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SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(c)
OF THE SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only as permitted by Rule
14c-5(d)(2)
[X] Definitive Information Statement
MAGELLAN FILMED ENTERTAINMENT, INC
(Name of Registrant As Specified in Charter)
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[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
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(2) Aggregate number of securities to which transaction applies: N/A
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid: N/A
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
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MAGELLAN FILMED ENTERTAINMENT, INC
8756 - 122nd Avenue NE
Kirkland, WA 98033
To Our Shareholders:
Notice is hereby given that an annual meeting of shareholders of Magellan Filmed
Entertainment, Inc, a Nevada corporation, will be held at the Bellevue Club,
11200 SE 6th, Bellevue, WA 98004 on August 23, 2001, at 10:00 a.m. PDT. The
purpose of the meeting is to consider and take action on the proposals
summarized below:
(i.) Increase in authorized Capital
An amendment to the Company's Articles of Incorporation to increase
the number of shares of common stock authorized for issuance, from
200 million to 950 million, and to increase the number of shares of
preferred stock authorized for issuance, from 50 million to 300
million;
(ii.) Change the par value
An amendment to the Company's Articles of Incorporation to change the
par value of the common stock from $.001 to $.0001 and to change the
par value of the preferred stock from $.001 to $.0001;
(iii.) Change in provisions for the issuance of capital stock.
An amendment to the Company's Articles of Incorporation to provide
that the Board of Directors have the authority to issue the Common
Stock and Preferred Stock in series and to determine for each series
the voting powers, designations, preferences, rights, qualifications,
limitations or restrictions expressed in the resolutions providing
for the issue of such series, and to add provisions to the Articles
of Incorporation to clarify features relating to the authorized
capital stock;
(iv.) Such other business as may properly come before the meeting.
This Information Statement is being sent on August 3, 2001 to the holders of
record of the Company's common stock at the close of business on July 24, 2001
(the "Meeting Record Date") which has been fixed as the record date for
determining shareholders entitled to notice of and to vote at the Meeting.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
Your attention is directed to the enclosed Information Statement.
By Order of the Board of Directors
/s/ Patrick F. Charles
Patrick F. Charles
President and CEO
MAGELLAN FILMED ENTERTAINMENT, INC
8756 - 122nd Avenue NE
Kirkland, WA 98033
INFORMATION STATEMENT
INTRODUCTION
This Information Statement is furnished by the Board of Directors of Magellan
Filmed Entertainment, Inc ("Magellan" or the "Company") to the shareholders of
record of the Company's common stock at the close of business on July 24, 2001
(the "Meeting Record Date"), and is being sent to you in connection with the
annual meeting of shareholders of Magellan to be held at the Bellevue Club,
11200 SE 6th, Bellevue, WA 98004 on August 23, 2001, at 10:00 a.m. PDT, (the
"Meeting"). The purpose of the Meeting is to consider and take action on the
proposals summarized below:
(i) Increase in authorized Capital
An amendment to the Company's Articles of Incorporation (the
"Articles") to increase the number of shares of common stock,
(the "Common Stock"), authorized for issuance from 200 million
to 950 million; to increase the number of shares of preferred
stock, (the "Preferred Stock"), authorized for issuance from
50 million to 300 million;
(ii) Change the par value
An amendment to the Company's Articles of Incorporation to
change the par value of the Common Stock from $.001 to $.0001
and to change the par value of the Preferred Stock from $.001
to $.0001;
(iii) Change in provisions for the issuance of capital stock.
An amendment to the Company's Articles of Incorporation to
provide that the Board of Directors have the authority to
issue the Common Stock and Preferred Stock in a series and to
determine for each series the voting powers, designations,
preferences, rights, qualifications, limitations or
restrictions expressed in the resolutions providing for the
issue of such series, and to add provisions to the Articles of
Incorporation to clarify features relating to the authorized
capital stock;
(iv) Such other business as may properly come before the meeting.
