATION TELEVISION, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 201
2
Note 6 – Commitments
(continued)
Employment Agreements
Gordon Scott Venters is employed as the
Company's President and Chief Executive Officer, pursuant to an employment
agreement, effective November 1, 200
4
.
The agreement was for an initial period
of three years, with automatic renewals of one year.
The employment agreement, which extended a
previous agreement, provides for an annual salary of $161,662; annual increases
of a minimum of 5%; and participation in incentive or bonus plans at the
discretion of the Board of Directors. The agreement additionally provides for
certain confidentiality and non-competition provisions and a minimum payment of
18 months’ salary in the event of a change of control or termination
"without cause," or if the employee terminates for "good
reason." As of January 31, 201
2 and October 31, 2011
, Mr. Venters was owed $
580,847 and
$
547,597
for accrued
wages, respectively.
Note 7 - Payroll Taxes Payable
The Company has been delinquent in
its payment of payroll taxes. As of July 31, 2009, the total of payroll taxes
payable, including estimated interest and penalties, was $261,710. In August,
October and November 2007, the Internal Revenue Service filed tax liens against
the Company in the total amount of $198,351. In August 2007, the Company
made a lump-sum payment of $48,000 and in November 2007, an additional lump sum
payment of $18,600. These payments were made in connection with the Company's
submission of an Offer in Compromise to settle its payroll tax obligations. The
Offer in Compromise was rejected and the Company appealed the initial
determination which also was rejected in June 2009. The Company plans to submit
a revised Offer in Compromise. There is no assurance that an acceptable
settlement will be reached. Payroll tax obligations for the calendar years
2007, 2008
, 2009,
20
1
0
and 2011
have been paid as required.
The balance due the Internal Revenue
Service for these unpaid payroll taxes was approximately $345,503 and $336,386
at January 31, 2012 and October 31, 2011, respectively.
Note
8
- Stockholders' Deficiency
Common Stock
Stock Issued for Cash
During period ended January
31, 201
2
, the Company did not issue
any shares of stock.
Stock Issued for Services
In
During period ended January 31, 201
2
,
the Company did not issue any shares of common stock.
Preferred Stock
Series B Preferred Stock
The Series B Preferred Stock
is identical in all aspects to the Common Stock, including the right to receive
dividends, except that each share of Series B Preferred Stock has voting rights
equivalent to four times the number of shares of Common Stock into which it
could be converted. As of January 31, 201
2,
there were 5,750,000 shares of Series B Preferred Stock outstanding and on
October 31, 20
11
there were 5,750,000 shares
outstanding. Each share of Series B Preferred Stock is convertible into one
share of common stock.
13
THE MOVIE
STUDIO, INC.
(FORMERLY DESTINATION TELEVISION, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 201
2
Note
9
- Common Stock Options
No options or warrants were
outstanding at January 31, 201
2
and October 31, 20
11
.
Note 1
0
– Litigation
As of January 31, 201
2
, the Company was not a party to any
existing or threatened litigation.
Note 1
1
- Related Party Transactions
Gordon Scott Venters
Effective November 2007, Gordon Scott
Venters, entered into a three-year employment agreement with the Company,
which is described above in
Note 5-
Commitments-Employment
Agreements
.
In November 2007, Mr. Venters, acquired
from the Company 2,000,000 shares of its Series B Preferred Stock as payment of
$56,000 of accrued unpaid salary. The shares were valued at $56,000, or $0.028
per share, which represented the approximate value, at the date of issuance, of
the common stock into which the Series B Preferred Stock may be converted.
Also, in September and October 2008, Mr. Venters, acquired a total 15,000,000
shares of common stock from the Company at an average price of approximately
$0.0051 as payment for accrued but unpaid salary of $76,000. The shares of
Series B Preferred Stock and the common shares have not been registered under
the Securities Act of 1933, as amended, and therefore, may not be transferred
in the absence of an exemption from registration under such laws and will be
considered "restricted securities" as that term is defined in Rule 144
adopted under the Securities Act, and may be sold only in compliance with the
resale provisions set forth therein.
In August 2006 and February 2007, Mr.
Venters made non-interest bearing unsecured loans to the Company in the amounts
of $25,000 and $5,000, respectively. In April 2007, the Company repaid the
$5,000 loan
; in addition to
the repayment of $5,000 loan, the Company also issued 500,000 if its $0.0001
par value common stock in exchange for the $25,000 loan and accrued wages.
