AS FILED WITH THE SECURITIES & EXCHANGE COMMISSION ON May 28, 2002
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
AMENDMENT NO. 1
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
-------------------------
MEDIATELEVISION.TV, INC.
(Exact Name of Small Business Issuer in our Charter)
DELAWARE 7812 98-0361568
(State of Incorporation) (Primary Standard Industrial (I.R.S. Employer
Identification No.) Identification No.)
----------------------------
1904 WEST 16TH AVENUE, SUITE 1
VANCOUVER, BRITISH COLUMBIA V6J 2M4
(Address of principal executive office)
----------------------------
(604) 605 0507
(Name, address and telephone of agent for service)
----------------------------
COPIES TO:
THOMAS A. BRAUN PENNY O. GREEN
THOMAS BRAUN LAW CORPORATION MEDIATELEVISION.TV, INC.
309 - 837 WEST HASTINGS STREET 1904 WEST 16TH AVENUE, SUITE 1
VANCOUVER, BRITISH COLUMBIA VANCOUVER, BRITISH COLUMBIA
CANADA V6C 3N6 CANADA, V6J 2M4
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after
this Registration Statement is declared effective.
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 43, check
the following box. [ ]
CALCULATION OF REGISTRATION FEE:
Title of each class of Dollar Amount to Offering price Maximum aggregate Amount of
securities to be registered be registered per share offering price registration fee
- ----------------------------- ------------------ ----------------- --------------------- ------------------
Common Stock Par Value 287,132 shares $0.20 $57,426.40 $92.00
$ 0.0001 per share previously sold
2
PROSPECTUS
MEDIATELEVISION.TV, INC.
287,132 SHARES
COMMON STOCK
The selling shareholders named in this prospectus are offering all of the shares
of common stock offered through this prospectus. The shares were acquired by the
selling shareholders directly from us in a private offering that was exempt from
registration under the US securities laws.
The selling shareholders will sell at a price of $0.20 per share until the
Company's shares are quoted on the OTC Bulletin Board and thereafter at
prevailing market prices or privately negotiated prices
Our common stock is presently not traded on any market or securities exchange.
- ----------------------------
AN INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE SECTION
ENTITLES "RISK FACTORS" ON PAGES 5 - 12.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- ----------------------------
The Date of this Prospectus is: January 25, 2002
3
TABLE OF CONTENTS
Page
PART I - INFORMATION REQUIRED IN PROSPECTUS
Summary Information & Risk Factors 5
Use of Proceeds 12
Determination of Offering Price 12
Dilution 12
Selling Security Holders 13
Plan of Distribution 15
Legal Proceedings 16
Directors, Executive Officers, Promoters and Control Management 16
Security Ownership of Certain Beneficial Owners and Management 18
Description of Securities 19
Interest of Named Experts and Counsel 20
Disclosure of Commission Position on Indemnification for
Securities Act Liabilities 21
Description of Business 21
Management's Discussion and Analysis or Plan of Operation 32
Description of Property 35
Certain Relationships and Related Transactions 35
Market for Common Equity and Related Stockholder Matters 36
Executive Compensation 36
Financial Statements 36
Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 36
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Indemnification of Directors and Officers 37
Other Expenses of Issuance and Distribution 38
Recent Sales of Unregistered Securities 38
Exhibits 39
Undertakings 39
Signatures 41
4
SUMMARY INFORMATION AND RISK FACTORS
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus.
Because this is a summary, it may not contain all of the information that you
should consider before receiving a distribution of our common stock. You should
read this entire prospectus carefully.
FINANCIAL SUMMARY INFORMATION
The following table sets forth selected financial information, which should be
read in conjunction with the information set forth under "Management Discussion
and Analysis" and the accompanying consolidated Financial Statements of the
Company and related notes includes elsewhere in this prospectus.
Income Statement Data
(audited)
- --------------------------------- ------------------------- --------------------
Six month period Year ended
ended March 31, 2002 September 30, 2001
- --------------------------------- ------------------------- --------------------
Revenue $ 951 $ 9,964
- ------- ------ -------
Expenses $ 11,616 $73,038
- -------- -------- -------
Net Profits (Losses) $ (14,579) ($63,804)
- -------------------- ---------- ---------
Balance Sheet Data
(audited)
- --------------------------------- ------------------------- --------------------
Six month period Year ended
ended March 31, 2002 September 30, 2001
- --------------------------------- ------------------------- --------------------
Working Capital (deficit) $ (11,411) ($4,650)
- ------------------------- ---------- --------
Total Assets $ 13,965 $22,732
- ------------ -------- -------
Total Liabilities $ 14,698 $16,611
- ----------------- -------- -------
Shareholder's Equity (Deficit) $ (733) $6,121
- ------------------------------ ------- ------
Our auditors have expressed substantial doubt regarding our ability to continue
as a going concern.
MEDIATELEVISION.TV, INC.
Mediatelevision.tv, Inc. was incorporated on October 11, 2000 under the laws of
the State of Delaware (hereinafter referred to as "we", "us", "our", "the
Company", and "Mediatv"). Our principal offices are located at 1904 West 16th
Avenue, Suite 1, Vancouver, British Columbia, Canada V6J 2M4.
On November 30, 2000 Mediatv incorporated Mediatelevision.tv Distribution Ltd.
under the laws of British Columbia, Canada, for the purpose of carrying on
business in Vancouver, British Columbia.
Mediatv is a production and distribution company that intends to specialize in
syndicating episodic video series designed especially for the Internet. Mediatv
intends to be in the business of content production, aggregation and
syndication. We mediate between sites that need content and sites or production
companies that need to sell content.
Mediatv has the following major components to our business:
o Production Services - we produce streaming video as content for
websites
o Distribution Services - we plan to generate revenues for content
producers by distributing their product
o Content Syndication - we have streaming video content available for
licensing by websites
o Product Placement & Advertising - we sell advertising and product
placement for Internet series and other streaming video which we
distribute
o Proprietary Software - we are developing templates for producing
interactive episodic Internet shows
o Encoding, Bandwidth and Hosting resale and other Media Management -
we offer domain name registration and we resell web hosting,
e-commerce packages and Internet bandwidth
5
THE OFFERING
Securities Offered: 287,132 shares of common stock. The
offering price will be determined by
market factors and the independent
decision of the selling shareholders.
Minimum Number of shares to
be sold in this offering: None
Securities Issued and to be 2,287,132 shares of common stock are
Issued: issued and outstanding as of the date
of this prospectus. All of the common
stock to be sold under this
prospectus will be sold by existing
shareholders.
Use of Proceeds: We will not receive any proceeds from
the sale of the common stock by the
selling shareholders.
RISK FACTORS
An investment in our common stock involves a high degree of risk. In addition to
the other information contained in this prospectus, you should carefully
consider the following risk factors and other information in the prospectus
before investing in our common stock.
RISKS RELATED TO BUSINESS
The Securities offered may qualify as penny stocks and may affect the ability of
shareholders to sell their shares
The initial offering price of the Company's common shares will be $0.20, and are
therefore may be subject to the provisions of Section 15(g) and Rule 15g-9 of
the Securities Exchange Act of 1934, as amended (the 'Exchange Act"), commonly
referred to as the "penny stock" rule. Section 15(g) sets forth certain
requirements for transactions in penny stocks and Rule 15g9(d)(1) incorporates
the definition of penny stock as that used in Rule 3a5l-l of the Exchange Act.
The Commission generally defines penny stock to be any equity security that has
a market price less than $5.00 per share, subject to certain exceptions. Rule
3a5l-l provides that any equity security is considered to be a penny stock
unless that security is: registered and traded on a national securities exchange
meeting specified criteria set by the Commission; authorized for quotation on
the NASDAQ Stock Market; issued by a registered investment company; excluded
from the definition on the basis of price (at least $5.00 per share) or the
issuer's net tangible assets; or exempted from the definition by the Commission.
If the Company's shares are deemed to be a penny stock, trading in the shares
will be subject to additional sales practice requirements on broker-dealers who
sell penny stocks to persons other than established customers and accredited
investors, generally persons with assets in excess of $1,000,000 or annual
income exceeding $200,000, or $300,000 together with their spouse. For
transactions covered by these rules, broker-dealers must make a special
suitability determination for the purchase of such securities and must have
received the purchaser's written consent to the transaction prior to the
purchase. Additionally, for any transaction involving a penny stock, unless
exempt, the rules require the delivery, prior to the first transaction, of a
risk disclosure document relating to the penny stock market. A broker-dealer
also must disclose the commissions payable to both the broker-dealer and the
registered representative, and current quotations for the securities. Finally,
monthly statements must be sent disclosing recent price information for the
penny stocks held in the account and information on the limited market in penny
stocks. Consequently, these rules may restrict the ability of broker dealers to
trade and/or maintain a market in the Company's Common Stock and may affect the
ability of shareholders to sell their shares.
Lack of market for common stock
There is no established public trading market or market maker for our
securities. There can be no assurance that a market for our common stock or will
be established or, that if established, a market will be sustained. Any
purchasers of our securities may be unable to resell them, and therefore,
potential buyers should be able to bear the financial burden of losing their
entire investment.
Because We Have Only Recently Commenced Business Operations, We Face A High Risk
- --------------------------------------------------------------------------------
of Business Failure.
- --------------------
We were incorporated on October 11, 2000. We are at an early stage of our
development and have a limited operating history and we face all of the risks
and uncertainties encountered by development stage companies in new, unproven
and rapidly evolving markets. Among other things, our business will require:
o Developing our relationships with producers of streaming video; o
Developing or obtaining software and technology that enables us to
deliver digital entertainment content;
o Successful marketing of our existing and planned products and
services;
o Responding effectively to competitive pressures;
o Maintaining and developing marketing relationships to expand our
consumer base; and
o Attracting and maintaining qualified and talented personnel in the
areas of management and technology.
If we are unable to achieve the above goals, or other requirements for
successful growth of an development stage media company, our business, financial
condition and the results of our operations could be materially adversely
affected.
6
Because We Have Only Recently Commenced Business Operations, We Expect to Incur
- -------------------------------------------------------------------------------
Operating Losses For The Foreseeable Future.
- --------------------------------------------
We have a limited operating history, have incurred losses and may continue to
realize losses. We reported net losses in the twelve months ended September 30,
2001of $63,804. We anticipate that we will continue to lose money in the
foreseeable future as our operating expenses continue to increase. We cannot
guarantee that we will ever achieve profitable operations or generate
significant revenue with our current products and strategy.
There is substantial doubt as to our ability to continue as a going concern
based on our past operating losses and predicted future operating losses. Our
auditor has issued a going concern opinion on our financial statements
expressing doubt that we can continue as a going concern for a reasonable period
of time unless sufficient equity financing can be secured. There can be no
assurances that any required capital can be obtained on terms favorable to the
Company.
Reliance on Certain Alliances
- -----------------------------
Thus far we have only secured one on-line digital distribution agreement with a
production company owned by the President of Mediatv. We believe that in order
for us to be profitable we must establish relationships with production
companies in order to have sufficient product to distribute. If we are unable to
build such relationships, we may not be able to operate our business according
to our current plan and we may not be able to generate revenues.
If we cannot Establish and Maintain Brand Recognition of Mediatv, we will not be
- --------------------------------------------------------------------------------
able to Successfully Conduct our Operations.
- --------------------------------------------
We believe that our future success depends on promotion and favorable perception
of the Mediatv brand in the online and entertainment industries and in the
media. Our financial condition and operating results will suffer if we cannot
obtain brand recognition.
If We Do Not Obtain Additional Financing, Our Business May Fail.
- ----------------------------------------------------------------
Our business plan calls for increased expenses in connection with maintaining
our websites, producing and distributing content, if we are to expand and
improve our offerings. Our capital requirements depend on several factors,
including the rate of market acceptance, the ability to expand our consumer
base, the level of our sales and marketing costs, production costs, costs of web
site upgrades and other factors. If capital requirements vary materially from
those currently planned, we may require additional financing. We cannot
guarantee that financing will be available in amounts or on terms acceptable to
Mediatv. If equity securities are issued in connection with a financing,
dilution to our shareholders may result. We intend to devote substantial
resources to the further development of our business. Accordingly, we will
require additional financing in order to finance this development expense. We do
not have any arrangements for financing and we can provide no assurance that we
will be able to obtain the required financing when needed. Obtaining additional
financing will be subject to a number of factors, including market conditions,
investor acceptance of our business plan and investor sentiment. These factors
may make the timing, amount, terms and conditions of additional financing
unattractive or unavailable to us. If we are not successful in achieving
financing in the amount necessary to acquire, develop and distribute video
series for the Internet, then we will not be able to achieve revenues and our
business will fail.
7
Growth May Cause us to Fail.
- ----------------------------
If our operations grow in a manner that exceeds our expectations, we are in
danger of not having the infrastructure to support it - we may not have
sufficient bandwidth or we may not be able to get sufficient bandwidth to
support a large number of users on our sites and this could result in a negative
consumer experience or could jeopardize our relationships and contractual
agreements. We may not have adequate staff and infrastructure to handle customer
service if we grow.
We cannot be sure of our ability to successfully manage all the tasks associated
with developing and maintaining a successful enterprise. Any failure by
management to guide and control growth effectively, which includes implementing
adequate systems, procedures and controls in a timely manner, could have a
material adverse effect on our business, financial condition and results of
operations. We cannot be sure that we can successfully launch our services, or
that we will achieve or sustain profitability or positive cash flow from
operating activities in the future. If we cannot achieve operating profitability
or positive cash flow from operating activities, we may not be able to meet our
debt service or working capital requirements and, consequently, our common stock
may have little or no value.
International Expansion May Create Problems for Us.
- ---------------------------------------------------
We intend to expand our business globally. In the event that we conduct such
expansion, we may encounter many of the risks associated with international
business expansion. Such risks include, but are not limited to language
barriers, fluctuations in currency exchange rates, political and economic
instability, regulatory compliance difficulties and problems enforcing
agreements.
If We Are Unable To Hire And Retain Key Personnel, then We May Not be Able to
- -----------------------------------------------------------------------------
Implement Our Business Plan.
- ----------------------------
We depend on the services of our senior management and key technical and
creative personnel. In particular, our success depends on the continued efforts
of Penny O. Green, our chief executive officer, as well as on our ability to
recruit, retain and motivate other officers and key employees. Competition for
qualified personnel is intense and there are a limited number of people with
knowledge of and experience in the Internet and entertainment industries. The
loss of the services of any of our officers or senior managers could harm our
business. We may not be able to hire and retain a sufficient number of qualified
employees to grow our business as planned.
We Risk System Failure Because We Rely on Internally Developed Software.
- ------------------------------------------------------------------------
Mediatv uses some internally developed software in its web site, media store and
some aspects of its transaction processing and order management. Our inability
to modify this software as necessary to accommodate increased traffic on our Web
site or increased volume through our transaction processing and order management
systems may cause unanticipated system disruptions, slower response times,
impaired quality and speed of order fulfillment, degradation in customer
service, and delays in reporting accurate financial information. Any of these
events could have a materially adverse affect on Mediatv.
8
The Online Entertainment Industry is Very Competitive.
- ------------------------------------------------------
The business of online entertainment is very competitive and we believe such
competition will continue to grow and intensify. In addition to competition on
the Internet, we will face competition from new forms of digital entertainment
distribution such as DVDs. We will also compete with other forms of leisure for
consumer spending, such as sports.
Once the Company is able to launch operations, we will be competing with more
established on-line entertainment distribution companies. These competitors may
include major music labels, movie studios, major technology companies, as well
as established on-line companies. Many of our future competitors have
substantially greater access to capital than us, greater financial, technical,
marketing, sales and distribution resources than ours, and more experience than
us in distribution of on-line entertainment and in the production of
entertainment. Some of our future competitors for content distribution are:
Screaming Media Inc., which is in the business of content aggregation and
distribution, iSyndicate, a provider of syndication solutions and content, and
Atom Films Inc., which is in the business of distributing short films.
Protection of our Intellectual Property is Limited and Efforts to Protect our
- ------------------------------------------------------------------------------
Intellectual Property may be Inadequate, Time-Consuming and Expensive
- ---------------------------------------------------------------------
We regard our trademarks, service marks, copyrights, trade secrets and similar
intellectual property as critical to our success. The unauthorized reproduction
or other misappropriation of our trademarks or other intellectual property could
diminish the value of our proprietary rights or reputation. If this were to
occur, our business could be materially and adversely affected.
