UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended April 30, 2011
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from ____________, to ____________
Commission File Number 000-30800
THE MOVIE STUDIO, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 65-0494581
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
530 North Federal Highway, Ft. Lauderdale, Florida 33301
(Address of Principal Executive Offices)
(954) 332-6600
(Registrant's Telephone Number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes No X
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Website, if any, every Interactive Data File required to
be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this
chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes No X
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
definition of "accelerated filer, large accelerated filer and smaller reporting
company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company X
1
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes No X
There were 131,182,473 shares of the Registrant's $0.0001 par value common stock
outstanding as of February 21, 2013.
2
The Movie Studio, Inc.
Contents
Part I. Financial Information
Item 1. Consolidated Financial Statements...........................4 - 18
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.......................................19
Item 3. Quantitative and Qualitative Disclosures About Market Risk......20
Item 4. Controls and Procedures.........................................21
Part II. Other Information
Item 1. Legal Proceedings...............................................22
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.....22
Item 3. Defaults Upon Senior Securities.................................22
Item 4. Mine Safety Disclosures.........................................22
Item 5. Other Information...............................................22
Item 6. Exhibits........................................................22
Signatures..............................................................23
3
PART I. FINANCIAL INFORMATION
Statements in this Form 10-Q Quarterly Report may be "forward-looking
statements." Forward-looking statements include, but are not limited to,
statements that express our intentions, beliefs, expectations, strategies,
predictions or any other statements relating to our future activities or
other future events or conditions. These statements are based on our current
expectations, estimates and projections about our business based, in part,
on assumptions made by our management. These assumptions are not guarantees
of future performance and involve risks, uncertainties and assumptions that
are difficult to predict. Therefore, actual outcomes and results may differ
materially from what is expressed or forecasted in the forward-looking
statements due to numerous factors, including those risks discussed in this
Form 10-Q Quarterly Report, under "Management's Discussion and Analysis of
Financial Condition or Plan of Operation" and in other documents which we
file with the Securities and Exchange Commission.
In addition, such statements could be affected by risks and uncertainties
related to our financial condition, factors that affect our industry, market
and customer acceptance, changes in technology, fluctuations in our quarterly
results, our ability to continue and manage our growth, liquidity and other
capital resource issues, competition, fulfillment of contractual obligations
by other parties and general economic conditions. Any forward-looking statements
speak only as of the date on which they are made, and we do not undertake any
obligation to update any forward-looking statement to reflect events or
circumstances after the date of this Form 10-Q Quarterly Report, except as
required by law.
Item 1. Financial Statements
THE MOVIE STUDIO, INC.
Table of Contents
PAGE
Consolidated Balance Sheets 5
Consolidated Statements of Operations 6
Consolidated Statements of Cash Flows 7
Notes to Financial Statements 8 - 18
4
THE MOVIE STUDIO, INC.
(FORMERLY DESTINATION TELEVISION, INC.)
Consolidated Balance Sheet
April 30, October 31,
2011 2010
--------- ----------
Assets
Current Assets
Cash $ 9,375 $ 19
--------- -------
Total Current Assets 9,375 19
Movie-In Process 4,054 -
Property and Equipment, net 7,851 9,129
Acquired amortizable intangible assets 1,105 1,180
--------- ---------
Total assets $ 22,385 $ 10,328
========= =========
Liabilities and Stockholders' Equity
Current Liabilities
Accrued rent 450,000 423,000
Payroll taxes payable 324,145 299,923
Due to Gordon Venters 507,109 461,905
Notes payable Related Party 705,000 705,000
Accrued interest 241,227 205,368
--------- ---------
Total current liabilities 2,227,481 2,095,196
Total Liabilities 2,227,481 2,095,196
Stockholder's deficiency
Preferred stock, series B convertible 206,000 206,000
($.0001 par value) 5,750,000 authorized,
issued and outstanding at April 30,
2011 and October 31, 2010, respectively
Convertible Units, (100:1 at $0.01)
-0- units issued and outstanding
October 31, 2010; 1 Unit issued and
outstanding April 30, 2011, respectively 10,000 -
Common stock, ($.0001 par value);
200,000,000 shares authorized,
102,355,260 and 102,355,260 shares
issued and outstanding April 30,
2011 and October 31, 2010, respectively 6,626,877 6,626,877
Accumulated deficit (9,046,973) (8,917,745)
----------- -----------
Total stockholders' deficiency (2,204,096) (2,084,868)
----------- -----------
Total liabilities and stockholders' $ 23,385 $ 10,328
deficiency ========== ==========
The accompanying footnotes are an integral part of these financial statements
5
THE MOVIE STUDIO, INC.
