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, 2006
[ ] 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
Incorporation or organization) Identification No.)
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: 16,351,192 as of December
31, 2006
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
Item 1. Financial Statements
STEREO VISION ENTERTAINMENT, INC.
(A Development Stage Company)
BALANCE SHEETS
(Unaudited)
ASSETS: December 31, June 30,
2006 2006
------------- -------------
Current Assets:
Cash $ 708 $ -
Prepaid Expenses - -
------------- -------------
Total Current Assets 708 -
------------- -------------
Fixed Assets:
Office Equipment 13,745 13,745
Less Accumulated Depreciation (13,745) (13,745)
------------- -------------
Net Fixed Assets - -
------------- -------------
Intangible and Other Non-Current Assets:
Investment in JamOakie 11,893 11,893
------------- -------------
Total Assets $ 12,601 $ 11,893
============= =============
2
STEREO VISION ENTERTAINMENT, INC.
(A Development Stage Company)
BALANCE SHEETS
(Continued)
(Unaudited)
December 31, June 30,
2006 2006
------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Liabilities:
Accounts Payable $ 258,377 $ 309,958
Accrued Expenses 815,559 787,266
Bank Overdraft - 1,815
Payable to SAG for Route 66 71,493 71,493
Lawsuit Payable 32,411 32,411
Loans from Shareholders 213,676 194,108
------------- -------------
Total Current Liabilities 1,391,516 1,397,051
------------- -------------
Stockholders' Equity:
Common Stock, $.001 Par value
Authorized 100,000,000 shares,
Issued 16,351,192 at December 31, 2006
and 15,245,076 at June 30, 2006 16,351 15,245
Common Stock to be Issued, 56,000 shares at
December 31, 2006 and 156,000 shares
at June 30, 2006 56 156
Additional Paid in Capital 13,866,944 13,776,725
Deficit Accumulated During the Development Stage (15,262,266) (15,177,284)
------------- -------------
Total Stockholders' Equity (1,378,915) (1,385,158)
------------- -------------
Total Liabilities and Stockholders' Equity $ 12,601 $ 11,893
============= =============
The accompanying notes are an integral part of these financial statements.
3
STEREO VISION ENTERTAINMENT, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
Cumulative
(Unaudited) (Unaudited) Since May 5,
For the For the 1999
Three Months Ended Six Months Ended Inception of
December 31 December 31 Development
2006 2005 2006 2005 Stage
------------ ------------ ------------ ------------ --------------
Revenues $ - $ - $ - $ - $ -
------------ ------------ ------------ ------------ --------------
Expenses
Research & Development - - - - 293,000
General & Administrative 30,010 24,004 51,078 57,061 8,443,482
Salaries & Consulting 50,000 18,774 101,875 172,460 5,247,803
Advertising & Promotion - - - - 418,423
Loss on Investment - - - - 558,191
Lawsuit Settlement - - - - 104,911
------------ ------------ ------------ ------------ --------------
Operating Loss (80,010) (42,778) (152,953) (229,521) (15,065,810)
------------ ------------ ------------ ------------ --------------
Other income (expense):
Interest (1,181) (6,039) (3,736) (11,781) (443,617)
Investment Fee - - - - (75,000)
Loss on Sale of Assets - - - - (15,883)
Write off of Note Receivable - - - - (191,701)
Gain on Forgiveness of Debt - - - - 48,516
Gain (Loss) on Available for
Sale Securities - - - - 412,772
------------ ------------ ------------ ------------ --------------
Total Other Income (expense) (1,181) (6,039) (3,736) (11,781) (264,913)
------------ ------------ ------------ ------------ --------------
Net Loss Before Taxes (81,191) (48,817) (156,689) (241,302) (15,330,723)
Income Tax Expense - - - - (3,250)
------------ ------------ ------------ ------------ --------------
Net Loss before extraordinary items (81,191) (48,817) (156,689) (241,302) (15,333,973)
Extraordinary item - legal settlement - - 71,707 - 71,707
------------ ------------ ------------ ------------ --------------
Net Loss $ (81,191) $ (48,817) $ (84,982) $ (241,302) $ (15,262,266)
============ ============ ============ ============ ==============
Loss per Common Share
Income before extraordinary item $ (0.01) $ - $ (0.01) $ (0.02)
Extraordinary item - - - -
------------ ------------ ------------ ------------
Loss per shares $ (0.01) $ - $ (0.01) $ (0.02)
============ ============ ============ ============
Weighted Average 15,998,819 10,821,855 15,713,516 10,821,855
============ ============ ============ ============
The accompanying notes are an integral part of these financial statements.