The form of the Certificate of Amendment to the Articles of Incorporation of
Magellan Filmed Entertainment, Inc. is included herewith as Exhibit A.
This Information Statement is being mailed on or before the close of business on
August 3, 2001, to shareholders holding Common Stock, the only shareholders
entitled to vote or give an authorization or consent in regard to any matter to
be acted upon. The Company will cause each of the matters described above to
become effective as soon as practicable twenty (20) days after August 3, 2001,
the date the Information Statement is first sent to the stockholders. The
effective date of the amendments described above will be the Meeting date,
August 23, 2001.
OUTSTANDING SECURITIES AND VOTING RIGHTS
As of the Meeting Record Date, July 24, 2001, there were issued and outstanding
180,884,192 shares of Common Stock for the purpose of determining shareholders
- -----------
entitled to receive this Information Statement. The Common Stock is the only
security of the Company that is issued and is entitled to vote on these matters.
The Company's Bylaws provide that shareholders holding 10% (ten percent) of the
issued and outstanding voting shares, present at the Meeting or represented by
proxy, shall constitute a quorum. When a quorum is present the vote of the
holders of 10% (ten percent) of the stock having voting power present at the
Meeting or represented by proxy shall be sufficient to decide any matter brought
before such meeting
Each holder of Common Stock is entitled to one vote in person or by proxy for
each share of Common Stock in his or her name on the books of the Company, for a
total of 180,884,192 Common Stock votes as of the Meeting Record Date, July 24,
-----------
2001 The Common Stock shareholders are entitled to vote on any matter submitted
to the vote of the shareholders at any meeting of the shareholders.
The Board of Directors of the Company believes that the proposals are in the
best interest of the Magellan shareholders and recommends adoption of the
proposals.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
ADDITIONAL INFORMATION
REASONS FOR THE CHANGES
The Company currently has 200 million shares of $.001 par value Common Stock and
50 million shares of $.001 par value Preferred Stock authorized for issuance.
The Company's Board of Directors recommended the increase in the authorized
Common Stock from 200 million shares par value $.001 to 950 million shares par
value $.0001, and the authorized Preferred Stock from 50 million shares, par
value $.001 to 300 million shares, par value $.0001 to make available for
issuance from time to time additional capital stock in connection with
financings, acquisitions and conversions. Because the market price for the
common stock has remained relatively low, it has been necessary to sell or
otherwise issue more shares than anticipated, in order to raise sufficient
capital through the issuance of convertible debt instruments. The Board believes
it necessary to increase the number of shares of Common Stock and Preferred
Stock the Company is authorized to issue. The Board also recommends the change
in the par value of the common Stock and Preferred Stock from $.001 to $.0001 to
insure that the issuance of shares for conversion of convertible debentures are
at prices that are at or above par value. Shares cannot be issued below par
value since such shares would not be fully paid. The decrease in par value may
also minimize state fees based on par value of authorized capital. The proposed
changes will be affected by the filing of a Certificate of Amendment with the
Secretary of State of the State of Nevada, included herein as Exhibit A. The
changes will be effective as of the Meeting date, August 23, 2001.
The Company anticipates that in the future it will consider a number of
financing and acquisition transactions which may involve the issuance of
additional equity, debt or convertible securities. The increase in authorized
capital stock and the provision giving the Board authority, without any further
approval of the shareholders, to determine the terms of any class or series of
Common Stock or Preferred Stock to be issued from time to time, including voting
powers, designations, preferences, rights, qualifications, limitations,
restrictions, dividends or interest rates, conversion prices, redemption prices,
maturity dates and similar matters will allow the board to act without the
necessity, and the related costs and delays, of either calling a special
shareholders meeting or of waiting for the regularly scheduled annual meeting of
shareholders in order to increase the authorized capital to the level proposed
herein. If, in a particular instance, shareholder approval were required by law
or otherwise deemed advisable by the Board, then the matter would be referred to
shareholders for their approval, regardless of whether shareholders had
previously approved a sufficient number of shares.