(FORMERLY DESTINATION TELEVISION, INC.)
Consolidated Statements of operatiions
Three months ended April 30, Six months ended April 30,
2011 2010 2011 2010
----------- ----------- ---------- -----------
Sales $ 4,896 $ 9,765 $ 4,896 $ 18,750
Expenses:
Selling, general and
administrative expenses 34,704 82,686 95,668 149,028
Consulting 2,597 4,450 2,597 4,450
Interest 4,593 20,191 35,859 39,357
----------- ---------- ---------- ----------
Total expenses 41,894 107,327 134,124 192,835
----------- ---------- ---------- ----------
Net loss before income taxes ( 41,894) ( 97,562) (129,228) (174,085)
Income taxes - - - -
----------- ---------- ---------- ----------
Net income (loss) $( 36,998) $( 97,562) $(129,228) $(174,085)
============ =========== ========== ==========
Basic and diluted loss
per share: $ - $ - $ - $ -
Weighted average ============ =========== ========== ==========
numberof common
shares outstanding,
basic and fully
diluted 98,971,698 99,849,643 98,971,698 101,123,215
============ =========== =========== ===========
The accompanying footnotes are an integral part of these financial statements
6
THE MOVIE STUDIO, INC.
(FORMERLY DESTINATION TELEVISION, INC.)
Consolidated Statements of Cash Flows
Six months ended
April 30,
2011 2010
Cash flows from operating activities: ----------- ----------
Net loss $(129,228) $(174,085)
Adjustment to reconcile net loss to net
cash used by operating activities:
Depreciation 1,428 3,106
Grant of stock options at fair value - -
Stock issued for services - -
Changes in operating assets and liabilites
Increase in payables and accrued expenses 66,500 34,051
Increase in accrued rent 27,000 13,500
Increase in accrued interest 35,859 10,050
Increase in payroll taxes payable - 9,116
Increase in Movie-in process ( 4,054) -
--------- ---------
Net cash used in operating activities 2,495 (104,262)
Cash flows from investing activities
Acquisition of fixed assets - ( 1,080)
--------- ---------
cash flows from financing activities - ( 1,080)
Proceeds from issuance of common stock 10,000 27,500
Proceeds from related party loan - 93,260
Net cash provided by financing --------- ---------
activities 10,000 121,120
Net increase (decrease) in cash 7,505 15,418
Cash, beginning of period 1,890 319
--------- ---------
Cash, end of period $ 9,395 $ 15,737
========= =========
The accompanying footnotes are an integral part of these financial statements
7
THE MOVIE STUDIO, INC.
(FORMERLY DESTINATION TELEVISION, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2011
Note 1. Description of Business
The Movie Studio, Inc. (the "Company") was incorporated in the State of Delaware
1961 under the name Magic Fingers, Inc. The company is a vertically integrated
motion picture production company that develops, manufactures and distributes
independent motion picture content for worldwide consumption on a multitude of
devices.
The Company has operated under various names since incorporation, most recently
Destination Television, Inc. from February 2007 to November 2012, when the name
was changed to The Movie Studio, Inc.
From October 31, 2001, the Company's focus was on the developing a private
television network, in high traffic locations such as bars and nightclubs.
During this development period, the Company received incidental revenue from the
sale of advertising and the production of commercials. In 2010, the Company
began implementation of its current business model, using the technology
previously developed for the private television network.
Note 2. Summary of significant Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated quarterly financial statements have been
prepared on a basis consistent with generally accepted accounting principles in
the United States ("GAAP") for interim financial information and pursuant to the
rules of the Securities and Exchange Commission ("SEC"). In the opinion of
management, the accompanying unaudited financial statements reflect all
adjustments, consisting of only normal and recurring adjustments, necessary for
a fair presentation of the results of operations, financial position and cash
flows for the periods presented. The results of operations for the periods are
not necessarily indicative of the results expected for the full year or any
future period. These statements should be read in conjunction with the Entity's
Annual Report on Form 10-K for the year ended October 31, 2010 as filed with the
SEC on January 12, 2013 (the "2010 Annual Report")
The consolidated financial statements include the accounts of The Movie Studio,
Inc. (Formerly Destination Television, Inc.), a Delaware corporation, and its
wholly owned subsidiary Destination Television, Inc., a Florida corporation. All
significant inter-company account balances and transactions between the Company
and its subsidiary have been eliminated in consolidation.