4
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
2006 2005 Stage
------------- ------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (84,982) $ (241,302) $(15,262,266)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and Amortization - - 3,536,428
Issuance of Common Stock for Expenses 5,000 - 6,327,985
Stock Issued for Payment of Accounts Payable 5,500 - 50,500
Stock to be Issued for Accrued Expenses - - 281,666
Compensation Expense from Stock Options - - 487,500
Realized gain on trading investments - - (412,773)
Loss on sale of assets - - 15,883
Loss on Investment Written Off - - 557,008
Gain on Forgiveness of Debt - - (48,516)
Cash acquired in merger - - 332
Extraordinary item (71,707) - (71,707)
Change in operating assets and liabilities:
Investment in films, manuscripts, recordings
and similar property - - (272,008)
Prepaid Expense & Other Receivable - 10,000 -
Accounts Payable (9,581) 3,914 282,947
Accrued Expenses 103,736 166,667 891,002
Lawsuit Payable - - 32,411
Payable to SAG for Route 66 - - 71,493
------------- ------------- -------------
Net Cash Used in operating activities (52,034) (60,721) (3,532,115)
------------- ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investment - - (5,892)
Purchase of equipment - - (13,745)
Proceeds from sale of assets - - 51,117
Proceeds from sale of investments - - 565,773
------------- ------------- -------------
Net cash provided (used) in investing activities - - 597,253
------------- ------------- -------------
5
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
2006 2005 Stage
------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from loans from shareholders $ 22,832 $ 55,937 $ 1,956,859
Proceeds from issuance of common stock 31,725 - 914,711
Proceeds from issuance of short-term notes - - 64,000
Bank Overdraft (1,815) 3,115 -
------------- ------------- -------------
Net Cash Provided by Financing Activities 52,742 59,052 2,935,570
------------- ------------- -------------
Net (Decrease) Increase in Cash 708 (1,669) 708
Cash at Beginning of Period - 1,669 -
------------- ------------- -------------
Cash at End of Period $ 708 $ - $ 708
============= ============= =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ - $ - $ 43,799
Income taxes $ - $ - $ -
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Common Stock Issued for Investment in
Wilfield Entertainment $ - $ - $ 220,000
Common Stock Issued for Investment in
Mad Dogs & Oakies Project - - 3,000
Common Stock Issued for Investment in
In the Garden of Evil Project - - 12,000
Notes Payable Converted to Stock 49,000 39,000 1,678,108
The accompanying notes are an integral part of these financial statements.
6
STEREO VISION ENTERTAINMENT, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of accounting policies for Stereo Vision Entertainment, Inc.
is presented to assist in understanding the Company's financial statements.
The accounting policies conform to generally accepted accounting principles
and have been consistently applied in the preparation of the financial
statements.
The unaudited financial statements as of December 31, 2006 and for the
three and six months then ended reflect, in the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
fairly state the financial position and results of operations for the three
and six months. Operating results for interim periods are not necessarily
indicative of the results which can be expected for full years.
Nature of Operations and Going Concern
---------------------------------------
The accompanying financial statements have been prepared on the basis of
accounting principles applicable to a "going concern", which assumes that the
Company will continue in operation for at least one year and will be able to
realize its assets and discharge its liabilities in the normal course of
operations.
Several conditions and events cast doubt about the Company's ability to
continue as a "going concern". The Company has incurred net losses of
approximately $15,262,266 for the period from May 5, 1999 (inception) to
December 31, 2006, 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.
7
STEREO VISION ENTERTAINMENT, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Organization and Basis of Presentation
--------------------------------------
The Company was incorporated under the laws of the State of Nevada on May
5, 1999. The Company as of December 31, 2006 is in the development stage, and
has not commenced planned principal operations.
Nature of Business
------------------
The Company intends to position itself to evolve into a vertically
integrated, diversified media entertainment company. The Company anticipates
generating revenues from several sources, including production of new and
existing feature films in both 2-D and 3-D format for theatrical and direct to
DVD release, as well as expanding into other areas of the entertainment
industry including the production of music albums
Cash and Cash Equivalents
-------------------------
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or
less to be cash equivalents to the extent the funds are not being held for
investment purposes.