These shares were valued at $0.052 per shares.
Additionally, in August 2007, he acquired
1,000,000 shares of common stock, which were valued at $0.04 per share, in
exchange for $40,000 of accrued unpaid salary. As of January 31, 201
2 and October 31, 2011
, Mr. Venters was owed
approximately
$
580,847 and
$
547,597
for accrued
wages, respectively.
Ventures
Capital Partners, LLC
In
April 2011, Ventures Capital Partners, LLC. (VCP) purchased a total debt of
$1,353,420 from a related party shareholder for an equity. VCP is owned by the
President of the Company.
14
THE MOVIE
STUDIO, INC.
(FORMERLY DESTINATION TELEVISION, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 201
2
Note 1
3
– Subsequent Events
In November 2012, the Company changed its
name from Destination Television, Inc. to the Movie Studio, Inc.
During the month of November 2012, the
Company became involved in litigation regarding the ownership of equipment left
in the building by a previous tenant. The building serves as the corporate
headquarters for the Company. The Company was ordered by the court to preserve
the equipment until ownership can be established by the court. The Company has
made no claim of ownership of the equipment and expects to be dismissed from
the litigation
15
Item 2. Management’s Discussion
and Analysis of Financial Conditions and
Results of Operations
THIS FILING CONTAINS FORWARD-LOOKING STATEMENTS. THE WORDS
“ANTICIPATED,” “BELIEVE,” “EXPECT,” “PLAN,” “INTEND,” “SEEK,” “ESTIMATE,”
“PROJECT,” “WILL,” “COULD,” “MAY,” AND SIMILAR EXPRESSIONS ARE INTENDED TO
IDENTIFY FORWARD-LOOKING STATEMENTS. THESE STATEMENTS INCLUDE, AMONG OTHERS,
INFORMATION REGARDING FUTURE OPERATIONS, FUTURE CAPITAL EXPENDITURES, AND
FUTURE NET CASH FLOW. SUCH STATEMENTS REFLECT THE COMPANY’S CURRENT VIEWS WITH
RESPECT TO FUTURE EVENTS AND FINANCIAL PERFORMANCE AND INVOLVE RISKS AND
UNCERTAINTIES, INCLUDING, WITHOUT LIMITATION, GENERAL ECONOMIC AND BUSINESS
CONDITIONS, CHANGES IN FOREIGN, POLITICAL, SOCIAL, AND ECONOMIC CONDITIONS,
REGULATORY INITIATIVES AND COMPLIANCE WITH GOVERNMENTAL REGULATIONS, THE
ABILITY TO ACHIEVE FURTHER MARKET PENETRATION AND ADDITIONAL CUSTOMERS, AND
VARIOUS OTHER MATTERS, MANY OF WHICH ARE BEYOND THE COMPANY’S CONTROL. SHOULD
ONE OR MORE OF THESE RISKS OR UNCERTAINTIES OCCUR, OR SHOULD UNDERLYING
ASSUMPTIONS PROVE TO BE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY AND
ADVERSELY FROM THOSE ANTICIPATED, BELIEVED, ESTIMATED, OR OTHERWISE INDICATED.
CONSEQUENTLY, ALL OF THE FORWARD-LOOKING STATEMENTS MADE IN THIS FILING ARE
QUALIFIED BY THESE CAUTIONARY STATEMENTS AND THERE CAN BE NO ASSURANCE OF THE
ACTUAL RESULTS OR DEVELOPMENTS.
The following discussion and analysis of our financial condition
and plan of operations should be read in conjunction with our financial
statements and related notes appearing elsewhere herein. This discussion and
analysis contains forward-looking statements including information about
possible or assumed results of our financial conditions, operations, plans,
objectives and performance that involve risk, uncertainties and assumptions.
The actual results may differ materially from those anticipated in such
forward-looking statements. For example, when we indicate that we expect to
increase our product sales and potentially establish additional license
relationships, these are forward-looking statements. The words expect,
anticipate, estimate or similar expressions are also used to indicate
forward-looking statements.
