SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
December 31, 2001
----------------
Date of Report
(Date of Earliest Event Reported)
MOVE FILMS, INC
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(Exact Name of Registrant as Specified in its Charter)
Texas 00-32691 76-0676168
- --------------- ----------- ------------------
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
9350 Civic Center Drive, Suite 110, Beverly Hills, CA 90210
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(Address of principal executive offices)
310-229-5229
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Registrant's telephone number
Expresso Express, Inc
618 Cardiff, Irvine, CA 92606
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(Former name and address of Registrant)
ITEM 7. FINANCIAL STATEMENTS
MOVE FILMS, INC
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
December 31, 2001
CONTENTS
Page
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INDEPENDENT AUDITOR'S REPORT F-2
FINANCIAL STATEMENTS
Balance Sheet F-3
Statement of Loss and Accumulated Deficit During F-4
the Development Stage
Statement of Cash Flows F-5
Statement of Stockholders' Equity F-6
NOTES TO FINANCIAL STATEMENTS F-7 to F-9
F-1
Independent Auditor's Report
Stockholders and Board of Directors
Move Films, Inc. (A Development Stage Company)
f/k/a ILN Pelham Corporation
Beverly Hills, California
We have audited the accompanying balance sheet of Move Films, Inc.
(A Development Stage Company) f/k/a ILN Pelham Corporation, as of
December 31, 2001, and the related statements of loss and
accumulated deficit during the development stage, cash flows, and
stockholders' equity for the period from inception (April 2, 2001)
to December 31, 2001. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
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
misstatement. 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 that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Move
Films, Inc. (A Development Stage Company) f/k/a ILN Pelham
Corporation and Express Express, Inc. at December 31, 2001,
and the results of its operations and its cash flows for
the period from inception (April 2, 2001) to December 31, 2001,
in conformity with accounting principles generally accepted
in the United States of America.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in
Note 5 to the financial statements, the Company incurred a loss
of $6,015 from inception (April 2, 2001) to December 31, 2001, which
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 5. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Dohan and Company, CPA's
May 11, 2002
Miami, Florida
F-2
MOVE FILMS, INC
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
December 31, 2001
ASSETS
Inventory (Scripts and Projects) $7,800,000
Deferred tax asset, less valuation allowance of $902 -
-----------
TOTAL ASSETS $7,800,000
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accrued liabilities $ 2,080
---------
TOTAL LIABILITIES 2,080
---------
COMMITMENTS AND CONTINGENCIES (NOTE 5)
STOCKHOLDERS'EQUITY
Preferred Stock, $.0001 par value, 20,000,000 shares
authorized; none outstanding -
Common Stock, $.0001 par value, 100,000,000 shares
authorized; 21,817,500 shares issued and outstanding 2,182
Additional paid-in capital 7,801,753
Deficit accumulated during the development stage (6,015)
---------
TOTAL STOCKHOLDERS' EQUITY 7,797,920
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $7,800,000
==========
See accompanying notes.
F-3
MOVE FILMS, INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF LOSS AND ACCUMULATED DEFICIT DURING THE DEVELOPMENT STAGE
For the period from inception (April 2, 2001) to December 31, 2001
EXPENSES
Organizational expenses $ 475
Professional fees 5,540
---------
NET LOSS BEFORE INCOME TAX (6,015)
INCOME TAXES -
---------
NET LOSS AND ACCUMULATED DEFICIT DURING THE
DEVELOPMENT STAGE $(6,015)
=========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
(BASIC AND DILUTED) 2,114,161
=========
NET LOSS PER SHARE (BASIC AND DILUTED) $ (0.00)
=========
See accompanying notes.