We rely upon a combination of trademark and copyright law, patent law, trade
secret protection and confidentiality and license agreements with our employees,
customers and others to protect our proprietary rights. We have not yet filed
any applications for patents, but we have filed one trademark application with
the United States Patent and Trademark Office. Furthermore, policing and
enforcement against the unauthorized use of our intellectual property rights
could entail significant expenses and could prove difficult or impossible.
We May be Exposed to Liability for Content Distributed Through Our Website.
- ---------------------------------------------------------------------------
We may be liable to third parties for content on our website and any other
materials we distribute and we may be subject to claims for defamation,
negligence, copyright or trademark infringement, invasion of privacy and
publicity, unfair competition or other liabilities based on the nature and
content of material that we distribute and publish through our website.
Liability or alleged liability for distributing and publishing content on our
website could harm our business by damaging our reputation, requiring us to
incur legal costs, exposing us to significant damage awards, and could divert
management's attention to the business.
9
Our Limited Experience Selling and Marketing our Services May Impede Expansion
- ------------------------------------------------------------------------------
of Our Business.
- ----------------
We have had relatively little experience marketing our services and may not be
able to successfully implement our sales and marketing initiatives. Marketing
our services in order to expand our customer base is crucial to the success of
our business. Our sales people work on a commission only basis and have been
hired in May, 2001. We may be unable to hire, retain, integrate and motivate
sales and marketing personnel. New sales and marketing personnel may also
require a substantial period of time to become effective. Unsuccessful sales or
marketing efforts or a material lengthening of our sales cycle could have
material adverse effects on our revenues. To date, our commissioned sales team
has not achieved any sales. There can be no assurance that our sales team will
achieve any sales in the future, or enough sales for the Company to become
profitable.
Potential Acquisitions and Strategic Investments May Result in Increased
- ------------------------------------------------------------------------
Expenses, Difficulties in Integrating Target Companies and Diversion of
- -----------------------------------------------------------------------
Management's Attention
- ----------------------
Although we are not currently in discussions with any party, we anticipate
undertaking one or more acquisitions or strategic investments in the near future
to expand our range of technology and products and to gain access to new
markets. Growth through acquisitions entails many risks, including the
following:
o our management's attention may be diverted during the acquisition
and integration process;
o we may face costs, delays and difficulties of integrating the
acquired company's operations, technologies and personnel into our
existing operations, organization and culture;
o the adverse impact on earnings of amortizing the acquired company's
intangible assets may be significant, particularly in light of the
high valuations of many Internet and other information technology
services companies;
o we may issue new equity securities to pay for acquisitions, which
would dilute the holdings of existing stockholders;
o the timing of the acquisition or our failure to meet operating
expectations for acquired businesses may impact adversely on our
financial condition; and
o we may be adversely affected by expenses of any undisclosed or
potential legal liabilities of the acquired company, including
intellectual property, employment and warranty and product
liability-related problems.
If realized, any of these risks could have a material adverse effect on our
business, financial condition and operating results.
RISKS OF DOING BUSINESS ON THE INTERNET
Our Ability to Earn Revenues is Dependent on the Internet and on Market
- -----------------------------------------------------------------------
Acceptance of Digital Entertainment.
- ------------------------------------
10
The distribution of digital entertainment online is an emerging market. Our
future revenues are dependent on consumer acceptance of watching digital
entertainment over the Internet. The growth of the Internet could slow down.
Demand for new products and services on the Internet are subject to uncertainty,
and most of the products and services Mediatv is offering are new. We cannot
assure you that the necessary infrastructure, such as a reliable network
backbone, or complementary products will be developed or that the Internet will
prove to be a viable commercial marketplace.
Because most of our anticipated customers are operators of commercial Web sites,
demand for our services will depend in large part on continued growth in use of
the Internet. If the Internet develops more slowly than we expect as a
commercial or business medium, demand for our services will be lower than we
expect.
We May Encounter Security Risks on the Internet.
- ------------------------------------------------
The growth of E-commerce depends on the development of technology and services
to allow secure transmission of confidential information over the Internet. The
use of the Internet could decline if the security of on-line consumers is
compromised or if consumers perceive it to be compromised. We may be required to
spend money to protect against the threat of security breaches or to alleviate
problems caused by such breaches. Protections against security breaches may not
be available at a reasonable price or at all.
If We Become Subject To Burdensome Government Regulations Affecting The
- -----------------------------------------------------------------------
Internet, Our Business Could by Adversely Affected.
- ---------------------------------------------------
Mediatv is subject, both directly and indirectly, to various laws and
regulations relating to its business. Laws and regulations applicable to the
Internet are increasing. The United States Congress has enacted Internet laws
regarding children's privacy, copyrights and taxation. This and other
legislation could decrease the growth of the Internet, decreasing the demand for
Mediatv's products and services. Other legislation could impose additional
burdens on companies conducting business online which could increase the cost of
doing business or otherwise have an adverse affect on Mediatv.
RISKS RELATED TO OUR SECURITIES
A Limited Number of Stockholders Control us, and their Interests may be
- -----------------------------------------------------------------------
Different Than Yours.
- ---------------------
Penny Green, our Chief Executive Officer beneficially owns approximately 67% of
our outstanding common stock and Thomas Braun, our Corporate Counsel
beneficially owns approximately 22% of outstanding common stock. These
stockholders are able to significantly influence all matters requiring approval
by our stockholders, including the election of directors and the approval of
significant corporate transactions. This concentration of ownership may also
have the effect of delaying, deterring or preventing a change in control of
Mediatv and may make some transactions more difficult or impossible without the
support of Ms. Green and Mr. Braun.
11
We Indemnify our Directors Against Liability to the Company and our
- -------------------------------------------------------------------
Stockholders.
- -------------
Mediatv's By-Laws allow for the indemnification of company Officers and
Directors in regard to their carrying out the duties of their offices. The
by-laws also allow for reimbursement of certain legal defenses.
As to indemnification for liabilities arising under the Securities Act of 1933
for directors, officers or persons controlling Mediatv, Mediatv has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy and unenforceable.
We Have Never Paid Dividends.
- -----------------------------
We have never paid any cash dividends and currently do not intend to pay any
dividends for the foreseeable future. To the extent that we require additional
funding currently not provided for in our financing plan, our funding sources
may likely prohibit the payment of dividends.
FORWARD- LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve risks and
uncertainties. These statements relate to future events or our future financial
performance. In some cases, you can identify forward-looking statements by
terminology including, "could" "may", "will ", "should", "expect", "plan",
"anticipate", "believe", "estimate", "predict", "potential", the negative of
these terms or other comparable terminology. These statements are only
predictions. Actual events or results may differ materially.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the common stock offered
through this prospectus by the selling shareholders.
DETERMINATION OF OFFERING PRICE
Selling shareholders will sell at a price of $.20 per share until our shares are
quoted on the OTC Bulletin Board, and thereafter at prevailing market prices or
privately negotiated prices.
DILUTION
The common stock to be sold by the selling shareholders is common stock that is
currently issued and outstanding. Accordingly, there will be no dilution to our
existing shareholders.
12
SELLING SHAREHOLDERS
The selling shareholders named in this prospectus are offering all of the
287,132 shares of common stock offered through this prospectus. The shares
include the following:
1. 287,132 shares of common stock that the selling shareholders
acquired from us in an offering that was exempt from registration
under section 4(2) and regulation S of the Securities Act of 1933
and completed on January 22, 2002.
2. The shares owned directly and indirectly by controlling shareholders
Penny Green and Thomas Braun are not being registered for sale.
The following table provides as of January 22, 2002 information regarding the
beneficial ownership of our common stock held by each of the selling
shareholders, including:
1. the number of shares owned by each prior to this offering;
2. the total number of shares that are to be offered for each;
3. the total number of shares that will be owned by each upon
completion of the offering;
4. the percentage owned by each; and
5. the identity of the beneficial holder of any entity that owns the
shares.
- ------------------------- -------------- -------------- ----------- ------------ ------------
Percent
Maximum Owned
Shares Number of Beneficial Upon
Owned Prior Shares Ownership Completion
Name of Selling To This Being After of this
Stockholder Offering Percent Offered Offering Offering
- ------------------------- -------------- -------------- ----------- ------------ ------------
Badior, Michael 2,000 Less than 1% 2,000 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Braun, Karin 5,000 Less than 1% 5,000 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Braun, Peter 57,500 2.5% 57,500 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Bruk, Steven 3,000 Less than 1% 3,000 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Chandra, Romi 1,000 Less than 1% 1,000 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Crottey, Timothy 1,500 Less than 1% 1,500 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Di Persico, Paulo 7,000 Less than 1% 7,000 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Dixon, Ted 5,000 Less than 1% 5,000 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Drescher, Tony 5,000 Less than 1% 5,000 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Farris, Ernest 3,000 Less than 1% 3,000 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Farris, Ingrid 3,000 Less than 1% 3,000 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Fossen, Shauna 1,500 Less than 1% 1,500 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Fuji, Michiko 1,000 Less than 1% 1,000 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Gaudet, Annette 1,700 Less than 1% 1,700 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Gaudet, Gina 1,700 Less than 1% 1,700 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Goldentur International
Corporation (1) 1,000 Less than 1% 1,000 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Green, Angela 61,000 2.7% 61,000 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Green, Violet 17,800 Less than 1% 17,800 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
(1) Goldentur International Corporation is not a broker-dealer or an affiliate
of a broker-dealer
13
- ------------------------- -------------- -------------- ----------- ------------ ------------
Percent
Maximum Owned
Shares Number of Beneficial Upon
Owned Prior Shares Ownership Completion
Name of Selling To This Being After of this
Stockholder Offering Percent Offered Offering Offering
- ------------------------- -------------- -------------- ----------- ------------ ------------
Hale, Rick 1,000 Less than 1% 1,000 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Hammer, Mark 1,700 Less than 1% 1,700 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Higgins, Duncan 5,000 Less than 1% 5,000 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Higgins, Norma 5,000 Less than 1% 5,000 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Kunos, Annamaria 1,000 Less than 1% 1,000 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Lower, Scott 1,000 Less than 1% 1,000 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Marimuthu, Prem 1,700 Less than 1% 1,700 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Martinov, Sergei 1,000 Less than 1% 1,000 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
McWhinney, Edward 3,000 Less than 1% 3,000 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Milka, Suzanne 1,000 Less than 1% 1,000 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Minh, Cao 1,000 Less than 1% 1,000 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Moschini, David 3,000 Less than 1% 3,000 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Muenz, George 1,700 Less than 1% 1,700 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Northcott, Bonny 1,000 Less than 1% 1,000 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Paterson, Tim 1,500 Less than 1% 1,500 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Remillard, Joan 6,666 Less than 1% 6,666 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Remillard, Heather 13,000 Less than 1% 16,000 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Richardson, Caroline 1,000 Less than 1% 1,000 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Ryan, Chris 11,666 Less than 1% 11,666 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Ryan, Kasia 3,000 Less than 1% 3,000 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Sakurai, Tomoko 1,000 Less than 1% 1,000 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Siam Oceanic Fund, Ltd. 1,000 Less than 1% 1,000 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Towill, David 2,500 Less than 1% 2,500 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Trinh, Anna 5,000 Less than 1% 5,000 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Trinh, Christine 1,000 Less than 1% 1,000 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Trinh, Chuc 5,000 Less than 1% 5,000 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Trinh, Theresa 1,000 Less than 1% 1,000 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Trinh, Vincent 10,000 Less than 1% 10,000 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Tunnicliffe, Ryan 15,000 Less than 1% 15,000 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Williams, Jay 1,000 Less than 1% 1,000 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Worland, Ian 1,000 Less than 1% 1,000 0 0
- ------------------------- -------------- -------------- ----------- ------------ ------------
Except as otherwise noted in the above list, the named party beneficially owns
and has sole voting and investment power over all shares or rights to these
shares. The numbers in this table assume that none of the selling shareholders
sells shares of common stock not being offered in this prospectus or purchases
additional shares of common stock, and assumes that all shares offered are sold.
14
The percentages are based on the 2,287,132 shares of common stock outstanding on
January 22, 2002.
Ryan Tunnicliffe is the Executive Director of Mediatv and he is the
director and editor of FashionFreakz.com.
Heather Remillard is the hostess of FashionFreakz.com.
Joan Remillard is the mother of Heather Remillard.
Chris Ryan is the Sales Manager.
Paulo Di Persico is the Director of Photography for FashionFreakz.com.
Violet Green is Penny Green's mother.
Angela Green is Penny Green's sister.
Peter Braun is Thomas Braun's father.
Other than as disclosed above, none of the selling shareholders or their
beneficial owners:
o has had a material relationship with us other than as a shareholder
at any time within the past three years; or
o has ever been one of our officers or directors or an officer or
director of our predecessors or affiliates.
PLAN OF DISTRIBUITON
Once the Company's shares are quoted on the OTC Bulletin Board or similar
market, and not before such time, the selling shareholders may sell some or all
of their common stock in one or more transactions, including block transactions:
1. On such public markets or exchanges as the common stock may from
time to time be trading;
2. In privately negotiated transactions;
3. Through the writing of options of the common stock;
4. In short sales; or
5. In any combination of these methods of distribution.
The sales price to the public may be:
1. The market price prevailing at the time of sale;
2. A price related to such prevailing market price; or
3. Such other price as the selling shareholders determine from time to
time.
The shares may also be sold in compliance with the Securities and Exchange
Commission's Rule 144.
The selling shareholders may also sell their shares directly to market makers
acting as principals or brokers or dealers, who may act as an agent or acquire
the common shares as a principal. Any broker or dealer participating in such
transactions as agent may receive a commission from the selling shareholders,
or, if they act as agent for the purchaser of such common stock, from such
purchaser. The selling shareholders will likely pay the usual and customary
brokerage fees for such services. Brokers or dealers may agree with that selling
15
shareholders to sell a specified number of shares at a stipulated price per
share and, to the extent such broker or dealer is unable to do so acting as
agent for the selling shareholders, to purchase, as principal, any unsold shares
at the price required to fulfill the respective broker's or dealer's commitment
to the selling shareholders. Brokers or dealers who acquire shares from time to
time in transactions in a market or on an exchange, in negotiated transactions
or negotiated prices, and in connection with such re-sales may pay or receive
commissions to or from the purchasers of such shares. These transactions may
involve cross and block transactions that may involve sales to and through other
brokers or dealers. If applicable, the selling shareholders may distribute
shares to one or more of their partners who are unaffiliated with us. Such
partners may, in turn, distribute such shares as described above. We can provide
no assurance that all or any of the common stock offered will be sold by the
selling shareholders.
We are bearing all costs relating to the registration of the common stock. The
selling shareholders, however, will pay any commissions or other fees payable to
brokers or dealers in connection with any sale of the common stock.
The selling shareholders must comply with the requirements of the Securities Act
and the Securities Exchange Act in the offer and sale of the common stock. In
particular, during such times as the selling shareholders may be deemed to be
engaged in a distribution of the common stock, and therefore be considered to be
an underwriter, they must comply with applicable law and may, among other
things:
1. Not engage in any stabilization activities in connection with our
common stock;
2. Furnish each broker or dealer through which common stock may be
offered, such copies of this prospectus, as amended from time to
time, as may be required by such broker or dealer; and
3. Not bid for or purchase any of our securities or attempt to induce
any person to purchase any of our securities other than as permitted
under the Securities Exchange Act.
LEGAL PROCEEDINGS
We are not aware of any pending or threatened legal proceedings which involve
Mediatv or any of its properties or subsidiaries.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
DIRECTORS AND OFFICERS
Our Bylaws provide that we shall have a minimum of one director and a maximum of
8 directors on the board at any one time. Our current directors and officers are
as follows:
16
NAME AGE POSITION
- ---- --- --------
Penny Green 30 Director, President and Chief Executive Officer
Penny Green will serve as a director until our next annual shareholder meeting
or until a successor is elected who accepts the position. Directors are elected
for one-year terms.