The Company currently anticipates the issuance of additional shares of Common
Stock for conversion of outstanding convertible debentures of $777,100. This
amount is convertible based on the dollars to be converted divided by the
current Common Stock price at the time of conversion, adjusted for any
conversion discounts. Future common stock prices are unknown, therefore the
number of shares to be issued for such conversions is unknown, if however the
Company were to issue a significant number of shares, such issuance would result
in a dilution of the percentage ownership interest of existing shareholders.
CERTAIN ANTI-TAKEOVER EFFECTS OF THE AUTHORIZED STOCK INCREASE
Under certain circumstances, the Board of Directors could create impediments to,
or delay persons seeking to effect, a takeover or transfer of control of the
Company by causing some or all of the additional authorized shares to be issued
to a holder or holders who side with the Board in opposing a takeover bid that
the Board of Directors determines is not in the best interests of the Company
and its shareholders. Such an issuance would diminish the voting power of
existing shareholders who favor a change in control, and the ability to issue
the shares could discourage an attempt to acquire control of the Company. While
it may be deemed to have potential anti-takeover effects, the Board is proposing
the increase in authorized capital stock solely for the purpose of poising
itself for potential financings and acquisitions. The amendment is not prompted
by any specific effort or takeover threat currently known or perceived by
management.
NO DISSENTERS' RIGHTS OF APPRAISAL
Nevada Law does not provide for dissenters' rights of appraisal with respect to
the increase in the number of authorized shares of Common Stock and Preferred
Stock, the change in par value or the change granting the Board authority to
determine the provisions of capital stock issued.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
No director, nominee for director, executive officer, associate of any director,
nominee for director, executive officer or any other person has any substantial
interest, direct or indirect, by security holdings or otherwise, in the proposed
amendment to Magellan's Articles of Incorporation, which is not shared by all
other stockholders.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information as of July 24, 2001
describing the beneficial ownership of Magellan's outstanding voting capital
stock by (i) each of the Company's Officers and Directors; (ii) each person who
is known by Magellan to own more than 5% of Magellan's outstanding common stock;
and (iii) all of Magellan's Officers and Directors as a group
Title of Name of Beneficial Amount and Nature Percent
Class Owner of Beneficial Ownership of Class
- ---------- ------------------- ----------------------- --------
Common Patrick F Charles 14,812,500 (a)(c) 8.19%
Stock 8756-122nd Avenue NE -----
Kirkland, WA 98033
President, Chief Executive
Officer and Director
Common Terrence K. Picken 14,812,500 (b)(c) 8.19%
Stock 8756-122nd Avenue NE ----
Kirkland, WA 98033
Executive Vice President
Chief Operating Officer
And Director
Common James G. Brewer 3,375,000 1.87%
Stock 8756-122nd Avenue NE -----
Kirkland, WA 98033
Vice President Finance and
Chief Financial Officer
Stock All Officers and Directors 33,000,000 18.24%
as a group (3 persons) -----
(a) Includes 1,000,000 shares held by PDDE, LLC a State of Washington limited
liability company formed in February 1998 of which Patrick F. Charles is
Managing Member and owns controlling interest and 687,500 shares held by
Coast Northwest Management, LLC a State of Washington Limited Liability
Company formed in February 1998 of which Patrick F. Charles is a
co-Managing Member and owns a 50% interest.
(b) Includes 625,000 shares held by United West Holdings LLC, a State of
Washington limited liability company formed in February 1998 of which
Terrence K. Picken is Managing Member and owns controlling interest,
375,000 shares held by TKY Holdings LLC, a State of Washington limited
liability company formed in February 1998 of which Terrence K. Picken is
Managing Member and owns controlling interest, and 687,500 shares held by
Coast Northwest Management LLC, a State of Washington limited liability
company formed in February 1998 of which Terrence K. Picken is a
co-Managing Member and owns a 50% interest.