Long-Lived Assets
In accordance with Financial Accounting Standard Board ("FASB") Accounting
Standards Codification ("ASC") Topic 360 "Property, Plant, and Equipment,"
the Company records impairment losses on long-lived assets used in operations
when indicators of impairment are present and the undiscounted cash flows
estimated to be generated by those assets are less than the assets' carrying
amounts. There were no impairment charges during the periods ended April 30,
2011 and 2010.
8
THE MOVIE STUDIO, INC.
(FORMERLY DESTINATION TELEVISION, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2011
Note 2. Summary of significant Accounting Policies (continued)
Fair Value of Financial Instruments
The fair values of the Company's assets and liabilities that qualify as
financial instruments under FASB ASC Topic 825, "Financial Instruments,"
approximate their carrying amounts presented in the accompanying consolidated
statements of financial condition at April 30, 2011 and October 31, 2010.
Revenue recognition
In accordance with the FASB ASC Topic 605, "Revenue Recognition," the Company
recognizes revenue when persuasive evidence of an arrangement exists, delivery
has occurred, the sales price is fixed or determinable, and collectability is
reasonably assured.
Income Taxes
The Company accounts for income taxes in accordance with FASB ASC Topic 740
"Income Taxes," which requires accounting for deferred income taxes under the
asset and liability method. Deferred income tax asset and liabilities are
computed for differences between the financial statement and tax bases of
assets and liabilities that will result in taxable or deductible amounts in
the future based on the enacted tax laws and rates applicable to the periods
in which the differences are expected to affect taxable income. Valuation
allowances are established, when necessary, to reduce the deferred income tax
assets to the amount expected to be realized.
In accordance with GAAP, the Company is required to determine whether a tax
position of the Company is more likely than not to be sustained upon
examination by the applicable taxing authority, including resolution of any
related appeals or litigation processes, based on the technical merits of the
position. The Company files an income tax return in the U.S. federal
jurisdiction, and may file income tax returns in various U.S. state and local
jurisdictions. Generally the Company is no longer subject to income tax
examinations by major taxing authorities for years before 2005. The tax benefit
to be recognized is measured as the largest amount of benefit that is greater
than fifty percent likely of being realized upon ultimate settlement.
De-recognition of a tax benefit previously recognized could result in the
Company recording a tax liability that would reduce net assets. This policy
also provides guidance on thresholds, measurement, de-recognition,
classification, interest and penalties, accounting in interim periods,
disclosure, and transition that is intended to provide better financial
statement comparability among different entities. It must be applied to all
existing tax positions upon initial adoption and the cumulative effect, if any,
is to be reported as an adjustment to stockholders equity as of January 1,
2009. Based on its analysis, the Company has determined that the adoption of
this policy did not have a material impact on the Company's financial statements
upon adoption. However, management's conclusions regarding this policy may be
subject to review and adjustment at a later date based on factors including, but
not limited to, ongoing analyses of and changes to tax laws, regulations and
interpretations thereof.
Comprehensive Income
The Company complies with FASB ASC Topic 220, "Comprehensive Income," which
establishes rules for the reporting and display of comprehensive income (loss)
and its components. FASB ASC Topic 220 requires the Company's change in foreign
currency translation adjustments to be included in other comprehensive loss, and
is reflected as a separate component of stockholders' equity.
9
THE MOVIE STUDIO, INC.
(FORMERLY DESTINATION TELEVISION, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2011
Note 2. Summary of significant Accounting Policies (continued)
Stock-Based Compensation
The Company complies with FASB ASC Topic 718 "Stock Compensation"
which establishes standards for the accounting for transactions in which
an entity exchanges its equity instruments for goods or services.
It also addresses transactions in which an entity incurs liabilities in
exchange for goods or services that are based on the fair value of the
entity's equity instruments or that may be settled by the issuance of
those equity instruments. FASB ASC Topic 718 focuses primarily on
accounting for transactions in which an entity obtains employee services
in share-based payment transactions. FASB ASC Topic 718 requires an
entity to measure the cost of employee services received in exchange for
an award of equity instruments based on the grant-date fair value of the
award (with limited exceptions). That cost will be recognized over the
period during which an employee is required to provide service in exchange
for the award (usually the vesting period). No compensation costs are
recognized for equity instruments for which employees do not render the
requisite service. The grant-date fair value of employee share options
and similar instruments will be estimated using option-pricing models
adjusted for the unique characteristics of those instruments (unless
observable market prices for the same or similar instruments are available).
If an equity award is modified after the grant date, incremental compensation
cost will be recognized in an amount equal to the excess of the fair value of
the modified award over the fair value of the original award immediately
before the modification. No employee stock options or stock awards vested
during the quarter ended January 31, 2011 under FASB ASC 718.
