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United
States
Securities And Exchange
Commission
Washington, D.D. 20549
FORM 10
GENERAL FORM FOR REGISTRATION OF
SECURITIES Pursuant
to Section 12(b) or (g) of The Securities Exchange Act of 1934
THE MOVIE STUDIO, INC.
2040
Sherman Street, Hollywood, Florida 33020
_______________________________________________________________________________________________
(Address
of Principal Executive Offices)
(954)
332-6600
______________________________________________________________________________________________
(Issuer’s
telephone number)
N/A
______________________________________________________________________________________________
(Issuer’s
facsimile number)
Delaware
|
65-0494581
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
Securities to be registered pursuant to Section 12(b) of the
Act:
Title of each class Name
of each exchange on
which to be so
registered each
class is to be registered
Common Stock ($0.0001 Par Value)
Over-the-Counter Market
Securities to be registered pursuant to Section 12(g) of the
Act:
This
form is being filed with the Securities & Exchange Commission in order to
become a reporting company under the Exchange Act of 1934 and to reestablish
the Company's quotation on the OTC Bulletin Board in compliance with the
National Association of Securities Dealers, Inc. Rules 6530 and 6540 to limit
quotations on the OTC Bulletin Board to securities of companies that report
their current financial information to the SEC, banking, or insurance
regulators.
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,”
“accelerated filer,” and “smaller reporting company in Rule 12b-2 of the
Exchange Act. (Check one):
Large accelerated filer_______ Accelerated
filer ____________
Non-accelerated filer ________ Smaller
reporting company [X]
TABLE OF CONTENTS
Page No.
Item
1. Description of Business.....................................1
Item
1A. Risk Factors................................................6
Item
2. Financial Information.......................................9
Item
3. Properties..................................................10
Item
4. Security Ownership of Certain Beneficial Owners and
Management..................................................10
Item
5. Directors and Executive Officers ...........................13
Item
6. Executive Compensation......................................14
Item
7. Certain Relationships and Related Transactions, and Director
Independence................................................15
Item
8. Legal Proceedings...........................................16
Item
9. Market Price of and Dividends on the Registrant’s Common
Equity and Related Stockholder Matters......................17
Item
10. Recent Sales of Unregistered Securities.....................18
Item
11. Description of Registrant’s Securities to be Registered.....19
Item
12. Indemnification of Directors and Officers...................20
Item
13. Financial Statements and Supplementary Data.................21
Item
14. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure....................................22
Item 15. Financial Statements and
Exhibits...........................23
Signatures...........................................................24
ITEM
1.
|
DESCRIPTION OF BUSINESS
|
GENERAL
The Movie Studio, Inc. F/K/A Destination Television, Inc. (“the
Company" or “DSTV” or the "Registrant”) is a publicly traded 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 is a broadcast media company that used its custom content and
entertainment-based programming along with its proprietary technology to
influence the purchasing decisions of millions of active consumers in targeted
“away-from-home” leisure destinations.
The
Company’s original core broadcast business was Bar TV, Gym TV, and Hotel TV,
which were designed and implemented to focus on leisure destinations with
entertaining and informative audio and video content, increasing the duration
and frequency of consumer visits and duration of stay, generating incremental
revenue and promoting the sale of specific products. The Company enabled
advertisers and leisure/retailers to effectively and efficiently reach active
consumers at the point of sale (POS) where most purchase decisions are made. In
addition to influencing consumer behavior, the Company’s programming was proven
to be successful in generating brand awareness and could create additional sales
lift. The Company’s business motto was “Leisure Destinations driving traffic to
Retail Locations.”
Over
the years, the Company surveyed the media landscape, combining the best aspects
of each medium into the DSTV’s business model, simultaneously applying it to a
very unique physical space. In 2008, the US advertising industry consolidated,
including digital signage space, because the industry did not provide a
quantifiable measurement platform for its advertisers; at that time, The
Company began to reorganize its business model. In 2009, The Company took the
first steps in transitioning its core business operations into a new media
platform, which included incorporating elements of its original media business
model into its new business, The Movie Studio. In 2010, the Company took the
next step, when it physically began transitioning its core business to the new
platform. The Movie Studio platform consists of three verticals that operate
synergistically with each other. Strategic Partner, is the first of the three
verticals. In this vertical, the Company enters into agreements with
substantial asset partners, wherein these partners can promote their brand,
product, or service through the Movie Studio, which can offer them, through the
its vertical integration model, a variety of opportunities, as a result of
their association with the movie business. Each partner agreement is crafted
in the best interest of the client’s needs or objectives.
Locations
Pay Us is the second vertical, wherein we get paid for filming a scene of our
movie at the location of a client. The excitement generated from motion
picture production at given location can drive traffic to the client’s point of
sale (POS); as a result, the Company and the client both benefit from this arrangement
. In addition, the Company utilizes its win-a-part-in-a-movie contest at the
location; it also provides digital plates to the client’s location, which can
utilize the key art shot of the location as base artwork for web, print or
television at no additional cost in perpetuity. Clients have reported that
their locations have seen double digit increases in their margins on the night
of the filming event. Product Placement is the third vertical. The motion
picture product placement industry is a two billion dollar industry; companies
utilize this platform to create worldwide brand awareness for their brand,
product or service, with the average movie impact of fifteen (15) years (in
five year distribution cycles). In addition, these companies provides us
products that we utilize at movie events for PPG (on premise promotional
giveaways); they also gain additional branding exposure in direct interaction
with the brands exact demographic.
The
value proposition for investors is in the bi-product of manufacturing of a
major motion picture asset(s), which reduces capital expenses (CAP X) by
utilizing these vertical in the manufacturing of the intellectual property
(movie) asset. The completed movie then employs a significant expense to
revenue ratio, by utilizing these metrics. The motion picture asset is
ultimately licensed to seventy (70) countries around the world (foreign market)
and domestically in the traditional media outlet channels, movie theaters,
television, DVD, pay cable, Video on Demand (VOD) mobile etc. In addition the
motion picture integrates a soundtrack, which creates an additional revenue
stream for investors. The Company has proven the business model on all three
verticals prior to occupying a 17,000 sq. ft. production studio in downtown Hollywood,
Florida complete with a 5,000 sq. ft. 2 edit suites, complete motion picture
manufacturing lighting and equipment, cameras, talent division, and in-house
marketing. The Movie Studio has manufactured its first
feature film production for Ventures Capital Partners, LLC. Is titled Exposure
starring Corey Feldman and is currently in pre-production of the sequel Double
Exposure with Ventures Capital II, LLC. and Pre-Production of BAD ACTRESS
with Ventures Caspital Partners III, LLC.. In addition, The Movie Studio can
generate additional revenue streams from studio rentals and music video
production. The Company
is
currently fully operational and implementing its business model to scale the
Companies operations in 2013 and beyond. The Company changed its name of
operations from Destination Television, Inc. to The Movie Studio, Inc. In
November, 2012 and received a new stock symbol (MVES) in July, 2014.
INDUSTRY BACKGROUND
Film Studio:
The Movie Studio, Inc. is an entertainment or motion picture
company that has its own privately owned studio facility that is used to make
films, which is handled by the production company. The majority of companies
in the entertainment industry have never owned their own studios, but have
rented space from other companies. There are also independently owned studio
facilities, which have never produced a motion picture of their own because
they are not entertainment companies or motion picture companies – they are
companies who sell only studio space.
Beginnings:
In
1893, Thomas Edison built the
first movie studio in the United States when he constructed the Black Maria, a
tarpaper-covered structure near his laboratories in West Orange, New Jersey, and asked circus, vaudeville, and
dramatic actors to perform for the camera. He distributed these movies at
vaudeville theaters, penny arcades, wax museums, and fairgrounds. The
pioneering film
studio was founded in New Rochelle, New York in 1909 by
American theatrical impresario Edwin Thanhouser. The company produced and released 1,086
films between 1910 and 1917, successfully distributing them around the world.
The first film serial ever, Million Dollar
Mystery, was released by
the Thanhouser Company in 1914. In the early 1900s, companies started moving
to Los Angeles, California. Although electric lights were by then widely available,
none were yet powerful enough to adequately expose film; the best source of
illumination for motion picture production was natural sunlight. Some movies
were shot on the roofs of buildings in Downtown Los Angeles. Early movie
producers also relocated to Southern California to escape
Edison's motion picture patents company, which controlled almost all
the patents relevant to movie production at
the time.
An independent
film is a professional film production resulting
in a feature film that
is produced mostly or completely outside of the major film studio system.
In addition to being produced and distributed by independent entertainment
companies, independent films are also produced and/or distributed by
subsidiaries of major film studios.
Independent films are sometimes distinguishable by their content and style and
the way in which the filmmakers' personal artistic vision is realized. Usually,
but not always, independent films are made with considerably lower film budgets than
major studio films. Generally, the marketing of independent films is
characterized by limited release,
but can also have major marketing campaigns and a wide release.
Independent films are often screened at local, national, or international film festivals before
distribution (theatrical and/or retail release). An independent film production
can rival a mainstream film
production if it has the necessary funding and
distribution.
PRINCIPAL PRODUCTS AND THEIR MARKETS
The
Movie Studio, Inc. (OTC: SYMBOL: MVES)
Due
to the proliferation of new mobile media platforms in society, The Movie Studio
intends to enter into the personalized content & media space utilized by
consumers via laptops, tablets, smartphone’s and new out-of home devices as
they are developed.