Penny Green, has been C.E.O., President and Director of Mediatv since October,
2000 and was developing the concept and business plan for Mediatv for several
years previously. Ms. Green worked as VP, Business Development of
Angelaudio.com, Inc. (OTCBB: AADC), an online music distribution company, from
May, 2000 to September, 2000. From April, 1999 to December, 1999 she worked as
VP, Production and Programming for Payforview.com Corp (OTC.BB.PAYV). From March
1998 to the present, Ms. Green has acted as the President of production,
consulting and finance company Bacchus Entertainment Ltd. Ms. Green was the
Director of International Sales for film distribution company Westar
Entertainment, Inc., a subsidiary of Eclipse Entertainment, Inc. (OTCBB: ECLE)
from February 1998 to November 1998. From 1996 to June 1998 Ms. Green worked as
a securities and entertainment lawyer at the firms Lang, Michener and Baily,
McLean. In 1995, Ms. Green articled at the firm Fasken Martineau (then Russel &
DuMoulin). Ms. Green has a B.A. in English Literature from the University of
Trent and an LL.B. (Bachelor of Laws) from the University of British Columbia.
Ms. Green has also taken courses in continuous disclosure and taking companies
public at Simon Fraser University.
SIGNIFICANT EMPLOYEES
Ryan Tunnicliffe
Ryan Tunnicliffe has been Creative Director of Mediatelevision.tv since October
2000. He is the director, editor and co-creator of Fashionfreakz.com. Mr.
Tunnicliffe has achieved success and recognition as an artist, musician and
filmmaker, talents that have led him in his primary occupation for the past
eight years. Mr. Tunnicliffe has directed eight short films, three of which have
been sold to the Canadian Broadcasting Corporation, and was invited to
participate in the 2001 European Arts Festival as a filmmaker. His experience
includes producing webcasts and interviews for such high profile bands as
Atlantic recording artist Bif Naked, and Vancouver bands Rhymes with Orange and
Pilgrims of the Mind. Mr. Tunnicliffe has a Bachelor of Fine Arts from the Emily
Carr Institute of Design.
FAMILY RELATIONSHIPS
There are no family relationships among our officers, directors, or persons
nominated for such positions.
17
LEGAL PROCEEDINGS
No officer, director, or persons nominated for these positions, and no promoter
or significant employee of our corporation has been involved in legal
proceedings that would be material to an evaluation of our management.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth the ownership, as of January 22, 2002, of our
common stock by each of our directors, and by all executive officers and by our
directors as a group. To the best of our knowledge, all persons named have sole
voting and investment power with respect to the shares, except as otherwise
noted.
SECURITY OWNERSHIP OF OFFICERS AND DIRECTORS
TITLE OF NO. OF CURRENT
CLASS NAME & ADDRESS SHARES %OWNED
- ------------------------------------------------------------
Common Thomas Braun 1 500,000 21.86%
309 - 837 West Hastings Street
Vancouver, BC V6C 3N6
Common Penny O. Green 2 1,500,000 65.58%
1904 West 16th Avenue, Suite 1
Vancouver, BC V6J 2M4
Common All Officers and 2,000,000 87.44%
Directors as a Group
1. Thomas Braun's shares are registered in the name of his private consulting
company Braun Management Services, Inc.
2. Penny O. Green owns 500,000 common shares in her name directly and also
beneficially owns 1,000,000 common shares owned by Bacchus Entertainment Ltd., a
company of which she is the sole shareholder.
Other than Penny Green and Thomas Braun, no person beneficially owns more than
5% of our outstanding common stock.
CHANGES IN CONTROL
There are currently no arrangements which would result in a change in control of
Mediatv.
18
DESCRIPTION OF SECURITIES
COMMON STOCK
The authorized capital stock of Mediatv consists of 80,000,000 Common Shares,
$0.0001 par value and 20,000,000 preferred shares, par value $0.0001. Holders of
the Common Stock have no preemptive rights to purchase additional shares of
Common Stock or other subscription rights. The Common Stock carries no
conversion rights and is not subject to redemption or to any sinking fund
provisions. All shares of Common Stock are entitled to share equally in
dividends from sources legally available, therefore, when, as and if declared by
the Board of Directors, and upon liquidation or dissolution of Mediatv, whether
voluntary or involuntary, to share equally in the assets of the company
available for distribution to stockholders. All outstanding shares of Common
Stock are validly authorized and issued, fully paid and non-assessable. The
Board of Directors is authorized to issue additional shares of Common Stock not
to exceed the amount authorized by Mediatv's Articles of Incorporation, on such
terms and conditions and for such consideration as the Board may deem
appropriate without further stockholder action.
The above description concerning the Common Stock of the Company does not
purport to be complete. Reference is made to Mediatv's Articles of Incorporation
and Bylaws which are available for inspection upon proper notice at Mediatv's
offices, as well as to the applicable statutes of the State of Delaware for a
more complete description concerning the rights and liabilities of stockholders.
VOTING RIGHTS
Each holder of Common stock is entitled to one vote per share on all matters on
which such stockholders are entitled to vote. Since the shares of Common Stock
do not have cumulative voting rights, the holders of more than fifty percent of
the shares voting for the election of directors can elect all the directors if
they choose to do so and, in such event, the holders of the remaining shares
will not be able to elect any person to the Board of Directors.
DIVIDEND POLICY
Holders of Mediatv's Common Stock are entitled to dividends if declared by the
Board of Directors out of funds legally available therefore. Mediatv does not
anticipate the declaration or payment of any dividends in the foreseeable
future. We intend to retain earnings, if any, to finance the development and
expansion of its business. Future dividend policy will be subject to the
discretion of the Board of Directors and will be contingent upon future
earnings, if any, Mediatv's financial condition, capital requirements, general
business conditions and other factors. Therefore, there can be no assurance that
any dividends of any kind will ever be paid.
STOCK TRANSFER AGENT
Upon completion of this offering, we intend to engage an independent stock
transfer agency firm to serve as our registrar and stock transfer agent.
19
SHARES ELIGIBLE FOR FUTURE SALE
The 287,132 shares of common stock registered in this offering will be freely
tradable without restrictions under the Securities Act. No shares held by our
"affiliates" (officers, directors or 10% shareholders) are being registered
hereunder. The remaining 2,000,000 of our outstanding shares are held by
affiliates: Thomas Braun owns 500,000 shares, all of which have been held for
more than one year, Penny Green owns 500,000 shares in her name and 1,000,000
shares through Bacchus Entertainment Ltd., of which she is the sole shareholder,
for a total of 1,500,000 shares, all of which have been held for more than one
year.
In general, under Rule 144, as currently in effect, any of our affiliates and
any person or persons whose sales are aggregated who has beneficially owned his
or her restricted shares for at least one year, may be entitled to sell in the
open market within any three-month period a number of shares of common stock
that does not exceed the greater of (i) 1% of the then outstanding shares of our
common stock, or (ii) the average weekly trading volume in the common stock
during the four calendar weeks preceding any sale. Sales under Rule 144 are also
affected by limitations on manner of sale, notice requirements, and availability
of current public information about us. Non-affiliates who have held their
restricted shares for two years may be entitled to sell their shares under Rule
144 without regard to any of the above limitations, provided they have not been
affiliates for the three months preceding any sale.
The 1,500,000 outstanding restricted securities held by Ms. Green, a director of
the company, are subject to the sale limitations imposed by Rule 144. The
500,000 outstanding restricted securities held by Mr. Braun, the Company's
Corporate Counsel, are subject to the sale limitation imposed by Rule 144. The
availability for sale of substantial amounts of common stock under Rule 144
could adversely affect prevailing market prices for our securities.
INTEREST OF NAMED EXPERTS AND COUNSEL
ACCOUNTANTS
Our Audited Financial Statements for the period of October 11, 2000 (inception)
to September 30, 2001 have been included in this prospectus in reliance upon
Stefanou & Company, LLP, as experts in accounting and auditing.
LEGAL MATTERS
Certain legal matters in connection with this offering will be passed upon for
us by our counsel, Thomas A. Braun. Mr. Braun owns 500,000 common shares with a
par value of $0.0001 in Mediatv.
20
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to our directors, officers and controlling persons, we have been
advised that in the opinion of the SEC, the indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification for liabilities, other than the
payment by us of expenses incurred or paid by our directors, officers or
controlling persons in the successful defense of any action, suit or
proceedings, is asserted by the director, officer, or controlling person in
connection with any securities being registered, we will, unless in the opinion
of our counsel the matter has been settled by controlling precedent, submit to
court of appropriate jurisdiction the question whether the indemnification by us
is against public policy as expressed in the Securities Act and will be governed
by the final adjudication of the issues.
DESCRIPTION OF BUSINESS
THE STREAMING CONTENT INDUSTRY
Streaming may be characterized as a client-side playback of time-based media
that originates on a server. Streaming media is sound and pictures that are
transmitted on the Internet in a streaming or continuous fashion, using data
packets. Streaming video is a sequence of moving images that are sent in
compressed form over the Internet and exhibited to the viewer as they arrive.
Streaming allows a steady flow of media data from the server to the client,
allowing viewing or listening to begin seconds after a stream is demanded.
Effective reception of streaming media requires some form of broadband
technology such as cable modem or DSL.
A streamed file is simultaneously downloaded and viewed, but leaves behind no
physical file on the viewer's machine. This allows the content owner control
over the dissemination of the content, and allows the content owner to restrict
access to the content to person who are connected to the server and receiving
the stream. Restricting access may reduce the amount of pirating and
unauthorized exploitation of the content.
To access streaming media, a viewer needs a player, which is a program that
uncompresses and sends video and audio data to the viewer's computer. Major
streaming media technologies include RealSystem G2 from RealNetwork, and
Microsoft Windows Media.
We believe that the Internet is establishing itself as a leading communications
tool as well as an entertainment medium. Statistics show that the Internet is
growing in popularity worldwide. We believe that broadband access is creating
new media opportunities. Based on our observations of the Internet and of
digital media that is available through other mediums, we believe that there is
a growing demand for media which allows viewers to inquire, discuss, argue,
play, shop, critique, investigate and inform.
Syndication companies have traditionally made it possible for comics, articles,
photos and television shows to reach new audiences. Syndication has been a
fundamental way to distribute content on radio, television and newspapers for
decades. Recently, companies like Screaming Media and iSyndicate have built on
21
the traditional syndication model to distribute text, images and audio over the
Internet. We believe that opportunities exist for the syndication of video over
digital networks.
Based on our observations and based on conversations with our clients, we
believe that digital media is becoming an essential communication tool for many
organizations. It is our observation that many producers and exhibitors of
entertainment products are including an Internet component in their production
and marketing plans. It is our assumption that, as opposed to the more generic
television audience, the Internet audience has individual niches, demographics,
and expectations. We believe that content for the Internet should be designed
with niche audiences in mind. We also believe that video content for the
Internet can maximize communication and commerce potential by including
interactive elements. Because the management of Mediatv is young, and because we
are in daily contact with other young people in the media business, we have
decided to position ourselves to target a younger audience, especially the
audience in the 18 - 35 age range. We are assuming that this market exists based
on anecdotal evidence. We believe that due to the youth of our management and
the expertise of our management in areas associated with younger audiences, we
will be able to create and acquire media that appeals to a younger audience.
Since we specialize in designing shows for the Internet, we intend to work with
television production companies and other producers of entertainment to help
them ensure that the Internet potential of their brand is exploited for maximum
revenues.
By forging relationships with content creators, we intend to make available to
web sites a selection of streaming video, animation and other forms of moving
images. We also intend to make some of these products available to brand
managers for product placement, sponsorship and branding.
The Internet industry, the film industry and the music industry have been
struggling with ways in which to converge technology and entertainment to create
a business model that combines the traditional forms of entertainment while
maximizing interactive features of the Internet. At Mediatv we intend to work
towards creating digital media solutions which allow effective communication
between digital content creators and viewers.
THE COMPANY
The concept behind Mediatv is based on our assumption that over the next few
years, as the Internet grows in its capacities and as the worldwide penetration
of bandwidth increases, the demand for original video programming designed
especially for the Internet will increase. We believe commercial opportunity
exists for companies that specialize in the production or distribution of
episodic video that meets today's demands of the Internet.
As a distribution company, and as the link between today's content producers and
content exhibitors, we intend to develop sustainable business models which
incorporate the exhibition of video on the Internet. We intend to include as
part of these revenue models product placement, advertising, syndication,
e-flyers and more. We also intend to use our experience creating and producing
22
Internet series as a platform for creating proprietary software for various
aspects of streaming video production and syndication.
PRODUCTION SERVICES
- -------------------
We design and produce digital media such as websites, streaming video, flash
movies, banners and audio files. We help our clients create a strategy for
promoting their brand, product or services using digital media.
Mediatv works with an experienced team of people capable of producing video
especially designed for viewing on the Internet. From concept to delivery, we
take care of all aspects of digital video production, including developing the
brand, providing all equipment, putting together the team, and completing all
photography, post-production and compression. For these services, we rely on
subcontractors for now and possibly full-time employees in the future as
permitted depending on our cash flow.
We are currently marketing our production services and we are in discussions
with a company for a contract for the production of customized streaming video.
DISTRIBUTION SERVICES
- ---------------------
We have distribution services available for content producers who want to
syndicate their content throughout the Internet - this includes television
production companies, television networks, websites and independent producers.
As a distributor, we can work with a production company to create a web version
of an established television series, and in some cases we will pre-sell a series
package (10 or more episodes). In addition to selling product directly to other
sites, Mediatv can assist companies in selling their streaming video on a
pay-per-view basis to an established viewer base.
We are currently testing the market to help us determine what types of streaming
video content is likely to be licensed by websites. The types of product which
we are testing include extreme sports clips, animated series, comic strips and
magazine type video shows.
TELEVISION AND FILM FINANCE
- ---------------------------
Mediatv intends to leverage pre-sales agreements that it hopes to arrange for
television shows and access interim financing through our network of investors.
The potential exists for us to have access to gap financing and interim bank
financing. Also, being located in Vancouver may allows Mediatv access to
numerous grants, loans and tax incentives available for production filmed in
Canada. Mediatv intends to work with production companies and other distribution
companies to help put together the many elements that need to be combined for
the successful financing of a media project. For these services, we receive
consulting fees, a percentage of revenues, and certain distribution and
ancillary rights.
23
CONTENT FOR LICENSING
- ---------------------
CURRENT PROJECTS
Mediatv has been developing the prototypes for all of its in house series,
beginning with FASHIONFREAKZ. The main target market of all our shows is people
who surf the Internet on a daily basis who have a few minutes to spare for some
entertainment. Each show also appeals to a niche audience. Our initial series,
although set in Vancouver, is designed to appeal to audiences around the world.
We intend as our target market, people who have high-bandwidth Internet access.
FASHIONFREAKZ
FASHIONFREAKZ is our first Internet series produced in house and we have
completed 6 episodes and completed principal photography on 4 more. Each episode
is between 3 and 8 minutes and is encoded for the Internet using Windows Media
technology. The show is designed for an Internet audience. We also have the
capabilities to web cast an event live.
EVENTS. FashionFreakz covers local Vancouver fashion events that garner local
press attention such as the M.A.C. Viva Glam Garden Party, Sensations 2001, and
the opening party and fetish fashion show for the Showcase television series
KINK. Sometimes we are paid to cover an event such as the episode we created for
RaHouse Clothing for their summer fashion and dance party extravaganza. We cover
events from March through November.
OTHER FORMATS. In addition to making the series available for streaming on the
Internet via Windows Media technology, we are also creating several other
formats which will be available for purchase in our online store. These include
a DVD, CD-Rom and VHS formats of the show. We are also looking into new and
developing technologies for streaming video.
TELEVISION SERIES. We believe that FashionFreakz has potential as a television
series and we are currently contacting North American broadcasters to secure
broadcast license agreements. If we are successful in exhibiting FashionFreakz
on television, we expect to receive revenues from the broadcast license, from
the increased traffic on our website, and from the increased value of the
FashionFreakz brand which could result in increased merchandising revenues.