Nonemployee awards
The fair value of equity instruments issued to a nonemployee is measured by
using the stock price and other measurement assumptions as of the date of
either: (i) a commitment for performance by the nonemployee has been reached;
or (ii) the counterparty's performance is complete. Expenses related to
nonemployee awards are generally recognized in the same period as the Company
incurs the related liability for goods and services received. The Company
recorded stock compensation of approximately $-0- and $-0- during the three
months ended April 30, 2011 and 2010, respectively, related to consulting
services.
Recently Adopted Accounting Pronouncements
In December 2010, FASB issued ASC ASU 2010-28, "When to Perform Step 2 of the
Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying
Amounts (Topic 350) - Intangibles - Goodwill and Other." ASU 2010-28 amends
the criteria for performing Step 2 of the goodwill impairment test for
reporting units with zero or negative carrying amounts and requires performing
Step 2, if qualitative factors indicate that it is more likely than not that
goodwill impairment exists. The amendments to this update are effective for us
in the first quarter of 2011. Any impairment to be recorded upon adoption will
be recognized as an adjustment to our beginning retained earnings. The Company
adopted the pronouncement on January 1, 2011 resulting in no impact to the
Company's financial statements.
10
THE MOVIE STUDIO, INC.
(FORMERLY DESTINATION TELEVISION, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2011
Note 2. Summary of significant Accounting Policies (continued)
Recently Adopted Accounting Pronouncements (continued)
In April 2010, the FASB issued ASU No. 2010-13, "Compensation - Stock
Compensation (Topic 718): Effect of Denominating the Exercise Price of a Share-
Based Payment Award in the Currency of the Market in Which the Underlying Equity
Security Trades," which addresses the classification of a share-based payment
award with an exercise price denominated in the currency of a market in which
the underlying equity security trades. Topic 718 is amended to clarify that a
share-based payment award with an exercise price denominated in the currency of
a market in which a substantial portion of the entity's equity securities trades
shall not be considered to contain a market, performance or service condition.
Therefore, such an award is not to be classified as a liability if it otherwise
qualifies as equity classification. The amendments in this update should be
applied by recording a cumulative-effect adjustment to the opening balance of
retained earnings. The cumulative-effect adjustment should be calculated for all
awards outstanding as of the beginning of the fiscal year in which the
amendments are initially applied, as if the amendments had been applied
consistently since the inception of the award. ASU No. 2010-13 is effective for
interim and annual periods beginning on or after December 15, 2010 and is not
expected to have amaterial impact on the Company's consolidated financial
position or results of operations. The Company adopted the pronouncement on
January 1, 2011 resulting in no impact to the Company's financial statements.
In January 2010, the FASB issued Accounting Standards Update 2010-06,"Fair
Value Measurements and Disclosures (Topic 820) - Improving Disclosures about
Fair Value Measurements" (ASU 2010-06), to require new disclosures related
to transfers into and out of Levels 1 and 2 of the fair value hierarchy and
additional disclosure requirements related to Level 3 measurements. The
guidance also clarifies existing fair value measurement disclosures about
the level of disaggregation and about inputs and valuation techniques used
to measure fair value. The additional disclosure requirements are effective
for the first reporting period beginning after December 15, 2009, except for
the additional disclosure requirements related to Level 3 measurements, which
are effective for fiscal years beginning after December 15, 2010. The Company
adopted the pronouncement on January 1, 2011 resulting in no impact to the
Company's financial statement.
The Company has adopted all accounting pronouncements issued since December 31,
2007 through April 30, 2011, none of which had a material impact on the
Company's financial statements.
Loss Per Common Share
The Company complies with the accounting and disclosure requirements of FASB
ASC 260,"Earnings Per Share." Basic loss per common share is computed by
dividing netloss available to common stockholders by the weighted average
number of common shares outstanding during the period. Diluted loss per
common share incorporates the dilutive effect of common stock equivalents on
an average basis during the period.
11
THE MOVIE STUDIO, INC.
(FORMERLY DESTINATION TELEVISION, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2011
Note 3. Going Concern
The accompany financial statements have been prepared on the basis of
accounting principles applicable to a going concern, which assume that
Destination Television, Inc. will continue in operation for a least one
year and realize its assets and discharge its liabilities in the normal
course of operations.
Several conditions cast doubt about the Company's ability to continue as
a going concern. The Company has an accumulated deficit of approximately
$9 million as of April 30, 2011, has no cash available for payment of
operating expenses, no source of revenue, and requires additional financing
in order to finance its business activities on ongoing basis. The Company's
future capital requirements will depend on numerous factors, including but
not limited to continued progress in the pursuit of business opportunities.