The
Movie Studio intends to manufacture independent content that fits the
marketplace void including indie movies with relevant movie stars and indie
soundtracks with substantial fan bases that we can reach their demographic
on-line and sell digital downloads direct to consumers with a minimum barrier
to entry and minimum capital expenditures compared to traditional marketing
forms of content delivery. In addition to traditional marketing platforms that we intend to sell and leverage as well, The
Movie Studio intends to sell its content and where it’s available on all
devices, mobile, I-Pad etc. for the personal user with the personal playlist of
unique and indie content relevant to their interests applicable for the
individual and their consumption.
The Movie Studio is implementing its new proven vertically
integrated revenue model:
(a) Strategic Partners in Motion Pictures.
(b) Locations Pay US a fee for placement in the movie, which can
monetize our platform at their point of sale (POS).
(c)
Product Placement: we receive a fee for product placement in a movie, product
branding, and on premise promotional giveaways (PPG). In addition the Product
Placement client receives digital plates and the same benefits as Location Pay
US a fee client receive (see (b) above).
(d)
At the American Film Market in November 2011, the Company established
significant motion picture arrangement for worldwide distribution, to provide
investors an exit strategy for (1) their movie partnership investment units and
(2) shareholdings in the Company. In May 1, 2012, we have entered into an
exclusive worldwide distribution agreement with Cinema Arts Entertainment, with
minimum guarantees (MG’s) that sales will total $520,000 for the first 10
markets. As of March 1st 2015 the Company has not received any sales
revenues other than the minimum guarantee and has requested an accounting.
(e)
The completed movie then employs a significant expense to revenue proposition
by utilizing these metrics and licenses the motion picture asset to seventy
(70) countries around the world (foreign market) as well as domestically in
traditional media outlet channels, movie theaters, television, DVD, pay cable,
video on demand (VOD) mobile etc. In addition the motion picture integrates a
soundtrack that creates an additional revenue stream for investors.
In addition, the Company provides locations digital plates and
green screen application for use in movies, commercials, for the location,
web-applications and print that can significantly monetize the location, while
360 degree media branding at the location can be an applicator for the
location in a variety of ways:
Promotional Media
Promotional media is a broad marketing term that describes methods
used to promote goods and or services. Promotional media can be broken into
several categories or channels, including:
Print Media--is all the media we use in hard copy format such as
* Business cards
* Brochures
* Posters
* Promotional Literature
* Banners
Digital Media--this includes the internet
* Video Promotion
* Websites
* Social Media
* Digital Signage
* Digital Tags
* Smartphone Apps
* Radio / TV
Promotional Gifts--often used to stay top-of-mind with customers
* Pens
* Caps
* T-shirts
* Mugs
* Bags
* Banners
DISTRIBUTION METHODS
Film
distribution Methods: A distributor is a
company or individual responsible for the marketing of a film. The distributor
may set the release date of a
film and the method by which a film is to be exhibited or made available for
viewing: for example, directly to the public either theatrically or for home
viewing (DVD, video-on-demand (VOD), download, television
programs through broadcast
syndication etc.). A distributor may do this
directly, if the distributor owns the theaters or film distribution networks,
or through theatrical exhibitors and other sub-distributors. A limited
distributor may deal only with particular products, such as DVDs or Blu-ray, or
may act in a particular country or market.
Theatrical distribution:
If a distributor
is working with a theatrical exhibitor, the distributor secures a written contract stipulating the
amount of the gross ticket sales to
be paid to the distributor by the exhibitor (usually a percentage of the gross)
after first deducting a floor, which is called a house allowance (also
known as the nut), collects the amount due, audits the exhibitor's
ticket sales, as
necessary, to
ensure the gross reported by the exhibitor is accurate, secures the
distributor's share of these proceeds, and transmits the remainder to the
production company (or to any other intermediary,
such as a film release agent).
The distributor
must also ensure that enough film prints are
struck to service all contracted exhibitors on the contract-based opening day, ensure their
physical delivery to the theater by the opening day, monitor exhibitors to make
sure the film is in fact shown in the particular theatre with the minimum
number of seats and show times, and ensure the prints' return to the
distributor's office or other storage resource also on the contract-based
return date. In practical terms, this includes the physical production of film
prints and their shipping around the world
(a process that is beginning to be replaced by digital
distribution) as well as the creation of posters, newspaper and magazine advertisements, television
commercials, trailers, and other types of ads.
The distributor is also responsible for
ensuring a full line of advertising material is available on each film which it
believes will help the exhibitor attract the largest possible audience, create
such advertising, if it is not provided by the production
company, and arrange for the physical delivery of the advertising items
selected by the exhibitor at intervals prior to the opening day.
If
the distributor is handling an imported or foreign film, it may also be
responsible for securing dubbing or subtitling for the film, and securing
censorship or other legal or organizational approval for the exhibition of the
film in the country/territory in which it does business, prior to approaching
the exhibitors for booking. Depending on which studio is distributing the film,
the studio will either have offices around the world, by themselves or
partnered with another studio, to distribute films in other countries. If a
studio decides to partner with a native distributor, upon release, both names
will appear. The foreign distributor may license the film for a certain amount
of time, but the studio will retain the copyright of the film.
Early
distribution windows:
Although there
are numerous distribution techniques today, previous to the multi-channel
transition, studios and networks did not experiment with different distribution
processes. Studios believed that the new distribution methods would cause their
old methods of revenue to be destroyed. Within time, the development of new
distribution did prove to be beneficial. The studios revenue was gained from
myriad distribution windows. These windows created many opportunities in the
industry and allowed networks to make a profit and eliminate failure. These new
distribution methods benefited audiences that were normally too small to reach
and expanded the content of television. With the new
age of technology, networks accepted the fact that it was a consumer demand
industry and accepted the new models of distribution.
Non-theatrical
distribution:
This term, used
mainly in the British
film industry, describes the distribution of feature films for
screening to a gathered audience, but not in theatres at which individual
tickets are sold to members of the public. The defining distinctions between a
theatrical and a non-theatrical screening are that the latter has to be to a
closed audience in some way, e.g. pupils of a school, members of a social club
or passengers on an airliner, and that there can be no individual admission
charge. Most non-theatrical screening contracts also specify that the screening
must not be advertised, except within the group that is eligible to attend
(e.g. in a membership organization’s newsletter or
an in-flight
magazine).
The largest
market for non-theatrical distribution is probably the airlines,
followed by film societies.
Non-theatrical distribution is generally handled by companies that specialize
in this market, of which Filmbank [1] is
Britain's largest, representing the major Hollywood studios. Home video media
is sold with a license that permits viewing in the home only (hence the copyright notice
that appears at the start of many VHS tapes and DVDs, which states
that the content must not be shown in oil rigs, prisons or schools). Until
these technologies were widespread, most non-theatrical screenings were on16mm film prints supplied
by the distributor. Today, the most common business model is
for a distributor to sell the exhibitor a license that permits the legal
projection of a copy of the film, which the exhibitor buys separately on a home
video format. These licenses can either be for individual, one-off screenings,
or cover an unlimited number of screenings of titles represented by that
distributor for a specified time period. The latter are often purchased by pubs and students' unions, to
enable them to show occasional feature films on a TV in their bars.
Home video distribution:
Some
distributors only handle home video distribution or some sub-set of home video
distribution such as DVD and/or Blu-ray distribution and now the fastest
growing area is Video on Demand (VOD). The remaining
home video rights may be licensed by the producer to other distributors or the
distributor may sub-license them to other distributors.
If a
distributor is going to distribute a movie on a physical format such as DVD,
they must arrange for the creation of the artwork for the case and the face of
the DVD and arrange with a DVD replicator to create a glass master to press
quantities of the DVD.
Today, some movie producers are using a process called DVD-on-demand. In
DVD-on-demand, a company will burn a DVD-R (a process called duplication) when
a copy of the DVD is ordered, and then ship in to the customer.
A
distributor may also maintain contact with wholesalers, who sell and ship DVDs to retail outlets as well as online
stores, and arrange for them to carry the DVD. The distributor may also place
ads in magazines and online and send copies of the DVD to reviewers.
The
newest area Video on Demand (VOD) is expected to grow as a result of new media devices, mobile phones, PDA’s, tablets
and I-Pads as additional ways individuals consume content.
The
New Hollywood/Foreign Distribution:
In the past, big studios have not always used analysis, analytics,
metrics or measurement; but that is not true any longer. Companies such as
Relativity Media use a new Hollywood approach that is vastly more technical
than preparing an analysis of how many people actually attend the theater as a
result of buying a ticket. Their approach now accounts for thousands of
variables, from the stars of a movie to its release date to the type of media
used in production, and compares each of those variables to nearly every film
ever made with at least one of the same attributes. It takes four people just
to operate the program that governs their approach.
New Hollywood companies employ a movie-rejection system, not a movie-picking
system, while the data-intensive approach operates on a new paradigm of new
media marketing and buzz worthy elements intertwined into the infrastructure of
the movie. Big studios are swinging for the fences, and they lose money on 85
percent of the movies they make; they don’t have a hedge against those losses,
so they need the one or two franchise movies each year
to make up for the money losers. New Hollywood studios have hedges; they make
movies that people will love, but also on a financially based system. They
don’t take huge risks.