Plan of Operation
The Movie Studio, Inc. F/K/A
Destination Television, Inc. (the "Company" or the
"Registrant") was incorporated in the State of Delaware in 1961 under
the name Magic Fingers, Inc. By amendment of its certificate of incorporation,
the Company's name was changed in 1999 to Magicinc.com and in April 2002 to
Magic Media Networks, Inc. and in February 2007 to Destination Television,
Inc. In November of 2012 the Company filed an amendment to change its name to
The Movie Studio, Inc. Through the period ended October 31, 1999, the Company
devoted substantially all its efforts to reorganizing its financial affairs and
settling its debt obligations. During the fiscal years ended October 31, 2000
and October 31, 2001, the
Company was engaged
primarily in the planning and development of an interactive network to provide
entertainment via the Internet. Subsequent to October 31, 2001, the Company
redirected its business focus to the development of a private television
network, in high traffic locations such as bars and nightclubs. During the
development process, the Company received incidental revenue from the sale of
advertising and the production of commercials.
16
Results of Operation
Three Months Ended January
31, 2012 Compared to Three Months Ended July 31, 2011
Revenue
The
Company had no revenues for the three months ended January 31, 2012 and 2011.
Expenses
Selling,
general and administrative expenses decreased $13,500 from $47,464 to $33,964 for
the three months ended January 31, 2012, as compared to the same period in 2011.
These decreases were primarily due to the Company’s decreasing payroll costs.
Other
For
the three months ended January 31, 2012 and 2011, the Company reported interest
expense of $9,116 and $20,191, respectively, a decrease of $11,075 or 54.9%.
Liquidity and Capital Resources
As of January 31, 2012 the Company had assets of $6,759 as against
total liabilities of $2,327,078.
The
Company has an accumulated deficit of approximately $9.1 million as of January
31, 2012, has no cash available for payment of operating expenses, no source of
revenue, and requires additional financing in order to finance its business
activities on ongoing basis. The Company’s future capital requirements will
depend on numerous factors, including but not limited to continued progress in
the pursuit of business opportunities. The Company is actively pursuing
alternative financing and has discussions with various third parties, although
no firm commitments have been obtained. In the interim, the principal
shareholder has committed to meeting any operating expenses incurred by the
Company. The Company believes that actions it is presently taking to revise its
operating and financial requirements provide it with the opportunity to
continue as a going concern.
Item
3
.
Quantitative and Qualitative Disclosures About
Market Risk
Not applicable.
Item 4. Controls and Procedures
(a) Evaluation of disclosure
controls and procedures.
Our management is responsible for establishing and
maintaining adequate internal control over financial reporting for the Company.
Internal control over financial reporting is defined in Rule 13a-15(f) or
15d-15(f) promulgated under the Securities Exchange Act of 1934 (Exchange Act)
as a process designed by or under the supervision of, our principal executive
and principal financial officers and effected by our Board of Directors,
management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles and includes those policies and procedures that:
Pertain to the maintenance of records that is in
reasonable detail accurately and fairly reflect the transactions and
dispositions of our assets
17
Provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and
expenditures of the Company are being made only in accordance with
authorizations of our management and directors: and
Provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use or disposition of the
Company’s assets that could have a material effect on the financial statements.
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
Management
assessed the effectiveness of the Company’s Internal Control over financial
reporting as of January 31, 2012. In making this assessment, management used
the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission in this Internal Control-Integrated Framework.
Base
on our assessment, we believe that, as of January 31, 2012 our internal control
over financial reporting was not effective.
Evaluation
of Disclosure Controls and Procedures
We
maintain disclosure controls and procedures (as defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act) that are designed to ensure that information
required to be disclosed in the reports we file or submit under the Exchange
Act is recorded, processed, summarized and reported within the time periods
specified in the SEC’s rules and forms, and that such information is accumulated
and communicated to our management, including our chief executive officer and
chief financial officer, as appropriate to allow timely decisions regarding
disclosure. In designing and evaluating the disclosure controls and
procedures, management recognized that any controls and procedures, no matter
how well designed and operated, can provide only reasonable assurance of
achieving the desired control objectives, and management necessarily was
required to apply its judgment in evaluating the cost-benefit relationship of
possible controls and procedures.
Our management, with the participation of our chief
executive officer and chief financial officer, has evaluated the effectiveness
of our disclosure controls and procedures as of January 31, 2010. Based on
their evaluation, our chief executive officer and chief financial officer have
concluded that, as of January 31, 2010, our disclosure controls and procedures
were not effective.
(b) Changes in internal controls
.