FASHION INTERNET SERVICES. Through Fashionfreakz, Mediatv is making specialized
Internet services available to the fashion industry, including website creation,
hosting, and e-commerce services. We are creating a fashion directory as well as
an e-business system which will allow merchants to sell their wares through our
sites. We currently have a selection of promotional services available which
include logos on flyers, sale announcements to targeted email lists, product
placement and live advertisements in the show. We have entered into an agreement
with Galaxy Blue, a small jewelry manufacturer, to handle e-commerce and
promotion for their products. The following is a list of some of the services
that we are currently marketing to the fashion industry:
24
- --------------------------------------------------- ------------ -------------
Service Set Up Fee Monthly Fee
- --------------------------------------------------- ------------ -------------
Model listing on website with photos & resume $40 $20
- --------------------------------------------------- ------------ -------------
Basic Web Page and Listing for Designers $100 $30
- --------------------------------------------------- ------------ -------------
Web Page, Listing, Links and Promotion for Retail $150 $45
- --------------------------------------------------- ------------ -------------
Bronze E-Commerce Package (10 items) $100 $50
- --------------------------------------------------- ------------ -------------
Silver E-Commerce Package (20 items) $200 $95
- --------------------------------------------------- ------------ -------------
Gold E-Commerce Package (50 items) $400 $180
- --------------------------------------------------- ------------ -------------
MARKETING. Our marketing plan for the show includes flyers, emails, co-branding
with other sites, links on the Internet, publicity, parties, posters and
merchandise. We hosted a launch party for FashionFreakz on April 20, 2001 and we
were successful in getting some publicity for the show. We have received
positive press coverage in magazines and newspapers in Vancouver. We have a deal
in place with a website called clubvibes.com, and we are currently promoting our
most recent episode through an article section on the front page of their site
for each city in which they have a presence. Clubvibes.com is a popular club
listings site in Vancouver and has recently expanded to include San Francisco,
Las Vegas, San Diego, Seattle, Calgary, Edmonton, Victoria, Whistler, Santa
Barbara, Boston, Portland and Toronto. We are currently negotiating with other
websites for exhibition of our first ten episodes and we are looking for
advertisers to incorporate into the streaming video. We have a banner that we
try to put up at the events that we cover. We give out flyers to people at the
shows we cover and we distribute flyers in clothing stores and record stores
throughout Vancouver. We have several commissioned sales people currently
promoting our services within the fashion industry in Vancouver, British
Columbia. If we are able to establish the name and brand of FashionFreakz in
Vancouver, we plan to expand to other cities.
WEBSITES
Mediatv will have the rights and control the websites for many of the shows
which we produce or distribute. We are building the infrastructure to support
all of the websites which we control. The websites are designed to maximize
revenue opportunities, including banner ads, directories, eflyers, pop up and
other advertising, and data mining. Mediatv is setting up a store and we have
merchant accounts with American Express, VISA and Mastercard. We are also in the
process of developing databases for customer profiles.
WWW.FASHIONFREAKZ.COM is the first ancillary website we are building. In
addition to watching the video, we plan to allow viewers the opportunity to
purchase clothes online after viewing a show by linking to other websites or by
purchasing directly from the Mediatv store. We also intend to feature
directories of designers and retail stores on the website.
BRANDING
Our intention is to establish for every series that we create, a brand that has
value in many different forms of media. We intend to approach broadcasters to
create television shows out of brands that we develop. We anticipate that we
will be successful in arranging broadcast licenses for one in every ten series
that we produce. We also intend to exploit ancillary rights of each brand such
as publishing and merchandising, by partnering with established companies in
25
those areas. In most cases, we will own the exclusive copyright and all
ancillary rights for all of the series which we produce, and brands that we
create.
OTHER SERIES IN DEVELOPMENT
We are using the templates, marketing materials, contracts and revenue plan that
we have created for FASHIONFREAKZ as a basis for developing our other shows. Our
programs in development include a health show, a travel show, a social issues
show and a music show.
DAXULA
Through an agreement with Bacchus Entertainment Ltd., Mediatv is currently the
exclusive marketing and distribution company for the online series DAXULA.
Daxula is a modern horror soap opera about two vampire sisters. Sarah and Dax
were made into vampires while still in their teens, hundreds of years ago. Since
then, the girls have seen and done horrible things that most mortals cannot even
imagine. Today, they continue to struggle against their own evil natures as they
lead a new generation of vampires against the undead hordes of The Man - an
ancient vampire who rules the underworld of drugs, crime, and high-tech
corruption. Daxula is an ongoing series of 5-minute episodes broadcast on the
Web at www.daxula.com.. The series has been especially designed for the Internet
and has as its niche target market teenage girls to whom the content of the
series relates (as the struggles of the vampires are similar to the challenges
faced by adolescent girls), and who are a fast growing segment of the Internet
audience. Two seven minute episodes of DAXULA are already completed and Mediatv
is developing packages to pre sell ten more episodes.
Bacchus Entertainment Ltd. currently owns the copyright to Daxula. Bacchus is
owned 100% by Penny Green, the President of Mediatv.
PRODUCT PLACEMENT, ADVERTISING AND SPONSORSHIP
- ----------------------------------------------
Mediatv is currently building alliances with advertising companies, product
placement agencies, and telecommunications and technology companies to maximize
revenue opportunities for our clients. From product placement to building a
consumer database, Mediatv intends to develop and actualize plans for clients to
find innovative ways to generate real revenue from their streaming video assets.
PROPRIETARY SOFTWARE
- --------------------
We are building an online store which enables us to offer e-commerce and
promotional services. We are building the entire store and we own the copyright
to all of the software that we produce. Our plan is to offer low cost services
to small and medium sized businesses to enable them to sell and promote products
and services through our web sites. We are designing the store so that
information regarding the products and services can be uploaded directly by the
client, including product name, description, picture, attributes, maximum
quantity, price, logo, and a store description. Our plans are to allow our
clients to apply online for our e-commerce services and all information will be
26
stored in a database which we are building. The User shopping experience that we
are creating includes allowing consumers to add and remove products from a
basket, charge their purchase to either American Express, VISA or Mastercard,
set attributes for each product, and view products through a menu of categories
or through a selection of stores.
We intend to use our experience creating and producing Internet series as a
platform for creating proprietary software for various aspects of streaming
video production and syndication. We intend to develop software with templates
for authoring interactive episodic shows for the Internet that will allow us to
simultaneously publish interactive shows to various platforms, such as WAP
enabled devices, the Internet and other handheld devises, and automatically
include sponsorship, advertising and interactive features. We intend to include
media management features in the software which we develop.
ENCODING, BANDWIDTH AND MEDIA MANAGEMENT
- ----------------------------------------
We have agreements in place for reselling e-commerce packages, domain names, web
hosting and bandwidth. We are building relationships with technology companies
to allow us to offer services to our clients at the lowest prices.
STRATEGIC ALLIANCES
BACCHUS ENTERTAINMENT LTD.
Bacchus Entertainment Ltd., a British Columbia company ("Bacchus") is the
producer of Daxula, the Internet series. In November, 2000, Bacchus completed
production of the first two episodes of Daxula, which were approximately 7
minutes each (the "Films"). Through an agreement with Bacchus, Mediatv has
exclusive world-wide distribution rights for all media, including rights to
exhibit the Films on all forms of television, on airlines, on ships, the right
to manufacture, sell and exploit CD-ROMs, compact disks, and other physical
carriers containing the Films, and the rights to encode the Films and distribute
them on the Internet. After full recoupment of all of Mediatv's expenses, the
agreement gives Mediatv 50% of all gross receipts from exploitation of the
rights in the territory. In addition to licensing the Films, the agreement gives
Mediatv the exclusive distribution rights to any episodes of Daxula that are
filmed and edited prior to January 5, 2003. The Agreement includes at $10,000
payment to Bacchus in the form of 1,000,000 common shares of Mediatv at a price
of $0.01 per share. The shares were issued to Bacchus in October, 2000. Mediatv
has an option to purchase all of the copyright, title and interest to Daxula,
including all trademarks, copyrights, licenses, merchandising rights,
novelisation rights, sound track recording rights, music publishing rights,
publishing rights and all underlying rights or elements contained in the Films.
Seven more episodes of Daxula of 5 minutes each have been written but not
produced. The price of the option is two million common shares of Mediatv and
the option may be exercised by Mediatv at any time prior to January 5, 2003.
Under the agreement, Mediatv is obligated to market the Films and to spend a
minimum of $5,000 to market the Films. So far, Media has spent approximately
$5,000 on a final sound mix, titles, encoding the Films for the Internet using
Windows Media and Quicktime technologies, CD-Rom packaging for the Films and on
building the website www.daxula.com. So far, Mediatv has not generated any
revenues from the exploitation of the Films. Mediatv's Chief Executive Officer,
Penny Green, is the sole shareholder of Bacchus.
27
DOMAINPEOPLE.COM
Mediatv has entered into a partner-branded agreement with Domainpeople.com. As
per the terms of the Agreement, the relationship between Mediatv and
Domainpeople.com is not a partnership agreement rather the term "Partner" is
used to refer to the DomainPeople Partner-branded Program. DomainPeople and
Mediatv are not partners. The parties are Independent Contractors of each other.
The agreement will enable us to offer the sale of domain names through our web
sites. The terms of the agreement allows Mediatv to sell domain names with the
...com, .net, .org, and .tv and new extensions as well as country extensions at
prices which we determine and we pay a wholesale price to Domainpeople.com.
Mediatv is obligated to purchase at least 20 domain names at wholesale prices
during the one year term of the agreement.
NETNATION
Mediatv has signed up for the reseller program at Netnation Communications Inc.
("Netnation"), which entitles us to resell NetNation's web solutions.
NetNation's web solutions include many web hosting packages with some value
added services like e-commerce and web streaming. We are charged NetNation's
retail account set-up and recurring monthly fees for each of the accounts we
resell, less a discount, depending on how many resold accounts we have. We are
entitled to a 10% discount rate for the first 5 resold accounts, 20% for 6 - 10
resold accounts, 30% for 11 to 20 resold accounts and 35% on 21 plus resold
accounts. We are responsible for billing our clients directly, and we may charge
any fee and package in any way the NetNation web solutions. As a reseller, we
receive 24/7 technical support and customer care. NetNation also provides us
with the ability to manage our accounts, track our clients, create new accounts
and upgrade web site functionality, add e-mail boxes or delete services. As a
reseller, we are entitled to be listed as a reseller on Netnation's website,
www.netnation.com, along with information detailing the products and services
that we offer. We became a NetNation reseller by purchasing a NetNation master
account at a regular price and registering as a reseller. The details of how the
NetNation reseller program works are contained at
http://www.netnation.ca/partner/resellerprogram.cfm and are attached to this
registration statement as an Exhibit.
PSIGATE
We have a merchant agreement with PsiGate through which we have set up merchant
accounts to allow us to process payments from VISA, Mastercard and American
Express online through our store and our web sites. These merchant agreements
allow our customers and online shoppers to charge products or services to their
credit cards.
MARKETING
We are developing alliances and associations to add to the current agreements
that we hope will provide Mediatv with access to a dynamic, current and diverse
selection of streaming and interactive video. We develop strategic marketing
plans for each of the projects and shows which we are developing or
distributing. Typically, our marketing plan for a show will be based around
hosting parties and gala fashion events in Vancouver that fund themselves, and
publicity through the parties and through press contacts that we have developed.
To market Mediatv as a distribution company, we intend to advertise in industry
magazines and newspapers such as the Hollywood Reporter, Variety, Playback
magazine and Screen International. We also plan on attending trade conventions
at which television series are bought and sold, such as the North American
Television Producers Association (NATPE) market in Las Vegas, Nevada in January,
the American Film Market (AFM) in Los Angeles, California in February, MIP-TV in
Cannes, France in April, MIF - the Cannes International Film Festival and Market
in May, the National Association of Broadcasters (NAB) market in Las Vegas,
Nevada in June and MIPCOM in Cannes, France in October.
We are in the process of creating a CD-ROM which will serve as a digital
portfolio for Mediatv. We are building the portfolio using Macromedia Flash 5.0.
The portfolio features different examples of media we have created. Our
categories of digital media include websites, streaming video, flash movies,
banners and audio files. Other services we offer include digital compression,
brand development and digital media strategy. Once our portfolio is complete, we
28
intend to promote our digital media products and services through independent
sales agents. We have been interviewing candidates for positions as independent
sales agents for several months.
FACILITIES
We are not currently obligated to pay rent as we share offices with Bacchus
Entertainment Ltd., and receive use of the office facilities at 1904 West 16th
Avenue, Suite 1, Vancouver, BC V6J 2M4. We share expenses for telephone, fax and
Internet connectivity with Bacchus. We have use of a production facility with a
digital studio located in the home of our Executive Director, Ryan Tunnicliffe,
in Vancouver. We paid Mr. Tunnicliffe 15,000 common shares of Mediatv for the
use of his studio and all of his digital production equipment for fifteen
months. After December 31, 2001, we may continue to use and access the studio
and equipment for a price of 1,000 common shares of Mediatv per month.
NEW PRODUCTS OR SERVICES
Other than the web services we are planning to provide to the fashion industry
through FashionFreakz, we currently have no new products or services announced
or planned to be announced to the public.
COMPETITION
Once we begin offering products or licenses our main, existing and potential
competitors for content syndication and distribution, digital media production,
and creation of interactive software and revenue models will include:
o syndication companies which distribute content on the Internet, such
as Yellowbrix.com, Screamingmedia.com, Isyndicate.com, Newsedge.com
and Mondo Media, which is syndicating 12 weekly animated series to
30 distribution partners including Netscape, Netcentre, NBCi and
Entertaindom.
o streaming video content aggregators such as Video Networks Inc.,
Eveo, CinemaNow and AtomFilms;
o streaming video communities such as 120seconds.com and heavy.com;
o application infrastructure providers such as Loudeye Technologies,
Netnation and RealNetworks;
o television and film distribution companies such as Hearst
Entertainment, New Line Television, and SPI International; and
o production companies including Hollywood studios and major
independents such as Alliance-Atlantis.
29
OUR COMPETITIVE POSITION
We believe that the quality, format, and production budgets of the video content
that is appropriate for the Internet today is substantially different from what
is required for programming currently produced and licensed for television. We
believe that content for the Internet should be more edgy than television, that
it speaks to a younger audience and that the demand for Internet shows is more
varied and more niche orientated. We have been careful to keep our costs down by
limiting the number of employees. We have developed crews for the production of
digital media that are smaller in number than crews usually required for
television production. Our crew for the production of Fashionfreakz, for
example, requires only four or five people. This is because each person is able
to provide several functions and because we use simple and effective production
techniques. The director of Fashionfreakz also does the sound recording, and all
post production. The hostess of Fashionfreakz usually does her own costume
design, hair and makeup. We always shoot video using digital cameras, which is
much cheaper than shooting on film. Our cost saving measure enable us to provide
digital production services at a competitive rate. We hope that our low
production costs for video we create ourselves, such as Fashionfreakz, will
allow us to break even sooner than more expensive productions.
Many of the members of our production teams and many of the other independent
contractors hired by Mediatv work from home, and most of them use their own
equipment and computers to create media or provide us with other services. We
hope that this will allow us to scale up our infrastructure if we are able to
secure more contracts to produce digital media or if licensing agreements allow
us to create more content in house. We believe that in today's volatile market
place, it is essential to have an easily scaled infrastructure.
Our objective is to develop business models for distributing entertainment in a
way that is profitable for us and for our clients. We believe that over the next
few years, web sites will find an increasing demand for streaming video and
other moving image content as high bandwidth penetration increases. Also,
advertising companies and brand managers are looking for ways to use the
Internet which go beyond simple banner advertising. We believe that by focusing
on all the elements involved in the exhibition of streaming video on the
Internet we will develop an expertise in that niche which will give us a
competitive edge over television distribution companies, whose management is
accustomed to dealing with bigger budget shows and wider audiences, and over
content syndicators whose focus is on delivering news items in the form of text
and photos. We intend also to distribute media through traditional forms such as
television and video.
In addition to providing product to web sites, with each show we are creating a
brand with a potential franchise. We believe that the value we create in these
brands may provide us with additional revenue streams such as ancillary rights,
merchandise sales and television broadcast licenses.
We believe that off line entertainment companies will be looking for companies
to partner with to forge into the Internet marketplace. By offering expertise
and services designed to bridge the gap between traditional entertainment and
the Internet, we will be targeting off line entertainment companies.
30
SOURCES AND AVAILABILITY OF RAW MATERIALS
As of the date of this prospectus, we have no need for raw materials or
suppliers.
CUSTOMER BASE
As of the date of this prospectus, we have very few customers. If we are able to
establish a customer base in the future, we may become dependent on a few major
customers.