The Company is actively pursuing alternative financing and has discussions
with various third parties, although no firm commitments have been obtained.
In the interim, the principal shareholderhas committed to meeting any
operating expenses incurred by the Company. The Company believes that actions
it is presently taking to revise its operating and financial requirements
provide it with the opportunity to continue as a going concern.
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of
the Company as a going concern. While we believe that the actions already
taken or planned, will mitigate the adverse conditions and events which raise
doubt about the validity of going concern assumption used in preparing these
financial statements, there can be no assurance that these actions will be
successful. If the Company were unable to continue as a going concern, then
substantial adjustments would be necessary to the carrying values of the
reported liabilities.
Note 4. Acquired Amortizable Intangible Assets
Since October of 2006, the Company invested $3,280 in establishing trademarks
associated with its Bar TV concept. The Company amortizes the costs of these
intangibles over their estimated useful lives unless such lives are deemed
indefinite. Amortizable intangible assets are also tested for impairment based
on undiscounted cash flows and, if impaired, written down to fair value based
on either discounted cash flows or appraised values. Intangible assets with
indefinite lives are tested for impairment, at least annually, and written down
to fair value as required. Expected annual amortization expense related to
amortizable intangible assets is,as follows:
as of April 30, 2011
2007 ............................. $ 525
2008 .............................. 525
2009 .............................. 525
2010 .............................. 525
2011 .............................. 150
-----
accumulated amortization 2,250
12
THE MOVIE STUDIO, INC.
(FORMERLY DESTINATION TELEVISION, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2011
Note 5. Income Taxes
The Company has approximately $9 million in net operating loss carryovers
available to reduce future income taxes. These carryovers expire at various
dates through the year 2029. The Company has adopted SFAS 109 which provides
for the recognition of a deferred tax asset based upon the value the loss
carryforwards will have to reduce future income taxes and management's estimate
of the probability of the realization of these tax benefits. The Company's
management determined that it was more likely than not that the Company's net
operating loss carry-forwards would not be utilized; therefore, a valuation
allowance against the related deferred tax asset has been established.
A summary of the deferred tax asset presented on the accompanying balance sheets
is, as follows:
April 30 October 31
2011 2010
------------ ------------
Deferred tax asset:
Net operating loss carry-forward $4,534,985 $4,405,757
Other Temporary differences - 1,800
------------ ------------
Deferred Tax asset 4,534,985 4,407,557
Less: Valuation allowance (4,534,985) (4,407,557)
------------ ------------
Net deferred tax asset $ - $ -
============ ============
April 30 October 31
2011 2010
------------ ------------
Statutory federal income tax expense (34)% (34)%
State and local income tax
(net of federal benefits) ( 5) ( 5)
Other temporary differences
Valuation allowance 39 39
------------ ------------
-% -%
============ ============
Note 6. Commitments
Facilities
The Company leases from a stockholder, Dr. H. K. Terry, pursuant to an oral
agreement on a month-to-month basis, an 8,500 square foot building in Fort
Lauderdale, Florida, which serves as its administrative offices and computer
operations center. The rent is $4,500 per month and the Company is responsible
for utilities. Rent expense was $27,000 and $27,000 for each of the six months
ended April 30, 2011 and 2010, respectively.
13
THE MOVIE STUDIO, INC.
(FORMERLY DESTINATION TELEVISION, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2011
Note 6. Commitments (continued)
Employment Agreements
Gordon Scott Venters is employed as the Company's President and Chief Executive
Officer, pursuant to an employment agreement, effective November 1, 2007. The
three-year employment agreement, which extended a previous agreement, provides
for an annual salary of $161,662; annual increases of a minimum of 5%; and
participation in incentive or bonus plans at the discretion of the Board of
Directors. The agreement additionally provides for certain confidentiality and
non-competition provisions and a minimum payment of 18 months salary in the
event of a change of control or termination "without cause," or if the employee
terminates for "good reason." As of April 30, 2011, Mr. Venters was owed
approximately $554,214 for accrued unpaid salary.
Note 7. Payroll Taxes Payable
The Company has been delinquent in its payment of payroll taxes. As of April
30, 2011,the total of payroll taxes payable, including estimated interest and
penalties was aproximately $324,145.
Note 8. Notes Payable
Convertible Notes Payable - Dr. Terry
As of April 30, 2011, notes payable due Dr. Terry totaled $500,000, comprised
of convertible notes of $400,000 and $100,000 at 6% and 8%, respectively. Of the
$500,000 principal balance of convertible notes payable, $300,000 of the notes
are secured by all of the assets of the Company and $200,000 of the notes are
unsecured.