Pervasiveness of Estimates
--------------------------
The preparation of financial statements in conformity with generally
accepted accounting principles required management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
8
STEREO VISION ENTERTAINMENT, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Property and Equipment
----------------------
Property and equipment are stated at cost. Depreciation is provided for
in amounts sufficient to relate the cost of depreciable assets to operations
over their estimated service lives, principally on a straight-line basis from
3 to 5 years.
Upon sale or other disposition of property and equipment, the cost and
related accumulated depreciation or amortization are removed from the accounts
and any gain or loss is included in the determination of income or loss.
Expenditures for maintenance and repairs are charged to expense as
incurred. Major overhauls and betterments are capitalized and depreciated
over their useful lives.
The Company identifies and records impairment losses on long-lived assets
such as property and equipment when events and circumstances indicate that
such assets might be impaired. The Company considers factors such as
significant changes in the regulatory or business climate and projected future
cash flows from the respective asset. Impairment losses are measured as the
amount by which the carrying amount of intangible asset exceeds its fair
value.
Stock Compensation for Non-Employees
------------------------------------
The Company accounts for the fair value of its stock compensation grants
for non-employees in accordance with FASB Statement 123. The fair value of
each grant is equal to the market price of the Company's stock on the date of
grant if an active market exists or at a value determined in an arms length
negotiation between the Company and the non-employee.
Advertising Costs
-----------------
Advertising costs are expensed as incurred. For the six months ended
December 31, 2006 and 2005, 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.
9
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, 2006 and 2005 and are thus
not considered. At December 31, 2006 and 2005, the total number of potentially
dilutive common stock equivalents was 0 and 20,000, respectively.
Reclassification
----------------
Certain reclassifications have been made in the 2005 financial statements
to conform with the 2006 presentation.
NOTE 2 - INCOME TAXES
As of December 31, 2006, the Company had a net operating loss
carryforward for income tax reporting purposes of approximately $15,262,266
that may be offset against future taxable income through 2026. Current tax
laws limit the amount of loss available to be offset against future taxable
income when a substantial change in ownership occurs. Therefore, the amount
available to offset future taxable income may be limited. Accordingly, the
potential tax benefits of the loss carryforwards are offset by a valuation
allowance of the same amount.
NOTE 3 - DEVELOPMENT STAGE COMPANY/ GOING CONCERN
The Company has not begun principal operations and as is common with a
development stage company, the Company has had recurring losses during its
development stage. Continuation of the Company as a going concern is
dependent upon obtaining the additional working capital necessary to be
successful in its planned activity, and the management of the Company has
developed a strategy, which it believes will accomplish this objective through
additional equity funding and long term financing, which will enable the
Company to operate for the coming year.
NOTE 4 - RENT EXPENSE
The Company'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 unfurnished 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, 2006 and 2005, rent expense was
$15,000 and $15,000, respectively.
10
STEREO VISION ENTERTAINMENT, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 5 - LOANS FROM SHAREHOLDERS AND OTHER RELATED PARTY TRANSACTIONS
As of December 31, 2006 and June 30, 2006, the company owes $213,676 and
$194,108 to various shareholders and officers/directors. The loans are
unsecured with interest at rates of between 4.00% to 12% and have no fixed
terms of repayment.
NOTE 6 - NOTES PAYABLE
On August 1, 2006, the Company converted $42,000 in accounts payable into
a note payable. The note is due on demand and carries an interest rate of 10%
per annum. During the quarter ended December 31, 2006, this note, plus
additional accrued expenses of $5,500 was converted into 475,000 shares of
common stock, valued at $.10 per shares.
NOTE 7 - 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.
11
STEREO VISION ENTERTAINMENT, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 7 - COMMON STOCK TRANSACTIONS (continued)
On February 14, 2000, the Company issued 4,000 (100,000 pre-split) shares
of common stock as payment for services rendered by Mr. Herky Williams valued
at $1.00 per share. The services rendered were for the development of the
company's music division. The shares were issued under Rule 4(2) to an officer
of the Company.
On April 17, 2000, the Company issued 4,000 (100,000 pre-split) shares of
common stock to Shauna Gilibarti as payment for marketing related services
valued at $100,000. They were cancelled on May 25, 2001 for failure to
perform.
On May 4, 2000, the Company issued 2,200 (55,000 pre-split) shares of
common stock for cash of $55,000.