INTELLECTUAL PROPERTY
We own the copyright in all of the series which we produce. We control the
domain names www.fashionfreakz.com, www.mediatelevision.tv , and www.daxula.com.
We have applied for a registered trademark for Fashionfreakz.com with the US
Patent and Trademark Office.
LEGISLATION AND GOVERNMENT REGULATION
Laws and regulations directly applicable to Internet communications, commerce
and advertising are becoming more prevalent. In addition to recent laws enacted
by the United States Congress regulating children's privacy, copyrights and
taxation, Mediatv is subject to rules and regulations around the world which
effect the business of the Internet. Also, because Mediatv carries on business
in Canada, it is subject to laws regarding employment, taxes and other
regulatory issues for its Canadian operations.
The European Union recently enacted its own privacy regulations that may result
in limits on the collection and use of certain user information. The laws
governing the Internet, however, remain largely unsettled, even in areas where
there has been some legislative action. It may take years to determine whether
and how existing laws such as those governing intellectual property, privacy,
libel and commerce may prompt calls for more stringent consumer protection laws,
both in the United States and abroad, that may impose additional burdens on
companies conducting business on the Internet. Furthermore, the Federal Trade
Commission has recently investigated the disclosure of personal identifying
information obtained from individuals by Internet companies. Evolving areas of
law that are relevant to our business include privacy law, proposed encryption
laws, content regulation and sales and use tax. For example, changes in
copyright law could require us to change the manner in which we conduct business
or increase our costs of doing business. Because of this rapidly evolving and
uncertain regulatory environment, we cannot predict how these laws and
regulations might affect our business. In addition, these uncertainties make it
difficult to ensure compliance with the laws and regulations governing the
Internet. These laws and regulations could harm us by subjecting us to liability
or forcing us to change how we do business.
31
RESEARCH AND DEVELOPMENT
To date, we have not undergone any research and development, except as required
to build our websites and our Internet series, and some inquiries to help us
determine for which type of streaming video content we should acquire
distribution rights.
ENVIRONMENTAL LAW COMPLIANCE
To the extent which environmental compliance may be necessary, we do not
anticipate any significant compliance expense.
EMPLOYEES
As of January 22, 2002, we have two full time contractors that work 40 hours a
week, our President Penny Green and our Executive Director, Ryan Tunnicliffe.
Approximately 10 people work for Mediatv on a contract basis in various areas of
Production of the series FashionFreakz.com, including Director of Photography,
stills photographer, writer, web designers, make-up artists and camera operators
We also engage independent contractors in the areas of bookkeeping, accounting,
sales, business development and legal services. We have several sales agents who
work on a commission only basis, that market our production services and sell
advertising space in our multi-media properties. None of our employees are
represented by a collective bargaining unit, and we consider our relations with
our employee and contractors to be good.
Reports to Security Holders
Upon effectiveness of this registration statement, we will be subject to the
reporting and other requirements of the Securities Exchange Act of 1934 and we
intend to furnish our shareholders annual reports containing financial
statements audited by our independent auditors and to make available quarterly
reports containing unaudited financial statements for each of the first three
quarters of each year.
The public may read and copy any materials that we file with the SEC at the
SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549.
The public may obtain information on the operation of the Public Reference Room
by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that
contains reports, proxy and information statements, and other information
regarding our electronic filings with the SEC. The address of that site is
http://www.sec.gov. Other information may be obtained from our Company website,
http://www.mediatelevision.tv
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The following discussion should be read in conjunction with our consolidated
financial statements, including the notes thereto, appearing elsewhere in this
prospectus. The discussions of results, causes and trends should not be
construed to imply any conclusion that these results or trends will necessarily
continue into the future.
OVERVIEW
Mediatv is a development stage company and our efforts have been principally
devoted to the business of producing, acquiring, and syndicating episodic series
designed especially for the Internet.
We anticipate that our business will incur significant operating losses in the
future. At this time, we believe that our success depends on our ability to
build a selection of quality content available for distribution on the Internet.
The Company's existence is dependent upon management's ability to develop
profitable operations and resolve it's liquidity problems. Management
anticipates the Company will attain profitable status and improve its liquidity
through the continued developing of its products, establishing a profitable
market for the Company's products and additional equity investment in the
Company.
32
In order to improve the Company's liquidity, the Company is actively pursuing
additional equity financing through discussion with investment bankers and
private investors. There can be no assurance the Company will be successful in
its effort to secure additional equity financing. If the Company is unable to
raise equity or obtain alternative financing, the Company may not be able to
continue operations with respect to the filming further episodes of
Fashionfreakz and the Company may have to cease distribution and acquisition
activities.
If operations and cash flow continue to improve through these efforts,
management believes that the Company can continue to operate. However, no
assurance can be given that management's actions will result in profitable
operations or the resolution of its liquidity problems.
If we are able to raise sufficient funds, we intend to spend $10,000 over the
course of the next year in the development of our contacts for a distribution
and licensing network in North America, and in the release and marketing of a
FashionFreakz DVD. If we are able raise additional financing , we expect to
expand our operations with the purchase of $3,000 worth of major equipment. The
Company's business plan provides for an increase of 4 part time contractors in
the next 12 months.
RESULTS OF OPERATIONS
The Company sustained a net loss of $ 63,804 for the year ended September 30,
2001 and $14,579 for the six month ended March 31, 2002, respectively. Losses
during that period were primarily attributable to the development of our
websites and administrative fees.
As of March 31, 2002, we had a deficit in working capital of approximately $
11,411. We intend to continue to make financial investments in marketing,
content, technology and website development. The Company expects to have
revenues from digital production services within the next quarter. The Company
expects in incur substantial losses over the next year.
We have entered into various license agreements and strategic alliances in order
to build our audience, provide content, and generate on-line traffic, and
generate revenue through on-line sales of products and services. We expect that
we will continue to enter into such arrangements.
We have been negotiating with a large media company for licensing of episodes of
Fashionfreakz.com We have also been negotiating with several content producers
regarding acquiring their content for distribution by Mediatv. These alliances
may involve significant amounts of intangible assets, or non-cash charges that
may affect our operating results over the next several fiscal periods.
We have been negotiating with companies to build marketing alliances. These
alliances may involve significant amounts of intangible assets, or non-cash
charges that may affect our operating results over the next several fiscal
periods.
LIQUIDITY AND CAPITAL RESOURCES
As a result of the Company's operating loss of $ 78,383 from its inception on
October 11, 2000 through March 31, 2002, the Company generated a cash flow
deficit of $ 51,434 from operating activities, adjusted principally for
depreciation and amortization of $ 200, and equity based compensation of $
31,533. The Company met its cash requirements during this period through the
receipt of $ 16,204 of cash advanced from an entity controlled by the Company's
President as well as $ 36,117 received in exchange for the sales of the
Company's common stock in a private placement to sophisticated investors
While the Company has raised capital to meet its working capital requirements in
the past, additional financing is required, in order to meet current and
projected cash flow deficits from operations. The Company plans to seek
financing in the form of equity and debt. The Company believes that once it goes
fully reporting and obtains a listing, it will be able to attain sufficient
equity financing through the sale of its securities in order to continue its
current level of operations. Until that time, the Company's President will be
deferring any cash compensation, as will the Company's attorney. The Company
will continue to engage outside contractors and consultants who are willing to
be paid in stock rather than cash, which will mitigate the Company's deficiency
in liquidity. Expenses incurred which cannot be paid in stock, such as Auditors
fees, will be paid through shareholders loans from the Company's President until
such time as the Company can raise sufficient equity financing. The Company
anticipates these expenses to be no more than $15,000 per year to maintain
operations. While the Company believes these measures will sufficiently address
the Company's deficiency in liquidity, there are no assurances the Company will
be successful in raising the funds required. If the Company is unable to raise
the necessary funds, the Company may not be able to pay its internet hosting
fees, making the Company's website and content unavailable to the public, and
the Company may not be able to pay its auditor which could result in failure to
comply with accounting disclosure requirements.
The Company borrowed $16,204 from Bacchus Entertainment, Ltd., a company owned
by the Company's President, Penny Green. The funds from the loan were used for
working capital purposes. The loan is interest free and there are no specific
repayment terms.
33
As the Company continues to expand, the Company will incur additional costs for
personnel. In order for the Company to attract and retain quality personnel,
management anticipates it will continue to offer competitive salaries, issue
common stock to consultants and employees, and grant Company stock options to
current and future employees.
The effect of inflation on the Company's revenue and operating results was not
significant. The Company's operations are located primarily in Canada and there
are no seasonal aspects that would have a material effect on the Company's
financial condition or results of operations.
The Company's independent certified public accountants have stated in their
report dated January 21, 2002 included herein, that the Company has incurred
operating losses from its inception, and that the Company is dependent upon
management's ability to develop profitable operations. These factors among
others may raise substantial doubt about the Company's ability to continue as a
going concern.
NEW ACCOUNTING PRONOUNCEMENTS
The Company adopted Statement of Financial Accounting Standards No. 132,
Employers' Disclosures about Pension and Other -Post Employment Benefits ("SFAS
132") in the year ended September 30, 2001. SFAS 132 establishes disclosure
requirements regarding pension and post employment obligations. SFAS 132 does
not affect the Company as of September 30, 2001.
The Company adopted Statement of Financial Standards No. 133, Accounting for
Derivative Instruments and for Hedging Activities ("SFAS 133") in the year ended
September 30, 2001. SFAS 133 requires that certain derivative instruments be
recognized in balance sheets at fair value and for changes in fair value to be
recognized in operations. Additional guidance is also provided to determine when
hedge accounting treatment is appropriate whereby hedging gains and losses are
offset by losses and gains related directly to the hedged item. SFAS 133's
impact on the Company's consolidated financial statements is not expected to be
material as the Company has not historically used derivative and hedge
instruments.
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101 (" SAB 101"), Revenue Recognition in Financial Statements,
which will become effective December 31, 2000. The Company does not expect the
standard to have a material effect on its financial condition or operating
results.
In March 2000, the Financial Accounting Standards Board issued interpretation
No. 44 ("FIN 44"), "Accounting for Certain Transactions Involving Stock
Compensation, an Interpretation of APB Opinion No. 25". FIN 44 clarifies the
application of APB No. 25 for (a) the definition of employee for purposes of
applying APB No. 25, (b) the criteria for determining whether a plan qualifies
as a noncompensatory plan, (c) the accounting consequences of various
modifications to previously fixed stock option or award, and (d) the accounting
for an exchange of stock compensation awards in a business combination. FIN 44
is effective July 2, 2000 but certain conclusions cover specific events that
occur after either December 15, 1998 or January 12, 2000. The adoption of FIN 44
did not have an affect on the Company's financial statements but may impact the
accounting for grants or awards in future periods
In June, 2000, Statement of Position No. 00-2, Accounting for Producers or
Distributors of Films, was issued, which replaces SFAS No. 53, Financial
Reporting by Producers and Distributors of Motion Picture Films. The accounting
standard establishes new accounting standards for producers and distributors of
films, including changes in revenue recognition and accounting for advertising,
development and overhead costs. This pronouncement is effective for fiscal years
beginning after December 15, 2000, but earlier application is acceptable. The
Company believes that it is already in substantial compliance with the
accounting requirements as set forth in this new pronouncement, and therefore
believes that adoption will not have a material effect on financial condition or
operating results.
34
In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 141, "Business Combinations" ("FAS 141") and
FAS 142, "Goodwill and Other Intangible Assets" ("FAS 142"). FAS 141 addresses
the initial recognition and measurement of goodwill and other intangible assets
acquired in a business combination. FAS 142 addresses the initial recognition
and measurement of intangible assets acquired outside of a business combination,
whether acquired individually or with a group of other assets, and the
accounting and reporting for goodwill and other intangibles subsequent to their
acquisition. These standards require all future business combinations to be
accounted for using the purchase method of accounting. Goodwill will no longer
be amortized but instead will be subject to impairment tests at least annually.
The Company is required to adopt FAS 141 and FAS 142 on a prospective basis as
of January 1, 2002; however, certain provisions of these new standards may also
apply to any acquisitions concluded subsequent to June 30, 2001. As a result of
implementing these new standards, the Company will discontinue the amortization
of goodwill as of December 31, 2001. The Company does not believe that the
adoption of FAS 141 and 142 has a material impact on its consolidated financial
statements
In October 2001, the Financial Accounting Standards Board issued FAS 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets" ("FAS 144").
FAS 144 addresses financial accounting and reporting for the impairment or
disposal of long-lived assets. This statement supersedes FAS 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of" ("FAS 121") and related literature and establishes a single accounting
model, based on the framework established in FAS 121, for long-lived assets to
be disposed of by sale. The Company is required to adopt FAS 144 no later than
January 1, 2002. The Company does not believe that the adoption of FAS 144 will
have a material impact on its consolidated financial
DESCRIPTION OF PROPERTY
Our executive offices are located at 1904 West 16th Avenue, Suite 1, Vancouver,
BC V6J 2M4, telephone (604) 732 4804, fax (604) 408 5177, where we share space
in the offices of our President, Penny Green. The space is approximately 800
square feet total and we are leased the space free of charge. We share costs for
the telephone, fax, and Internet bandwidth. We feel that this space is adequate
for our needs at this time, and we feel that we will be able to locate adequate
space in the future, if needed, on commercially reasonable terms.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Other than the sale of shares to our officers and directors and the transactions
listed below, we have not entered into any transactions with our officers,
directors, persons nominated for these positions, beneficial owners of 5% or
more of our common stock, or family members of these persons. We are a partially
owned subsidiary of Bacchus Entertainment Ltd., a company incorporated in
British Columbia which is 100% owned by Penny Green, our President.
Bacchus Entertainment Ltd., a British Columbia company ("Bacchus") is the
producer of Daxula, the Internet series. In October, 2000 Bacchus received
1,000,000 common shares from Mediatv pursuant to a licensing agreement dated
October 15, 2000 for the Internet series Daxula. We also have an option to
finance and produce additional episodes of the series and we have an option to
purchase all rights to the series for a price of 2,000,000 common shares in
Mediatv.
Our President, Penny Green, was our only promoter. Ms. Green provided services
for her 500,000 shares of common stock.
We paid Angela Green, the sister of our President, Penny Green, 60,000 common
shares for payment in full of her invoices of approximately $12,000 for
programming and design of the website of FashionFreakz and for developing and
programming the FashionFreakz store.
We have paid Ryan Tunnicliffe, our executive director and the director of
FashionFreakz, 1,000 common shares in Mediatv each month for 15 months for a
total of 15,000 shares for use and continuous access to his production studio
facilities which include digital video cameras, lighting gear, still cameras,
editing and special effects programs, sound editing programs, music production
equipment, and compression facilities for encoding video for the Internet.
We have paid Chris Ryan, our Sales Manager, 11,666 shares in Mediatv for his
services relating to sales and marketing of our production services, our
advertising product, and for finding and training a sales team for Mediatv.
Thomas Braun provided organizational services for his 500,000 shares of common
stock.
Bacchus Entertainment Ltd., an entity controlled by Penny Green, the Company's
President and principal shareholder has advanced $16,204 to the Company as of
September 30, 2001 for working capital purposes. There are no specific repayment
terms.
The Company shares space in the offices of our President, Penny Green. The space
is approximately 800 square feet total and we are leased the space free of
charge. We share costs for the telephone, fax, and Internet bandwidth.
Sound Revolution, Inc., which is owned and controlled by Penny Green, the
President of the Company, paid us $5,900 to develop a television/Internet series
relating to music and to design a corporate logo and website. We have already
designed the Internet series and have provided Sound Revolution with design
services. We are still obligated to shoot and edit a three minute pilot for the
series for Sound Revolution.
35
MARKET FOR COMMON EQUITY AND RELATED MATTERS
MARKET INFORMATION
Our common stock is not traded on any exchange. We plan to eventually seek
listing on the OTC Bulletin Board ("OTCBB"), once our registration statement has
been declared effective by the Securities and Exchange Commission. We cannot
guarantee that we will obtain a listing. There is no trading activity in our
securities, and there can be no assurance that a regular trading market for our
common stock will ever be developed.