The New Hollywood studios can make money without a blockbuster on
its slate, if it controls upfront costs and has unique arrangements with film
distributors on the back-end. Unlike most major studios, who own their own
distribution companies, New Hollywood studios seek relationships with over 117
distributors around the globe, each of which could come under contract to buy
any movie the studio makes at a preset percentage of the film’s budget. In
return, the distributors are guaranteed a piece of the back-end revenue for
each movie. For New Hollywood studios, the structure is a safety net for films
that underperform, a safety net the major studios don’t have.
STATUS OF ANY PUBLICLY ANNOUNCED NEW PRODUCTS
The
Movie Studio has manufactured its first feature film production for Ventures
Capital Partners, LLC, a film titled Exposure, starring Corey Feldman.
The studio is currently in pre-production of the sequel Double Exposure in
Ventures Capital Partners II, LLC. The Studio is currently in
pre-production of it’s third independent film BAD ACTRESS in Ventures Capital
Partners III, LLC. In addition, The Movie Studio can generate additional
revenue streams from studio rentals and music video production. The Company is
currently fully operational and implementing its business model for operations
in 2015 and beyond.
SOURCES AND AVAILABILITY OF PRODUCTS
The
Movie Studio has manufactured its first feature film production for Ventures
Capital Partners, LLC, a film titled Exposure, starring Corey Feldman.
The studio is currently in pre-production of the sequel Double Exposur and
new feature film project BAD ACTRESS. In addition, The Movie Studio can
generate additional revenue streams from studio rentals and music video production.
The Company is currently fully operational and implementing its business model
for operations in 2015 and beyond.
DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS
The Company is not dependent on one or a few major customers.
PATENTS AND TRADEMARKS
Destination
Television® currently owns the registered trademark for the name and brand for
Destination Television, Inc. with the United States Patent and Trademark office
(USPTO). The Movie Studio ™ is a trademark of The Movie Studio, however, is not
a registered trademark.
The
Movie Studio occupies a 17,000 Sq. Ft. production studio in downtown Hollywood,
Florida, complete with 5,000 sq. ft. soundstage/green screen, edit suites,
complete motion picture manufacturing lighting and equipment, cameras, talent
division and in-house marketing.
ENVIRONMENTAL LAWS
Our operations are not subject to environmental laws and
regulations.
EMPLOYEES
The
Company currently is currently completing its quasi-reorganization and
currently employs one (1) full time employee, the president and utilizes the
services of numerous work for hire and other individuals.
ITEM 1A. RISK
FACTORS
Lack
of Profitable Operating History
The Company does not have a
history of profitable operation. There is no assurance that the Company will
ever be profitable. The Company’s ability to achieve profitability will depend
upon a number of factors, including, but not limited to, whether the Company:
• has
funds available for working capital, project development and sales and
marketing efforts;
• has
funds for the continuous upgrading of its production operations and facilities;
• achieves
the projected sales revenues;
• controls
the Company’s operating expenses;
• continues
to attract new business; and
•
withstands competition in the Company’s marketplace.
Competition
The Company’s
competitors are rapidly changing and may be well capitalized and financially
stronger than Destination Television. Our competitors could reproduce the
company’s business model without significant barriers to entry.
The
Company’s activities may require additional financing, which may not be
obtainable.
The
Company had limited cash deposits. Based on the Company’s expectations as to
future performance, the Company considers these resources and existing and
anticipated credit facilities, to be inadequate to meet the Company’s
anticipated cash and working capital needs at least through January 31, 2015.
The Company, however, expects to be able to raise capital to fund the Company’s
operations, current and future acquisitions and investment in new program
development. The Company may also need to raise additional capital to fund
expansion of the Company’s business by way of one or more strategic
acquisitions. Unless the Company’s results improve significantly, it is
doubtful that the Company will be able to obtain additional capital for any
purpose if and when the Company needs it.
The
Company depends heavily on the Company’s CEO who may be difficult to replace.
The
Company believes that the Company’s future success depends to a significant
degree on the skills, experience and efforts of its chairman, CEO. While there
are incentives to have him remain with the Company and is bound by an employment
contracts, there is no assurance that either of them will not elect to
terminate his
services
to us at any time.
Increasing
the Company’s business depends on the Company’s ability to increase demand for
the Company’s products and services.
While
the Company believes that there is a market for its planned increase in the
Company’s products and services, there is no guarantee that the Company will be
successful in its choice of product or technology or that consumer demand will
increase as the Company anticipates.
The
Company may be exposed to significant costs of defense and damages in
litigation stemming from current unresolved legal proceedings undertaken in the
future by and against the Company.
The
Company could be subject of legal proceedings against the Company that could
give rise to significant exposure in costs and damages.
The
Company’s ability to operate and compete effectively requires that the Company
hires and retain skilled marketing and technical personnel, who have been in
short supply from time to time and may be unavailable to us when the Company
needs them.
The
Company’s business requires us to be able to continuously attract, train,
motivate and retain highly skilled employees, particularly marketing and other
senior management personnel. The Company’s failure to attract and retain the
highly trained personnel who are integral to the Company’s sales, development
and distribution processes may limit the rate at which the Company can generate
sales. The Company’s inability to attract and retain the individuals
the Company needs could adversely impact the Company’s business and its ability
to achieve profitability.
The
Company may suffer from a business interruption and continuity of its ongoing
operations might be affected.
The
Company’s ability to implement its business plans may be adversely affected by
any business interruption that will affect the continuity of its operations.
While the Company may take reasonable steps to protect itself, there could be
interruptions from computer viruses, server attacks, network or production
failures and other potential interruptions that would be beyond the Company’s
reasonable control. There can be no assurance that the Company’s efforts will
prevent all such interruptions. Any of the foregoing events may result in an
interruption of services and a breach of the Company’s obligations to its
clients and customers or otherwise have a material adverse effect on the
business of the Company.
Macro-economic
factors may impede business, access to finance or may increase the cost of
finance or other operational costs of the Company.
Changes
in the United States and global financial and equity markets, including market
disruptions, interest rate fluctuations, or inflation changes, may make it more
difficult for the Company to obtain financing for its operations or investments
or increase the cost of obtaining financing. In the event that the Company is
delayed in attaining its projections, borrowing costs can be affected by short
and long-term debt ratings assigned by independent ratings agencies which are
based, in significant part, on the Company’s performance as measured by credit
metrics such as interest coverage and leverage ratios. Decrease in these ratios
or debt ratings would increase the Company’s cost of borrowings and make it
more difficult to obtain financing.
There
is a limitation on the officers and directors liability.
The
articles of the Company limit the personal liability of directors and officers
for breach of fiduciary duty and the Company provides an indemnity for expenses
and liabilities to any person who is threatened or made a party to any legal
action by reason of the fact that the person is or was a director or officer of
the Company unless the action of proven to that the person was liable to be
negligent or misconduct in the performance of their duty to the Company.
The
loss of our key officers or directors may raise substantial doubt as to the
continued viability of the Company.
The
Company’s operations depend on the efforts of key officers and directors and
the loss of their services may irreparably harm the Company in such a manner
that it may not be able to overcome any such loss in management.
Investors
may lose their entire investment if the Company fails to implement its business
plan.
The
Company expects to face substantial risks, uncertainties, expenses, and
difficulties because it is a development stage company. The Company was formed
in 1961. The Company has no demonstrable operations record of substance upon
which you can evaluate the Company’s business and prospects. The Company
prospects must be considered in light of the risks, uncertainties, expenses and
difficulties frequently encountered by companies in their early stages of
development. The Company cannot guarantee that it will be successful in
accomplishing its objectives.
As
of the date of this prospectus, the Company has had only limited startup
operations and has generated very small revenues. Considering these facts,
independent auditors have expressed substantial doubt about the Company’s
ability to continue as a going concern in the independent auditors’ report to
the financial statements included in the registration statement, of which this
prospectus is a part. In addition, the Company’s lack of operating capital
could negatively affect the value of its common shares and could result in the
loss of your entire investment.
Because
of our new business model, we have not proven our ability to generate profit,
and any investment in The Company is risky.
We have very little meaningful operating history so
it will be difficult for you to evaluate an investment in our stock. We have
not sold any of our products to date. Our auditors have expressed substantial
doubt about our ability to continue as a going concern. We cannot assure that
we will ever be profitable. Since we have not proven the essential elements of
profitable operations, you will be furnishing venture capital to us and will
bear the risk of complete loss of your investment in the event we are not
successful.
We
may be unsuccessful in monitoring new trends.
Our
net revenue might decrease with time. Consequently, our future success depends
on our ability to identify and monitor trends and the development of new
markets. To establish market acceptance of a new technologies, we will dedicate
significant resources to research and development, production and sales and
marketing. We will incur significant costs in developing, commissioning and
selling new products, which often significantly precedes meaningful revenues
from its sale. Consequently, new business can require significant time and
investment to achieve profitability. Prospective investors should note,
however, that there can be no assurance that our efforts to introduce new
products or other services will be successful or profitable.
We
may face distribution and product risks.
Our
future financial results depend in large part on our ability to develop
relationships with our customers. Any disruption in our relationships with our
future customers could adversely affect our financial performance.
We
may face claims of infringement on intellectual property rights.