On June 2, 2000, the Company issued 4,000 (100,000 pre-split) shares of
common stock to Profit Earth as payment for market development services
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.
12
STEREO VISION ENTERTAINMENT, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 7 - COMMON STOCK TRANSACTIONS (continued)
On November 22, 2000, the Company issued 2,000 (50,000 pre-split) shares
of common stock for conversion of notes payable totaling $25,000. The value
of these shares was $0.50 per share according to the terms of the original
agreement.
On November 22, 2000, the Company issued 4,080 (102,000 pre-split) shares
of common stock to Daniel Symmes as payment for 3-D consulting services valued
at $102,000.
On December 4, 2000, the Company issued 400 (10,000 pre-split) shares of
common stock as payment for services valued at $10,200.
On December 14, 2000, the Company issued 4,000 (100,000 pre-split) shares
of common stock to Rod Whiton as payment for advertising services valued at
$106,000. These shares were cancelled for non-performance on May 25, 2001.
On January 23, 2001, the Company issued 600 (15,000 pre-split) shares of
common stock for cash $15,000.
On January 30, 2001, the Company issued 4,724 (118,100 pre-split) shares
of common stock to six individuals as payment for services valued at $64,950.
These services included advising on the film "On Route 66" as well as
website design. On May 25, 2001, 2,000 of these shares were cancelled for
non-performance.
On March 10, 2001, the Company issued 8,000 (200,000 pre-split) shares of
common stock to Herky Williams (100,000) and Jerry 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.
13
STEREO VISION ENTERTAINMENT, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 7 - COMMON STOCK TRANSACTIONS (continued)
On May 25, 2001, 14,000 (350,000 pre split) shares that were issued
during the years ended June 30, 2001 and 2000 to various people for services
were cancelled. These shares were cancelled for non-performance of services.
The expenses related to these shares were recorded when the shares were
issued. The expenses related to the issuance of these shares were reversed
upon the cancellation of the shares.
On June 1, 2001, the Company issued 840 (21,000 pre-split) shares of
common stock for conversion of notes payable totaling $7,513, according to the
terms of the original agreement.
On June 15, 2001, the Company issued 1,000 (25,000 pre-split) shares of
common stock as payment for services valued at $15,000.
On June 28, 2001, the Company issued 10,000 (250,000 pre-split) shares of
common stock to Vision Publishing (100,000) and Jim and Cynthia Pitochelli
(150,000) as payment for services and advertising expenses valued at $150,000.
On June 29, 2001, the Company issued 34,000 (850,000 pre-split) shares of
common stock for conversion of notes payable totaling $225,000, according to
the terms of the original loan agreement.
On August 29, 2001, the Company issued 13,400 (335,000 pre-split) shares
of common stock for conversion of notes payable totaling $100,500, according
to the terms of the original loan agreement.
During the quarter ended September 30, 2001, 4,000 (100,000 pre-split)
shares were issued for conversion of notes payable totaling $25,600. The value
of these shares was $0.26 per share, as agreed in the original loan documents.
These shares were issued under Rule 4(2).
On September 25, 2001, 4,000 (100,000 pre-split) shares that were issued
during the year ended June 30, 2000 for services were cancelled. These shares
were cancelled for non-performance of services. The expenses related to these
shares were recorded when the shares were issued. The expenses related to the
issuance of these shares were reversed upon the cancellation of the shares.
Also on September 25, 2001, the asset acquisition agreement with 3-D was
rescinded and the assets acquired by the Company were returned to 3-D. The
stock issued by the Company in the acquisition was not returned. There was a
net increase in total stockholders' equity of $70,532.
14
STEREO VISION ENTERTAINMENT, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 7 - COMMON STOCK TRANSACTIONS (continued)
During the quarter ended September 30, 2001, the company issued 112,200
(2,805,000 pre-split) shares to the Company's officers and directors for
services rendered in their various capacities (J. Honour (1,500,000), H.
Williams (600,000), J. Bodziak, R. Urbisci and T. Noonan (100,000 each)) at
the market value of the stock on the date of agreed (not actual) issuance of
$0.30 to $0.45 per share.
During the quarter ended September 30, 2001, 3,600 (90,000 pre-split)
restricted common shares were issued to individuals for cash at $0.50 per
share trading value. All shares were issued under Rule 4(2).