The convertible notes have not been registered under the Securities Act of 1933,
as amended, and therefore, may not be transferred in the absence of an exemption
from registration under such laws and will be considered "restricted securities"
as that term is defined in Rule 144 adopted under the Securities Act, and may be
sold only in compliance with the resale provisions set forth therein.
Loans Payable - Dr. Terry
On May 16, 2008, the Company borrowed $30,000 from Dr. Terry. The loan which is
unsecured is payable in one-year with 6% interest. Loans payable to Dr. Terry
totaled $205,000 as of July 31, 2010.
14
THE MOVIE STUDIO, INC.
(FORMERLY DESTINATION TELEVISION, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2011
Note 9. Stockholders' Deficiency
Common Stock
Stock Issued for Cash
During the three months ended April 30, 2011, the Company had not issued
any common stock for cash.
Stock Issued for Services
During period ended April 30, 2011, the Company did not issue any shares of
common stock for services.
Preferred Stock
Series B Preferred Stock
The Series B Preferred Stock is identical in all aspects to the Common Stock,
including the right to receive dividends, except that each share of Series B
Preferred Stock has voting rights equivalent to four times the number of
shares of Common Stock into which it could be converted.
As of April 30, 2011 there were 5,750,000 shares of Series B Preferred
Stock outstanding; and on October 31, 2010 there were 5,750,000 shares
outstanding. Each share of Series B Preferred Stock is convertible into one
share of common stock.
Note 10. Common Stock Options
During the three months ended April 30, 2011, there were no stock option
granted nor were any issued and outstanding.
15
THE MOVIE STUDIO, INC.
(FORMERLY DESTINATION TELEVISION, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2011
Note 10. Convertible Units
During the quarter ended April 30, 2011 the Company made available through
its Venture Capital Partners Llc subsidiary authorized the sale of $1,000,000
convertible units. Such units are are convertible into common shares at the
ratio of (100:1 at $0.01).
Note 11. Litigation
As of January 31, 2011, the Company was not a party to any existing or
threatened litigation.
Note 12. Related Party Transactions
Dr. Harold Terry
As of April 30 2011, the balances owed for the convertible note is $705,000,
these notes are unsecured, non-interest bearing at 7%.
As of April 30, 2011, the interest owed on these notes payable is $247,709.
As of April 30, 2011, the balance owed for the studio rent is $450,000.
Gordon Scott Venters
Effective April 30, 2011, Gordon Scott Venters, entered into a three-year
employment agreement with the Company, which is described above in Note 6-
Commitments-Employment Agreements.
Note 12. Related Party Transactions (continued)
Gordon Scott Venters (continued)
As of April 30, 2011 Gordon S Venters was owed approximately $507,109.
Note 13. Supplemental Cash Flow Information
Selected non-cash investing and financing activities are summarized,
as follows:
2011 2010
----------- -----------
Stocks issued for services $ - $ -
Stocks issued for payment of loans payable - -
Options issued for services - -
Note 14. Subsequent Events
As of April 30, 2011 there were no subsequent events.
16
THE MOVIE STUDIO, INC.
(FORMERLY DESTINATION TELEVISION, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2011
Item 2. Management's Discussion and Analysis of Financial Conditions and
Results of Operations
THIS FILING CONTAINS FORWARD-LOOKING STATEMENTS. THE WORDS "ANTICIPATED,"
"BELIEVE," "EXPECT," "PLAN," "INTEND," "SEEK," "ESTIMATE," "PROJECT,"
"WILL," "COULD," "MAY," AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY
FORWARD-LOOKING STATEMENTS. THESE STATEMENTS INCLUDE, AMONG OTHERS,
INFORMATION REGARDING FUTURE OPERATIONS, FUTURE CAPITAL EXPENDITURES,
AND FUTURE NET CASH FLOW. SUCH STATEMENTS REFLECT THE COMPANY'S CURRENT
VIEWS WITH RESPECT TO FUTURE EVENTS AND FINANCIAL PERFORMANCE AND INVOLVE
RISKS AND UNCERTAINTIES, INCLUDING, WITHOUT LIMITATION, GENERAL ECONOMIC
AND BUSINESS CONDITIONS, CHANGES IN FOREIGN, POLITICAL, SOCIAL, AND
ECONOMIC CONDITIONS, REGULATORY INITIATIVES AND COMPLIANCE WITH
GOVERNMENTAL REGULATIONS, THE ABILITY TO ACHIEVE FURTHER MARKET PENETRATION
AND ADDITIONAL CUSTOMERS, AND VARIOUS OTHER MATTERS, MANY OF WHICH ARE
BEYOND THE COMPANY'S CONTROL. SHOULD ONE OR MORE OF THESE RISKS OR UN-
CERTAINTIES OCCUR, OR SHOULD UNDERLYING ASSUMPTIONS PROVE TO BE INCORRECT,
ACTUAL RESULTS MAY VARY MATERIALLY AND ADVERSELY FROM THOSE ANTICIPATED,
BELIEVED, ESTIMATED, OR OTHERWISE INDICATED. CONSEQUENTLY, ALL OF THE
FORWARD-LOOKING STATEMENTS MADE IN THIS FILING ARE QUALIFIED BY THESE
CAUTIONARY STATEMENTS AND THERE CAN BE NO ASSURANCE OF THE ACTUAL RESULTS
OR DEVELOPMENTS.