(c) Gives effect to the exercise of options to purchase shares of Common Stock:
for Mr. Charles, 250,000 shares at an average price of $0.40 per share and
for Mr. Picken, 250,000 shares at an average price of $0.40 per share.
OTHER INFORMATION
Additional information concerning Magellan, including its annual report on Form
10-KSB, its quarterly reports on Form 10-QSB or its periodic reports on Form 8-K
which have been filed with the Securities and Exchange Commission, may be
accessed through the EDGAR archives, at www.sec.gov. Magellan's Common Stock
trades on the Over The Counter Bulletin Board. The current trading symbol is
MLFM.
The following document is being delivered to the Company's stockholders together
with this Information Statement:
Exhibit A - Form of Certificate of Amendment to the Articles of Incorporation of
Magellan Filmed Entertainment, Inc.
EXHIBIT "A"
CERTIFICATE OF AMENDMENT TO THE ARTICLES OF INCORPORATION
OF MAGELLAN FILMED ENTERTAINMENT, INC
THE UNDERSIGNED, Patrick F. Charles, President and CEO of Magellan Filmed
Entertainment, Inc hereby certifies that:
1. The original articles were filed with the Office of the Secretary of State
of the State of Nevada on February 28, 2000.
2. Pursuant to an action at the annual meeting of the shareholders of the
corporation dated August 23, 2001, the corporation hereby adopts the
following amendment to the Articles of Incorporation of this Corporation:
Article Six: Authorized Capitalization shall be and read as follows:
Article Six. Authorized Capitalization
The authorized capitalization of this corporation shall be and is the sum of
950,000,000 shares of Common Stock at $0.0001 par value and 300,000,000 shares
of Preferred Stock at $0.0001 par value. The Common Stock and the Preferred
Stock shall be fully paid at such time as the Board of Directors may designate
in exchange for cash, property or services, the stock of other corporations or
other values, rights, or things and the judgment of the Board of Directors as to
the value thereof shall be conclusive.
6.1 Issuance of Common and Preferred Stock in Series
The Common Stock and Preferred Stock may be issued from time to time in
one or more series the shares of each series to have such voting
powers, full or limited, and such designations, preferences and
relative, participating, optional or other special rights and
qualifications, limitations or restrictions thereof as are stated and
expressed herein or in the resolution or resolutions providing for the
issue of such series adopted by the Board of Directors. The Board of
Directors may amend these Articles of Incorporation from time to time
as necessary to express herein the provisions of a series of stock
issued.
6.1.1 Dividends
Subject to any preferential rights granted for any series of
Preferred Stock, the holders of shares of the Common Stock
shall be entitled to receive dividends out of the funds of the
corporation legally available therefore at the rate and at the
time or times, whether cumulative or noncumulative, as may be
provided by the board of directors. The holders of shares of
the Preferred Stock shall be entitled to receive dividends to
the extent provided herein or by the board of directors in
designating the particular series of Preferred Stock. The
holders of shares of the Common Stock shall not be entitled to
receive any dividends thereon other than the dividends
referred to in this section.
6.1.2 Voting
To the extent provided herein or by resolution or resolutions
of the board of directors providing for the issue of a class
or series of Common Stock or Preferred Stock, the holders of
each such class or series shall have the right to vote for the
election of members of the board of directors of the
corporation and the right to vote on all other matters, except
those matters as to which Nevada law or these Articles provide
for a separate vote.
6.1.3 Issuance of Shares
The corporation may from time to time issue any authorized and
unissued shares of Common Stock or Preferred Stock for such
consideration as may be fixed from time to time by the board
of directors, without action by the shareholders. The board of
directors may provide for payment therefore to be received by
the corporation in cash, property, services or such other
consideration as is approved by the board of directors. Any
and all such shares of Common Stock or Preferred Stock, the
issuance of which has been so authorized, and for which
consideration so fixed by the board of directors has been paid
or delivered, shall be deemed fully paid stock and shall not
be liable to any further call or assessment thereon.