Other
parties may assert claims of ownership or infringement or assert a right to
payment with respect to the exploitation of certain intellectual properties
against us. In many cases, the rights owned or being acquired by us are limited
in scope, do not extend to exploitation in all present or future uses or in
perpetuity. We cannot assure you that we will prevail in any of these claims.
In addition, our ability to demonstrate, maintain or enforce these rights may
be difficult. The inability to demonstrate or difficulty in demonstrating our
ownership or license rights in these technologies may adversely affect our
ability to generate revenue from or use of these intellectual property rights.
If
our operating costs exceed our estimates, it may impact our ability to continue
operations.
We
believe we have accurately estimated our needs for the next twelve months. It
is possible that we may need to purchase additional equipment, hire additional
personnel, and further develop new business ventures, or that our operating
costs will be higher than estimated. If this happens, it may impact our
ability to generate revenue and we would need to seek additional funding. We
intend to establish our initial client base via existing relationships that our
directors and officers have established in past business relationships. Should
these relationships not generate the anticipated volume of business, any
unanticipated costs would diminish our working capital.
Competitors
with more resources may force us out of business.
Competition
in our sectors of business come from a variety of factors, including quality,
timely commissioning of new projects, product positioning, pricing and brand
name recognition. The principal competitors for our business may do this
better than we can. Each of these competitors has substantially greater
financial resources than we do. New technologies may also present substantial
competition. We may be unsuccessful in competing with these competitors, which
may materially harm our business.
The
Company may not be able to attain profitability without additional funding,
which may be unavailable.
The
Company has limited capital resources. Unless the Company begins to generate
sufficient revenues to finance operations as a going concern, the Company may
experience liquidity and solvency problems. Such liquidity and solvency
problems may force the Company to cease operations if additional financing is
not available.
ITEM 3.
|
FINANCIAL STATEMENTS
|
Our financial statements,
together with the report of auditors, are as follows
TERRY
L. JOHNSON, CPA
406 Greyford Lane
Casselberry, Florida 32707
Phone 407-721-4753
Fax/Voice Message
866-813-3428
E-mail cpatlj@yahoo.com
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
To
the Stockholders and Board of Directors
The
Movie Studio, Inc.,
I
have audited the accompanying balance sheets of The Movie Studio, Inc. as of
October 31, 2014 and 2013 and the statements of operations, stockholders’
equity, and cash flows for the years ended October 31, 2014 and 2013. These
financial statements are the responsibility of the Company’s management. My
responsibility is to express an opinion on these financial statements based on
my audit.
Management’s Responsibility
for Financial Statements
Management is responsible
for the preparation and fair presentation of these consolidated financial
statements in accordance with accounting principles generally accepted in the
United State of America; this includes the design, implementation and
maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement,
whether due to fraud or error.
Auditor’s Responsibility
My responsibility is to
express an opinion on these consolidated financial statements based on my
audits. I conducted my audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require
that I plan and perform the audit to obtain reasonable assurance about whether
the consolidated financial statements are free of material misstatement. The
Company is not required to have, nor was I engaged to perform, an audit of its
internal control over financial reporting. My audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Company’s internal control
over financial reporting. Accordingly, I express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. I believe that my audits provide a reasonable basis
for my opinion.
Opinion
In
my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of The Movie Studio, Inc. as of
October 31, 2014 and 2013 and the results of its operations and its cash flows
for the years ended October 31, 2014 and 2013 in conformity with accounting
principles generally accepted in the United States.
Emphasis of Matter
The
accompanying financial statements have been prepared assuming the Company will
continue as a going concern. As discussed in Note 3 to the financial
statements, the Company has a minimum cash balance available for payment of
ongoing operating expenses, has experienced losses from operations since
inception, and it does not have a source of revenue sufficient to cover its
operating costs. These factors raise substantial doubt about the Company’s
ability to continue as a going concern. Management’s plans in this regard are
described in Note 3. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
/s/ Terry L. Johnson, CPA
Casselberry,
Florida
March
20, 2015
THE MOVIE STUDIO, INC.
|
(FORMERLY DESTINATION TELEVISION,
INC.)
|
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
$
1,360
|
|
$
8,012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
current assets
|
|
1,360
|
|
8,012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
and equipment, net
|
|
|
|
-
|
|
1,911
|
|
|
Acquired
amortizable intangible assets
|
|
|
-
|
|
280
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
$
1,360
|
|
$
10,203
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
and stockholders' deficiency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payroll
taxes payable
|
|
|
|
-
|
|
412,515
|
|
|
|
Loans
payable - related party
|
|
|
$ 902,370
|
|
803,698
|
|
|
|
Loan
from VCP
|
|
|
|
1,371,463
|
|
1,371,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
current liabilities
|
2,273,833
|
|
2,587,676
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
2,273,833
|
|
2,587,676
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
deficiency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
stock, Series B convertible ($.0001 par value)
|
|
|
|
|
|
|
|
5,750,000
authorized, issued and outstaning at October 31, 2014
|
|
|
|
|
|
|
and
October 31, 2013, respectively
|
|
|
575
|
|
575
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock,( $.0001 par value); 750,000,000 shares
|
|
|
|
|
|
|
|
authorized,
236,000,000 and 170,545,068 shares issued and
|
|
|
|
|
|
|
outstanding
at October 31, 2014 and October 31, 2013, respectively
|
23,600
|
|
17,055
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
paid in capital
|
|
|
|
7,063,369
|
|
6,871,247
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
deficit
|
|
|
|
|
(9,360,017)
|
|
(9,466,350)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
stockholders' deficiency
|
(2,272,473)
|
|
(2,577,473)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders' deficiency
|
$
1,360
|
|
$
10,203
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying footnotes
are an integral part of these financial statements.
|
|
|
|
|
|
|
|
|
|
|
|
F-2
|
THE
MOVIE STUDIO, INC.
|
(FORMERLY
DESTINATION TELEVISION, INC.)
|
Consolidated
Statements of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended October 31,
|
|
|
|
|
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
$
31,679
|
|
$
295,824
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative expenses
|
|
337,861
|
|
404,944
|
|
|
|
Interest
expense
|
|
-
|
|
39,664
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
expenses
|
|
337,861
|
|
444,608
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss before income taxes
|
|
(306,182)
|
|
(148,784)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
(306,182)
|
|
$
(148,784)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted loss per share
|
|
(0.002)
|
|
(0.001)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common
|
|
|
|
|
|
|
|
shares outstanding, basic and fully diluted
|
|
203,272,534
|
|
133,232,022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying footnotes are an
integral part of these financial statements.
|
|
|
|
|
|
|
|
|
|
F-3
|
(FORMERLY DESTINATION TELEVISION,
INC.)
|
Consolidated Statements of Changes in
Stockholders Deficiency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
Total
|
|
Common Stock
|
|
Preferred Stock
|
|
Paid-In
|
|
Accumlated
|
|
Stockholders'
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Deficit
|
|
Deficiency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, October 31, 2011
|
102,355,260
|
|
$ 10,236
|
|
5,750,000
|
|
$ 575
|
|
$ 6,822,066
|
|
$ (9,145,247)
|
|
$ (2,312,370)
|
Net Loss
|
|
|
|
|
|
|
|
|
|
|
-
|
|
-
|
Balance, October 31, 2012
|
102,355,260
|
|
10,236
|
|
5,750,000
|
|
575
|
|
6,822,066
|
|
(9,145,247)
|
|
(2,312,370)
|
Common Stock issued for cash
|
68,189,808
|
|
6,819
|
|
|
|
|
|
49,181
|
|
|
|
56,000
|
Net Loss
|
|
|
|
|
|
|
|
|
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, October 31, 2013
|
170,545,068
|
|
17,055
|
|
5,750,000
|
|
575
|
|
6,871,247
|
|
(9,145,247)
|
|
(2,256,370)
|
Common Stock issued for cash
|
65,454,932
|
|
6,545
|
|
|
|
|
|
192,122
|
|
|
|
198,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Write-off Payroll Tax Payable
|
|
|
|
|
|
|
|
|
|
|
412,515
|
|
412,515
|
Net Loss
|
|
|
|
|
|
|
|
|
|
|
(306,182)
|
|
(306,182)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, October 31, 2014
|
236,000,000
|
|
23,600
|
|
5,750,000
|
|
575
|
|
7,063,369
|
|
(9,038,914)
|
|
(1,951,370)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE MOVIE
STUDIO, INC.
|
(FORMERLY DESTINATION TELEVISION,
INC.)
|
Consolidated Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
$
(306,182)
|
|
$
(148,784)
|
|
|
|
|
|
|
|
|
|
|
Adjustment
to reconcile net loss to net
|
|
|
|
|
|
|
net
cash used by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
2,191
|
|
2,408
|
|
|
|
|
|
|
|
|
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
Increase
in amount due to GSV
|
98,673
|
|
|
|
|
|
Decrease
in payables and accrued expenses
|
-
|
|
35,331
|
|
|
|
Increase
in payroll taxes payable
|
-
|
|
39,664
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash used in operating activities
|
(205,318)
|
|
(71,381)
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
Proceeds
from issuance of common stock
|
198,667
|
|
56,000
|
|
|
|
Proceeds
from related party loan to the company
|
-
|
|
23,374
|
|
|
|
|
Net
cash provided by investing activities
|
198,667
|
|
79,374
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
incresase(decrease) in cash
|
(6,651)
|
|
7,993
|
|
|
|
Cash,
beginning of period
|
8,012
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
Cash,
end of period
|
$
1,361
|
|
$
8,012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying footnotes are an
integral part of these financial statements.
|
|
|
|
|
|
|
|
|
F-5
|
THE MOVIE STUDIO, INC.