The following discussion and analysis of our financial condition and plan
of operations should be read in conjunction with our financial statements
and related notes appearing elsewhere herein. This discussion and analysis
contains forward-looking statements including information about possible or
assumed results of our financial conditions, operations, plans, objectives
and performance that involve risk, uncertainties and assumptions. The actual
results may differ materially from those anticipated in such forward-looking
statements. For example, when we indicate that we expect to increase our
product sales and potentially establish additional license relationships,
these are forward-looking statements. The words expect, anticipate, estimate
or similar expressions are also used to indicate forward-looking statements.
Plan of Operation
The Movie Studio, Inc. F/K/A Destination Television, Inc. (the "Company"
or the "Registrant") was incorporated in the State of Delaware in 1961
under the name Magic Fingers, Inc. By amendment of its certificate of
incorporation, the Company's name was changed in 1999 to Magicinc.com
and in April 2002 to Magic Media Networks, Inc. and in February 2007 to
Destination Television, Inc. In November of 2012 the Company filed an
amendment to change its name to The Movie Studio, Inc. Through the period
ended October 31, 1999, the Company devoted substantially all its efforts
to reorganizing its financial affairs and settling its debt obligations.
During the fiscal years ended October 31, 2000 and October 31, 2001,
the Company was engaged primarily in the planning and development of an
interactive network to provide entertainment via the Internet. Subsequent
to October 31, 2001, the Company redirected its business focus to the
development of a private television network, in high traffic locations
such as bars and nightclubs. During the development process, the Company
received incidental revenue from the sale of advertising and the production
of commercials.
Results of Operation
Revenue
Revenue for the six months ended April 30, 2011 was $4,895 compared with the
six months ended April 30, 2010 of $18,750. The $13,855 decrease in revenue
is primarily attributable to the decrease in subscription revenue.
Expenses
Selling, general and administrative expenses decreased $14,905 from $149,028
to $134,123 for the six months ended April 30, 2011, as compared to the
same period in 2010. These decreases were primarily due to the Company's
decrease in payroll costs.
Other
For the three months ended April 30, 2011 and 2010, the Company reported
interest expense of $35,859 and $39,357, respectively, a decrease of
$3,498 (9%).
17
THE MOVIE STUDIO, INC.
(FORMERLY DESTINATION TELEVISION, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2011
Liquidity and Capital Resources
As of April 30, 2011 the Company had assets of $22,385 against total
liabilities of $2,281,068. The Company has an accumulated deficit of
approximately $9,100,560 as of April 30, 2011, has no cash available for
payment of operating expenses, no source of revenue, and requires additional
financing in order to finance its business activities on ongoing basis. The
Company's future capital requirements will depend on numerous factors,
including but not limited to continued progress in the pursuit of business
opportunities. The Company is actively pursuing alternative financing and
has discussions with various third parties, although no firm commitments
have been obtained. In the interim, the principal shareholder has committed
to meeting any operating expenses incurred by the Company. The Company believes
that actions it is presently taking to revise its operating and financial
requirements provide it with the opportunity to continue as a going concern.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 4. Controls and Procedures
(a) Evaluation of disclosure controls and procedures.
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting for the Company. Internal control over
financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under
the Securities Exchange Act of 1934 (Exchange Act) as a process designed by or
under the supervision of, our principal executive and principal financial
officers and effected by our Board of Directors, management and other personnel,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles and includes those policies and
procedures that:
Pertain to the maintenance of records that is in reasonable detail accurately
and fairly reflect the transactions and dispositions of our assets
Provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the Company are
being made only in accordance with authorizations of our management and
directors: and
Provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the Company's assets that could
have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
18
THE MOVIE STUDIO, INC.