There have not been any changes in the Company’s
internal control over financial reporting (as such term is defined in Rules
13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended January
31, 2010 that have materially affected, or are reasonably likely to materially
affect, the Company’s internal control over financial reporting.
18
PART
II - OTHER INFORMATION
Item 1. Legal Proceedings
During the month of November 2012, the
Company became involved in litigation regarding the ownership of equipment left
in the building by a previous tenant. The building serves as the corporate
headquarters for the Company. The Company was ordered by the court to preserve
the equipment until ownership can be established by the court. The Company has
made no claim of ownership of the equipment and expects to be dismissed from
the litigation.
Item 2. Unregistered
Sales of Equity Securities and Use of Proceeds
During the three month period ended January 31, 2012, there was no
modification of any instruments defining the rights of holders of the Company’s
common stock and no limitation or qualification of the rights evidenced by the
Company’s common stock as a result of the issuance of any other class of
securities or the modification thereof.
Item 3. Defaults
upon Senior Securities
There have been no defaults in any material payments during the
covered period.
Item 4. Mine
Safety Disclosures
Not applicable.
Item 5. Other
Information
The Company does not have any other material information to report
with respect to the three month period ended January 31, 2012.
Item 6. Exhibits and Reports on
Form 8-K
(a)
Exhibits
33.1
Certification pursuant to Section 302 of Sarbanes Oxley Act of 2002
33.2
Certification pursuant to Section 906 of Sarbanes Oxley Act of 2002
(b)
Reports on
Form 8-K
No
reports on Form 8-K were filed during the quarter ended January 31, 2012.
19
SIGNATURES
In accordance with the
requirements of the Exchange Act, the registrant caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
THE MOVIE STUDIO, INC.
Date: July 29, 2013
/s/ Gordon Scott
Venters
Gordon Scott Venters
President, Secretary and
Director
20
EXHIBIT 33.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
AND CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
I, Gordon Scott Venters,
certify that:
1.
I have reviewed this Quarterly
Report on Form 10-Q of The Movie Studio, Inc.
2.
Based on my knowledge, this report
does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with
respect to the period covered by this report;
3.
Based on my knowledge, the
financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of
operations and cash flows of the small business issuer as of, and for, the
periods present in this report;
4.
The small business issuer’s other
certifying officer(s) and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in
Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:
(a)
Designed such disclosure controls
and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to
the small business issuer, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in
which this report is being prepared;
(b)
Designed such internal control
over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally
accepted accounting principles;
(c)
Evaluated the effectiveness of the
small business issuer’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on
such evaluation; and
(d)
Disclosed in this report any
change in the small business issuer’s internal control over financing reporting
that occurred during the small business issuer’s most recent fiscal quarter
(the small business issuer’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially
affect, the small business issuer’s internal control over financial reporting;
and
5.
The small business issuer’s other
certifying officer(s) and I have disclosed, based on our most recent evaluation
of internal control over financial
reporting,
to the small business issuer’s auditors and the audit committee of the small
business issuer’s board of directors (or persons performing the equivalent
functions):
21
(a)
All significant deficiencies and
material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the small
business issuer’s ability to record, process, summarize and report financial
information; and
(b)
Any fraud, whether or not
material, that involved management or other employees who have a significant
role in the small business issuer’s internal control over financial reporting.
Dated: July 29, 2013
/s/ Gordon Scott
Venters
Gordon Scott Venters
Chief Executive Officer
Chief Accounting Officer
22
EXHIBIT 33.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with this
Quarterly Report of The Movie Studio, Inc. (the “Company”) on Form 10-Q for the
period ending January 31, 2012 , as filed with the Securities and Exchange
Commission on the date hereof (the “Report”), I, Gordon Scott Venters, Chief Executive
Officer and Chief Accounting Officer of the Company, certifies to the best of
his knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 that:
1.
The Report fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and
2.
The information contained in the
Report fairly presents, in all material respects, the financial condition and
result of operations of the Company.
By:
/s/ Gordon Scott Venters
Gordon Scott Venters
Chief Executive
Officer
Chief Accounting
Officer
Dated: July 29, 2013
Movie Studio (PK) (USOTC:MVES)
Historical Stock Chart
From Jun 2024 to Jul 2024
Movie Studio (PK) (USOTC:MVES)
Historical Stock Chart
From Jul 2023 to Jul 2024