(FORMERLY
DESTINATION TELEVISION, INC.)
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 2014
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, knowledge and
application of content creation previously developed for the private
television network.
Note 2 – Summary of significant
Accounting Policies
Basis of Presentation The consolidated financial statements include the accounts of The
Movie Studio, Inc. (Formerly 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 years ended October 31, 2014 and
2013.
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 October 31, 2014 and
2013.
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.
F-6
THE
MOVIE STUDIO, INC.
(FORMERLY
DESTINATION TELEVISION, INC.)
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER
31, 2014
Note
2 – Summary of significant Accounting Policies (continued)
Income
Taxes (continued)
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 2005. 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.
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 2014 or 2013 under FASB
ASC 718
F-7
THE
MOVIE STUDIO, INC.
(FORMERLY
DESTINATION TELEVISION, INC.)
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER
31, 2014
Note
2 – Summary of significant Accounting Policies (continued)
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 expense of approximately $1,200 issuing 12,000,000 shares at par
value $0.0001; and $-0- during the years ended October 31, 2014 and October 31,
2014 for consulting services, respectively.
Recently
Adopted Accounting Pronouncements
In
February 2013, the accounting guidance was amended for obligations resulting
from joint and several liability arrangements for which the total amount of the
obligation is fixed at the reporting date. The amendments provide guidance on
the recognition, measurement, and disclosure of obligations resulting from
joint and several liability arrangements, including debt arrangements, other
contractual obligations, and settled litigation and judicial rulings, for which
the total amount of the obligation is fixed at the reporting date. The
amendment was effective for the Company beginning January 1, 2014 and was
applied retrospectively. The adoption of this guidance did not have a material
effect on the Company’s results of operations, cash flows or financial
condition.
In
July 2013, the Financial Accounting Standards Board (“FASB”) issued
Accounting Standards Update (“ASU”) No. 2013-11, Presentation of an
Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax
Loss, or a Tax Credit Carryforward Exists, which states that entities
should present the unrecognized tax benefit as a reduction of the deferred tax
asset for a net operating loss (“NOL”) or similar tax loss or tax credit
carryforward rather than as a liability when the uncertain tax position would
reduce the NOL or other carryforward under the tax law. The Company will be
required to adopt this new standard on a prospective basis in the first interim
reporting period of fiscal 2015, though early adoption is permitted as is a retrospective
application. We do not anticipate that the adoption of this standard will have
a material effect on the Company’s results of operations, financial position or
cash flows.
In May
2014, the Financial Accounting Standards Board ("FASB") issued Accounting
Standards Update No. 2014-09, Revenue from Contracts with Customers ("ASU
2014-09"). It outlines a single comprehensive model for entities to use in
accounting for revenue arising from contracts with customers and supersedes
most current revenue recognition guidance, including industry-specific
guidance. The core principle of the revenue model is that revenue is recognized
when a customer obtains control of a good or service. A customer obtains
control when it has the ability to direct the use of and obtain the benefits
from the good or service. ASU 2014-09 is effective for annual periods beginning
after December 15, 2016, including interim periods within that annual period.
The Company is in the process of assessing the impact of the adoption of ASU
2014-09 to its consolidated financial statements.
In
June 2014, accounting guidance was updated for stock-based awards when the
terms of an award provide that a performance target that affects vesting could
be achieved after the requisite service period. The current accounting standard
for stock-based compensation as it applies to awards with performance
conditions should be applied. This guidance is effective for the Company as of
January 1, 2016. The Company is currently evaluating this guidance, but does
not anticipate it will have a material impact on its financial statements.
In June 2014, the FASB
issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an
Award Provide That a Performance Target Could Be Achieved after the Requisite
Service Period. This guidance requires that a performance target that
affects vesting and that could be achieved after the requisite service period
be treated as a performance condition of the award. A reporting entity should
apply existing guidance in Accounting Standards Codification
Topic 718, Compensation-Stock Compensation, as it relates to such
awards. The guidance is effective for fiscal years beginning after December 15,
2015, and may be applied prospectively.
F-8
THE MOVIE STUDIO,
INC.
(FORMERLY
DESTINATION TELEVISION, INC.)
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 2014
Note
2 – Summary of significant Accounting Policies (continued)
Recently
Adopted Accounting Pronouncements (continued)
or retrospectively. Early
adoption is permitted. The Company is currently evaluating the impact that the
adoption of this guidance will have on the Company’s consolidated statements
and related disclosures.
In August 2014, the FASB
issued ASU 2014-15, Presentation of Financial Statements – Going Concern
(Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to
Continue as a Going Concern. The guidance requires an entity to evaluate
whether there are conditions or events, in the aggregate, that raise
substantial doubt about the entity’s ability to continue as a going concern
within one year after the date that the financial statements are issued (or
within one year after the financial statements are available to be issued when
applicable) and to provide related footnote disclosures in certain
circumstances. The guidance is effective for the annual period ending after
December 15, 2016, and for annual and interim periods thereafter. Early
application is permitted. We do not believe the adoption of this guidance will
have a significant impact the Company’s consolidated statements and related
disclosures.
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.
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 $9,360,017
as of October 31, 2014, 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.
F-9
THE
MOVIE STUDIO, INC.
(FORMERLY
DESTINATION TELEVISION, INC.)
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
OCTOBER 31, 2014
Note 4 - Acquired Amortizable
Intangible Assets
As of October 31, 2006, the Company invested $3,280 in
establishing trademarks associated with its concept of placing TV’s in bars,
hotels and gyms. 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:
As of October 31, 2014
|
$ 280
|
Note 5 - Income Taxes
The Company has approximately $9,360,017 million in net operating loss carryovers available to reduce
future income taxes. These carryovers expire at various dates through the year
2033. 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 represents the amount of preserved carryover losses due to changes
in the US Tax Code from the five year carryover rule for accumulated Net
Operating Losses to twenty years IRC§1179, is
as follows:
|
|
October 31,
|
|
|
2014
|
|
2013
|
Deferred tax asset:
|
|
|
|
Net operating loss carryforwards
|
$ 3,997,182
|
|
$ 3,692,000
|
Deferred tax asset
|
3,997,182
|
|
3,692,000
|
|
|
|
|
|
Less: Valuation allowance
|
(3,997,182)
|
|
(3,692,000)
|
Net deferred tax asset
|
$ -
|
|
$ -
|
The Company has taken a full valuation allowance against the
deferred asset attributable to the NOL carryovers of approximately $3,998,182
and $3,692,000 at October 31, 2014 and 2013, respectively, due to the
uncertainty of realizing the future tax benefits.
F-10
THE
MOVIE STUDIO, INC.
(FORMERLY
DESTINATION TELEVISION, INC.)
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 2014
|
|
|
October 31,
|
|
|
|
2014
|
|
2013
|
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 leased 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 $54,000 for each of the years ended October 31,
2014 and October 31, 2013.
As of November 1st 2014, the Movie Studio, Inc. moved
its production facility without executing a lease agreement or rent agreement
to a new 17,000 square foot studio in Hollywood, Florida with administrative
office space, food court, and 5,000 square foot sound stage/green screen, edit
suites and two audio suites and voice over booth. Its new business address is
2040 Sherman Street Hollywood, Florida 33020.
Employment Agreements
Gordon Scott Venters is employed as the Company's president and
chief executive officer pursuant to an employment agreement, effective November
1, 2007. The three-year 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 in the event of a change of control or termination without cause,
or if the employee terminates for good reason. As of October 31, 2014
and 2013, the Company owed Mr. Venters $902,370 (unpaid wages of $831,888; advances of $70,482)
and $803,698 (unpaid wages of $733,216; advances of $70,482), respectively, for
unpaid wages and advances he made to the Company. He has agreed to
convert the $733,216 due him for unpaid wages, under terms of his employment
agreement, and the $70,482 due him for advances he has made to the Company in
exchange for the issuance to him of 25 million shares of the Company’s common
shares, which will have one to one voting rights. This conversion transaction
will be completed within the next twelve months. As of March 1st
2015 any unpaid salary will begin to accumulate in exclusion of the 25 million
previous salary conversion agreement.
F-11
THE
MOVIE STUDIO, INC.
(FORMERLY
DESTINATION TELEVISION, INC.)
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 2014
Note 7 - Payroll Taxes Payable
The Company has been
delinquent in its payment of payroll taxes for the periods of December 2005;
March, June and September of 2006 in the amount of $412,500. During February
of 2013, the Internal Revenue Service deemed the unpaid balance as “Uncollectible”
and the President of the Company was issued a Levy on Wages, Salary, and Other
Income personally in the amount of $93,457 owed to and for the Trust Fund
Management Penalty. Payroll tax obligations for the calendar years since 2007,
2008, 2009, 2010, 2011, 2012 and 2013 that have been incurred have paid as
required. There were no payroll taxes incurred for the three quarters then
ended October 31, 2014.