F-4
MOVE FILMS, INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
For the period from inception (April 2, 2001) to December 31,2001
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (6,015)
Adjustments to reconcile net loss to net cash
used by operating activities:
Common stock issued for services 182
Increase in accrued liabilities 2,080
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NET CASH USED BY OPERATING ACTIVITES (3,753)
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CASH FLOWS FROM FINANCING ACTIVITIES
Capital Contributed 2,753
Common stock issued for cash 1,000
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NET CASH PROVIDED BY FINANCING ACTIVITIES 3,753
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NET INCREASE IN CASH AND EQUIVALENTS FOR THE PERIOD
AND CUMULATIVE DURING THE DEVELOPMENT STAGE -
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD -
----------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ -
==========
SUPPLEMENTAL DISCLOSURES
Interest paid $ -
Income taxes paid $ -
In addition to amounts reflected above, common stock was issued for:
Common stock issued films acquired $7,800,000
Common stock issued for services 182
==========
See accompanying notes.
F-5
MOVE FILMS, INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
Accumulated
Deficit
Common Stock Additional During the Total
----------------------- Paid-In Development Stockholders'
Description Shares Amount Capital Stage Equity
- ----------------------------------------------------------------------------------------------------
Common stock issued
for cash 5,000,000 $ 500 $ 500 $ - $ 1,000
Contributed capital - - 2,753 - 2,753
Common stock issued
for assets 15,000,000 1,500 7,798,500 - 7,800,000
Common stock issued
pursuant to 2001
stock incentive plan 1,817,500 182 - - 182
Net loss and cumulative
loss during the
development stage - - - (6,015) (6,015)
- -----------------------------------------------------------------------------------------------------
BALANCE,
December 31, 2001 21,817,500 $2,182 $7,801,753 $(6,015) $7,797,920
=====================================================================================================
See accompanying notes.
F-6
NOTE 1. ORGANIZATION AND MERGERS
MOVE FILMS, INC ("MOVE" or the "Company") (fka "ILN Pelham
Corporation")(fka "Expresso Express, Inc") was incorporated in the
State of Texas on April 2, 2001 to serve as a vehicle to effect
a merger, exchange of capital stock, asset acquisition, or other
business combination with a domestic or foreign private business.
The Company entered into a business combination and acquired all of
the assets and liabilities of The Expresso Express, on October 2,
2001, pursuant to an agreement and Plan of Reorganization.
The Expresso Express was a sole proprietorship formed on September
14, 2001, created to engage in the drive-thru espresso business.
Subsequent to the Agreement and Plan of reorganization, the name
ILN Pelham Corporation was changed to Expresso Express, Inc. The
Agreement and Plan of Reorganization set forth that Pelham would
issue 20,000,000 shares to the owner of The Expresso Express. This
business combination was accounted for as a purchase.
Pursuant to an Agreement and Plan of Reorganization dated December
31, 2001, the Company acquired all the assets of Motion
Entertainment Group ("Motion"), a California partnership, and
commenced the business operations formally conducted by Motion. The
Company subsequently changed its name from 'Expresso Express,
Inc' to 'Move Films, Inc' and discontinued all of its business
activities in the drive-thru espresso business. This business
combination was accounted for as a purchase.
Motion Entertainment Group was formed on December 25, 2001,
to engage in the business of development, production,
and distribution of full length feature film properties.
The Agreement and Plan of Reorganization required the
Company to issue 15,000,000 shares to the general partners
of Motion Entertainment Group in exchange for the 20,000,000
shares held by Jennifer Baker and Simon Gaunt, former
directors of the Company.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
UNCLASSIFIED BALANCE SHEET
In accordance with the provisions of the American Institute of
Certified Public Accountants' Statement of Position No. 00-2
("SOP 00-2"), Company has elected to present an unclassified
balance sheet.
USE OF ESTIMATES
The preparation of financial statements, in conformity with
generally accepted accounting principles, requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosures of contingent
assets and liabilities at the date of the financial statements,
and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those
estimates.
F-7
FILM INVENTORIES
Film inventories (scripts and developed projects) are stated at
estimated net realizable value.