A market maker sponsoring a company's securities is required to obtain a listing
of the securities on any of the public trading markets, including the OTCBB. If
we are unable to obtain a market maker for our securities, we will be unable to
develop a trading market for our common stock. We may be unable to locate a
market maker that will agree to sponsor our securities. Even if we do locate a
market maker, there is no assurance that our securities will be able to meet the
requirements for a quotation or that the securities will be accepted for listing
on the OTCBB.
We intend to apply for listing of the securities on the OTCBB, but there can be
no assurance that we will be able to obtain this listing. The OTCBB securities
are not listed and traded on the floor of an organized national or regional
stock exchange. Instead, OTCBB securities transactions are conducted through a
telephone and computer network connecting dealers in stocks. Over-the-counter
stocks are traditionally smaller companies that do not meet the financial and
other listing requirements of a regional or national stock exchange.
As of January 22, 2002, there were approximately 51 holders of record of our
common stock.
EXECUTIVE COMPENSATION
The Company is not presently paying any executive compensation. At the
conclusion of the Offering, the Board of Directors may adopt an executive
compensation plan for key executives. Such compensation will enable the Company
to attract and retain skilled professional managerial and technical executive
employees on a competitive basis.
FINANCIAL STATEMENTS
The response to this Item is included as a separate Exhibit to this report.
Please see pages F-1 through F-17.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
The accounting firm of Stefanou & Company, LLP, Certified Public Accountants
audited our financial statements. Since inception, we have had no changes in or
disagreements with our accountants.
36
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 24. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 102 of the Delaware General Corporation Law ("DGCL") as amended allows a
corporation to eliminate the personal liability of directors of a corporation to
the corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except where the director breached his duty of loyalty,
failed to act in good faith, engaged in intentional misconduct or knowingly
violated a law, authorized the payment of a dividend or approved a stock
repurchase in violation of Delaware corporate law or obtained an improper
personal benefit.
Section 145 of the DGCL provides, among other things, that we may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding (other than an
action by or in the right of the registrant) by reason of the fact that the
person is or was a director, officer, agent or employee of the registrant or is
or was serving at our request as a director, officer, agent, or employee of
another corporation, partnership, joint venture, trust or other enterprise
against expenses, including attorneys' fees, judgment, fines and amounts paid in
settlement actually and reasonably incurred by the person in connection with
such action, suit or proceeding. The power to indemnify applies (a) if such
person is successful on the merits or otherwise in defense of any action, suit
or proceeding, or (b) if such person acted in good faith and in a manner he
reasonably believed to be in the best interest, or not opposed to the best
interest, of the registrant, and with respect to any criminal action or
proceeding had no reasonable cause to believe his conduct was unlawful. The
power to indemnify applies to actions brought by or in the right of the
registrant as well but only to the extent of defense expenses (including
attorneys' fees but excluding amounts paid in settlement) actually and
reasonably incurred and not to any satisfaction of judgment or settlement of the
claim itself, and with the further limitation that in such actions no
indemnification shall be made in the event of any adjudication of negligence or
misconduct in the performance of his duties to the registrant, unless the court
believes that in light of all the circumstances indemnification should apply.
Section 174 of the DGCL provides, among other things, that a director, who
willfully or negligently approves of an unlawful payment of dividends or an
unlawful stock purchase or redemption, may be held liable for such actions. A
director who was either absent when the unlawful actions were approved or
dissented at the time, may avoid liability by causing his or her dissent to such
actions to be entered in the books containing the minutes of the meetings of the
board of directors at the time such action occurred or immediately after such
absent director receives notice of the unlawful acts.
Our Certificate of Incorporation includes a provision that eliminates the
personal liability of its directors for monetary damages for breach of fiduciary
duty as a director, except for liability:
o for any breach of the director's duty of loyalty to the registrant
or its stockholders;
o for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;
37
o under section 174 of the Delaware General Corporation Law regarding
unlawful dividends and stock purchases; or for any transaction from
which the director derived an improper personal benefit.
These provisions are permitted under Delaware law.
Our Bylaws provide that:
o we may indemnify our directors and officers to the fullest extent
permitted by Delaware law;
o we may indemnify our other employees and agents to the same extent
that we indemnified our officers and directors, unless otherwise
determined by our Board of Directors; and
o we may advance expenses, as incurred, to our directors and executive
officers in connection with a legal proceeding to the fullest extent
permitted by Delaware law.
The indemnification provisions contained in our Certificate of Incorporation and
Bylaws are not exclusive of any other rights to which a person may be entitled
by law, agreement, vote of stockholders or disinterested directors or otherwise.
Reference is made to the Registrant's Certificate of Incorporation filed as
Exhibit 1 and to the Registrant's By-Laws filed as Exhibit 2 to this document
We have no directors and officers liability insurance at this time. At present,
there is no pending litigation or proceeding involving any director, officer,
employee or agent where indemnification would be required or permitted.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Our estimated expenses in connection with the issuance and distribution of the
securities being registered are estimated to be as follows
Securities and Exchange Commission filing fee $ 92.00
Legal fees and expenses 1,500.00
Accounting fees and expenses 1,500.00
Printing & Marketing expenses 500.00
Miscellaneous 800.00
-----------
Total $ 4,392.00
===========
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
In October, 2000, we issued 500,000 shares of our common stock to our founder,
Penny Green, an "accredited" investor, for her duties of founder and President
of the company. In October, 2000 we issued 500,000 shares of our common stock to
Thomas Braun, for legal services. In October, 2000, we issued Bacchus
Entertainment Ltd. 1,000,000 shares of our common stock pursuant to an agreement
for licensing of Daxula, the Internet series. These transactions did not involve
a public offering and were exempt from registration in the U.S. pursuant to
Section 4(2) and regulation S of the Securities Act of 1933.
38
Between February 1, 2001 and January 22, 2002 we issued 179,466 shares of our
common stock at a price of US$0.20 or CDN$0.30 per share, or aggregate proceeds
of US$35,893. Our offering was made available to residents of British Columbia,
Canada and was made available through an Offering Memorandum that was filed with
the Securities Commission of British Columbia on February 26, 2001. These
transactions did not involve a public offering and were exempt from registration
in the U.S. pursuant to Section 4(2) and regulation S of the Securities Act of
1933. All of these investors were "accredited" investors.
Between April 2000 and January 2002, the Company issued 107,666 shares of our
common stock in payment for consulting services, valued cumulatively at $21,533,
or US$.20 per share..
The following lists the individuals to which the shares were issued and their
relationship to the Company:
Name Number of shares Relationship to Company
Panolo Di Persico 7,000 Director of Photography, Fashionfreakz.com
Angela Green 61,000 Programmer for Mediatelevision and sister of Penny Green,
the Company's President
Heather Remillard 10,000 On camera star of the FashionFreakz program
Chris Ryan 11,666 Sales Manager of Mediatelevision
Ryan Tunnicliffe 15,000 Creative Director of Mediatelevision
Michael Badior 2,000 Consultant to Mediatelevision
Jay Williams 1,000 Choreographer, Fashionfreakz.com
These issuances were considered exempt from registration under Section 4(2) of
the Securities Act of 1933 (transactions by an issuer not involving any public
offering).
ITEM 27. EXHIBITS
Exhibit Number Exhibit Description
- -------------- -------------------
3.1 (1) Articles of Incorporation as filed with the Delaware Secretary
of State on October 11, 2000
3.2 (1) Bylaws
4 (1) Instrument Defining the Right of Holders - Form of Share
Certificate
5 Legal Opinion
10.1 (1) Agreement with Bacchus Entertainment Ltd. for licensing of Daxula
10.2 (1) Partner-Branded Agreement with DomainPeople.com
10.3 (1) Contract with the star of FashionFreakz.com, Heather Remillard
10.4 (1) Contract with Ryan Tunnicliffe, director of FashionFreakz.com
10.5 (1) Merchant Agreement with Psi Gate
10.6 Netnation Reseller Program
10.7 Promotion Agreement with Galaxyblue
10.8 Agreement with Sound Revolution
23.1 Consent of Legal Expert
23.2 Consent of Auditor
(1) previously filed
UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission this
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against these liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by the
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether this indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
39
The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement to:
o to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
o reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
o include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
2. That for determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time
to be the initial bona fide offering.
3. To file a post-effective amendment to remove from registration any
of the securities that remain unsold at the end of the offering.
4. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of
the Securities and Exchange Commission the indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable.
5. In the event that a claim for indemnification against the
liabilities, other than the payment by the Registrant of expenses
incurred and paid by a director, officer or controlling person of
the Registrant in the successful defense of any action, suit or
proceeding, is asserted by the director, officer or controlling
person in connection with the securities being registered by this
registration statement, will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether the
40
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of the
issue.
6. For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed
to be a part of this Registration Statement as of the time it was
declared effective.
7. For the purposes of determining any liability under the Securities
Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement on Form SB-2 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Vancouver, Province of British Columbia, Canada,
on the 25th day of January, 2002.
MEDIATELEVISION.TV, INC.
By: /s/ Penny O. Green
-------------------------
President
In accordance with the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates stated.
SIGNATURES TITLE DATE
/s/ Penny O. Green Director & President May 27, 2002
- -----------------------------
Penny O. Green
41
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FINANCIAL STATEMENTS AND SCHEDULES
SEPTEMBER 30, 2001
MEDIATELEVISION. TV , INC
(A DEVELOPMENT STAGE COMPANY)
MEDIATELEVISION.TV, INC
(A DEVELOPMENT STAGE COMPANY)
INDEX TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Page No.
--------
Report of Independent Certified Public Accountants F-3
Consolidated Balance Sheet at September 30, 2001 F-4
Consolidated Statement of Loss for the Period October 11, 2000
(date of inception) to September 30, 2001 F-5
Consolidated Statement of Stockholders' Equity for the Period
October 11, 2000 (date of inception) to September 30, 2001 F-6
Consolidated Statement of Cash Flows for the Period October 11, 2000
(date of inception) to September 30, 2001 F-7
Notes to Consolidated Financial Statements F-8 - F-15
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Condensed Consolidated Balance Sheet as of March 31, 2002 and
September 30, 2001 F-16
Condensed Consolidated Statement of Losses for the three and six
months ended March 31, 2002 and 2001 and for the period
October 11, 2000 (date of inception) to March 31, 2002 F-17
Consolidated Statement of Deficiency in Stockholder's Equity for
the period October 11, 2000 (date of inception) to March 31, 2002 F-18
Condensed Consolidated Statement of Cash Flows for the six months
ended March 31, 2002 and 2001 and for the period October 11, 2000
(date of inception) to March 31, 2002 F-19
Condensed Notes to Consolidated Financial Statements at
March 31, 2002 F-20 - F-21
F-2
STEFANOU & COMPANY, LLP
CERTIFIED PUBLIC ACCOUNTANTS
1360 Beverly Road
Suite 305
McLean, VA 22101-3621
703-448-9200
703-448-3515 (fax)
Philadelphia, PA
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------
Board of Directors
Mediatelevision.tv, Inc
Vancouver, BC
We have audited the accompanying consolidated balance sheets of
Mediatelvision.tv, Inc (a development stage Company) as of September 30, 2001
and the related consolidated statements of loss, stockholders' equity, and cash
flows for the years then ended and for the period October 11, 2000 (date of
inception) to September 30, 2001. These financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements based upon our audits.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatements. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe our audit provide a reasonable
basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Mediatelevision.tv, Inc as of September 30, 2001, and the results of its
operations and its cash flows from October 11, 2000 (date of inception) to
September 30, 2001, in conformance with accounting principles generally accepted
in the United States of America.
The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Note I to the
financial statements, from its inception the Company has suffered recurring
losses from operations . This raises substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note I. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ STEFANOU & COMPANY, LLP
---------------------------
Stefanou & Company, LLP
Certified Public Accountants
McLean, Virginia
January 21, 2002
F-3
MEDIATELEVISION.TV, INC
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2001
ASSETS
Current assets:
Cash and equivalents $ 6
Deposits 877
Advance to related party ( Note B ) 11,078
---------
Total current assets 11,961
Property & Equipment - at cost
Property and Equipment, 887
Less: Accumulated Depreciation 116
---------
771
License Agreement, at cost (Note G) 10,000
Total Assets $ 22,732
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 407
Advances from shareholder (Note C) 16,204
---------
16,611
Commitments and contingencies (Note E)
Stockholders' equity : (Note F)
Preferred stock, par value $.0001 per share; 20,000,000 authorized, none
issued and outstanding at September 30, 2001 -
Common stock, par value $.0001 per share; 80,000,000 authorized,
2,249,632 issued and outstanding at September 30, 2001 225
Additional paid-in-capital 69,700
Deficit accumulated during development stage (63,804)
---------
6,121
---------
$ 22,732
=========
See accompanying notes to consolidated financial statements
F-4
MEDIATELEVISION.TV, INC
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF LOSS
For the Period from October
11, 2000 (date of inception)
through September 30, 2001
Revenue:
Design services $ 7,086
Promotional fees 2,878
------------
Total Revenues 9,964
Operating expenses:
Selling, general and administrative 72,922
Depreciation 116
------------
Total Operating Expenses 73,038
------------
Other Income:
Foreign currency translation gain (loss) 729
------------
Net loss before taxes (63,804)
Provision for income taxes -
------------
Net Loss $ (63,804)
============
Loss per Common Share (Basic and Diluted) $ (0.02)
============
Weighted Average Common Share Outstanding 2,631,071
============
See accompanying notes to consolidated financial statements
F-5
MEDIATELEVISION.TV, INC
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE PERIOD OCTOBER 11, 2000 (DATE OF INCEPTION) THROUGH SEPTEMBER 30, 2001
Deficit
accumulated
during
Common Stock Common Stock Additional Development
Common shares Amount Subscriptions Paid in Capital Stage Total
------------- ------ ------------- --------------- ----------- --------
Common stock issued in October 2000 to
founders in exchange for services rendered at
$.01 per share 1,000,000 100 - 9,900 - 10,000
Common stock issued in October 2000 to
founder in exchange for License and
Distribution Agreement at $.01 per share 1,000,000 100 - 9,900 - 10,000
Common Stock subscribed March 2001, at $ .20
per share - - 3,833 - - 3,833
Common Stock subscribed April 2001, at $.20
per share - - 6,720 - - 6,720
Common Stock issued in April 2001 in exchange
for services rendered at $.20 per share 18,000 2 - 3,598 - 3,600
Common Stock subscribed May 2001, at $ .20 per
share - - 12,080 - - 12,080
Common Stock issued in May 2001 in exchange
for services rendered at $.20 per share 67,000 7 - 13,393 - 13,400
Common Stock subscribed June 2001, at $.20 per
share - - 1,200 - - 1,200
Common Stock subscribed July 2001, at $ .20
per share - - 1,026 - - 1,026
Common Stock issued in July 2001in exchange
for services rendered at $ .20 per share 8,000 1 - 1,599 - 1,600
Common Stock subscribed August 2001, at $ .20
per share - - 1,000 - - 1,000
Common Stock issued in August 2001 in exchange
for services rendered at $ .20 per share 14,666 1 - 2,932 - 2,933
Common Stock subscribed September 2001, at $
...20 per share - - 2,533 - - 2,533
Conversion of Common Stock Subscriptions on
September 10, 2001into Common Stock, 141,966 14 (28,392) 28,378 - -
Net Loss - - - - (63,804) (63,804)
----------- ------ -------- ---------- --------- ---------
Balance at September 30, 2001 2,249,632 $ 225 $ - $ 69,700 $(63,804) $ 6,121
=========== ====== ======== ========== ========= =========
See accompanying notes to consolidated financial statements
F-6
MEDIATELEVISION.TV, INC
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 2001
For the Period from
October 11, 2000
(date of inception)
through
September 30, 2001
Cash flows from operating activities:
Net loss from operating activities $(63,804)
Adjustments to reconcile net income to net cash:
Common stock issued to founders in exchange for
services 10,000
Common stock issued in exchange for services 21,533
Depreciation 116
Change in:
Prepaid expenses and other assets (877)
Advances to related parties (11,078)
Accounts Payable 407
---------
Net cash from operating activities (43,703)
Cash flows used in investing activities:
Capital expenditures, net of disposals (887)
---------
Net cash used in investing activities (887)
Cash flows (used in)/provided by financing activities:
Proceeds from stockholder advances 16,204
Proceeds from issuance of common stock 28,392
---------
Net cash used in financing activities 44,596
Net increase in cash and cash equivalents 6
Cash and cash equivalents at October 11, 2000 -
---------
Cash and cash equivalents at September 30, 2001 $ 6
---------
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for interest $ -
Cash paid during the period for taxes -
Common stock issued in exchange for services 21,533
Common stock issued to founders in exchange for services 10,000
Common stock issued to Founder in exchange for
Distribution and License Agreement 10,000
See accompanying notes to consolidated financial statements
F-7
MEDIATELEVISION.TV, INC
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2001
NOTE A - SUMMARY OF ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the preparation of
the accompanying consolidated financial statements follows.