6.2 Designation of Common Stock
6.2.1 Dividends
Dividends shall be declared and set aside for any shares of
the Common Stock only upon resolution of the Board of
Directors.
6.2.2 Liquidation Rights
Upon the voluntary or involuntary dissolution, liquidation or
winding up of the corporation, the assets available for
distribution to the Common Stock shall be distributed in the
order and amounts described in Section 6.3.8.
6.2.3 Voting Power
Each holder of Common Stock shall be entitled to one vote for
each share of Common Stock held at the record date for the
determination of Common Stockholders entitled to vote on such
matter or, if no such record date is established, at the date
on which notice of the meeting of shareholders at which the
vote is to be taken is marked, or the date any written consent
of shareholders is solicited if the vote is not to be taken at
a meeting.
6.3 Designation of Series of Preferred Stock
6.3.1 Designations
6.3.2 Dividends
6.3.3 Voting Power
6.3.4 Liquidation Rights
Upon the voluntary or involuntary dissolution, liquidation or
winding up of the corporation, the assets of the corporation
available for distribution to its shareholders shall be
distributed in the order and amounts described in Section
6.3.8.
6.3.5 Conversion Rights
6.3.6 Redemption
6.3.7 Reissuance of Stock
6.3.8 Liquidation Rights
Upon the voluntary or involuntary dissolution, liquidation or winding up of the
corporation, the assets of the corporation available for distribution to its
shareholders shall be distributed in the following order and amounts:
a. General
(i.) Common Stock. Subject to payment in full of preferential liquidation rights
granted to any series of Preferred Stock the holders of shares of Common
Stock shall be entitled to receive $1.00, appropriately adjusted for any
stock dividend, split or combination of such Common Stock for each
outstanding share of Common Stock held by them (the "Common Stock
Liquidation Amount"). If the assets of the corporation shall be
insufficient to permit the payment of the full Common Stock Liquidation
Amount, then the assets of the corporation available for distribution shall
be distributed ratably among the holders of the Common Stock in the same
proportions as the aggregate of the Common Stock Liquidation Amount each
such holder would otherwise be entitled to receive bears to the total
Common Stock Liquidation Amount that would otherwise be payable to all such
holders, and no further distribution to other shareholders of the
corporation shall be made. Upon the completion of the preferential rights
granted for any series of Preferred Stock and the full Common Stock
Liquidation Amount if assets remain in the corporation, such remaining
assets shall be distributed as set forth in Section 6.3.8a(ii).
(ii.)Participation. Subject to payment in full of preferential liquidation
rights granted to any series of Preferred Stock and the payment in full or
the Common Stock Liquidation Amount as provided in Section 6.3.8a (i), if
assets remain in the corporation, such remaining assets shall be
distributed to the holders of shares of Common Stock together, who shall
each be entitled to receive their Pro Rata Amount; provided that the rights
of the holders of shares of Common Stock are subject to any preferential
rights granted for any subsequent series of Preferred Stock. "Pro Rata
Amount" means that portion of remaining assets to which a group would be
entitled based on its percentage of the number of shares of Common Stock
outstanding and the number of shares of Common Stock into which the
outstanding shares of Preferred Stock could then be converted.
b. Treatment of Sales of Assets or Acquisitions. The sale of all or
substantially all of the assets of the corporation or the acquisition of
the corporation by another entity by means of merger, consolidation or
otherwise, resulting in the exchange of the outstanding shares of the
corporation for securities of or consideration issued, or caused to be
issued, by the acquiring entity or any of its affiliates, shall be regarded
as a liquidation within the meaning of this Section 6.3.8.
c. Distributions Other Than Cash. Whenever the distribution provided for in
this Section 6.3.8 shall be payable in property other than cash, the value
of such distribution shall be the fair market value of such property as
determined in good faith by the board of directors.
MAGELLAN FILMED ENTERTAINMENT, INC
a Nevada corporation
/s/ Patrick F. Charles
Patrick F. Charles
President and CEO