Note 8 - Notes Payable
At March 31, 2011, the Company owed Dr. K. Terry, a related party
shareholder, a total of $1,371,463, which represented $436,500 for accrued rent, $705,000 for
convertible notes, and $229,963 for
accrued interest against the convertible notes. On April 1, 2011, the total
due Dr. Terry of $1,371,463 was
purchased by Ventures Capital Partners, LLC, another related party, which
provided Dr.Terry an equity interest in Ventures
Capital Partners, LLC.
Note 9 - Stockholders' Deficiency
Common Stock
Stock Issued for
Cash
During
June of 2014, the Company amended its articles of incorporation and
reauthorized an additional 550,000,000 shares of common stock at par value of
$0.0001. As of July 31, 2014, the Company has a total of 750,000,000 shares
authorized and as of October 31, 2014 and 2013 had 236,000,000 and 170,545,068
shares issued and outstanding. During year ended October 31, 2014, the Company
issued to accredited investors a total of 57,634,932 shares of common stock for
$0.0008 per share for a total of $197,467. As of March 1st 2015 the
Company had 300,000,000 shares outstanding issued and outstanding with
59,820,000 shares of common stock for $0.0018 for a total of $108,250.00 issued
to accredited investors. None of the above shares have been registered.
Note 9 - Stockholders' Deficiency (continued)
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
October 31, 2014 and 2013, there were 5,750,000 shares
of Series B preferred stock outstanding. Each
share of Series B preferred stock is convertible into one share of common
stock.
F-12
THE
MOVIE STUDIO, INC. (FORMERLY DESTINATION TELEVISION, INC.)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 2014
Note 10-
Common Stock Options
No options or warrants were outstanding at October 31, 2014 and October 31, 2013.
Note 11 –
Litigation
As of February 28th,
2015, the Company was not a party to any existing or threatened
litigation.
Note 12 -
Related Party Transactions
Gordon Scott Venters
Effective November 2007, Gordon Scott
Venters, entered into an employment agreement with the Company,
which is described above in Note 6--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 and Mr. Venters
acquired from the Company 500,000 shares of its common stock, which were valued
at $26,000, or $0.052 per share, in exchange for the $25,000 loan and the
balance of $1,000 was applied to accrued unpaid salary. 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 October 31, 2013
and 2012, the Company owed Mr. Venters
$803,698 (unpaid wages of $733,216; advances of $70,482) and $680,590 (unpaid
wages of $680,597; advances of $47,108), respectively, for unpaid wages and advances he made to the Company. He has agreed to convert the $733,216 due him for unpaid wages, under
terms of his employment agreement, and the $70,482 due him for advances he has
made to the Company in exchange for the issuance to him of 25 million shares of
the Company’s common shares, which will have one to one voting rights. This
conversion transaction will be completed within the next twelve months. As of
March 1st 2015 any unpaid salary will begin to accumulate in
exclusion of the 25 million previous salary conversion agreement.
Note 13 –
Subsequent Events
On
January 5, 2015 the Company issued a Private Placement Memorandum for The Movie
Studio, Inc.’s 175,000,000 shares offered at $.003 per share totaling $525,000
with a minimum investment of $25,000 for 8,333,333 shares. The Company is
conducting a 506(b) exempted offering to sell 175,000,000 shares having a par
value of $.0001 per share at the discounted price of $.003 per share, offered
on a “best efforts” basis to accredited investors only. The funds will be used
to acquire the Company’s first film library.
F-13
THE
MOVIE STUDIO, INC. (FORMERLY DESTINATION TELEVISION, INC.)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 2014
Note 13 –
Subsequent Events - Continued
On
January 7, 2015 the Company signed a Letter of Intent with Seven Arts
Entertainment Inc. (now known as Wireless Connection Inc.) a Pink Sheet Company
having symbol: SAPX, a diversified company with motion picture
production assets and wireless communications to acquire a movie library of
twelve titles. Under the terms of the LOI, The Movie Studio Inc. agrees to
acquire the film library for cash and stock from a lender Seven Arts
Entertainment Inc. assigned them to.
F-14
The Company leased 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 $54,000 for each of the years ended October 31,
2013 and October 31, 2012.
As of November 1st 2014, the Movie Studio, Inc. moved
its production facility without executing a lease agreement or rent agreement
to a new 17,000 square foot studio in Hollywood Florida with administrative
office space, food court, and 5,000 square foot sound stage/green screen, edit
suites and two audio suites and voice over booth. It’s new business address is
2040 Sherman Street Hollywood, Florida 33020.
ITEM 4.
|
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
The following table illustrates the common stock and preferred
stock ownership of Gordon Scott Venters as of February 21, 2013.
Title
of Name, Title and Address of Beneficial Amount of
Beneficial % of
Class
Owner of Shares Ownership
Shareholdings
Common
Gordon Scott Venters, CEO, and 3.5 million shares with 25 million share
executed option 9.4%
Director
Preferred
Gordon Scott Venters, CEO, and 5.75 million
shares 100%
Director
The address for all officers
and directors is 530 North Federal Highway, Ft. Lauderdale, Florida 33301.
ITEM 5.
|
DIRECTORS,
EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
|
The directors and officers
as of October 31, 2014, are set forth below. The directors hold
office for their respective term and until their successors are duly elected
and qualified. Vacancies in the existing Board are filled by a majority vote of
the remaining directors. The officers serve at the will of our Board of
Directors.
Name
|
|
Age
|
|
First
Year as Director
|
|
Position
|
Gordon Scott Venters
|
|
53
|
|
1993
|
|
CEO/Director
|
|
|
|
|
|
|
|
BUSINESS EXPERIENCE
Set forth below is the name
of our director and officer, all positions and offices held, the period during
which he has served as such, and the business experience during at least the
last five years:
Gordon Scott Venters, Chief Executive
Officer and Chairman of the Board
Gordon
Scott Venters has been president and chief executive officer and a director of
The Movie Studio FKA Destination, Television, Inc. for the last ten months and
a director of Destination Television since 1996. During that time he has
executive produced, produced, written and directed Exposure starring
Corey Feldman ready for worldwide released in the first quarter of 2013 the
first of the four picture franchise. He has also served as a member of our
board of directors from March 1994 to May 1995. Prior to joining Destination
Television, Inc., Mr. Venters was engaged in the entertainment industry,
including the financing, management and production of films, videos and
recordings. From May 1995 until December 1996, he served as president and
director of Quantum Entertainment, Company in Los Angeles. From 1990 to 1993,
Mr. Venters served as president and chief executive officer of Flash
Entertainment, Inc., an independent feature film company and predecessor of our
company, during which time he was the executive producer of no More Dirty
Deals and five music videos. He had previously been the Executive Producer
of two full length feature films, Shakma & Shoot. Mr. Venters, has
also been a financial advisor and a registered stockbroker with FD. Roberts
Securities and Prudential Bache Securities, Inc.
CERTAIN LEGAL PROCEEDINGS
No director, nominee for
director, or executive officer has appeared as a party in any legal proceeding
material to an evaluation of his ability or integrity during the past five
years.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
To date, we have not filed Form 5 for the year ended October 31,
2014.
ITEM 6.
|
EXECUTIVE COMPENSATION
|
Gordon Scott Venters is employed as the Company's president and
chief executive officer, pursuant to an employment agreement, effective
November 1, 2007. The three-year 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 month salary in the event of a change of control or termination without
cause, or if the employee terminates for good reason. As of October 31, 2014
and 2013, the Company owed Mr. Venters
$902,370 (unpaid wages of $831,888; advances of $70,482) and $803,698 (unpaid
wages of $733,216; advances of $70,482), respectively, for unpaid wages and advances he made to the Company. He has agreed to
convert the $733,216 due him for unpaid wages, under terms of his employment
agreement, and the $70,482 due him for advances he has made to the Company in
exchange for the issuance to him of 25 million shares of the Company’s common
shares, which will have one to one voting rights. This conversion transaction
will be completed within the next twelve months. As of March 1st
2015 any unpaid salary will begin to accumulate in exclusion of the 25 million
previous salary conversion agreement.
No retirement, pension,
profit sharing, stock option or insurance programs or other similar programs
have been adopted by us for the benefit of our employees.
ITEM 7.
|
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
None
ITEM 8.
|
LEGAL PROCEEDINGS
|
None
ITEM 9.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
Price
Range of Common Stock
The
Company's Common Stock was traded on the OTC Bulletin Board under the symbol “DSTV”
until June 30, 2014 when the Company changed the symbol to "MVES".
Since January 20, 2000, the Company's stock has been previously quoted in the
National Quotation Bureau "Pink Sheets" under the symbol "MAGC."
Upon this filing becoming effective with the Securities and Exchange
Commission, and clearing any comments of the SEC staff, the Company will
attempt to become re-listed as a fully reporting (OTC:BB) public company. The
following table sets forth the high and low bid quotations for the Company's
common stock for the periods listed. However, records provided by the Trading
Market Service of NASD for OTC Quarterly Trading Summaries indicate that, for
the period January 2012 through December 31, 2014, trading in the Company's
common stock was negligible and could not be considered a true indication of
its true market value.