During the quarter ended December 31, 2001, the Company issued 25,912
(647,795 pre-split) shares of stock for conversion of notes payable totaling
$135,596, for accrued interest on the notes payable of $12,275, and for
consulting services of $20,779. The value of the shares was between $0.14 and
$0.35 per share. The share values were always determined based upon the
trading price of the stock on the date of the agreement, not on the date of
issuance of the shares. All shares were issued in reliance on the exemption
provided by Rule 4(2).
During the quarter ended December 31, 2001, the Company issued 94,825
(2,370,631 pre-slit) shares to twelve different individuals for services at
the market value on the date of the agreements, between $0.21 and $0.54 per
share. Such services included financial and market advisory as well as
project advisory.
On January 15, 2002, 12,000 (300,000 pre-split) shares of common stock
were issued for cash at $0.33 per share.
During the quarter ended March 30, 2002, 119,185 (2,979,625 pre split)
shares were issued in connection with previous debt cancellation, pursuant to
the terms of the convertible instrument. These shares were issued under Rule
4(2), and the recipient was an accredited investor.
On April 10, 2002, the Company issued 9,920 (248,000 pre-split) shares of
common stock for conversion of notes payable totaling $32,627 according to the
terms of the original agreement.
On April 29, 2002, 8,000 (200,000 pre-split) common shares were issued
for the purchase of "In the Garden of Eden" album. The value of the shares was
$0.06 on the date of contractual agreement, and the shares were issued under
Rule 4(2), but later rescinded for failure of the owner to deliver the rights.
These shares were cancelled on June 3, 2003.
On May 30, 2002, 4,000 (100,000 pre-split) common shares were issued to
various people for services, which included writing, arranging, composing and
product placement, all connected with the project "Mad Dogs and Oakies." The
value of the shares was $.03 per share on the date of contract. These shares
were issued to non-affiliates under Rule 4(2).
15
STEREO VISION ENTERTAINMENT, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 7 - COMMON STOCK TRANSACTIONS (continued)
During the quarter ended June 30, 2002, the Company issued 12,000
(300,000 pre-split) shares of common stock for cash. Shares were issued for
$.025 to $.075 per share.
During the quarter ended June 30, 2002, 10,000 (250,000 pre-split) shares
were issued for consulting and rent expense. The value of the shares was
between $.03 (April 15) and $.08 (May 24) per share.
On July 1, 2002, 34,000 (850,000 pre-split) common shares were issued for
cash of $9,500, based upon a conversion contract entered into earlier.
On July 8, 2002, 85,334 (2,133,334 pre-split) shares were issued in
connection with a previous debt cancellation, based upon the terms of the note
and conversion price therein committed. These shares were issued to an
accredited investor under Rule 506 of Regulation D.
On December 20, 2002, 20,000 (500,000 pre-split) shares were returned to
the treasury and cancelled.
On December 23, 2002, 104,000 (2,600,000 pre split) common shares were
cancelled from various shareholders for non-performance of services. 750,000
shares were initially issued December 20, 2001, 1,500,000 shares were
initially issued September 27, 2001, and 450,000 shares were initially issued
October 2, 2001. The shares were recorded as a prepaid asset at the time of
issuance. The entry recording the issuance of the shares was reversed upon
cancellation.
During the quarter ended March 31, 2003, a total of 559,800 (13,995,000
pre-split) common shares were issued to individuals for services. This total
included issuances to officers and directors, at $0.029 per share (restricted)
of 13,450,000 shares (J. Honour (10,000,000), H. Williams (1,500,000), T.
Noonan (500,000), J. Bodziak (250,000) and R. Urbisci (100,000)) and outside
consultants providing media solicitation services (Ron Kelley, 1,100,000
shares).
On March 26, 2003, 160,000 (4,000,000 pre-split) common shares were
issued for conversion of notes payable of $274,932. These shares were issued
to an accredited investor, in conversion of pre-existing rights, under Rule
506.
On May 9, 2003, 101,600 (2,540,000 pre-split) shares were issued to 7
individuals providing various consulting services, all as described in the
Form S8 registration statement, filed April 29, 2003. The value of the
registered shares was effectively $0.01 per share. The private placement
shares were issued under the exemption available through Rule 4(2).
16
STEREO VISION ENTERTAINMENT, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 7 - COMMON STOCK TRANSACTIONS (continued)
On June 2, 2003, 88,000 common shares were issued for conversion of debt
totaling $20,000 according to the terms of the original agreement.