In June 2000, the Accounting Standards Executive Committee of
the American Institute of Certified Public Accountants
("AcSEC") issued SOP 00-2, "Accounting by Producers or
Distributors of Films." SOP 00-2 superseded existing film
accounting standards related to the recognition of revenues,
costs and film cost valuation and must be adopted by companies
for fiscal years beginning after December 15, 2000. SOP 00-2
requires that advertising costs for theatrical and television
product be expensed as incurred. Furthermore, revenue associated
with the home video market must be recognized upon availability
to customers (street date) and not the date the product is
shipped. The Company adopted SOP 00-2 during the year ended
December 31, 2001.
REVENUE RECOGNITION
The Company recognizes revenue in accordance with the
provisions of Statement of Financial Accounting Standards
No. 139 and SOP 00-2. Revenues from feature film distribution
licensing agreements are recognized on the date the completed
film is delivered or becomes available for delivery, is
available for exploitation in the relevant media window
purchased by that customer or licensee and certain other
conditions of sale have been met pursuant to criteria
specified by SOP 00-2.
Revenues from domestic television and video licensing
contracts, which provide for the receipt of non-refundable
guaranteed amounts, are recognized when the film is available
for exhibition, provided that the other conditions of sales
required by SOP 00-2 have been met. Until all conditions
for sale have been met, amounts received on such licensing
contracts are reflected as deferred income.
The market trend of each film is regularly examined to determine
the estimated future revenues and corresponding lives. Due to the
nature of the industry, management's estimates of future revenues
may change within the next year and the change could be material.
NET LOSS PER COMMON SHARE
Basic net loss per common share is computed by dividing net
loss applicable to common shareholders by the weighted-average
number of common shares outstanding during the period.
Diluted net loss per common share is determined using the
weighted-average number of common shares outstanding during the
period, adjusted for the dilutive effect of common stock
equivalents, consisting of shares that might be issued upon
exercise of common stock options. In periods where losses are
reported, the weighted-average number of common shares
outstanding excludes common stock equivalents, because their
inclusion would be anti-dilutive.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with
original maturities of three months or less to be cash
equivalents.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial instruments, accounts payable, and accrued liabilities
are carried at amounts which reasonably approximate their
fair value due to the short-term nature of these amounts
or due to variable rates of interest which are consistent
with market rates.
CONCENTRATION OF CREDIT RISK
The Company operates in the film industry in the Southern
California area. Consequently, the Company's business will be
affected by economic fluctuations in the film industry.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company reviews its long-lived assets for impairment
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
net cash flows expected to be generated by the assets. If the
assets are considered to be impaired, the impairment to be
recognized is measured by the amount by which the carrying
amount exceeds the fair value of the assets.
DEVELOPMENT STAGE COMPANY
The Company has been devoting its efforts to activities such
as raising capital, establishing sources of information,
and developing markets for its planned operations. The
Company has not yet generated any revenues and, as such,
it is considered a development stage company.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 2001, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards
("SFAS") No. 141, "Business Combinations." This statement
addresses financial accounting and reporting for business
combinations. All business combinations in the scope of this
statement are to be accounted for using the purchase method.
The provisions of this statement apply to all business
combinations initiated after June 30, 2001.
In July 2001, the FASB issued SFAS No. 142, "Goodwill and
Other Intangible Assets." This statement addresses financial
accounting and reporting for acquired goodwill and other
intangible assets. It addresses how intangible assets that
are acquired individually or with a group of other assets should
be accounted for in financial statements upon their acquisition.
This statement also addresses how goodwill and other intangible
assets should be accounted for after they have been initially
recognized in the financial statements. It is effective for
fiscal years beginning after December 15, 2001. Early
application is permitted for entities with fiscal years beginning
after March 15, 2001, provided that the first interim financial
statements have not been issued previously. The Company
does not expect adoption of SFAS No. 142 to have a material impact,
if any, on its financial statements.
Impairment of Long-Lived Assets
The Company reviews its long-lived assets for impairment 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 net cash flows expected to be
generated by the assets. If the assets are considered to be
impaired, the impairment to be recognized is measured by the
amount by which the carrying amount exceeds the fair value of the
assets.