Years
and Quarters Ending
High Low
2013
January 31 $0.01 $0.0125
2013
April 30 $0.005 $0.0075
2013
July 31 $0.003 $0.01
2013 October 31 $0.025 $0.005
2014 January 31 $0.0075 $0.01
2014
April 30 $0.003 $0.006
2014
July 31 $0.006 $0.007
2014
October 31 $0.002 $0.006
2014 December 31 $0.004 $0.006
2015 January 31 $0.003
$0.0045
As of November 12, 2014,
there were approximately 439 common stock shareholders of record.
DIVIDENDS
We do not intend to retain
future earnings to support our growth. Any payment of cash dividends
in the future will be dependent upon: the amount of funds legally available;
therefore, our earnings; financial condition, capital requirements, and other
factors which our board of directors deems relevant.
ITEM 10.
|
RECENT SALES OF UNREGISTERED SECURITIES
|
Below is a schedule that represents the amount of
most recent sales of unregistered securities as required by item 701 of
Regulation S-K (§229.201) during the year 2014. These sales include shares
that were issued for consulting services rendered to the Company during the
year of 2014.
ADD
NEW ISSUANCES OF MVES AS OF MARCH 1ST 2015.
ITEM
11.
|
Description of Registrant’s Securities
to be Registered
|
Securities to be registered pursuant to
Section 12(g) of the Act: Common Stock, $0.001 par value
Common Stock
During
June of 2014, the Company amended its articles of incorporation and
reauthorized an additional 550,000,000 shares of common stock at par value of
$0.0001. As of July 31, 2014, the Company has a total of 750,000,000 shares
authorized and as of October 31, 2014 and 2013 had 240,180,000 and 170,545,068
shares issued and outstanding. During year ended October 31, 2014, the Company
issued to accredited investors a total of 57,634,932 shares of common stock for
$0.0008 per share for a total of $197,467. None of the above shares have been
registered.
ITEM 12.
|
INDEMNIFICATION OF DIRECTORS AND
OFFICERS.
|
Title
8 Section 145 of the Delaware Statutes provides for indemnification of a
corporation's officers and directors in certain situations where they might
otherwise personally incur liability, judgments, penalties, fines and expenses
in connection with a proceeding or lawsuit to which they might become parties
because of their position with the Company.
In
accordance with the provisions referenced above, the Company shall indemnify to
the fullest extent permitted by its bylaws, and in the manner permissible under
the laws of the State of Delaware, any person made, or threatened to be made, a
party to an action or proceeding, whether criminal, civil, administrative or
investigative, by reason of the fact that he is or was a director or officer of
the Company, or served any other enterprise as director, officer or employee at
the request of the Company. The Board of Directors, in its discretion, shall
have the power on behalf of the Company to indemnify any person, other than a
director or officer, made a party to any action, suit or proceeding by reason
of the fact that he/she is or was an employee of the Company.
Insofar
as indemnification for liabilities arising under the Act may be permitted to
directors, officers and controlling persons of the Company, the Company has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Company of expenses incurred or
paid by a director, officer or controlling person of the Company in the successful
defense of
any
action, suit or proceedings) is asserted by such director, officer, or
controlling person in connection with any securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit t o a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issues.
ITEM 13.
|
FINANCIAL INFORMATION. Please See ITEM
2. For the FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
|
Results of Operations for
the years ended October 31, 2014 and 2013
The following tables sets
forth a summary of financial highlights for the years ended October 31:
|
|
Year Ended
|
|
|
|
|
|
|
October 31,
|
|
|
|
%
|
|
|
2014
|
|
2013
|
|
Change
|
|
Change
|
Statement of operations data:
|
|
2014
|
|
2013
|
|
Changes
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$ 31,679
|
|
$ 295,824
|
|
$ (264,145)
|
|
-
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
337,862
|
|
444,608
|
|
(106,746)
|
|
-24%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
(306,183)
|
|
(148,784)
|
|
(157,399)
|
|
(14%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share
|
|
$ (0.001)
|
|
$ (0.001)
|
|
|
|
|
For the years ended October 31, 2014 and 2013, we reported a net
loss of $306,183 and $148,784, respectively, an increase in net loss of
$157,399. The increase in net loss is primarily attributable to a decrease in
revenue of $264,145, partially offset by a decrease in total expenses of $106,746.
For the years ended October 31, 2014 and 2013, we reported
revenues of $31,679 and $295,824, respectively.
Total expenses for the years ended October 31, 2014 and 2013 were
$335,951 and $444,608, respectively, a decrease of $106,746, or 24%. This decrease
is primarily attributable of a decrease of $106,746 in selling and general
administrative expenses.
Interest expense decreased $39,644 for the year ended October 31,
2014 to $0 from the $39,644 reported for the prior fiscal year. This decrease
results from an overall elimination of debt obligations during the year ended
October 31, 2014.
ITEM 14.
|
CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
|
Our
accountant is Terry Johnson, C.P.A., P.A. We do not presently intend to change
accountants. At no time have there been any disagreements with such accountant
regarding any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure.
ITEM 15.
|
Financial Statements and Exhibits.
|
(a) Index
to Financial Statements filed herewith as made part of this registration
statement.
(b) Exhibits
required by Item 601 of Regulation S-K (§229.601)
3.1
|
Certificate of Incorporation of Magic Fingers, Inc.
|
3.2
|
Certificate of Amendment of the Articles of Incorporation of
Magic Fingers, Inc.
|
3.3
|
Certificate of Restoration and Revival of Certificate of
Incorporation.
|
Reports on
Form 8k:
None
THE
MOVIE STUDIO, INC.
INDEX TO FINANCIAL STATEMENTS
Independent
Auditors' Report...........................................F-2
Financial
Statements:
Balance
Sheet as of October 31, 2014 and October 31, 2013 .............F-3
Statement
of Operations for the ten months ended October 31, 2014
and
the year ended October 31, 2014 ...................................F-4
Statement
of Cash Flows for the ten months ended October 31, 2014
and
the year ended October 31, 2014 ...................................F-5
Statement
of Changes in Stockholders' Equity for the twenty four
months
ended October 31, 2014 and the year ended October 31, 2014. ... F-6
Notes
to Financial Statements..........................................F-7
Unaudited
Interim Financial Statements:
Accountants'
Review Report............................................F-16
Balance
Sheet as of April 30, 2014 and October 31, 2013...............F-17
Statement
of Operations for the six months ended
April
30, 2014 and April 30, 2013 ....................................F-18
Statement
of Cash Flows for the six months ended
April
30, 2014 and April 30, 2013 ....................................F-19
Notes to Unaudited Interim Financial
Statements.......................F-20
F-1
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
THE MOVIE STUDIO, INC
(FORMERLY
DESTINATION TELEVISION, INC.)
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2014
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,
2013 as filed with the SEC on November 29, 2014 (the “2013 Annual Report”).
The consolidated financial statements include the
accounts of The Movie Studio, Inc. (Formerly 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 April 30,
2014 and the year ended October 31, 2013.
THE MOVIE
STUDIO, INC.
(FORMERLY
DESTINATION TELEVISION, INC.)
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2014
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 April 30, 2014 and October
31, 2013.
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.
THE MOVIE
STUDIO, INC.
(FORMERLY DESTINATION
TELEVISION, INC.)
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2014
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
2014 or 2013 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 six months ended
April 30, 2014 and 2013, 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.
THE MOVIE
STUDIO, INC.
(FORMERLY
DESTINATION TELEVISION, INC.)
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2014
Note
2 – Summary of significant Accounting Policies (continued)
Recently
Adopted Accounting Pronouncements (continued)
ASU
2011-04. In May 2011, the FASB issued Accounting Standards Update 2011-14, Fair
Value Measurement (Topic 820). This Update will improve the comparability
of fair value measurements presented and disclosed in financial statements
prepared in accordance with US GAAP and International Financial Reporting
Standards (“IFRS”). The amendments in this Update result in common fair value
measurement and disclosure requirements in U.S. GAAP and IFRSs and they explain
how to measure fair value and they do not require additional fair value
measurements and are not intended to establish valuation standards or affect
valuation practices outside of financial reporting. The amendments in this
Update apply to all reporting entities that are required or permitted to
measure or disclose the fair value of an asset, a liability, or an instrument
classified in a reporting entity’s shareholders’ equity in the financial
statements.
The
amendments in this update are to be applied prospectively. For public entities,
the amendments are effective during interim and annual periods beginning after
December 15, 2011. Early application by public entities is not permitted. The
adoption of ASU 2011-04 is not expected to have any material impact on our
financial position, results of operations or cash flows.
ASC
480, In March of 2012, the FASB issued Accounting Standards Update, Distinguishing
Liabilities from Equity ; primarily originated from FAS 150 and related
interpretations. This subtopic establishes standards for how an issuer
classifies and measures certain financial instruments with characteristics of
both liabilities and equity. The guidance applies to freestanding financial
instruments, thus reinforcing the importance of this determination.
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
THE MOVIE
STUDIO, INC.
(FORMERLY
DESTINATION TELEVISION, INC.)
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2014
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 The Movie Studio,
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
$9.34 million as of April 30, 2014, has limited 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 of
October 31, 2013:
|
|
$ 150
|
Thereafter
|
|
280
|
Total expected
annual amortization expense
|
$ 280
|
THE MOVIE
STUDIO, INC.
(FORMERLY
DESTINATION TELEVISION, INC.)