On June 3, 2003, 12,000 shares were cancelled for non-performance of
services. These shares were originally issued during the year ended June 30,
2002. 8,000 shares were initially issued April 29, 2002 and recorded as other
assets. 4,000 shares were initially issued September 27, 2001 and recorded as
a prepaid asset. The journal entries recording the issuance of these shares
was reversed upon cancellation.
On June 25, 2003, 40,000 shares were issued for conversion of debt
totaling $15,491, issued to Freddi Sidi, an accredited investor, under Rule
506.
During the quarter ended June 30, 2003, 2,156,000 shares were issued to
various people for services which included 2,000,000 shares issued to Jack
Honour, the Company President, in exchange for $600,000 of past and current
services ($.30 per share or a 50% discount to market), and 156,000 shares
issued to nine additional issuees for services whose shares were valued from
$.60 per share to $1.13 per share (market value on the date of issuance) as
their contract dates differed from Honour's. These shares were issued under
Rule 4(2).
On July 8, 2003, 30,000 shares of common stock were issued for conversion
of debt totaling $8,905, according to the terms of the original agreement.
During the quarter ended September 30, 2003, 1,198,000 shares were issued
to various people for services. A registration statement on Form S8 was filed
covering 710,000 of these shares to the 5 individuals listed therein, at 100%
of market on the date of issuance and registration ($0.57). The value of the
unregistered shares, when originally issued, was between $0.47 and $0.52 per
share on the various agreement dates. These recipients (Buss, McLane,Tribe,
Duke Films, Doug Schwartz, Lawrence Kallet, Edby and Eric Honour) provided
consulting services in locating and securing new media projects. These shares
were issued under Rule 4(2).
On November 17, 2003, 100,000 shares were cancelled for non-performance
of services. These shares were originally issued in July 2003 to Rod McLane
and the expense associated with these shares was recorded when the shares were
issued. The expense related to the issuance of these shares was reversed upon
the cancellation of the shares.
17
STEREO VISION ENTERTAINMENT, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 7 - COMMON STOCK TRANSACTIONS (continued)
During the quarter ended December 31, 2003, 523,072 shares were issued
for $68,000 in services at approximately $0.13 per share (50% discount to
market on October 1, 2003). During the quarter, 20,000 shares were issued to
Chicago Investment Group and Greg Myers for financial consulting services at
$0.26 per share, the market value on the date of issuance (October 1, 2003).
In addition, 700,000 shares total were issued to Herky Williams (500,000),
John Bodziak (100,000) and Tom Noonan (100,000) for employment and consulting
services as officers and directors of the company, at approximately $0.20 per
share (50% discount to market on November 23, 2003). Also, the Company issued
200,000 shares to pay an accounts payable of $55,500 due to Adams Technical
Solutions at a price of approximately $0.26 per share, (market value on date
of issuance on October 1, 2003). All shares were issued under the Rule 4 (2)
exemption.
On January 12, 2004, 90,000 shares were issued to Focus Partners West,
for financial services valued at $54,000.
On January 20, 2004, the Company converted debt of $35,046 to 200,000
shares of common stock, pursuant to terms of pre-existing contracts.
On February 9, 2004, 20,000 shares were cancelled for non-performance of
services. These shares were originally issued to Chicago investment Group and
Greg Myers in October 2003, and the expense associated with these shares was
recorded when the shares were issued. The expense related to the issuance of
these shares was reversed upon the cancellation of the shares.
On March 9, 2004, 156,000 shares were cancelled for non-performance of
services. These shares were originally issued to Tribe Communications for
provision of advertising services in September 2003, and the expense
associated with these shares was recorded when the shares were issued. The
expense related to the issuance of these shares was reversed upon the
cancellation of the shares.
On March 9, 2004, 100,000 shares were issued to pay rent valued at
$25,000, according to the terms of a previous agreement.
On March 11, 2004, 345,000 shares were issued to employees and
consultants at $2.00, which was the market price on the date of issuance, and
these shares, issued to 7 named individuals, were the subject of a
registration statement on Form S8, filed March 5, 2004.
During the quarter ended March 31, 2004, the Company issued 400,000
shares for cash (cancellation of indebtedness of $100,000) at $.25 per share,
the price pre-set in the conversion agreements. The Company also issued 25,000
shares for cash (cancellation of indebtedness of $12,500) at $.50 per share,
the price pre-set in the conversion agreements.