(FORMERLY DESTINATION TELEVISION, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2011
Item 4. Controls and procedures
(a) Evalustion of disclosure and procedures - continued.
Management assessed the effectiveness of the Company's Internal Control over
financial reporting as of January 31, 2011. In making this assessment,
management used the criteria set forth by the Committee of Sponsoring Organizat-
ions of the Treadway Commission in this Internal Control-Integrated Framework.
Based on our assessment, we believe that, as of January 31, 2011 our internal
control over financial reporting was not effective.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rules 13a-15(f)
and 15d-15(f) under the Exchange Act) that are designed to ensure that
information required to be disclosed in the reports we file or submit under
the Exchange Act is recorded,processed, summarized and reported within the time
periods specified in the SEC's rules and forms, and that such information is
accumulated and communicated to our management,including our chief executive
officer and chief financial officer, as appropriate to allow timely decisions
regarding disclosure. In designing and evaluating the disclosure controls and
procedures, management recognized that any controls and procedures, no matter
how well designed and operated, can provide only reasonable assurance of
achieving the desired control objectives, and management necessarily was
required to apply its judgment in evaluating the cost-benefit relationship of
possible controls and procedures.
Our management, with the participation of our chief executive officer and chief
financial officer, has evaluated the effectiveness of our disclosure controls
and procedures as of April 30, 2011.
Based on their evaluation, our chief executive officer and chief financial
officer have concluded that, as of January 31, 2011, our disclosure controls and
procedures were not effective.
(b) Changes in internal controls.
There have not been any changes in the Company's internal control over financial
reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) during the quarter ended January 31, 2010 that have materially
affected, or are reasonably likely to materially affect, the Company's internal
control over financial reporting.
19
THE MOVIE STUDIO, INC.
(FORMERLY DESTINATION TELEVISION, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2011
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
During the month of November 2012, the Company became involved in litigation
regarding the ownership of equipment left in the building by a previous tenant.
The building serves as the corporate headquarters for the Company. The Company
was ordered by the court to preserve the equipment until ownership can be
established by the court. The Company has made no claim of ownership of the
equipment and expects to be dismissed from the litigation.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the six month period ended April 30, 2011, there was no modification
ofany instruments defining the rights of holders of the Company's common stock
and no limitation or qualification of the rights evidenced by the Company's
common stock as a result of the issuance of any other class of securities or the
modification thereof.
Item 3. Defaults upon Senior Securities
There have been no defaults in any material payments during the covered period.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
The Company does not have any other material information to report with respect
to the three month period ended April 30, 2011.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
33.1 Certification pursuant to Section 302 of Sarbanes Oxley Act of 2002
33.2 Certification pursuant to Section 906 of Sarbanes Oxley Act of 2002
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended April 30, 2011.
20
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
thisreport to be signed on its behalf by the undersigned, thereunto duly
authorized.
THE MOVIE STUDIO, INC.
Date: April 23, 2013
/s/ Gordon Scott Venters
Gordon Scott Venters
President, Secretary and Director
21
EXHIBIT 33.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
AND CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
I, Gordon Scott Venters, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of The Movie Studio, Inc.
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the small business
issuer as of, and for, the periods present in this report;
4. The small business issuer's other certifying officer(s) and I are
responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the small business issuer and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the small business issuer, including its
consolidated subsidiaries,is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
(c) Evaluated the effectiveness of the small business issuer's disclosure
controls and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the small business issuer's internal
controlover financing reporting that occurred during the small business issuer's
most recent fiscal quarter (the small business issuer's fourth fiscal quarter in
likely to materially affect, the small business issuer's internal control over
financial reporting; and
5. The small business issuer's certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over financial reporting
to the small business issuer's auditors and the audit committee of the small
business issuer's board of directors (or persons performing the equivalent
functions):
22
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the small business issuer's ability to record,
process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involved management or other
employees who have a significant role in the small business issuer's internal
control over financial reporting.
Dated: April 23, 2013
/s/ Gordon Scott Venters
Gordon Scott Venters
Chief Executive Officer
Chief Accounting Officer
23
EXHIBIT 33.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with this Quarterly Report of The Movie Studio, Inc.
on Form 10-Q for the period ending April 30, 2011, as filed with
the Securities and Exchange Commission on the date hereof (the "Report"),
I, Gordon Scott Venters, Chief Executive Officer and Chief Accounting
Officer of the Company, certifies to the best of his knowledge, pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 that:
1. The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of
the Company.
By: /s/ Gordon Scott Venters
Gordon Scott Venters
Chief Executive Officer
Chief Accounting Officer
Dated: April 23, 2013
24