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
APRIL 30, 2014
Note 5 - Income Taxes
The Company has approximately $9.34 million in net
operating loss carryovers available to reduce future income taxes. These
carryovers expire at various dates through the year 2031. The Company has
adopted FASB ASC Topic 740 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:
|
|
|
April 30,
|
|
|
October 31,
|
|
|
|
2014
|
|
|
2013
|
Deferred
tax assets
|
|
|
|
|
|
Net
operating loss carry forwards
|
$
|
1,278,162
|
|
$
|
3,634,000
|
Deferred
tax asset
|
|
1,278,162
|
|
|
3,634,000
|
Less:
Valuation allowance
|
|
(1,278,162)
|
|
|
(3,634,000)
|
Net
deferred tax asset
|
$
|
0
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
April 30,
2014
|
|
|
October
31,
2013
|
S
|
Statutory
federal income tax expense
|
|
(34)%
|
|
|
(34)%
|
|
State
and local income tax
|
|
(5)
|
|
|
(5)
|
|
(net
of federal benefits)
|
|
-
|
|
|
-
|
|
Other
temporary differences
|
|
39
|
|
|
39
|
|
Valuation
allowance
|
|
- %
|
|
|
- %
|
|
|
|
|
|
|
|
|
Note 6 - Commitments and Facilities
The Company previously leased 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 $4,770 and
$13,500 for each of the three months ended April 30, 2014 and 2013,
respectively. The Company currently occupies a 17,000 sq. ft. production
facility
THE MOVIE STUDIO, INC.
(FORMERLY
DESTINATION TELEVISION, INC.)
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2014
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, 2007. The three-year 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 in the event of a change of control or termination without
cause, or if the employee terminates for good reason. As of October 31, 2013
and 2012, the Company owed Mr. Venters $803,698 (unpaid wages of $733,216;
advances of $70,482) and $680,590 (unpaid wages of $680,597; advances of
$47,108), respectively, for unpaid wages and advances he made to the Company.
He has agreed to convert the $733,216 due him for unpaid wages, under terms of
his employment agreement, and the $70,482 due him for advances he has made to
the Company in exchange for the issuance to him of 25 million shares of the
Company’s common shares, which will have one to one voting rights. This
conversion transaction will be completed within the next twelve months.
The balance due Mr. Venters
at April 30, 2014 and October 31, 2013 for unpaid wages was approximately
$837,887 and $788,624, respectively. He has agreed to convert the monies
due him for unpaid wages, under terms of his employment agreement,and the
$70,482 due him for advances he has made to the Company in exchange for the
issuance to him of 25 million shares of the Company’s common shares, which will
have one to one voting rights. This conversion transaction will be completed
within the next twelve months. As of March 1st 2015 any unpaid
salary will begin to accumulate in exclusion of the 25 million previous salary
conversion agreement.
Note 7 - Payroll Taxes Payable
The Company has been delinquent in its payment
of payroll taxes for the periods of December 2005; March, June and September of
2006 in the amount of $412,500. During February of 2013, the Internal Revenue
Service deemed the unpaid balance as “Uncollectible” and the President of the
Company was issued a Levy on Wages, Salary, and Other Income personally in the
amount of $93,457 owed to and for the Trust Fund Management Penalty. Payroll
tax obligations for the calendar years since 2007, 2008, 2009, 2010, 2011, 2012 and 2013 have been paid as required.
There have been no payroll taxes incurred for the quarter ended April 30,
2014.
Note 8 - Stockholders' Deficiency
Common Stock
Stock Issued for Cash
During
period ended April 30, 2014, the Company issued to accredited investors a total
of 19,000,000 shares of common stock for $87,300, all of which were issued at
various prices between $0.0001 and $0.0005 per share.
None of the above shares have 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
THE
MOVIE STUDIO, INC.
(FORMERLY
DESTINATION TELEVISION, INC.)
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2014
Common Stock - Continued
Securities Act, and may be sold only in compliance
with the resale provisions set forth therein.
During
the fiscal year ended October 31, 2013, the Company issued approximately
68,189,808 shares of stock at various prices between $0.0001 and $0.005 per
share.
Note 8 - Stockholders' Deficiency (continued)
Stock Issued for Services (continued)
During periods ended April 30, 2014, the Company
issued 2,000,000 shares of common stock for services.
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 April 30, 2014, there were 5,750,000 shares of Series B
Preferred Stock outstanding and on October 31, 2013 there were 5,750,000 shares
outstanding. Each share of Series B Preferred Stock is convertible into one
share of common stock.
Note 9- Common Stock Options
No options or warrants were outstanding at April 30,
2014 and October 31, 2013.
Note 10 – Litigation
On December 13, 2012, Peter Langone filed a civil
suit against the Company, wherein he claimed certain ownership of equipment and
services rendered on behalf of the Company, when he was an occupant at the
offices of the Company. The Company disputed his claim
and settled with Mr. Langone in 2013. The final case was released in Febuary,
2015.
In September 25, 2013, Ali, Sonoma Steward filed a
civil suit against the Company and Ventures Capital Partners, LLC, claiming the
Company was using her image and likeness on the artwork used in connection the
marketing and advertising of the motion picture Exposure. The Company
provided the Plaintiff’s counsel with a binding Letter of Intent (LOI)
Agreement, which became binding upon completion of the production for the movie
Exposure; this LOI granted the Company the rights to use Ali Sonoma
Stewarts, “Image,” “Likeness,” “Web,” “Print,” and “Media” in connection with
this movie in perpetuity. The Company anticipates the civil suit will be
dismissed on January 21, 2015, on the basis of the release and Lack of
Prosecution. The case was dismissed in February 2015.
THE MOVIE STUDIO, INC.
(FORMERLY
DESTINATION TELEVISION, INC.)
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
APRIL 30, 2014
Note 11 - 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 April 30,
201
4 and October
31, 2013, Mr. Venters was owed approximately $
814,379 and $ 733,216 for accrued wages, respectively.
He has agreed to convert the $733,216 due him for unpaid wages,
under terms of his employment agreement, and the $70,482 due him for advances
he has made to the Company in exchange for the issuance to him of 25 million
shares of the Company’s common shares, which will have
one to one voting rights. This conversion transaction will be completed within
the next twelve months.
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 the $5,000 loan, the Company also issued
500,000 of 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 share.
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. The
THE MOVIE STUDIO, INC.
(FORMERLY
DESTINATION TELEVISION, INC.)
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2014
Note 11 - Related Party Transactions (continued)
Gordon Scott Venters (continued)
balance due Mr. Venters for unpaid wages as of April
30, 2014 and October 31, 2013 was $837,887 and $788,624, respectively.
Ventures
Capital Partners, LLC
Since April 2011, Ventures
Capital Partners, LLC. (VCP) the Company negotiated the purchase of debt in the
amount of $1,353,420 from a related party shareholder for equity in VCP, LLC,
as follows:
Note
12 – Notes Payable
At March 31, 2011, the Company owed Dr. K. Terry, a related party
shareholder, a total of $1,353,420, which represented $436,500 for accrued
rent, $705,000 for convertible notes, and $211,920 for accrued interest against
the convertible notes. On April 1, 2011, the total amount due Dr. Terry of
$1,353,420 was purchased by Ventures Capital Partners, LLC, another related
party, which provided Dr. Terry an equity interest in Ventures Capital
Partners, LLC
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, POLITIAL, 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.
Results of Operation
Three
months ended April 30, 2014 compared with three months ended April 20, 2013.
Revenue
The Company had revenues for the six
months ended April 30, 2014 of $7,322 compared to none April 30, 2013.
Expenses
For
the six month period ended April 30, 2014 and 2013 general and administrative
expenses increased $48,626 from $117,769 to $166,395, respectively.
Other
For
the six months ended April 30, 2014 and 2013, the Company reported interest
expense of $0 and $18,232, respectively.
Six
months ended April 30, 2014 compared with six months ended April 20, 2013.
Revenue
The Company had revenues for the three
months ended April 30, 2014 of $1,519 and none April 30, 2013.
Expenses
General
and administrative expenses increased $29,242 from $37,826 to $67,068 for the
three months ended April 30, 2014, as compared to the same period in 2013.
Other
For
the six months ended April 30, 2014 and 2013, the Company reported interest
expense of $0 and $9,116, respectively.
Liquidity and Capital Resources
As
of April 30, 2014 the Company had net assets of $280 as against total
liabilities of $2,197,987. The Company has an accumulated deficit of
approximately $9.34 million as of April 30, 2014, has limited 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 being taking to revise its operating and financial
requirements in order to provide itself 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
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 April 30, 2014. 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.
Based
on our assessment, we believe that, as of April 30, 2014 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 April 30, 2014. Based on their evaluation, our chief
executive officer and chief financial officer have concluded that, as of April
30, 2014, 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 April 30, 2014 that have materially
affected, or are reasonably likely to materially affect, the Company’s internal
control over financial reporting.
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 six month period ended April
30, 2014, 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 and six month periods ended
April 30, 2014.
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 April 30, 2014.
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:
December 1, 2014
/s/ Gordon Scott Venters
Gordon
Scott Venters
President,
Secretary and Director
SIGNATURES
Pursuant to the requirements
of Section 12 of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.
________________________
Registrant
By: /s/ Gordon Scott Venters
President, Chief Executive
Officer,
Director
Dated: March 6, 2015
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