Business and Basis of Presentation
Mediatelevision.tv, Inc (the "Company") was formed on October 11, 2000 under the
laws of the State of Delaware. The Company is a development stage enterprise, as
defined by Statement of Financial Accounting Standards No. 7 ("SFAS. 7") and is
in the business of producing, acquiring and syndicating episodic series designed
especially for the Internet. From its inception through the date of these
financial statements, the Company has incurred significant operating expenses
and accumulated losses of $ 63,804. Consequently, its operations are subject to
all risks inherent in the establishment of a new business enterprise.
The consolidated financial statements include the accounts of the Company, and
its wholly-owned subsidiary, Mediatelevision.tv Distribution, Ltd. Significant
intercompany transactions have been eliminated in consolidation.
REVENUE RECOGNITION
INTERNET SERIES PRODUCTION, DISTRIBUTION AND SYNDICATION. The Company produces
episodic video series designed especially for the Internet. Revenues are
recognized in accordance with the provisions of Statement of Financial
Accounting Standards No. 53 ("SFAS 53"). Revenues from production and license
agreements are recognized when the license period begins and the programming is
available pursuant to the terms of the agreement, typically when the finished
product has been delivered or made available and accepted by the customer. The
Company also provides distribution services for content producers who want to
syndicate their content through the Internet. Service revenue is recognized when
persuasive evidence of a sale or licensing arrangement with a customer exists,
the series is complete and has been delivered or is available for immediate and
unconditional delivery in accordance with the terms of the arrangement, the
license period has begun and the customer can begin its exploitation,
exhibition, or sale, the fee is fixed or determinable, and collection of the fee
is reasonably assured. No amounts in the historical financials statements
currently exist for this item, but this will be the accounting policy upon
generating amounts in the future.
PRODUCT PLACEMENT AND ADVERTISING. The Company develops plans for clients to
maximize Internet revenue opportunities. Business development fees are generally
based upon agreements whereby the clients are contractually obligated to pay to
the Company a fixed fee for the opportunity to develop business using the
Company's proprietary technology. The fees are recognized by the Company as
earned, and the specific timing of which depends on the terms and conditions of
the particular contractual arrangements.
PROPRIETARY SOFTWARE. The Company develops software for authoring interactive
episodic Internet shows. The Company generates revenues from licensing software,
and providing professional services such as consulting, training, development,
maintenance, product support and periodic updates for previously licensed
products. The Company follows the provisions of Statement of Position No. 97-2
("SOP 97-2"), "Software Revenue Recognition," as amended by SOP 98-9,
"Modification of SOP 97-2, Software Revenue Recognition, with Respect to Certain
Transactions." License revenue is recognized when a non-cancelable,
non-contingent license agreement has been signed, the software product has been
delivered, no uncertainties exist surrounding product acceptance, fees from the
agreement are fixed and determinable, and collection is probable. Revenues from
professional services are typically recognized as the services are performed or
recognized ratably over the term of the agreements. . No amounts in the
historical financials statements currently exist for this item, but this will be
the accounting policy upon generating amounts in the future.
ENCODING, BANDWIDTH AND MEDIA MANAGEMENT. Revenues derived from encoding and
domain name registration are recognized as service revenue in the period the
services are provided. Website creation, hosting, Internet bandwidth, and
e-commerce service fees are recognized as service revenue over the life of the
related contracts, which in most instances include set up fees and monthly fees.
... No amounts in the historical financials statements currently exist for this
item, but this will be the accounting policy upon generating amounts in the
future.
PROMOTIONAL AND OTHER FEES . The Company will follow a policy of recognizing fee
income as revenue in the period the service is provided.
F-8
MEDIATELEVISION.TV, INC
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2001
NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)
Capitalized Software Costs
- --------------------------
The Company accounts for the costs of computer software developed or obtained
for internal use in accordance with Statement of Position 98-1, "Accounting for
the Costs of Computer Software Developed or Obtained for Internal Use." The
Company capitalizes costs of materials, consultants, and payroll and
payroll-related costs for employees incurred in developing internal-use computer
software. Costs incurred during the preliminary project and post-implementation
stages are charged to general and administrative expense. No amounts in the
historical financials statements currently exist for this item, but this will be
the accounting policy upon generating amounts in the future.
Website Development Costs
The Company recognizes website development costs in accordance with Emerging
Issue Task Force ("EITF") No. 00-02, "Accounting for Website Development Costs."
As such, the Company expenses all costs incurred that relate to the planning and
post implementation phases of development of its website. Direct costs incurred
in the development phase are capitalized and recognized over the estimated
useful life. Costs associated with repair or maintenance for the website are
included in cost of net revenues in the accompanying consolidated statement of
income. No amounts in the historical financials statements currently exist for
this item, but this will be the accounting policy upon generating amounts in the
future.
Advertising
The Company recognizes advertising expenses in accordance with SOP 93-7
"Reporting on Advertising Costs." As such, the Company expenses the costs of
producing advertisements at the time production occurs. Internet advertising
expenses are recognized based on the terms of the individual agreements, which
is generally over the greater of the ratio of the number of impressions
delivered over the total number of contracted impressions, or a straight-line
basis over the term of the contract. Advertising costs incurred during the year
ended September 30, 2001 was $ 312.
Income Taxes
Income taxes are provided based on the liability method for financial reporting
purposes in accordance with the provisions of Statements of Financial Standards
No. 109, "Accounting for Income Taxes". Under this method deferred tax assets
and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be removed or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in the statement of operations in the period
that includes the enactment date.
Cash Equivalents
For purposes of the Statements of Cash Flows, the Company considers all highly
liquid debt instruments purchased with a maturity date of three months or less
to be cash equivalents.
Property and Equipment
For financial statement purposes, property and equipment will be depreciated
using straight-line method over their estimated useful lives (five years for
furniture, fixtures and equipment). The straight-line method of depreciation is
also used for tax purposes.
F-9
MEDIATELEVISION.TV, INC
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2001
NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)
Long-Lived Assets
The Company has adopted Statement of Financial Accounting Standards No. 121
(SFAS 121). The Statement requires that long-lived assets and certain
identifiable intangibles held and used by the Company be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. SFAS 121 also requires assets to be disposed of
be reported at the lower of the carrying amount or the fair value less costs to
sell.
Goodwill and Other Intangibles
Goodwill represents the excess of the aggregate purchase price over the fair
value of net assets acquired and is being amortized on a straight-line basis
over a period not exceeding five years. The Company reviews impairment of
goodwill whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. Recoverability of assets to be held
and used is measured by a comparison of the carrying amount of the assets to
future undiscounted cash flows of the businesses acquired. Should impairment be
identified, a loss would be reported to the extent that the carrying value of
the related goodwill exceeds the fair value of that goodwill based upon the
expected discounted future cash flows. Through September 30, 2001, no impairment
has occurred. . No amounts in the historical financials statements currently
exist for this item, but this will be the accounting policy upon generating
amounts in the future.
The Company is required to adopt SFAS 141 and 142 on a prospective basis as of
January 1, 2002. As a result of implementing these new standards, goodwill will
continue to be recognized as an asset, but will not be amortized as previously
required by APB Opinion No. 17 "Intangible Assets." Instead, goodwill will be
subject to periodic (at least annual) tests for impairment and recognition of
impairment losses in the future will be based on a new methodology for measuring
impairments prescribed by these pronouncements.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly actual results
could differ from those estimates.
Concentrations of Credit Risk
Financial instruments and related items, which potentially subject the Company
to concentrations of credit risk, consist primarily of cash, cash equivalents
and trade receivables. The Company places its cash and temporary cash
investments with high credit quality institutions. At times, such investments
may be in excess of the FDIC insurance limit.
Stock Based Compensation
The Company accounts for stock transactions in accordance with APB Opinion 25,
"Accounting for Stock Issued to Employees." In accordance with Statement of
Financial Accounting Standards No. 123, "Accounting for Stock Based
Compensation," the Company has adopted the proforma disclosure requirements.
F-10
MEDIATELEVISION.TV, INC
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2001
NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)
Liquidity
The Company is in the development stage and its efforts have been principally
devoted to the business of producing, acquiring, and syndicating episodic series
designed especially for the Internet. The accompanying statements have been
prepared on a going concern basis, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business. As shown
in the accompanying financial statements, the Company has accumulated a net loss
of $ 63,804 during the period October 11, 2000 (date of inception) through
September 30, 2001. The Company's current liabilities exceed its current assets
by $ 4,650 at September 30, 2001. Consequently, its operations are subject to
all risks inherent in the establishment of a new business enterprise, an along
with other factors may indicate that the Company will be unable to continue as a
going concern for a reasonable period of time. While the Company has raised
capital to meet its working capital and financing needs in the past, additional
financing is required in order to meet the Company's current and projected cash
flow deficits from operations and development. The Company is seeking financing
in the form of equity in order to provide the necessary working capital. The
Company currently has no commitments for financing. There is no guarantee that
the Company we will be successful in raising the funds required.
The Company's management believes that its existing capital resources will be
sufficient to fund our current level of operating activities, capital
expenditures and other obligations through the next 12 months. However, if
during that period or thereafter, the Company is not successful in generating
sufficient liquidity from operations or in raising sufficient capital resources,
on terms acceptable to the Company , this could have a material adverse effect
on the Company's business, results of operations liquidity and financial
condition. The accompanying financial statements do not include any adjustments
that might result should the Company be unable to continue as a going concern.
COMPREHENSIVE INCOME
The Company does not have any items of comprehensive income in any of the
periods presented.
Net Loss Per Share
The Company has adopted Statement of Financial Accounting Standards No. 128,
"Earnings Per Share," specifying the computation, presentation and disclosure
requirements of earnings per share information. Basic earnings (loss) per share
has been calculated based upon the weighted average number of common shares
outstanding. Stock options and warrants will be excluded as common stock
equivalents in the diluted earnings per share because they are either
antidilutive, or their effect is not material.
Foreign Currency Translation
The Company translates the foreign currency financial statements of its Canadian
subsidiary in accordance with the requirements of Statement of Financial
Accounting Standards No. 52, "Foreign Currency Translation." Assets and
liabilities are translated at current exchange rates, and related revenue and
expenses are translated at average exchange rates in effect during the period.
Resulting translation adjustments are recorded as a separate component in
stockholders' equity. Foreign currency translation gains and losses are included
in the statement of income.
New Accounting Pronouncements
The Company adopted Statement of Financial Accounting Standards No. 132,
Employers' Disclosures about Pension and Other -Post Employment Benefits ("SFAS
132") in the year ended September 30, 2001. SFAS 132 establishes disclosure
requirements regarding pension and post employment obligations. SFAS 132 does
not affect the Company as of September 30, 2001.
F-11
MEDIATELEVISION.TV, INC
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2001
NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)
The Company adopted Statement of Financial Standards No. 133, Accounting for
Derivative Instruments and for Hedging Activities ("SFAS 133") in the year ended
September 30, 2001. SFAS 133 requires that certain derivative instruments be
recognized in balance sheets at fair value and for changes in fair value to be
recognized in operations. Additional guidance is also provided to determine when
hedge accounting treatment is appropriate whereby hedging gains and losses are
offset by losses and gains related directly to the hedged item. SFAS 133's
impact on the Company's consolidated financial statements is not expected to be
material as the Company has not historically used derivative and hedge
instruments.
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101 (" SAB 101"), Revenue Recognition in Financial Statements,
which will become effective December 31, 2000. The Company does not expect the
standard to have a material effect on its financial condition or operating
results.
In March 2000, the Financial Accounting Standards Board issued interpretation
No. 44 ("FIN 44"), "Accounting for Certain Transactions Involving Stock
Compensation, an Interpretation of APB Opinion No. 25". FIN 44 clarifies the
application of APB No. 25 for (a) the definition of employee for purposes of
applying APB No. 25, (b) the criteria for determining whether a plan qualifies
as a noncompensatory plan, (c) the accounting consequences of various
modifications to previously fixed stock option or award, and (d) the accounting
for an exchange of stock compensation awards in a business combination. FIN 44
is effective July 2, 2000 but certain conclusions cover specific events that
occur after either December 15, 1998 or January 12, 2000. The adoption of FIN 44
did not have an affect on the Company's financial statements but may impact the
accounting for grants or awards in future periods
In June, 2000, Statement of Position No. 00-2, Accounting for Producers or
Distributors of Films, was issued, which replaces SFAS No. 53, Financial
Reporting by Producers and Distributors of Motion Picture Films. The accounting
standard establishes new accounting standards for producers and distributors of
films, including changes in revenue recognition and accounting for advertising,
development and overhead costs. This pronouncement is effective for fiscal years
beginning after December 15, 2000, but earlier application is acceptable. The
Company believes that it is already in substantial compliance with the
accounting requirements as set forth in this new pronouncement, and therefore
believes that adoption will not have a material effect on financial condition or
operating results. The Company plans on adopting SOP 00-2 at the beginning of
its next fiscal year.
In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 141, "Business Combinations" ("FAS 141") and
FAS 142, "Goodwill and Other Intangible Assets" ("FAS 142"). FAS 141 addresses
the initial recognition and measurement of goodwill and other intangible assets
acquired in a business combination. FAS 142 addresses the initial recognition
and measurement of intangible assets acquired outside of a business combination,
whether acquired individually or with a group of other assets, and the
accounting and reporting for goodwill and other intangibles subsequent to their
acquisition. These standards require all future business combinations to be
accounted for using the purchase method of accounting. Goodwill will no longer
be amortized but instead will be subject to impairment tests at least annually.
The Company is required to adopt FAS 141 and FAS 142 on a prospective basis as
of January 1, 2002; however, certain provisions of these new standards may also
apply to any acquisitions concluded subsequent to June 30, 2001. As a result of
implementing these new standards, the Company will discontinue the amortization
of goodwill as of December 31, 2001. The Company does not believe that the
adoption of FAS 141 and 142 has a material impact on its consolidated financial
statements.
In October 2001, the Financial Accounting Standards Board issued FAS 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets" ("FAS 144").
FAS 144 addresses financial accounting and reporting for the impairment or
disposal of long-lived assets. This statement supersedes FAS 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of" ("FAS 121") and related literature and establishes a single accounting
model, based on the framework established in FAS 121, for long-lived assets to
be disposed of by sale. The Company is required to adopt FAS 144 no later than
January 1, 2002. The Company does not believe that the adoption of FAS 144 will
have a material impact on its consolidated financial statements.
F-12
MEDIATELEVISION.TV, INC
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2001
NOTE B - ADVANCE TO RELATED PARTY
The Company has advanced funds to the Company's President and principal
shareholder in the amount of $11,078 as of September 30, 2001. There are no
specific repayment terms. .
NOTE C - DUE TO SHAREHOLDERS
An entity controlled by the Company's President and principal shareholder has
advanced $16,204 to the Company as of September 30, 2001 for working capital
purposes. There are no specific repayment terms.
NOTE D - INCOME TAXES
Financial Accounting Standards No. 109 requires the recognition of deferred tax
liabilities and assets for the expected future tax consequences of events that
have been included in the financial statement or tax returns. Under this method,
deferred tax liabilities and assets are determined based on the difference
between financial statements and tax bases of assets and liabilities using
enacted tax rates in effect for the year in which the differences are expected
to reserve. Temporary differences between taxable income reported for financial
reporting purposes and income tax purposes are insignificant.
At September 30, 2001, the Company has available for federal income tax purposes
a net operating loss carry forward of $ 63,804, expiring the year 2021, that may
be used to offset future taxable income. The Company has provided a valuation
reserve against the full amount of the net operating loss benefit, since in the
opinion of management based upon the earnings history of the Company, it is more
likely than not that the benefits will not be realized. Due to significant
changes in the Company's ownership, the Company's future use of its existing net
operating losses may be limited.