18
STEREO VISION ENTERTAINMENT, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 7 - COMMON STOCK TRANSACTIONS (continued)
On April 7, 2004, the Company issued 60,000 shares of common stock to
Messrs. Goldman and Botts, at $2.04 per share (the then market price), for the
provision of financial advisory services.
On April 7, 2004 the Company issued 375,000 shares of common stock for
cash of $215,000, valued at $0.57 per share, in accordance with previously
agreed conversion rights. In addition, approximately $14,200 in loans were
converted into 30,000 shares of common stock, at a conversion price of $0.47
per share, the pre-agreed conversion price. All shares were issued under the
exemption provided by Rule 4(2).
On April 14, 2004, the Company issued 100,000 shares of common stock for
cash at $0.25 per share, resulting from an option exercise.
On May 6, 2004, the Company issued 10,000 shares of common stock for cash
at $0.50 per share.
On May 25, 2004, the Company issued 50,000 shares of common stock to Var
Growth valued at $0.81 per share for marketing services.
On June 8, 2004, the Company issued 100,000 shares of common stock for
cash at $0.75 per share, to acquire distribution rights in Baywatch 3 DD, a
planned movie. These shares were issued to an accredited investor under Rule
506.
On June 16, 2004, 240,000 shares were issued to Jack Fennie for an
$80,000 debt of the company which he paid, at $0.33 per share, representing
50% of the market price on the date of delivery of the executed contract.
During the quarter ended September 30, 2004, the Company issued 1,234,333
shares of common stock to nine individuals for services rendered, including
financial advisory, marketing, PR and strategic advice. Consulting expense of
$461,233 was recognized in connection with these issuances. Also during the
quarter 400,000 shares were issued for cash at $0.25 per share equal to 50% of
the bid price.
During the quarter ended December 31, 2004, the Company issued 189,300
shares of common stock as follows: 86,000 shares to five individuals for
services including secretarial, marketing and public relations. This included
issuance of 56,000 S-8 shares valued at the closing price of the stock on the
day prior to issuance and 30,000 restricted shares valued at fifty per cent of
the price of the stock on the day prior to issuance. Consulting expense of
$39,850 was recognized in connection with these issuances. Also during the
quarter, $39,000 in loans was converted into 103,300 shares of common stock.
19
STEREO VISION ENTERTAINMENT, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 7 - COMMON STOCK TRANSACTIONS (continued)
During the quarter ended March 31, 2005, the Company issued 160,000
shares of common stock for cash of $35,000. These shares were valued at $.25
per share, which was equal to a discount of 50% of the prevailing market price
due for restricted securities.
During the quarter ended March 31, 2005, the Company issued 100,000
shares of common stock for $25,000 of accounts payable. These shares were
valued at $.25 per share, which was equal to a discount of 50% of the
prevailing market price due for restricted securities.
During the quarter ended March 31, 2005, the Company issued 370,000
shares of common stock to various people for services valued at $167,850. The
shares were valued at the market price on the date of the signing of the
agreements, which ranged from $.25 to $.70 per share.
During the quarter ended March 31, 2005, the officers of the Company
agreed to convert accrued payroll of $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.
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.
20
STEREO VISION ENTERTAINMENT, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 7 - COMMON STOCK TRANSACTIONS (continued)
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.
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.
21
STEREO VISION ENTERTAINMENT, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 8 - STOCK SPLIT
On May 30, 2003, the Board of Directors approved a proposal to effectuate
a 25 to 1 reverse stock split of the Company's outstanding common shares with
no effect on the par value or on the number of authorized shares. As a result
of this action, the total number of outstanding shares of common stock are
reduced from 37,903,485 to 1,516,150 shares. All references to common stock in
the financial statements have been changed to reflect the stock split.
NOTE 9 - 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 10 - 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.
On July 12, 2004, the Board of Directors granted an option to its former
President and CEO, Mr. Lance Robbins, to purchase 2,500,000 unregistered
common shares at an exercise price of $0.40 per share that vest one year from
the grant date. These options have been cancelled for non-performance.
22
STEREO VISION ENTERTAINMENT, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 10 - STOCK OPTIONS (continued)
The following table sets forth the options and warrants outstanding as of
December 31, 2006 and 2005:
December 31,
2006 2005
------------- -------------
Options Outstanding, Beginning of period - 1,120,000
Granted - -
Expired - (1,100,000)
Exercised - -
------------- -------------
Options Outstanding, End of period - 20,000*
============= =============
Exercise price for options outstanding,
end of period $ - $0.40 -$1.00
============= =============
* 1,100,000 were cancelled for non-performance on November 9, 2005.