NOTE 3. RELATED PARTY TRANSACTIONS
The Company issued 5,000,000 shares of common stock to ILN
Industries, LLC for a total value of $1,000 on April 2, 2001
pursuant to Section 4(2) of the Securities Act.
On October 2, 2001, ILN Industries, LLC returned the
5,000,000 shares to the Company for cancellation.
The Company issued 5,000,000 shares of common stock to ILN
Industries, LLC for a total value of $1,000 on October 2, 2001.
pursuant to Section 4(2) of the Securities Act.
NOTE 4. INCOME TAXES
At December 31, 2001, the Company had a net operating loss of
approximately $6,015. This loss may be used offset federal
taxable income in future periods. However, if subsequently
there are ownership changes in the Company, as defined in
Section 382 of the Internal Revenue Code, the Company's
ability to utilize net operating losses available before
the ownership change may be restricted to a percentage of
the market value of the Company at the time of the ownership
change. Therefore, substantial net operating loss
carryforwards could, in all likelihood, be limited or
eliminated in future years due to a change in ownership as
defined in the Code. The utilization of the remaining
carryforwards is dependent on the Company's ability to
generate sufficient taxable income during the carryforward
periods and no further significant changes in ownership.
The Company computes deferred income taxes under the provisions
of FASB Statement No. 109 (SFAS 109), which requires the use of
an asset and liability method of accounting for income taxes.
SFAS No. 109 provides for the recognition and measurement of
deferred income tax benefits based on the likelihood of their
realization in future years. A valuation allowance must be
established to reduce deferred income tax benefits if it is
more likely than not that, a portion of the deferred income
tax benefits will not be realized. It is Management's opinion
that the entire deferred tax benefit of $902 resulting from
the net operating loss may not be recognized in future periods.
Therefore, a valuation allowance equal to the deferred tax
benefit of $902 has been established, resulting in no deferred
tax benefits as of the balance sheet date.
F-8
NOTE 5. GOING CONCERN AND MANAGEMENT'S PLANS
The Company incurred a net loss of $6,015 for the period from
inception (April 2, 2001) to December 31, 2001. The ability of
the Company to continue as a going concern is dependent upon its
ability to obtain financing and achieve profitable operations.
The Company anticipates meeting its cash requirements through
the financial support of its shareholders until such time as
it obtains additional capital. The financial statements
do not include any adjustments that might be necessary
should the Company be unable to continue as a going concern.
NOTE 6. STOCKHOLDERS' EQUITY
SALE OF SHARES
In October, 20,000,000 shares were issued pursuant to a Plan of
Reorganization for a total of $2,000. The 20,000,000 shares
were later returned for cancellation in December, and 15,000,000
shares were issued for Plan of Reorganization dated
December 31, 2001, in exchange for total assets received of
$7,800,000.
CAPITAL CONTRIBUTED
ILN Industries, LLC, a beneficial shareholder of the Company
contributed $2,753 to pay for the Company's organizational
expenses, professional, and operating fees.
PREFERRED STOCK
The Board of Directors is authorized to establish the rights
and preferences of preferred stock. To date, the Board of
Directors has not established those rights and preferences.
NOTE 7. STOCK INCENTIVE PLAN
During the period ended December 31, 2001, the Company adopted
a Stock Incentive Plan and issued 1,817,500 pursuant to the
Stock Incentive Plan. The purpose of the plan is to assist
in attracting and retaining key employees, non-employee
directors and consultants to achieve long-term corporate
objectives. These shares were recorded at a par value of $0.0001
because value and services rendered were minimal.
This amount totaled $182 and is included in consulting fees.
F-9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this Current Report on Form
8-K/A to be signed on its behalf by the undersigned hereunto duly
authorized.
MOVE FILMS, INC.
May 15, 2002 By /s/ Christopher Eberts
--------------------------------
Christopher Eberts, President