Components of deferred tax assets at September 30, 2001 are as follows:
Non Current:
Net Operating Loss carryforward $ 21,693
Valuation Allowance (21,693)
---------
Net Deferred tax asset $ -
=========
NOTE E - COMMITMENTS AND CONTINGENCIES
Lease Commitment
The Company has an informal month-to-month agreement with a consultant to the
Company for the use and continuous access to the consultant's production studio
facilities, in exchange for 1,000 shares of the Company's restricted common
stock .
License Agreement
- -----------------
The Company entered into an exclusive License and Distribution Agreement
("License") with an entity controlled by the Company's President and principal
shareholder to distribute specific programming produced prior to January 5,
2003. in exchange for 1,000,000 shares of the Company's issued and outstanding
common stock. After full recoupment of all expenses, the License provides the
Company 50% of all revenues from distributing the product on the Internet, as
well as 40% of any television and related media licensing. The Company has an
option through January 5, 2003 to purchase all of the copyright, title and
interest to the programming in exchange 2,000,000 common shares of the Company's
common stock .
F-13
MEDIATELEVISION.TV, INC
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2001
NOTE E - COMMITMENTS AND CONTINGENCIES (continued)
Consulting Agreement
- --------------------
The Company has consulting agreements with outside contractors, certain of whom
are also Company stockholders, directors and officers. The agreements are
generally for a term of 12 months from inception and renewable automatically
from year to year unless either the Company or Consultant terminates such
engagement by written notice.
NOTE F - CAPITAL STOCK
The Company was incorporated under the laws of the State of Delaware on October
11, 2000 under the name of Mediatelevision.tv, Inc. The Company has authorized
20,000,000 shares of preferred stock, with a par value of $0.0001 per share. As
of September 30, 2001, there are no preferred shares outstanding.
The Company has authorized 80,000,000 shares of common stock, with a par value
of $0.0001 per share. As of September 30, 2001, there are 2,249,632 shares of
common stock outstanding.
In October 2000, the Company issued 500,000 shares of common stock to its
President in exchange for services rendered as a founder of the Company. The
Company also issued 500,000 shares of common stock to its Vice President in
exchange for organizational services. In accordance with EITF 96-18 the
measurement date to determine fair value was in October 2000. This was the date
at which a commitment for performance by the counter party to earn the equity
instrument was reached. The Company valued the shares issued at approximately
$0.01 per share, which presents the fair value of the services received which
did not differ materially from the value of the stock issued.
In October 2000, the Company issued to an entity controlled by the Company's
President and principal shareholder 1,000,000 shares of the Company's common
stock pursuant to an agreement for licensing and distributing programming (see
Note E). In accordance with Staff Accounting Bulletin Topic 5-G, Transfer of
Nonmonetary Assets by Promoters or Shareholders, the Company valued the stock
issued at $ 0.01 per share, which represents the shareholder's historical cost
of the License Agreement and did not differ materially from the fair value of
the stock issued.
Between March 12, 2001 and September 30, 2001, the Company issued a total of
141,966 shares of common stock in a private placements and exempt offerings to
sophisticated investors, primarily in Canada and in the United States in
exchange for $ 28,392 net of costs and fees.
During the year ended September 30, 2001, the Company issued 107,666 shares of
common stock to consultants in exchange for services provided to the Company.
The Company valued the shares issued at approximately $0.20 per share, which
presents the fair value of the services received which did not differ materially
from the value of the stock issued.
NOTE G - RELATED PARTY TRANSACTIONS
The Company compensated a consultant related to the Company's President and
principal shareholder 60,000 shares of the Company's common stock for certain
web site design services valued at $12,000. The Company valued the shares issued
at approximately $0.20 per share, which presents the fair value of the services
received which did not differ materially from the value of the stock issued.
NOTE H - NET LOSS PER SHARE
The following table presents the computation of basic and diluted losses per
share:
October 11, 2000
(date of inception)
to September 30, 2001
Loss available to common shareholders $ (63,804)
===============
Basic and fully diluted loss per share $ (0.02)
===============
Weighted average common shares outstanding 2,631,071
F-14
MEDIATELEVISION.TV, INC
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2001
NOTE I - GOING CONCERN
The accompanying statements have been prepared on a going concern basis, which
contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business. As shown in the financial statements from October
11, 2000 (date of inception of Company), the Company incurred losses from
operations of $ 63,804. This factor among others may indicate that the Company
will be unable to continue as a going concern for a reasonable period of time.
The Company's existence dependent upon management's ability to develop
profitable operations and resolve it's liquidity problems. Management
anticipates the Company will attain profitable status and improve its liquidity
through the continued developing of its products, establishing a profitable
market for the Company's products and additional equity investment in the
Company. The accompanying financial statements do not include any adjustments
that might result should the Company be unable to continue as a going concern.
In order to improve the Company's liquidity, the Company is actively pursuing
additional equity financing through discussion with investment bankers and
private investors. There can be no assurance the Company will be successful in
its effort to secure additional equity financing.
If operations and cash flow continue to improve through these efforts,
management believes that the Company can continue to operate. However, no
assurance can be given that management's actions will result in profitable
operations or the resolution of its liquidity problems.
F-15
MEDIATELEVISION.TV, INC
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED BALANCE SHEET
3/31/2002 9/30/2001
(Unaudited)
ASSETS
Current assets:
Cash and equivalents $ - $ 6
Deposits 868 877
Advance to related parties 2,419 11,078
--------- ---------
Total current assets 3,287 11,961
Property & Equipment - at cost
Furniture, Equipment, & Leasehold Improvements 877 887
Less: Accumulated Depreciation 199 116
--------- ---------
678 771
License Agreement, at cost 10,000 10,000
Total Assets $ 13,965 $ 22,732
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current Liabilities:
Cash balance in excess of available funds $ - $ -
Accounts Payable 583 407
Due to shareholder 14,115 16,204
--------- ---------
14,698 16,611
Stockholders' equity (deficiency) :
Preferred stock, par value $.001 per share;
20,000,000 authorized, none issued and outstanding at
March 31, 2002 and September 31, 2001 - -
Common stock, par value $.001 per share; 80,000,000
authorized, 2,287,132 and 2,249,632 issued and
outstanding at March 31, 2002 and September 30, 2001,
respectively 228 225
Additional paid-in-capital 77,422 69,700
Deficit accumulated during development stage (78,383) (63,804)
--------- ---------
(733) 6,121
--------- ---------
$ 13,965 $ 22,732
========= =========
See accompanying footnotes to the unaudited condensed financial statements
F-16
MEDIATELEVISION.TV, INC
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENT OF LOSSES
For the Period from
October 11, 2000
(date of inception)
Three Months Ended March 31, Six Months Ended March 31, through March 31,
2002 2001 2002 2001 2002
------------ ------------ ------------ ------------ ------------
Revenue:
Internet Service and Design $ 951 $ - $ 951 $ - $ 8,037
Party/ Ticket Revenue - - - - 2,878
------------ ------------ ------------ ------------ ------------
Total Revenue 951 - 951 - 10,915
Operating expenses:
Selling, general and
administrative 5,247 12,868 11,532 22,940 84,454
Research & Development - - - - -
Depreciation 44 - 84 - 200
------------ ------------ ------------ ------------ ------------
Operating expense 5,291 12,868 11,616 22,940 84,654
Other Income - - - - -
Translation Gain or Loss (3,959) 3,173 (3,914) (336) (4,643)
------------ ------------ ------------ ------------ ------------
(3,959) 3,173 (3,914) (336) (4,643)
Net loss before taxes (8,299) (9,695) (14,579) (23,276) (78,382)
Provision for income taxes - - - - -
------------ ------------ ------------ ------------ ------------
Net loss $ (8,299) $ (9,695) $ (14,579) $ (23,276) $ (78,382)
============ ============ ============ ============ ============
Loss per Common Share (Basic and
Diluted) $ (0.01) $ (0.00) $ (0.01) $ (0.01) $ (0.04)
============ ============ ============ ============ ============
Weighted Average Common Share
Outstanding 2,278,299 2,000,000 2,263,808 1,879,121 2,118,144
See accompanying footnotes to the unaudited condensed financial statements
F-17
MEDIATELEVISION.TV, INC
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE PERIOD OCTOBER 11, 2000 (DATE OF INCEPTION) THROUGH MARCH 31, 2002
Deficit
accumulated
during
Common Stock Common Stock Development
Common shares Amount Subscriptions APIC Stage Total
------------- ------ ------------- ---- ----------- -----
Common stock issued in October 2000 to founders in
exchange for services rendered at $.01 per share 1,000,000 $ 100 $ - $ 9,900 $ - $ 10,000
Common stock issued in October 2000 to founders in
exchange for License and Distribution agreement at $.01
per share 1,000,000 100 - 9,900 - 10,000
Common Stock subscribed March 2001, at $ 0.20 per share - - 3,833 - - 3,833
Common Stock subscribed April 2001, at $ 0.20 per share - - 6,720 - - 6,720
Common Stock issued in exchange for services rendered in
April 2001 18,000 2 - 3,598 - 3,600
Common Stock subscribed May 2001, at $ 0.20 per share - - 12,080 - - 12,080
Common Stock issued in exchange for services rendered in
May 2001 67,000 7 - 13,393 - 13,400
Common Stock subscribed June 2001, at $ 0.20 per share - - 1,200 - - 1,200
Common Stock subscribed July 2001, at $ 0.20 per share - - 1,026 - - 1,026
Common Stock issued in exchange for services rendered in
July 2001 8,000 1 - 1,599 - 1,600
Common Stock subscribed August 2001, at $ 0.20 per share - - 1,000 - - 1,000
Common Stock issued in exchange for services rendered in
August 2001 14,666 1 - 2,932 - 2,933
Common Stock subscribed September 2001, at $ 0.20 per
share - - 2,533 - - 2,533
Conversion of Common Stock Subscriptions into Common
Stock, September 10, 2001 141,966 14 (28,392) 28,378 - -
Net Loss - - - - (63,804) (63,804)
---------- ---------- ---------- ---------- ---------- ----------
Balance at September 30, 2001 2,249,632 $ 225 $ - $ 69,700 $ (63,804) $ 6,121
========== ========== ========== ========== ========== ==========
Common stock issued for cash , January 2002 37,500 3 - 7,722 - 7,725
Net loss - - - - (14,579) (14,579)
---------- ---------- ---------- ---------- ---------- ----------
Balance at March 31, 2002 2,287,132 $ 228 $ - $ 77,422 $ (78,383) $ (733)
========== ========== ========== ========== ========== ==========
See accompanying footnotes to the unaudited condensed financial statements
F-18
MEDIATELEVISION.TV, INC
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the Period from
October 11, 2000 (date
of inception) through
Six Months Ended March 31, March 31, 2002
------------------------- --------------
2002 2001
Cash flows from operating activities:
Net loss from operating activities $(14,579) $(23,276) $(78,383)
Adjustments to reconcile net income to net cash:
Translation Gain or Loss 3,914 336 4,643
Common stock issued to founders in exchange for
services - 10,000 10,000
Common stock issued in exchange for services
rendered - - 21,533
Depreciation 84 - 200
Change in:
Prepaid expenses and other assets - (878) (877)
Advances to related parties 2,671 (5,308) (9,136)
Accounts Payable 179 - 586
--------- --------- ---------
Net cash from operating activities (7,731) (19,126) (51,434)
Cash flows used in investing activities:
Capital expenditures, net of disposals - (887) (887)
--------- --------- ---------
Net cash used in investing activities - (887) (887)
Cash flows (used in)/provided by financing activities:
Proceeds from stockholder loans - 17,458 16,204
Repayment of stockholder loans - - -
Proceeds from issuance of common stock 7,725 3,035 36,117
--------- --------- ---------
Net cash used in financing activities 7,725 20,493 52,321
Net increase in cash and cash equivalents (6) 480 -
Cash and cash equivalents at beginning of period 6 - -
--------- --------- ---------
Cash and cash equivalents at end of period $ - $ 480 $ -
--------- --------- ---------
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for interest $ - $ - $ -
Income taxes paid - - -
Common stock issued for services - - 21,333
Common stock issued to founders - 10,000 10,000
See accompanying footnotes to the unaudited condensed financial statements
F-19
MEDIATELEVISION.TV, INC
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002
NOTE A - SUMMARY OF ACCOUNTING POLICIES
- ---------------------------------------
GENERAL
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form 10-QSB, and therefore, do not
include all the information necessary for a fair presentation of financial
position, results of operations and cash flows in conformity with generally
accepted accounting principles.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included. The
results from developmental stage operations for the six-month period ended March
31, 2002 are not necessarily indicative of the results that may be expected for
the year ended September 30, 2002. The unaudited consolidated financial
statements should be read in conjunction with the consolidated September 30,
2001 financial statements and footnotes thereto included in the Company's SEC
Form SB-2.
BUSINESS AND BASIS OF PRESENTATION
Mediatelevision.tv, Inc (the "Company") was formed on October 11, 2000 under the
laws of the State of Delaware. The Company is a development stage enterprise, as
defined by Statement of Financial Accounting Standards No. 7 ("SFAS. 7") and is
in the business of producing, acquiring and syndicating episodic series designed
especially for the Internet. From its inception through the date of these
financial statements, the Company has incurred significant operating expenses
and accumulated losses of $ 78,383. Consequently, its operations are subject to
all risks inherent in the establishment of a new business enterprise.
The consolidated financial statements include the accounts of the Company, and
its wholly-owned subsidiary, Mediatelevision.tv Distribution, Ltd. Significant
intercompany transactions have been eliminated in consolidation.
RECENT ACCOUNTING PRONOUNCEMENTS
In July 2001, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 141, "Business Combinations" (SFAS No.
141), and Statement of Financial Accounting Standards No. 142, "Goodwill and
Other Intangible Assets" (SFAS No. 142). The FASB also issued Statement of
Financial Accounting Standards No. 143, "Accounting for Obligations Associated
with the Retirement of Long-Lived Assets" (SFAS No. 143), and Statement of
Financial Accounting Standards No. 144,"Accounting for the Impairment or
Disposal of Long-Lived Assets"(SFAS No. 144), in August and October 2001,
respectively.
SFAS No. 141 requires the purchase method of accounting for business
combinations initiated after June 30, 2001 and eliminates the
pooling-of-interest method. The adoption of SFAS No. 141 had no material impact
on the Company's consolidated financial statements.
Effective January 1, 2002, the Company adopted SFAS No. 142. Under the new
rules, the Company will no longer amortize goodwill and other intangible assets
with indefinite lives, but such assets will be subject to periodic testing for
impairment. On an annual basis, and when there is reason to suspect that their
values have been diminished or impaired, these assets must be tested for
impairment, and write-downs to be included in results from operations may be
necessary. SFAS No. 142 also requires the Company to complete a transitional
goodwill impairment test six months from the date of adoption.
Any goodwill impairment loss recognized as a result of the transitional goodwill
impairment test will be recorded as a cumulative effect of a change in
accounting principle no later than the end of fiscal year 2002. The adoption of
SFAS No. 142 had no material impact on the Company's consolidated financial
statements.
F-20
MEDIATELEVISION.TV, INC
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002
NOTE A - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
- ---------------------------------------------------
SFAS No. 143 establishes accounting standards for the recognition and
measurement of an asset retirement obligation and its associated asset
retirement cost. It also provides accounting guidance for legal obligations
associated with the retirement of tangible long-lived assets. SFAS No. 143 is
effective in fiscal years beginning after June 15, 2002, with early adoption
permitted. The Company expects that the provisions of SFAS No. 143 will not have
a material impact on its consolidated results of operations and financial
position upon adoption. The Company plans to adopt SFAS No. 143 effective
January 1, 2003.
SFAS No. 144 establishes a single accounting model for the impairment or
disposal of long-lived assets, including discontinued operations. SFAS No. 144
superseded Statement of Financial Accounting Standards No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
(SFAS No. 121), and APB Opinion No. 30, "Reporting the Results of Operations -
Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary,
Unusual and Infrequently Occurring Events and Transactions". The Company adopted
SFAS No. 144 effective January 1,2002. The adoption of SFAS No. 144 had no
material impact on Company's consolidated financial statements.
F-21