20,000 expired in March 2006 unexercised.
NOTE 11 - 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, 2006 and June 30, 2006, the total amount due was $32,411.
The Company and its former President and CEO, Lance Robbins, who resigned
on December 5, 2004 signed an agreement in April 2006 resolving all
outstanding claims and liabilities arising out of Robbins' employment with
Stereo Vision. As part of the settlement, Robbins withdrew his claim of fraud
and misrepresentation on the part of the Company and Stereo Vision
acknowledged that Robbins resigned from the Company before the Company
terminated him. In addition, Robbins agreed to the return/cancellation of a
total of 183,333 shares granted to him in July, 2004 in connection with his
employment. During the quarter ended September 30, 2006, $71,707 in accrued
salary to Robbins that had been previously expensed was reversed and reported
as extraordinary income for the six months ended December 31, 2006.
23
STEREO VISION ENTERTAINMENT, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 12 - INVESTMENT IN JAMOAKIE PRODUCTIONS
On May 2, 2005, the Company signed an agreement with Mr. Jamie Oldaker to
acquire a 10% interest in JamOakie Productions which entitles the company to
10% of the profits from the album, "Mad Dogs and Oakies" which has
subsequently been released. The Company has the right but not the obligation
to finance future JamOakie projects. The price paid was 20,000 unregistered
common shares of the Company which were worth $6,000 at the time, and $5,893
in cash.
Item 2. Management's Discussion and Analysis or Plan of Operation.
Plan of Operations - The following discussion should be read in
conjunction with the Company's audited financial statements.
SVEI intends to pursue opportunities in four product segments of the
entertainment industry:
Direct to DVD 2-D and 3-D films
Feature length 2-D and 3-D films for theatrical release
Pilots for television series
Music production
StereoVision intends to be the only company in Hollywood focused on
developing a library of films using 3-D technology. The company intends to
develop four new scripts for theatrical release and direct to DVD movies each
year and will concentrate on the most popular genres including horror,
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.
24
Results of Operations - There were no revenues from sales for the three months
ended December 31, 2006 and 2005. SVEI has sustained a net loss of
approximately $81,191 for the three months ended December 31, 2006. 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 $4,000,000
which it will obtain from a variety of sources including partner distributors,
tax rebates for on site production in certain jurisdictions as well as debt
and equity sources. The Company may attempt to arrange joint ventures with
studios to facilitate the development of new movies.
The aforementioned estimates of capital required are still preliminary in
nature and are subject to substantial and continuing revisions. Although the
Company has not yet commenced any formal capital raising efforts, the Company
expects that any capital that it raises will be in the form of one or more
debt or equity financings. However, there can be no assurances that the
Company will be successful in raising any required capital on a timely basis
and/or under acceptable terms and conditions. To the extent that the Company
does not raise sufficient capital to implement its plan of operations on a
timely basis, it will have to curtail, revise and/or delay its business plans.
The Company has financed its operations to date from the sale of stock and
loans from related parties. During the three months ended December 31, 2006,
the Company received approximately $37,000 from related party loans and a sale
of stock. However, there can be no assurances that additional loans will be
forthcoming from officers, directors, and shareholders.
Government Regulations - The Company is subject to all pertinent Federal,
State, and Local laws governing its business. The Company is subject to
licensing and regulation by a number of authorities in its State or
municipality. These may include health, safety, and fire regulations. The
Company's operations are also subject to Federal and State minimum wage laws
governing such matters as working conditions and overtime.
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,
25
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, 2006, there were no changes
in the Company's internal controls over financial reporting for the quarter
ended December 31, 2006, 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, 2006 and June 30, 2006, the total amount due was $32,411.
Item 2. Changes in Securities
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.
26
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.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereto duly
authorized.
STEREO VISION ENTERTAINMENT, INC.
(Registrant)
Dated: February 14, 2007 By /S/ John Honour
-----------------------------------------
John Honour
C.E.O., President, Director
(Principal Executive and Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf
of the Registrant and in the capacities indicated.
Signatures & Title
/S/ John Honour
--------------------------------
John Honour
C.E.O., President, Director
(Principal Executive and Financial Officer)
28